Laura Spiekerman first got acquainted with infrastructure as employee number one at a fintech company in Kenya, where she saw the life-changing power of payment technologies like mPesa. She also came to see how much work remained to be done in the U.S.
Her pursuit of a better banking system—one in which small credit unions, fintech companies, and local banks can expand their digital product offerings and large financial institutions can strip out some of their technological biases—led her to cofound Alloy with Tommy Nicholas and Charles Hearn in 2015.
Since then—and with a total of $55.8 million in funding, including a seed investment from Primary—the KYC, AML, and compliance platform has grown to serve clients like Ally, Brex, Petal, and Ramp, processing 455,594 decisions a day on average.
In this Q&A, Laura discusses why early-stage founders should ignore scale, how to source deep value proposition insights from your existing customers, and what investors really want to know about the problem you’re solving.
What’s Alloy’s origin story? What made this concept exciting to you?
My interest in financial services infrastructure developed after an experience in Kenya as the first employee at a fintech company called Kopo Kopo. There, I saw how mPesa (mobile phone-based money transfer service) infrastructure changed peoples’ financial lives, and it inspired me to help modernize the infrastructure in the United States. So, I joined a startup working on ACH (Automated Clearing House), where I met the other Alloy cofounders. We realized that while ACH was one big challenge, identity was an even bigger challenge underpinning so much of financial services. We then decided to switch gears and formed Alloy.
What’s a key piece of advice you’d want to give a new software infrastructure founder on day one?
Don’t worry about scalability or getting to 100 customers. Focus on solving the critical problem at hand and delighting one or two customers who will serve as references.
What’s the biggest challenge you’ve overcome as a founder and what did you learn from it?
Focus on a “people function” early. Recruiting, hiring, onboarding, and retention feel silly to focus on when you’re a small team, but investing in these areas early on will yield rewards and attract the best talent.
Another thing I learned was to raise more money than you think you need and do whatever you can to survive. Infrastructure costs a lot more and takes longer than many people expect, so you’ll need to have enough money to get stuff to market. Plus, timing in infrastructure matters, so you need to make sure you survive long enough to reap the benefits.
What’s one thing you learned as you did your first few seed-round pitches?
We let processes go on too long, allowing investors to talk to each other, and backchannel too much—sheep behavior can be very real! We also learned to keep it simple: Don’t over-complicate the narrative with everything YOU know. Remember, they likely know very little about the problem you’re solving.
What kinds of early hires are most important in this industry? What kinds of characteristics and backgrounds should they have?
We’ve found it’s important to hire for enthusiasm and curiosity—this leads to passionate employees. Hiring former founders brings a lot of great ideas to the table, and hiring someone who may not be great at everything but is good enough at several things, especially at team building, helps when you start to scale.
What was a key turning point in discovering your product-market fit? What kinds of questions do you suggest software infrastructure founders ask themselves to get here?
We started to realize we were on to something when we got some momentum from inbound leads with zero marketing and saw the passion with which other founders spoke of our product; they were raving that it was a game-changer for them when we didn’t know that yet ourselves.
The primary thing you should ask yourself is whether or not your product is 10X better than the existing solution. It can’t be just a step up; it has to be so much better. Ask your customers questions about how they use it, what they would do without it, and what they would tell other people about it. Try to understand what would go into an ROI (return on investment) analysis/business case for your customers early; this step helps you understand your value proposition and how your customers are making that economic decision. Then, you can use that information to help you set your price and get your messaging right.
What are a few key documents and/or processes you’d suggest founders focus on at early stages?
We’ve found success with our ROI model to help rally folks around our value proposition. Define implementation processes and related measures so that you can get customers up and running quickly and efficiently. I’d also suggest establishing an internal decision-making process and making sure that people understand it (I like Gokul Rajaram’s).
What software infrastructure trends or predictions are you thinking about most right now?
I’ve been thinking a lot about how to make things more self-service—I don’t know the answer yet but am curious! I’m also interested in automating pieces of compliance—the gathering of information, sharing it, testing it, etc.
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