Fast CEO Says Big Reason Fintech Failed Was Hiring Too Many People Too Soon

  • Fast CEO Domm Holland said the main reason he closed the company was because he hired too many people too quickly.
  • The startup, which offered one-click payment software to online merchants, collapsed last week.
  • Holland spoke to “20VC” about the strategic mistake that stopped the fast-growing startup in its tracks.

Had Domm Holland succeeded, the CEO of Fast would have laid off half his workforce months ago.

“I’ll tell you what, it would have been a lot easier in December of last year to let half the team go and raise money,” Holland told “The Twenty Minute VC” podcast in a published episode. Wednesday.

In Holland’s story, that’s what he voted for: reducing the company’s burn rate at the turn of the year to create more track for the startup to finish building its large merchant integrations. .

“My vote was to do this, fundraise or whatever and keep going,” Holland said in the podcast. “We would have really needed the existing investors, the insiders, to step up, execute the restructuring, execute some kind of right-sizing, reduce the burn, and then go out and raise money. I think our insiders really wanted to see outside investors come in and lead this process.”

The one-click startup closed its doors last week, after raising more than $120 million from Silicon Valley investors. Meanwhile, competition in online payment has intensified, with Amazon, Shopify and Bolt creating their own payment solutions.

While Holland said on the podcast that payroll, not marketing, spending accelerated Fast’s rate of cash burn in the months leading up to its closure, people within the company blamed the the company’s spending on advertising and lavish corporate retreats as well as its hiring spree.

In the podcast, Holland disputed the report, as detailed by The Information, that Fast’s burn rate at the time of its closure was $10 million per month, but he did not provide different numbers to back it up. his assertion.

Just three months before its implosion, Fast was near a tipping point, Holland said. In January, Fast onboarded its first billion-dollar merchant. And there were others where it came from: The startup had $8 billion in “signed enterprise-merchant agreements” it was onboarding, Holland said.

Bringing in enterprise e-commerce merchants involved tricky integrations, which Fast provided staff for.

“The reason we grew the team, especially on the R&D side, which was the majority of the business, you have to build – there’s a lot to build. To sustain the business, there’s no it’s not just about having a great business E-commerce is very fragmented – many different platforms, many different integrations, there’s a lot of different things you need to build before you can actually build an integrated business “Holland said.

But the customer success team and partnership team, which “were just too big for what we needed at the time”, had pushed Fast’s cash burn past the point of no-no. return.

“The vast majority of our burns came directly from people. Like well over 80% of our cost space was just salaries, health care, benefits, over 80%. Like our money just went to people We just hired a lot of people,” Hollande said.

“Frankly, you can be aggressive, and we were still too far in terms of hiring,” he added.

The frothy private and public investment markets that fintechs have enjoyed during the pandemic have cooled in 2022. Ongoing supply chain issues and Russia’s invasion of Ukraine have added to the uncertainty.

In the third and fourth quarters of 2021, “we basically doubled our consumption,” Holland said. “We got to a point where just as we were raising funds – we needed fundraising – the market also crashed and crashed. Any high-consumption business was struggling to raise money. funds.”

Meanwhile, Fast had competitors that were way ahead of these “big and hairy” integrations.

“Bolt had been building all of these integrations for a lot longer. They were five years ahead of building all of these pieces. They had nibbled away at the kind of midsize business, and so they were bigger than our small businesses that we carrier-based and integrated aircraft, they weren’t as big as our big ones,” Holland said. “They certainly weren’t growing very fast, but it was enough to give them that base.”

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