“Leave your ego aside, roll up your sleeves and surround yourself with people that are passionate and capable”: Interview with Hristo Borisov, CEO/Co-Founder, Payhawk

Wouldn’t it be nice if within your company there was a unified system for corporate credit cards, payments, and expenses – instead of separate platforms to manage payments and ask for reimbursements?

This is what Payhawk, a London-based fintech company aims to provide. Their financial system combines credit cards, payments, expenses, cash management, and pre-accounting into one integrated experience, to give businesses maximum control and visibility over their spending. Founded in 2018 by Hristo Borisov and Konstantin Dzhengozov, Payhawk closed a €16.9 million ($20 million) funding round last April 2021 led by QED Investors and with existing investor Earlybird Digital East also participating.

We spoke with Hristo on his founding of Payhawk, his thoughts about fintech and its future, the challenges he encountered as an entrepreneur, Payhawk’s goals and long-term plans, as well their experiences in growing their team and cultivating diversity at Payhawk.

What first got you into entrepreneurship? Walk us through your story of co-founding Payhawk

Curiosity is a big driver for me. Being a software engineer by training has taught me to seek and understand the inner workings of every product or innovation. Early in my career I realized that the best products don’t always win. I noticed that a lot of marvel engineering and great ideas don’t make it, due to poor management, or the wrong strategy.

I switched to product management early in my career, and this helped me shape a lot of products at Telerik, which is the biggest exit story in Bulgaria, acquired by Progress Inc (NASDAQ: PRGS) for $263.5 million in 2014 (Editor’s note: around €222.7 million). Being in the driving seat for a product felt great, but I always wanted to start a company from scratch.

We started Payhawk with the ambition to create a big company, and to do so, we had to solve a big problem in a big market. We were very methodical on how we planned our product vision, strategy, and later execution, to ensure we have a chance at disrupting a space big enough to produce a massive company.

I co-founded Payhawk exactly 3 years ago (July 2, 2018), with phenomenally talented engineer Boyko Karadzhov (our CTO), and later on Konstantin Djengozov joined us as a CFO.

We started the company with a Google Sprint during which we identified a set of hypotheses on where the market was heading. After 2 months of iterations and pivots, we nailed down the vision, gathered a strong engineering team around us, and set out on the journey.

Do you have any advice for first time founders?

Leave your ego aside, roll up your sleeves and surround yourself with people that are passionate and capable. Being professional, but also scrappy, is crucial for an early stage team. Be extremely persistent, but also try to listen as much as possible. The path to becoming a unicorn is attainable for you! Nothing is impossible, you just need to figure out how to get there.

Also prepare your family and friends on the journey that you are taking. There will be many ups and downs, and you will need plenty of support.

What has been one of your biggest failures, and what did you learn from the experience?

In 2014, I got cut off on the street by a rude driver. This inspired me to build a mobile app for reporting violations on the road. Simply take a picture of the driver with their license plate, and if the person wants the photo removed, they have to apologize through the mobile app. People could also subscribe to track license plates, so if a family member is caught doing dangerous things, you can have a conversation at home. The app was also connected to the traffic police in Bulgaria.

Long story short – the app went viral. We became the most downloaded mobile app in the App Store, and more than 130,000 Bulgarians have reported more than 100,000 violations for the past 6 years. However, the internal struggle around roles, direction, contribution, shares and ego taught me the hard lesson that you should always agree beforehand the role and “exit” clauses for everybody. Even more if you are starting a business with close friends.

Every founder should have a reverse vesting plan from day 1, so that everybody is free to leave and knows exactly what he leaves on the table. A lot of entrepreneurs leave this question unanswered, or avoid the unpleasant conversation for too long. This always creates friction and turbulence down the road. When I decided to leave the team, I changed my vision for the perfect company. From being a family, to being a professional team.

What do you think is the biggest challenge in fintech that still needs to be solved? Do you have any ideas on how to go about solving it?

Fintech is still a disconnected and fragmented world. Unlike the software market, fintech companies need to navigate a lot of regulations, compliance, jurisdictions, currencies and different infrastructure providers.

