Episode 234 – Partnerships in the Payments Industry – Insights, Musings, and Hard-Won Wisdom with Steve Klebe

Yvette Bohanan

March 13, 2024

POF Podcast

Have you ever wished for a “payments sherpa”? Someone who would share their experiences, opinions, and advice about this industry – the uncut, “real real” of what can happen and what to remember as you move along your payments journey. In this episode, we sit down with one of our favorite payments industry sherpas – Steve Klebe.

No stranger to our podcasts, this time Steve talks about payments partnerships. This is a topic Steve is passionate about – and for good reasons. Partnerships – the successful ones – make this industry go around. The right payments partnerships can make the industry better, bring novel and differentiated offerings to the market, and make the payment transaction easier, more secure, and more valuable to consumers and businesses.

Steve has invested about half his career creating successful strategic partnerships for Verifone, CyberSource, Google, and more (frequently going out on a limb to do it), and he survives to tell his tale. We hope you enjoy listening to this episode as much as we enjoyed recording it.

 

Yvette Bohanan:

Welcome to Payments On Fire, a podcast from Glenbrook Partners about the payments industry, how it works, and trends in its evolution.

Hello, I’m Yvette Bohanan, a partner at Glenbrook and your host for Payments On Fire. One of our most popular Payments Views blog posts in 2023 written by my colleague Drew Edmond was titled Poor Account Management: The Silent Killer of Payment Service Providers. The PV post discusses what we have observed in many engagements, the incredible impact a customer facing team has on an organization’s reputation, and ultimately bottom line.

The popularity of that PV post got me thinking about the role partnerships play in payments, particularly during challenging economic times, times of fundamental technology shifts, or both. That means today more than ever, partnerships in the payments industry are critical to the successful execution of business strategies and product introductions.

My guess is that a fair number of you listening to our podcast have some big goals ahead of you in 2024, and partnerships. Whether for bank sponsorship, tech capabilities, new embedded payment services, or something else, will be a key component of your success.

Joining me for this episode is Steve Klebe. Steve has been a Payments On Fire guest who in episode 98 explored with us the ins and outs of Google Pay, and later in episode 145 discussed GPay’s impact on every stakeholder. Steve spent the first half of his extensive career in sales, sales, management, and business development, and the second half primarily in partnerships.

In this episode, we are tapping into Steve’s 30 plus years in the payments industry to find out what tips, tricks, and words of wisdom he’s willing to share to help those of you facing big audacious partnership goals. Steve, it’s always great to see you. Welcome back to Payments On Fire.

Steve Klebe:

It’s my pleasure, Yvette. I’m so looking forward to doing this. Third time’s the charm.

Yvette Bohanan:

I wouldn’t say that. I think you have some of the most popular podcasts we’ve ever produced, so congratulations on a great run.

Steve Klebe:

Thank you.

Yvette Bohanan:

We always begin, as you well know, talking about people’s career journeys. And we’ve done that a little bit in the past, but I really would like you to have the opportunity here to kick us off by painting the landscape of your career. You’ve managed to be in the room where it happened during some really pivotal moments over the past few decades in the industry. Was that a result of intentional decisions, being at the right place at the right time? Maybe a bit of both? Tell us a little bit about that.

Steve Klebe:

Well, it’s a great question. I would like to believe that it was all intentional, but I’d be lying. So really, I would say especially during the first half of my career, it was pretty accidental and just lucky to be in those moments. I would like to think that in the second half of the career, I had learned some things that allowed me to be a little bit more intentional, but I would be kidding myself and the listeners if I didn’t say that it was being at the right place at the right time, hard work, but plenty of luck as well went into the equation.

I was fortunate enough to fall into Verifone early in my career, which was the true first payment moment. I was the 35th employee at Verifone. I was there nine years. I had seven different jobs while I was there. Then again, somewhat accidental, but things started to make sense. The founder of Verifone then left Verifone and founded a company called CyberCash, which was the very first internet payment gateway, and I joined him in that endeavor.

