It was the type of assignment that Mike Milotich had been awaiting for most of his career. An innovative product team at American Express had just launched a promising new offering, and Milotich had been assigned to the group to help “optimize its day-to-day decision making”.
“I arrived when it had been live for only maybe 4 to 6 weeks, and all of the traditional metrics indicated that it was a runaway success,” explains Milotich, who adds that the early consensus among team members and even the company at large was, “Wow! It looks like we may really have something here.”Read More
As it turned out, the assignment provided Milotich with a singular perch from which to study the high-flying opportunity.
“My job was to determine what was driving this success and what we were seeing with regard to the behaviors of customers that could be fueling this,” comments Milotich, who notes that such insight could have potentially uncorked a new secret sauce for the company as a whole.
However, there would be no secret sauce.
Observes Milotich: “As we started to dig deeper, we began to understand that we had a problem.”
The nagging question that began to haunt the product team was whether its new product was cannibalizing sales from existing customers.
“We set up a weekly meeting with the leader who ran the business, at which for an hour each week I would come in with analysis and say, ‘Here’s what’s happening,’” recalls Milotich, who points out that at the time, the indications of cannibalization remained somewhat murky because behaviors of early adopters sometimes vary from those of broader customer segments.
As time moved forward, the leader and the greater team began to accept the idea that the product was flawed and changes were required.
“Then the discussion shifted to ‘How do we maintain many of the new innovative attributes of the product but make certain that it’s both almost as attractive to the customer and at the same time not something that’s going to damage us financially?,’” reports Milotich, who in the weeks ahead would begin working closely with the team’s marketing and sales executives to help them to reposition the product to mitigate the risk of cannibalization.
Says Milotich: “In something like a 6- to 9-month time period, we went from a kind of a euphoria to ‘Uh-oh!’ to then designing a solution that could hold on to the best parts of the product.” –Jack Sweeney
Made Possible By
CFOTL: Tell us about Marqeta … what does this company do, and what are its offerings today?
Milotich: Marqeta is the first modern card-issuing platform. I’ll explain what card-issuing is in a minute, but essentially it’s built by developers, for developers. It’s all OpenAPI, best-in-class developer tools in the cloud. Essentially, what an issuer processor does is to help to authorize or decline transactions. When you’re at the point of sale and you’re paying with your card and you tap it or you dip it in, it takes about a second for your terminal to say “Approved.” What’s happening in that time is that a message is being sent from that terminal all the way back through Visa or MasterCard, to your issuer, which might be a bank or maybe Cash App.Read More
All of this happens in a split second, and then you see the terminal say “Approved”—but a lot is happening in this time. What Marqeta does as the issuer processor is really to help with that authorization decision on behalf of the card-issuing bank. It’s maintaining the system of record in terms of how much of your credit line you have drawn down. How much of your bank balance have you just reduced by making that debit transaction? It’s really that system of record. What was innovative about what Marqeta did was to take all of the great design possibilities that could be done from a payment experience and put them in the hands of our customer, which is typically an innovative technology company. This kind of pushed the financial institutions into the background. It also really unlocked a lot of innovation, because there is a lot of regulation associated with payments and lots of rules about things that you have to do that come even from the payment networks.
The innovation of Marqeta was to kind of put all of this into the background and say, “We’ll take care of that for you—you just worry about coming up with really creative ways to solve commerce problems or create unique experiences for customers.” For example, if you use Instacart or DoorDash, Marqeta powers the payment process that allows the driver to pay for your order. They know that it’s your order because of technology that we’re providing. If you’re using the Cash App card, it’s powered by Marqeta. If you’re using Affirm, or Klarna, or Afterpay and buy now, pay later at checkout, in many cases it’s actually Marqeta that’s powering that payment behind the scenes. So, we’re really all about a lot of the new ways in which you either pay or use a service that sort of helps to facilitate payment for you. A lot of this innovation is coming from the Marqeta platform in the background. We’re a B2B company, not consumer-facing, but we are enabling a lot of these innovative companies to do what they do.
Marqeta | www.marqeta.com | Oakland, CA