Young founder Derek Canton was obsessed with making restaurant payments frictionless. COVID scrambled his product plans but opened up a huge opportunity to provide contactless payment. Throughout lockdown Paerpay has gotten traction for its text-driven payment system which is a perfect fit for the times.
Click here to read full episode transcript
Highlights:
Sal Introduces Founder Derek Canton of Paerpay
What Paerpay Does
How Paerpay Makes Money
The Competition is Device-Centric, Paerpay Is Software that Runs on Legacy Devices
How the Paerpay Solution Is Implemented
A Possible Collaboration with Squadle?
Derek Canton Has Ambitions Beyond the Restaurant Space for Paerpay
Sal’s Pitch for His Investment Syndicate
Derek Canton’s Discovery that He Was an Entrepreneur
Derek’s Dad Gives Him “The Talk” About Entrepreneurship
“But I tell people it's the most rewarding, most painful experience you can have, being an entrepreneur, but candidly I'm addicted to it, man. I love it.”
“…on a personal side was as simple as do what you love and if your dream doesn't scare you, it's not big enough.”
“…the first times in history where operators are thinking about contactless payments being the number one way of form of accepting payments, period, period. That's never happened before.”
“…a few months from now the world is going to be completely different. And so, for the first time in history, we have this opportunity to really help shape what that world looks like. And our tech is doing it already and it's been incredible.”
How Derek Canton Got His Co-Founder Alan Inacio – How They Seized the Opportunity for Contactless Payments Created by COVID
“…, if you are a founder and you're looking for a problem to solve, now's the perfect time to be able to do that. The world is quickly changing…”
Paerpay: Contactless Pay at the Table
Guest: Founder and CEO, Derek Canton
Sal Introduces Founder Derek Canton of Paerpay
Sal Daher: Welcome to Angel Invest Boston, conversations with Boston's most interesting founders and Angels. I'm Sal Daher your host, an Angel who delights in the interesting and fascinating tech companies that abound in Boston's just singular startup ecosystem. Today, I have the privilege to have on a young founder. His name is Derek Canton. Welcome Derek.
Derek Canton: Hey, glad to be here.
Sal Daher: So, Derek tell us what your startup does, Paerpay, and why it's important.
What Paerpay Does
Derek Canton: Yeah. So for us, we're focusing on making payments completely frictionless and along those lines is contactless, especially given the state of the world right now. And so we do this in a couple of ways. One is we allow your guests to be able to simply pay for their orders, whether it be dining in or taking out, without requiring any physical contact with staff members or operators in the restaurant. And from the guests experience side of things, we allow those payments to be simple, secure, and completely frictionless.
Sal Daher: Great. Great. So give me a little idea of how it works. I get into the restaurant. Am I paying ahead like it used to be at Legal Sea Foods, the old Legal Sea Foods, like 40 years ago. They'd make you pay ahead. They said, "Oh, it's more efficient that way." No, I think they were afraid of people skipping out.
Derek Canton: Yes, so I'll tell you exactly how it works here. So of course most restaurants are closed for dining in and only doing takeout. Right?
Sal Daher: Well, let's just set a context. We are recording towards the end of May. Restaurants are just beginning to open up. This is going to be launched several weeks into the future. So right now restaurants are just beginning to figure out how to open, the governor has laid out some guidelines and people are figuring out how to open. And so Paerpay, which is the app that Derek has built, is playing in that, in a sense that you're creating a contactless payment experience. That's completely seamless.
Derek Canton: Yeah.
Sal Daher: Please go on.
Derek Canton: Yeah. So how it works is, for takeout experience, you call the restaurant, place, your order like you traditionally would, then the operator will ask you for your phone number, like they traditionally would for the order. And all the operator has to do is type in your cell phone number directly into the point of sale system. Once that is in the system with your order, when they send that order to the back of the house where it has to be cooked, we read that with our technology and we'll automatically send you a text messages to be able to view and pay for your order. So there's no downloading apps and it's super easy to use.
