Sezzle CEO’s Secrets to Start-up Success

While Sezzle [SEZL] is neither the first nor the largest buy now, pay later (BNPL) firm, it has carved out a niche for itself in the dynamic payments space, capturing enviable growth with a wide range of innovative products. 

CEO and Co-founder Charlie Youakim has learned a lot about competing with heavyweights in his decade of helping fintech start-ups grow. Prior to his time at Sezzle, he founded parking payment app Passport, which quickly grew to outpace the previous market leaders. His current company, meanwhile, manages to hold its own against heavy hitters such as Block’s [XYZ] Afterpay, Klarna and PayPal [PYPL]. 

In this edition of OPTO Sessions, Youakim talks about his path to success, and the simple formula to cutting through the competition “like butter”.

Watch the full episode on YouTube, or listen on Spotify or Apple Podcasts. 

Team Building

It has not been all smooth sailing for Sezzle. The company experienced what Youakim calls “tech-pocalypse” in 2021, after expanding into India, Brazil and Europe. Overstretched in unprofitable markets, the company had to cut down from 580 employees to around 240. 

Since then, they have focused on quality, rather than quantity. 

“I think it all starts with really high standards on hiring, and then really working hard to keep a great team together.”

Sezzle does take a somewhat unorthodox approach to hiring, Youakim admits. “Interviews are almost a crap shoot.” The ideal candidate for most companies, he says, is a “good talker, good doer.” 

“The worst hire is the good talker, bad doer. And if you just focus on interviews, there’s a good chance you’re going to get a lot of good talkers and bad doers.”

To find the right team, they look a bit deeper, examining a potential hire’s transcripts and getting them to take an IQ test. 

“If you have a high IQ, that’s your horsepower, your ability. Then your GPA shows that you know how to get things done.”

Resilience is a key characteristic of a successful employee. “In school, you probably had a lot of classes that you didn’t even care about, but you still had to get it done. That happens a lot in work. You’ll get projects that you don’t necessarily care about, but you still want to get the A.”

Once they’re hired, the onus is on the company to keep the team together and running smoothly. “We make sure we hold people accountable. My view is always the best people want to work with the best people, and the best people hate dragging anchors.”

Capturing Efficiencies

While Sezzle is embracing the artificial intelligence (AI) revolution as much as the next fintech, its mission to capture efficiencies predates the debut of AI chatbots. 

What lies at the core of true efficiency? “A really effective team,” Youakim affirms.

The company has built an AI team, but it is still a work in progress. Rather, Sezzle’s key resource is human, and the company culture that guides workplace conduct. 

The characteristics of a great employee are simple enough. “Character and integrity are number one. Then we have to be a great communicator, and listening is half of communication. Be driven to succeed. Act like an owner. Be fun to work with.”

One part of Sezzle’s work culture might surprise most managers, especially in an age when back-to-the-office initiatives are gaining strength. “We’re basically a remote-first culture,” Youakim explains. “When teams have problems with that, in my personal opinion, it’s because they just use it as an excuse for poor performance management.”

Sezzle’s approach to team building has helped boost the company’s bottom line, as well as its ability to scale. “We don’t really have to add to the team at nearly the same rate to grow revenue and gross margin.” That means that, “as we grow the gross margins, we don’t have to grow our OPEX, which increases net income.”

Even with a strong team, however, there are risks inherent to a sector as new as BNPL. Youakim points to third-party fraud as a key challenge. Part of the responsibility for addressing it, Youakim says, lies with public entities. “I wish the government actually helped create consortiums, because fraudsters hit tons of companies at the same time.” 

While defaults are another issue for any loan-based business, “automated tools that try to create fake accounts and try to wipe you clean is 99% of the problem.” Customers not paying, meanwhile, is much rarer — and much less dangerous. “One of the most refreshing things about running a lending company is you find that almost all customers want to pay it back. It’s just the ability in most cases.”

Ultimately, a human-centric approach has helped Sezzle prevent fraud. “We’ve never really had a big incident at the company. I think it’s because we have these really strong know-your-customer type systems and identity methods that make sure there’s a person on the other side.”