Yvette Bohanan:

That was Bill Melton, right?

Steve Klebe:

That was Bill Melton, correct. And I stayed there about three years and then pivoted over to Cybersource, and I was the 15th employee at Cybersource. I was there for nine years, three or four different jobs while I was there. Then I took a brief pivot out of payments, pure payments, and into online banking, and I joined a company that was fighting the phishing. And then of course, as you very well know, I ended up at Google 12 years ago and spent nine years there, and then briefly spent a little time at Stripe before I went off into the sunset, which is where I am now.

Yvette Bohanan:

And in your definition of off in the sunset, you’re basically an angel investor and advisor on boards for several companies?

Steve Klebe:

Yeah. Yeah. So my wife still doesn’t believe that I’ve retired.

Yvette Bohanan:

Neither do I. I’m in her camp.

Steve Klebe:

Okay. So yes, but I am officially retired from full-time work, which I was planning on doing back in February of 2020. But then the pandemic hit. And luckily enough, former colleague of mine at Google had left a year or so earlier and joined Stripe, and we got to talking. And I ended up joining Stripe for a brief 18-month journey, which was fun. We grew from 3,500 people to 9,000 people in that 18-month period, so that was a wild, wild ride.

But yes, now aside from playing tennis four or five times a week, I am on six different private company boards, three real boards and three advisory boards. And I’m doing a bunch of angel investing, which I’ve been doing for about five years now. Not necessarily in the payment space, although occasionally a payments company pops up.

Yvette Bohanan:

When we were preparing for this podcast, you made a really important and interesting point. Basically, you said something to the effect of partnerships and payments are profoundly important and very different because of the number of different players and how everything has to interact. And I’m going to add to that, in order to be successful. So why do you believe that?

Steve Klebe:

Yeah, it should be pretty obvious, but-

Yvette Bohanan:

Nothing in this industry is obvious. If you think it’s obvious, you’re not thinking hard enough about it.

Steve Klebe:

Yeah. Well, I think I would say that it’s become more obvious. But I can surely say that if I look back on my career, a lot of the battles I had to fight early on was convincing senior management to look past closing the next big direct sale, and being willing to invest in partnerships. Which oftentimes don’t directly generate revenue, but can truly shape a company and even change an industry.

Also, I would say a day doesn’t go by that I don’t read something in Payments News or one of the other newsletters that I follow, and the word partnership is constantly used, oftentimes abused, which is one of the challenges that we all have. You and I talked in the preparation for this, the term business development has gotten somewhat polluted. Most people go wink, wink. It’s really just sales. That’s why early on when I was at Cybersource, we actually created a role which was the head of strategic alliances, and now it’s more broadly thought of as partnerships. But it’s definitely different than business development.

So I was running sales and BD at Cybersource. And personally, I was spending most of my time on the more strategic partnership-like relationships and letting the sales team do the important work of signing individual deals.

But the biggest challenge was getting a company aligned to be patient with some of the more challenging, grander strategic opportunities. And of course, my favorite story is the deal that I struck with Visa, which was long before Cybersource was acquired by Visa. So if you’d like, I can give you a quick summary.

Yvette Bohanan:

I was just going to say, can you kind of dig into that and unpack what happened there? Because that is kind of a textbook example, if you will, of what a partnership means and highlights a few of the points you just made.

Steve Klebe:

Yeah, for sure. It’s one of the profound moments in my career. Of course, it was like a lot of other things. Actors talk about overnight success. Well, this is a classic example of something that was definitely not an overnight success.

So one of the unique things about Cybersource was that because it had grown up as the back office for an internet software retailer, there was a bunch of functions that were not necessarily common at that time. Now, gateways offer all sorts of ancillary services. But because this was carved out of an operating store, it had some additional features.