Sal Daher: That's very promising. That's quite an evolution from when I first saw you pitch at Walnut. And I understand that you were getting ready to go to the New England Food Show when COVID-19 hit and you have an anchor tenant, shall say an anchor client, are you free to disclose who that is?
Derek Canton: So, I won't say specifically who the name is. You can Google and probably figure it out, but I will say they are the second largest restaurant group in Massachusetts. And we're also working with a few big, big names in Massachusetts. I guess by the time you're listening to this podcast, it'll be public. So you probably already know at this point, but I will say within let's say the first two weeks of us officially releasing our text-to-pay platform, signed up over 65 restaurants that are interested in using this platform. Our first one is already live, Coppersmith in South Boston with a handful of other local names that are going to be coming on this platform very shortly. And the adoption has been really great. Some of these restaurants are seeing a huge increase in call-in phone orders. And for the first question that we're working with, we're seeing about 60, 65% of their orders being placed over the phone. And of those orders, about a hundred percent of them are being paid with our platform. It's been incredible.
Sal Daher: That is great to hear. So how do you make money?
How Paerpay Makes Money
Derek Canton: Yeah, so we make money a couple of ways. So one is we do have an installation fee and we do have a monthly SaaS fee as well as we're able to make money on the transaction as well too. But right now, given the state of the world with COVID-19 we've been able to give restaurants significant discounting just to help get them up and running here. But the nice thing about our business model and the relationships that we have with some of these credit card processing, is the ability to be able to make money on the transactions, as well as these other parts of the experience for the operator side things as well too. But right now our biggest focus is: Let's get these restaurants up and running and providing some discount, a lot of these restaurants are operating at 20, 25% capacity. So being able to support them as has been a priority at this moment.
Sal Daher: Yeah. Oh, it's really a pity to see what's happening with this and the restaurants, these guys are just, 25% capacity is hard for them to survive. So what do you see as your competition?
The Competition is Device-Centric, Paerpay Is Software that Runs on Legacy Devices
Derek Canton: Yeah. So that's a good question. You could say that Toasts of the world are our competition. Of course there's players in that space that we're looking at, I think Toast is probably the one that people ask us about the most. The thing for us as we integrate with the majority of the point of sale systems out there, the big players, Aloha, MICROS, POSitouch, NCR, and there's a whole list of them there. And at the moment, Toast does not do those integrations. And so we have the ability to go outside the scope of Toast. Of course it would be great to integrate with Toast and we'd love to figure that out, but we do not have that in place today.
We’ve seen some other players that are trying to enter the space for contactless payments, but some of them are introducing hardware devices, which truly isn't contactless. It might be one or two touches for the guests themselves, but the operators are passing devices amongst their staff members and whatnot. So we're like, let's truly make something that's contactless. And then also do it in a way that has lower cost for the restaurant, as well as lower training perspective. Because one is, there's no new apps for the guests. There's no new hardware for the operators. And because of that, the training experience for the guests or the training experience for the restaurant is pretty much nothing. The only thing you have to do is: This is how you add a phone number and you add it to the order. And boom, everything else is handled with our technology. It's really cool.
Sal Daher: That is tremendous. So basically when did you go live?
Derek Canton: Cinco de Mayo.
Sal Daher: Cinco de Mayo.
Derek Canton: crosstalk 00:06:25].
Sal Daher: Big day.
Derek Canton: Yeah.
Sal Daher: All the Mexican restaurants, you had your launch on Cinco de Mayo.
Derek Canton: Mm-hmm(affirmative).
Sal Daher: Awesome. Awesome. Oh gosh. But you were very brave to have gone live in the middle of a COVID shutdown. That was pretty amazing.
Now tell me, how do you plan to expand? What's your go-to-market plan after these initial reference clients that you're building? Pretty big names, the second biggest restaurant chain in Massachusetts. How do you expect to spread to many more locations?
Derek Canton: That's a great question. The thing which is cool about our product and our platform, it doesn't matter where you are as a restaurant. You could be in California, you can be in New York, our product will work for you and we can do the setup and installation in a matter of hours. It doesn't really matter where you are in the country.