Our goal with Payhawk is to empower global companies to reach their full potential by providing them with the financial system of tomorrow. They can manage all of their payments for their global employees and businesses from a single system without the need to deal with expense reports, manual reconciliations and multiple card providers. We streamline payments for the next generation of global companies.

Fintech vs. Techfin, can you elaborate on the differences?

As the market is saturating with fintechs and banks competing for the attention of SMEs or consumers, most of the margins earned traditionally by banks will go down. You are what you eat (earn). So if the unit economics of a fintech go constantly down, it will start to seek other revenue sources. And the most natural way for a startup to generate revenue is through software services. If a company is generating 80% of its revenues from software rather than financial services, it’s safe to say that this is a Techfin rather than a Fintech!

There is also an alternative path that emerges on the market. Instead of going into the SaaS route, a lot of players are forced to focus on a niche and specialize their financial services offering. A good example is what happens in the lending business. Instead of having general credit lines, there is a tendency where now you have to “name/brand” the capital you are lending. There are players that target small ecommerce shops, and provide lending for their marketing spend only.

What differentiates Payhawk from its competitors?

We have the most comprehensive product offering on the market that a fast-scaling business can find. Companies can manage company cards, bills, expenses and reimbursements in a single system with very advanced workflows and spend policies. We have accepted that the financial services part will be a race to the bottom, so we provide our customers with free SEPA Instant and Faster Payments, extremely good exchange rates of 0.90%, dedicated IBANs for customers, so that they can also receive third-party transfers on them and many more. We are also ramping up enterprise features with an incredible speed.

Payhawk was founded in 2018. How have your objectives and goals changed since the company has grown?

Our objectives remain the same. To disrupt a market where we can create a strong and healthy company and deliver innovation in the space it is. We are extremely fortunate to have a great bunch of investors like Earlybird, QED, Eleven and many others who work alongside us every day to achieve our objective.

After your latest funding round (€16.9 million, April 2021), how do you intend to use the capital infusion?

We are investing heavily in our go to market strategy. Like every product-driven company our initial sales organization was very thin. We are now ramping up our presence in our core markets with offices in London, Berlin and Barcelona where last year we hired our first employees. We are also significantly expanding our engineering capacities to accelerate our roadmaps, and deliver even more innovation to companies in the next 18 months.

What is your long-term vision for Payhawk?

To bridge the gap between banking and Enterprise Resource Planning (ERP) systems. Executives should have one system in place to manage the business, and we are doing it by simply following the money. We have set our eyes way beyond the current expense management and accounts payable space. I think we are going to see a big transformation in the way businesses are managed with the advent of automation, AI, and real-time data.

How was it like growing your team? What are the challenges and surprises you encountered? What tips do you have for building a solid team?

In a startup, you should always try to hire people that are currently 2-3 positions below their potential. My advice for building a solid team would be to look for people that would like someday to run their own business, but still don’t have the experience and want to be part of a growth story.

The challenges for growing a team are constantly changing. As the company grows, and the organization evolves, you have to remind senior people to zoom out and re-focus, as their role will be changing too. When growing a company, you need to understand that what made us successful in the past 6-9 months, won’t necessarily be the winning formula for the next 6-9 months.

When building a startup, the odds are always against you. That is why, as a leader, you have to keep the organization on its toes, and make the best of what you have. I am a big believer that hard constraints produce innovation. The biggest surprise was that when we started talking to VCs, they couldn’t comprehend how we had put together such a comprehensive product with so few employees. My tip to entrepreneurs would be to avoid making excuses for not having enough resources, talent, or money. Put together a plan and strategy for what you have and make the most of it.

Diversity in the team, yes or no? Why?

At Payhawk, 40% of our employees are women, which outperforms the industry average for Europe – the European Commission observes that only 17% women in the ICT sector. We also have employees from 7 different countries from different races, ages and backgrounds. And, of course, we’re always keen to improve, and to hear from new candidates irrespective of their background.