And one of it was a very rudimentary fraud screening solution. And the challenge was that it worked halfway decently for the initial merchants that we were selling to, which happened to be other companies selling downloadable software. But it really was pretty weak to tell the truth, and it was based on very rudimentary things, like it would see the customer was using a Hotmail email address, so that was a fraud signal, etc. It wasn’t really doing anything intelligent. And because we were only the gateway, we only saw the front end of a transaction, we saw the initial order, but we never saw the chargeback reports.

Yvette Bohanan:

The true final outcome of-

Steve Klebe:

Right. So I had this brainstorm, why don’t we go to the card brands and work out a deal with them, where we’ll share with them the information on the original order that we funneled through for processing? If they all then go into their systems and look at those orders down the road, 30, 60, 90 days down the road, and see which ones actually turned into fraud. And if they would share that information back to us, then we could tune the fraud screen and continuously make it better. Sort of I went and talked to all the card brands.

Yvette Bohanan:

Just to really put a point on this, this was what year? 2000. Was it 2000 yet? ’99?

Steve Klebe:

This was about 1998.

Yvette Bohanan:

’98, okay. So this was very early days. I don’t think people realized merchants who were into this online thing at the time, it was super brand new. They didn’t even realize that there could be fraud online at the beginning. So just to set the table a little bit here, and now you’re showing up and you have the wherewithal to go knock on the doors of Visa, MasterCard, American Express with this idea.

Steve Klebe:

Yeah, I had the naivete that I could actually pull this off.

Yvette Bohanan:

Exactly.

Steve Klebe:

Which actually is something to think about. You have to have a certain amount of turn off all the logical thoughts in your mind about what it takes to develop a partnership with a mega, behemoth company like Visa.

Now, it was somewhat convenient that I lived in San Mateo and Visa was headquartered here in San Mateo, but I approached all three major card brands at that point to share this concept. And I’ll just say two out of the three seemed interested. One of them just said, “Go away,” which was good because that one would’ve required a lot of cross country plane travel, and at the time we didn’t have a lot of money. So that was important.

So anyway, I shared that idea. I found a champion within Visa who embraced the concept and began delving into it. And really, it was a simple idea. The idea was once a month or once a quarter, we would share a secure file with Visa. They would run it through their system, look at those transactions 30, 60, 90 days out, and then literally mark them, truth mark them. And then we would get that data back and start building some intelligence. This is before the world of artificial intelligence. But we would start building some know-how to improve the fraud screen.

Well, these discussions were not easy. They went on for months and months and months. The leadership at Cybersource was losing patience with me with the amount of time I was spending working on this partnership. And oftentimes I was told, “Just forget it. Move on. It’s not going to happen.”

I believed A, the industry was in trouble. B, I knew that the fraud screen we had at that point was pretty weak, and customers were starting to notice that and use it less and less. And I really thought this was a strategically important thing.

So I basically stopped talking about it as much as I could possibly hide my efforts at work and just keep doing the core things we needed to do. And I went off and just kept pursuing it.

And the fact that I started out in my career as a 100% commissioned salesperson and learned all the skills necessary to be a persistent successful salesperson, I just continued to use those skills in these discussions.

And eventually, not only did we get an agreement to move ahead. But through the negotiations, which in and of themselves were quite challenging, Visa decided to invest a million and a half dollars in Cybersource. We didn’t need the money, but it was a really important strategic thing that we could tout.

Yvette Bohanan:

It was a vote of confidence, right?

Steve Klebe:

It was definitely a vote of confidence. But almost more importantly, in exchange for us walking away from doing a similar deal with one of the other brands actually agreed to let us use their name in the product name that we were then going to sell from that day forward. And that had never been done before, where Visa had actually let a third party use its brand as part of its product naming.

Yvette Bohanan:

Yeah, that’s like handing someone here’s the-

Steve Klebe:

Keys to the kingdom. Because anyone who’s ever worked with Visa, or MasterCard, or Amex, you know that brand is just top drawer. So we did the deal and we started sharing the files. And literally, this is somewhat funny, but because they were local, I literally once a quarter got this tech folks to spin up the CD with the encrypted data. And I drove it to San Mateo, handed it to the contact in the data department that had been assigned to work with me, who I’m now a lifelong friend with. And we started the process.