So, we're currently having conversations with restaurants all over. Our first Chicago restaurant, we'll be installing with them on Friday. We're talking to a few in California, St. Louis. Texas. The response has been beyond just Massachusetts, which is super, super cool. But how we really scale that up is, is really channel sales and partnerships. So we are talking with a few resellers as well, too.
One of the companies that we're working with is a Beacon Payments and Pineapple Payments and we've already done the integrations with them. And one of the reasons why we did that is there's a lot of restaurants are directly tied into their processor and don't have the capability of switching that. And so for us to be able to integrate with those processors and have those relationships helps restaurants a lot. And so we were able to do that with Beacon Payments, which was fantastic.
There are a few others that we're having conversations with, who in a sense you were saying, "Hey, we're going to then push this product out to our restaurants that are already processing." And the cool thing about it is because they already have a relationship with the restaurants, there's really not any added cost from a processing side, for the restaurants. It's just, "Hey, here's our processor. You're already using it. Here's a third party that integrates." And then that helps opens doors for new restaurants getting on our platform. So we're already exploring those channels that are going to allow our product to scale up pretty quickly here. And we're already seeing the fruits of it very early on.
Sal Daher: So, your product is delivered just via software that you're loading onto existing processors, payment processors that exist already. How is it that you upload? You do a software update? It's included in the software update for the processor, the payment processor?
How the Paerpay Solution Is Implemented
Derek Canton: So great question. So we do a couple things. So one is we do upload software directly to the back of the house point of sale system for the restaurant and we install it, we set up once and then that allows us to remotely communicate with the restaurant. And regarding processing, we have two options. One is going directly with their current processor, or we do have third-party processing relationships that we have as well too that we can use as well. So we do have a lot of flexibility there depending on what the restaurant's needs are, but literally just takes one installation, we integrate with the processor and they're up and running pretty quickly. Depending on what they have for their point of sale system, we can get them up and going in a matter of days. It's pretty quickly, it's pretty sweet.
A Possible Collaboration with Squadle?
Sal Daher: Awesome. Awesome. I'm just curious. Have you run across Squadle?
Derek Canton: Yes. I'm familiar with Squadle, yup.
Sal Daher: I'm just wondering, is there any possible interaction between what you guys are doing and what Squadle's doing?
Derek Canton: A hundred percent and I think one of the things for them, it would probably be on the back of the house side.
Sal Daher: Let me just fill in a little bit what Squadle does, Squadle is a software platform for doing back of the house bookkeeping for keeping temperatures, the refrigerator, cooking temperatures, all the records they have to maintain in the kitchen for inspections and that kind of stuff. Instead of keeping binders, they're doing it with an iPad that plugs into these digital thermometers and all that stuff. So, this is for the benefit of the audience who may not know what Squadle does.
Now, what you're doing is your integrating into the back of the house POS, which keeps track of the orders and also payments and all that stuff. And so, these guys, they are in the restaurants, like in the McDonald's for example, what do you see as a possible interaction between you and Squadle?
Derek Canton: Yeah, there's definitely an opportunity there. So there's a couple of things that we were already doing with current players in the restaurant space is one of them is some referral pricing to be able to provide some of their customers support as well, too. And we have a few of those relationships already in place, but someone like Squadle, long-term, I think there's an opportunity when it comes to data and helping restaurants optimize what they're doing. Help these operators understand exactly how their guests are coming in and payments and that whole relationship with the back of the house. There's a lot of insight and value that we could in theory provide to someone like a Squadle.
Sal Daher: Oh, very good. Very good. So where do you see Paerpay? By the way, if somebody wants to look it up, would you please give us the web address?
Derek Canton: Yeah, of course. So you're going to find us at Paerpay.com. That's P-A-E-R-P-A-Y.com.
Sal Daher: Okay. P-A-E-R-P-A-Y.com.
Derek Canton: Correct.
Sal Daher: Excellent. Excellent. Where do you see yourself in five years? Where do you expect to be at the end of 2025?
