Local Teams, a Global Player. For Laurent le Moal, CEO of PayU, that’s what makes the company unique and gives the team a sense of purpose.
Laurent le Moal arrived in PayU early this year, but he’s no stranger to digital payments and emerging markets. He concluded an 11-year career at PayPal as Vice-President and General Manager for Continental Europe, where he successfully led the launch of PayPal in Africa, Israel, the Middle-East, and Russia.
As the CEO, his main role was to embrace the challenge of running PayU, a leading online payment service provider, working in 16 high growth markets across the world. PayU is part of Naspers, a global internet and entertainment group and one of the largest technology investors in the world.
That strategy is an example of how mergers and acquisitions can work – PayU is the result of a combination of local and successful startups and e-commerce properties acquired by Naspers, put together to build one global company. “I must say the unique part of it is that the founders are all still present in the team,” explains Laurent.
Is your relationship with Naspers a big competitive advantage?
LM: Our connection is an asset for two reasons: with Naspers being one of the biggest technology investors in emerging markets (invested in companies such as Flipkart, India's leading e-commerce marketplace, OLX, the world's leading classifieds platform or Movile, the leading mobile commerce and content platform in Latin America), and most people still don’t know about, we have the opportunity to use their resources for our own M&A.
Naspers is also a major shareholder in many e-commerce websites, which makes it easier for us to establish contacts and start discussions in these markets.
Why high growth/emerging markets?
LM: It began with a historical incentive. Naspers started in South Africa and represents the story of a group that has reinvented itself from being a traditional media company, to a global group present in digital media, e-commerce, payments and more. It always focused on growing markets in Africa and then took big bets in other emerging markets where sincerely, few were the ones willing to take these bets.
For instance, fifteen years ago Naspers took one of its biggest bets, investing in Tencent in China. Back then no one was doing something similar and for Naspers it absolutely paid off. They invested $34 million on the Chinese startup and today that stake is worth $88 billion.1
And why are still so many opportunities passing over the players? Fear of the many risks, maybe they don’t believe the markets are big enough or they don’t grasp well the potential of these markets in the years to come.
What are the most attractive countries to you?
LM: When talking about payments and financial inclusion in general, definitely India and China. They are big single markets where there isn't one local player completely established, with very high economic growth (projected growth rate in 2016 of 6.6% in China and 7.4% in India)2 and mobile penetration. Just in 2020, we expect 245 million new mobile users in China and 195 million in India.3
I would also add Latin America, where you have a huge opportunity in terms of cross-border transactions. When analysing a new market we look at: expected consumers base, mobile penetration, potential for cross-border transactions, maturity of financial players and legislation.
We tend to think about the USA or the United Kingdom everytime we talk about fintech, however the biggest disruption is coming from emerging markets like India or China. To give you an idea, in India they have been truly progressive in terms of regulation, where right now there are already 23 banking licenses operating.
Nonetheless there are other new markets with potential: Southeast Asia, more specifically Indonesia and the Philippines. Or Iran, which is just starting to open up and I expect a huge boom in terms of e-commerce in the next 3 years.
How do you develop a local approach being a global player?
LM: The model we have is very local, each region has the flexibility to customize its product. PayU in many ways is actually a group of startups acquired that are operating in their local markets. There’s no point for us to come to a new market and start from scratch, when we already have an existing team and business running it successfully.
For us, it made sense as it was quicker and more efficient. Indeed you are able to keep the best of both worlds: the passion from the entrepreneurs and the resources and synergies of a big group.
It must be hard to keep such a diverse team motivated.
LM: It isn’t easy, but one motivation comes from PayU being a global player. We are truly trying to create a global platform that differs greatly from the players coming from the USA and Europe. This sense of purpose in the local environment whilst playing at a global level makes the motivation unique: each local team keeps its regional unfair advantage whilst also being part of something bigger!
Talking about innovation, what are the trends in the fintech industry?
LM: Fintech is a very broad term, I always organize it in four segments: payments, lending, wealth management and digital banking. All the different startups I see now scaling and being successful are not only worrying about providing a quality service, but focusing on the data they are using. It's all about machine learning, artificial intelligence and data access.
They are also coming up with different models in terms of business partnerships, especially in the case of e-commerce, where it's still a bit difficult to scale up a business because of the increasing customer acquisition cost.
And lastly, the geographical expansion – they are identifying the growth potential and expanding their businesses to new markets.
What about the challenges?
LM: The industry is still heavily regulated, as most of the markets are not acting like India. There’s also a key question every player asks itself: how do you scale your business to embrace tens of millions of customers?
You partnered with Seedstars to bring the “PayU Fintech Prize”, which will award the best three fintech startups with a trip and a booth at M2020 conference, and the best startup with access to our Growth Program. What are you looking for in the startups applying for this prize?
LM: We are truly looking for bright people. What are the great teams out there trying to solve problems like access to financial services and how we can help them? Since this is a competition, we want to reward the best team, but that's where we go a bit further – we help these entrepreneurs not only financially, but also in terms of expertise, access to our distribution channels and more.
Any advice for the fintech entrepreneurs expanding to new emerging markets?
LM: First of all, It’s important for people to understand that financial services aren’t easy. You don’t wake up one morning, start coding and have a product. It takes much more than that.
As for the expansion to emerging markets, like Russia or India, you have to be very clear regarding what is it that you want to achieve. You have to spend as much time as possible understanding what’s different in this market in terms of financial services, consumer habits, regulation, lobbying, etc. and then define what is the best entry strategy.
Also, keep in mind that this is not a short term play! But like in every other business, there is no one-size fits all. Everybody has to find his own way.
- Naspers without Tencent stake worth less than what it owns, Livemint, October 2016
- Economic forecasts, Asian Development Bank, 2016
- The Mobile Economy Asia Pacific, GSMA, 2016