Derek Canton Has Ambitions Beyond the Restaurant Space for Paerpay
Derek Canton: Yeah. So that's really good question. It's funny, we're talking internally with our team of looking at the direction that we can go with this product. And there are a few things that we're really excited about beyond the restaurant space. I don't want to share too much yet because there's some really cool things that we have cooking up that I don't want public just yet. But I will say that for us, with our technology, our focus from day one has been on payments. It hasn't necessarily just been, "Hey, we want to be the best payments for restaurants." It's been, "Hey, we went to provide the best payment experience." Period. That's truly frictionless. That can be truly contactless. I wish I could tell you, but I'll get in trouble. My team will be like, "I thought we're not telling anybody yet."
But I will say in some of the circles that you are involved with, the Walnuts of the world, we might be exploring those conversations again soon with our growth that we're seeing and with the story that we think we can tell on how quickly we can grow and the story of where the business is going. So I'm sure you'll hear more offline soon.
Sal Daher: A little bit of mystery. Well, you can come back on and do an update when that becomes public.
Derek Canton: Great.
Sal’s Pitch for His Investment Syndicate
Sal Daher: Coming up next, I'm going to ask young founder, entrepreneur, Derek Canton, about how he got on this entrepreneurship track. But before that, I just want to do a little plug for my syndicate list. I'm an angel investor and I've invested in certainly over 50 startups. And I really enjoy working with them. I'm on the board of one and I am becoming more and more focused on the life science space here in Boston.
Why? Because there's just so much stuff that's going on in the life science space. Perhaps the first vaccine for COVID-19 might come from here, from Moderna and companies such as these are the companies that I get a chance to invest in really, really early. And so I lead people into my syndicate, I get together with other investors who may not have the time to put in the work of understanding these really early stage life science companies. And for me, it's not work. It's fun. That's what I do just for fun. And so I afford them the opportunity to invest alongside me and some of the other really savvy investors with whom I invest, in these really cutting edge companies. One of them that's been, which a company that I led the first round, Derek, have you heard of SQZ Biotech? S-Q-Z Biotech?
Derek Canton: I have not, no.
Sal Daher: Okay, it's a company, they're based in Watertown, Massachusetts now. They started out here in Cambridge, it's an MIT spinoff. And they're in the business of cell transformation using a process, basically squeezing cells through certain constrictions and getting various types of things into it. And they just raised $65 million on a pre money valuation of $250 million to support stuff that they're doing in terms of finding various therapies that involve cells, taking cells and transforming cells.
And I'm very proud that I led Walnut Ventures and other investors in the first a million dollars that SQZ raised. And they've gone out to raise quite a bit. They've entered into a very significant partnership with Roche, has a value of up to $1.3 billion. And it's become a biotech company that is very, very much in the news right now. And they're also working on something that creates infrastructure for creating future vaccines really quickly because the technology that they have, it doesn't do anything that can't be done so far. You can laboriously do what they do, but they do it so easily and they can do it at scale. So that, for example, in the case of the clinical trial that they're on for HPV positive cancers, which is horrible cancers, all the doses that they are applying in the clinical trial for each patient, and these are doses that are tailored to each patient, they make them within 24 hours.
It wasn't possible without the SQZ technology. Roche had the therapy, but it couldn't work except together with the SQZ technology, to manufacture the doses. And so this is precision medicine, and we all have our fingers crossed that this clinical trial will be as successful because it will relieve a lot of human suffering.
And also, part of this raise that they just did of 65 million, they're going to be using towards building capacity so that in the future, they can quickly create a vaccine also using this transfection method that they have, cell transformation. So this is the kind of stuff that I do. So if you're interested in being in the very cutting edge of the life science world and early on, sign on.
Derek Canton’s Discovery that He Was an Entrepreneur
So anyway, Derek, I've always been intrigued as to how, by the way, tell everybody, how old are you?
Derek Canton: So, I'm 27.
Sal Daher: Okay. You see, not even 30 yet. You're a very smart guy, you have all sorts of things that you could be doing. Why did you decide on this life of penury and struggle, which is entrepreneurship? Was your dad an entrepreneur, was your mom an entrepreneur?
Derek Canton: So, no, actually, from my direct family there's not a ton of entrepreneurs in my family, actually. My grandfather, he was a carpenter and he built houses and stuff like that. But from the technology side, it's something that I've just always been fascinated in. And it's funny because it's a little of a story here. But for me, I grew up very involved in church and my home church, when we first started attending, was 45 people. And I had the pleasure of seeing it grow to about 2,000 people while being really young.
And when I was there, I did everything from, I built a bookstore, I helped build and lead their youth ministry, their young adult ministry, kids, I play on the worship team, a little bit of everything. And I had a mentor and she challenged me just to get into graphic design and video production and just this whole world of, I call them projects. And one of the biggest projects I did for them was I built an app and one thing I tell people probably is, I don't know how to write code. I do a little, but not enough to really help out my team members. And so I learned from an early age of how to be an effective product manager. And so I was able to go out and get this app developed very cost effectively. And then being one of the number one outreach tools for our church, which was incredible. A church of 2,000 people and having over 10,000 downloads of an app was super exciting and this was when I was back in high school.
And I remember, one of my mentors and I remember we were out, I think we were at Chili's at the time. I remember she looked at me across the table and said, "Derek, so what are you up to nowadays? I know you're so entrepreneurial." And I was a high school student, I had no idea what that word meant. You use your context clues, whatever, but honestly, that was the first time anyone called me an entrepreneur and I didn't know what it meant. But I [crosstalk 00:19:20] to, and just fell in love with the process of creating things and solving problems.
And the second thing I went to deal with after that was my first business, was an apparel company. And I ended up winning the first ever business competition at my university. And we got some money and was lucky enough to receive additional funding from the guy who literally funded the entire program at my university. And he just took me under his wing and coached me and I learned a heck of a lot from failing upwards. And just the process of knowing your numbers and how do you manage a team and managing inventory and all this stuff. And I just fell in love with the process.
Derek’s Dad Gives Him “The Talk” About Entrepreneurship
And I remember when I was coming out of college, I was very much ready for my next entrepreneurial endeavor. And my dad called me over, he had us sit down, he said, "Hey, look Derek, I love that you're entrepreneurial. And I love that you want to create these things."
Sal Daher: The Talk.
Derek Canton: The Talk.
Sal Daher: He's going to have The Talk with you. Yeah, yeah.
Derek Canton: Exactly, yup.
Sal Daher: All right kid, you've done this stuff but...
Derek Canton: But one of the things he told me, he was like, "Look, you can be an entrepreneur, but don't buy into this stigma that you have to be a starving entrepreneur." [crosstalk 00:20:29] It's either you're broke or you're rich. [crosstalk 00:20:34] don't buy into that. And so, what he encouraged me to do and it's honestly some of the best advice I've ever gotten, he was like, "Look, you're going to have to work harder than everybody else, but," he's like, "I believe that you have the ability to maintain a full time job, get a great salary. You learn as much as can and still have your entrepreneurial side hustles." He's like, "When you get to a point where you can look yourself in the eye in the mirror and say, "Hey, look, I cannot grow this business anymore because of the restraints of my full time job."" He's like, "That's when you know, it's time to step away."
And that's exactly what I did. I got a job at Dell EMC, lucky enough to be a part of their marketing development rotational program which is very competitive to be a part of. And man, I learned a heck of a lot. It was very humbling for me, even to this day some of my old bosses still a mentor and advisor to me there. And it's been super helpful and I'm glad that I made that decision.
And when I was at Dell EMC, I started a consulting business, which was doing fairly well. I'm helping people do product design and helping startup with product design and whatnot. And then when I was there, I was lucky enough to compete in the world's largest financial technology hackathon called Money20/20 in Las Vegas.
Sal Daher: Okay, okay.
Derek Canton: And that was in 2016. And so long story short is I ended up winning with this whole idea of frictionless payments and came in the first place with first data, second place overall and had this idea of can we make payments truly frictionless? And that's what put me on this journey of solving this problem.
Sal Daher: So Paerpay came from that competition?
Derek Canton: Yeah, it did. Yep.
Sal Daher: Pretty cool.
“But I tell people it's the most rewarding, most painful experience you can have, being an entrepreneur, but candidly I'm addicted to it, man. I love it.”
Derek Canton: Now I'll tell you the way that we do the payments has evolved significantly since. But the mission has always been the same of making these payments completely frictionless. But yeah, that's kind of my journey. Of course there's many ups and downs and failures along that path and I had many ideas in that interim that worked, didn't work, even the idea before Paerpay, we actually ended up consolidating it and just focusing on the payment side of things for this hackathon. And so, I tell people who reach out to me, "Hey, I want to be like you, I want to be a entrepreneur, I want to do this and that." I'm like, "It's 10% the articles and the interviews and whatever, it's 90% me pulling all-nighters that with my team, with the stress and the will this product even work. What if this customer pulls out?" There's so many things that go into it, it's just agonizing. But I tell people it's the most rewarding, most painful experience you can have, being an entrepreneur, but candidly I'm addicted to it, man. I love it.
Sal Daher: Yeah, it is. I can understand it being addictive. So this is really interesting. So I guess, well, pastors have to be entrepreneurial, a church that grows from 45 members to 2,000 members, that's 44x, that's a lot of growth, it's a growth hacker with a different mission, but I guess that kind enthusiasm can be very contagious. I can see your dad's perspective of urging you to moonlight, because it does a bunch of things. It allows you to test your idea, allows you to also test your commitment. And then you see, you were working at Dell EMC in a prized situation, you're learning to sell, but it's also a great opportunity. You could make a tremendous career in these places and you knew enough that you could just walk away from that and do your own thing, which is just tremendous. That's really tremendous.
So, Derek, as we wind up the interview, I'd like to open up the floor to you. What would you like to communicate to this audience of founders, angels and people who work at startups all across the country? What kind of a-ha discovery that you made, that you wish you'd known and you bang your head and say, "Oh, if I had known this, it would have saved me so much agony, so much stress."
“…if I knew how hard it was going to be, I never would have done it [start a company]."
Derek Canton: That's a great question. It's funny, I was joking with my co-founder and said, "If I knew what I knew now, and I went back in time and gave all this information to me when I first started, if I knew how hard it was going to be, I never would have done it." You don't know what you don't know. And part of my ignorance was also part of my advantage to be honest with you. And my commitment of just, "Hey, I'm going to get it done." We'll figure it out. And luckily we've been able to do that. So I think there's been a couple a-ha moments for me. One from a personal side of being an entrepreneur and I'll talk about our product side afterwards.
“…on a personal side was as simple as do what you love and if your dream doesn't scare you, it's not big enough.”
I think the first thing for me on a personal side was as simple as do what you love and if your dream doesn't scare you, it's not big enough. And I remember I read that in a book, it absolutely challenged me. And the reality is, is someone's going to do it, so why not me? And so it might be painful, there might be growing pains or there might be challenges, peaks and valleys as there often are in entrepreneurship, but why not me? And so it's always been that mentality of I can, I will, I must. I'm going to figure it out. Is there an obstacle in front of me? Well, hey, I can, I will, I must get over this obstacle. Do I need to find a technical co-founder? Yeah, I can. I will. I must find a technical co-founder.
“…the first times in history where operators are thinking about contactless payments being the number one way of form of accepting payments, period, period. That's never happened before.”
And literally it's convincing myself against all odds, we're going to make it work. And on that thread in this eureka moment, if you will, for our business, things got shut down for the world with COVID-19, especially Boston who got hit really hard, Massachusetts in general. I looked at my team members and said, "Hey guys, we can, we must, and we will get through this. We're going to figure it out." I didn't know what it was going to look like at first, but we knew that, "Hey guys, we can, we will, we must figure this out." And the point for me that was the eureka moment was really realizing and after talking with a bunch of restaurant operators from as big as 50 plus locations to as small as one, two locations, now this is truly one of the first times in history where operators are thinking about contactless payments being the number one way of form of accepting payments, period, period. That's never happened before.
The fact that some of these operators saying, "Hey, look, we might change our processor. It's going to be like pulling teeth, but we might do that." For them to think, "Hey, yeah, we're going to stop accepting physical credit cards." Or not even physically drop a check and just tell people, "Hey, use this method of payment." That's unheard of. Our initial business model was capturing a few percentages of transactions from these restaurants. If you look at the adoption of Apple Pay and Google Pay in the marketplace, it's only a few percent. But now the message is, we could potentially see upwards of 65 to 80% of transactions for every merchant using our platform, their transactions coming through us. Completely unheard of.
“…a few months from now the world is going to be completely different. And so, for the first time in history, we have this opportunity to really help shape what that world looks like. And our tech is doing it already and it's been incredible.”
And with that, it's created a huge financial opportunity for our business. I think there's also a sense of responsibility now, as we dive more and more and look at this payment processing industry and realize the way it's been done is a little corrupt, if you will, and understanding all the things that are happening and I think we have a real opportunity to do some real good for the world here. For the merchants, for the guests and just create a damn good experience while doing it, man. That's really what it is here. So I think that's really this eureka moment is we realize that a few months from now the world is going to be completely different. And so for the first time in history, we have this opportunity to really help shape what that world looks like. And our tech is doing it already and it's been incredible.
Sal Daher: It's great to hear. This is so heartening to hear your confidence that the future, you're going to be able to handle it no matter what comes. Actually, one thing I wanted to go back on, reminded me here, tell me a little bit about how you connected with your co-founder and what he brings to the equation.
How Derek Canton Got His Co-Founder Alan Inacio – How They Seized the Opportunity for Contactless Payments Created by COVID
Derek Canton: Yeah. So a little bit of context for our listeners here too. So I'm originally a solo founder. I started the business in 2017 and officially founded it. I was able to pull in some technical support, which helped get us off the ground. But as I was looking for a technical co-founder, candidly, I didn't find someone that had enough experience in this space that added significant value to consider them a co-founder. And trust me, I was looking man. I was looking. And we actually went through the process of finding some people who, we tried them as a co-founder, if you will, and it just didn't work out for one reason or another.
So for me, we actually brought on a co-founder, a technical co-founder, back in January of this year. And I'll tell you, man, if I wasn't able to be lucky enough to find this person before everything shut down, we wouldn't have the ability to move as quickly as we're moving. Because he's the one who's building this technology. He has the level of depth and experience with payments and compliance and building scalable technologies. And he's really good at what he does and has been an incredible cultural compliment and also a skillset compliment to myself as well, too.
It's actually funny. We actually just, this past newsletter update to our investors, we actually made the official announcement so everyone officially knows who it is. I'll tell you, man, how we went about finding this individual. Literally, I'd just been pinging my network and asking people who I know and I trust to, "Hey, do you know anybody?" I think whether it be for finding technical talent or finding a co-founder in general, the best people are always doing something. All the people I initially interviewed were idle. "Okay. I have time..."
Sal Daher: Those guys, forget about it.
Derek Canton: Yeah. I quickly realized that like, okay, I need to find someone who's in motion. And luckily enough, I was able to find someone who when I first got the introduction to him, I knew for a fact there was no way I can match his salary, he was doing [crosstalk 00:30:29]-
Sal Daher: What is his name?
Derek Canton: So, his name is Alan Inacio.
Sal Daher: Alan Inacio. Okay. So you knew there was no way you could match his salary.
Derek Canton: Yeah.
Sal Daher: So how did you hook him? How did you fool him into your crazy venture?
Derek Canton: Yeah. So a couple of things. One is, I think culture fit was a big thing, two, I think is vision, and three was I told him, "Look, I'm looking for a long-term partner here. So this is not my first business and it's definitely not going to be my last business." And also he's had a very successful professional corporate career and was interested in making the jump into the world of startups. And he had some really nice job offers for some early stage startups doing some cool stuff, but none of them was at a co-founding position. I think that's how I was able to do it.
And I remember, if you're familiar with FastCTO, Igor, he's actually the guy that made the introduction. And he was like, "Yeah, man, he probably has two feet in the door at another company that's about to hire him, but I'll introduce you to him." Why not? Right? And I said, "Just give me the meeting, just give me the meeting."
And honestly, like I said, it was a great culture fit and Alan literally said, "Hey look, if this is going to work, we should just start working together and figure it out." So while he was working his full-time job, nights and weekends he was dedicating time. He said, "Hey, look, you don't have to pay me anything. I just want to show I'm committed to this process." And because of that, I was like, "Hey man, what do we need to do to get you on board from a salary, an equity position where you feel confident that this is your baby. I want you to truly feel like you're a co-founder."
We started in January, we officially made the announcement this month here, this past month here. It's been a journey and I told him when first things got started that if things don't work out here it's going to be tough for me because I'm investing so much time into him. But luckily it paid off tenfold. He's absolutely the right fit. We already talked about, whatever happens next, we will be continuing to work together, but he has definitely been the catalyst that allowed us to be able to build such robust technology so quickly.
Sal Daher: This is so important. I've interviewed Ed Roberts. Who's started the whole discipline of studying entrepreneurship at the MIT Sloan school. I've interviewed his PhD student, Chuck Eesley, who teaches entrepreneurship at Stanford. And they've both agreed that the most robust result in all of the study of entrepreneurship is that having a co-founder significantly increases your chances of success, a co-founder who shares your values, but who compliments your skills. If you're a technical co-founder, bringing somebody in who knows how to sell, who's got some business experience or vice versa in your situation, you had that sort of thing already. You needed a technical person. It just hugely increases the chances of success. And being a solo founder is darn hard. And so it's very wise, very, very wise. And I see entrepreneurs get the advice, "Get a co-founder," and they resist and they say, "No, but I'm so busy. I got so much to do. Finding a co-founder is a lot of work. I don't have time to find a co-founder. I got to go do this. I got to go do that."
And I applaud you for having stuck to it, having gone through all the potential co-founders that didn't work out and you found a tremendous match. So that is great.
Derek Canton: Thank you. It's been a journey. And for anyone who is listening to that is a solo founder, or thinking about being a solo founder, I urge you, if you can find someone and the one thing, if I could change anything in time, if I could find Alan earlier, I absolutely would have, but the process was worth it. It's like dating, right? It's like when you know you find the right person, you're like, "Yeah, this is a 10xer, for my life, for what I'm doing." The work habit, the whole nine. Finding that one person is a game changer.
Sal Daher: Excellent. Any other thoughts Derek, before we wrap up?
“…, if you are a founder and you're looking for a problem to solve, now's the perfect time to be able to do that. The world is quickly changing…”
Derek Canton: Yeah. I guess the last thing I'll say here is, one is, if you are a founder and you're looking for a problem to solve, now's the perfect time to be able to do that. The world is quickly changing and I'm telling you, man, if you can find something that inspires you, you're passionate about, go do it and make those changes.
Now, if you're an investor or you're familiar with the payment technology space in any way, shape or form, I'll tell you, man, we're constantly learning. Being able to navigate these challenges with someone who has expertise in this area will be super, super helpful. And I would love to have conversations and any mentorship or advice that you guys are open to having those conversations with, I would love to do that. We're not actively raising at the moment, but any support and feedback for our business is absolutely helpful as we help these merchants.
And then lastly, Sal, thank you so much for your time. This has been incredible. And man, if I can inspire one founder or one person to go out and solve a problem that makes a difference in this world, that's a win for me. So I really appreciate your time.
Sal Daher: Derek. I'm so grateful. I want to say to anybody who's interested in the payment space, Derek is, I met him about two years ago, and he's just been dogged, he's a very pleasant person, but I think it hides a very steely personality. He just doesn't give up, just keeps coming back. He's got a smile. He's got a pleasant way about him, but he just keeps at it. And so I think you're going to do great things and I would advise someone who is interested in this space to really consider very highly figuring out a way to roll up your sleeves and help Paerpay and Derek Canton.
So, I thank you again for coming on.
Derek Canton: Thank you.
Sal Daher: This is Angel Invest Boston, conversations with Boston's most interesting angels and founders. And Derek Canton is certainly one of those most interesting founders. I'm Sal Daher.
Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme is composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.