And not only did Visa make a very successful investment, this was pre-IPO that they made this investment in Cybersource and they profited handsomely from that. The fact of the matter is for the next three to five years, it’s all anybody in the industry ever talked about when they talked about Cybersource was this fraud screening product that had been enhanced by Visa.

And so it was a profoundly important deal and just taught me a whole bunch of lessons about how you can overcome objections, how you have to nurture relationships. So it was absolutely critical that along the way, I had convinced my engineering colleagues, my product management colleagues, that this was going to be game changing for the company and the industry. And that if it actually came to fruition, I was going to need them to be really serious about putting resources on to the project and fully taking advantage of it.

So the other lesson learned was that you have to be in a position, and it’s harder in larger companies. Because Cybersource was still relatively small, and my role was broad enough that I personally stayed involved right through to literally for the next six, nine months. Literally, I was the one who was carrying the CD back and forth to these and back, and making sure that both sides stayed engaged.

So it’s not just about having the concept and negotiating internally and externally, getting the deal signed. But then you really have to be passionate about it and really want to see it through. Because a lot of partnerships get signed, and then they just sort of sit on the shelf.

Yvette Bohanan:

That’s a great, great story. Thank you for sharing that. You’ve really touched on a few things. One of the things you said earlier that you kind of emphasized here, and yes, granted Visa made a strategic investment in Cybersource pre-IPO, and that was a good thing financially as it turns out. And then they made a bigger investment when they acquired them years down the road. But you didn’t sit there and negotiate and sort of haggle over, it’s going to cost a penny a transaction to do this. How did you avoid having that discussion informing the partnership?

Steve Klebe:

There have surely been other cases as I’ve done partnerships over the years where some amount of money changes hands. But whenever I’ve been asked about partnerships, and I’ll coach people in the area of partnerships, one of the first things I normally say is this is about revenue shares and things like that. Probably, it’s not truly strategic. And so it’s not that there aren’t things that you can do with other companies that revenue share makes sense. There’s nothing wrong with that. But if you’re really working on something that’s profound, it’s usually not about that.

Yvette Bohanan:

You’re really starting to hit on some of the nitty-gritty details that get into defining a partnership. What is this? How do you create the right value prop for the companies involved? Ultimately for the customer, or the industry, if you’re really going big, pointing out here. You think about positioning relative to the competition, how’s that going to work? The tricky subject of, sometimes you’re partnering with the competition and we call that coopetition.

And then there’s this new phenomenon that I’d love to have you define and talk a little bit about as well called balance of trade, which is kind of a generic term, but how does that relate to specifically partnerships in the payments industry? And what are your tenets around all these things, these detailed things? People are listening right now. Given where the industry is, given where we are from a macroeconomic perspective, where we are with VC funding globally, there are a lot of people out there that are being tasked with create a partnership to do X, Y, Z. Embedded commerce is driving that too.

So help us out. What is the stuff that you have to pay attention to, and what are some of the tenets around them that you’ve observed, created, got through hard knocks, whatever?

Steve Klebe:

So you’ve hit on some really heavy words.

Yvette Bohanan:

Take your time. Take your time.

Steve Klebe:

Yeah. Each and every one of them could take up an entire podcast. So coopetition, I wish I could remember when that word first surfaced and came to mind, but I think that word defines the industry. And it is a key challenge that anyone doing partnerships, I personally remember many instances where I had to work through convincing colleagues or the partner to look past some area where we were competing, to agree that what we were talking about was actually rising tide lift all boats kind of phenomenon.

So I’ll just sort of leave that particular point there. I think it is something that you have to constantly be conscious about. And there was a time back in the day when deals like that, there was actually an illegal approach to how those kinds of deals were being done. AOL apparently was famous. We can talk about AOL because they don’t exist anymore. But there was a way that AOL went about certain deals where, “If you advertised with us, we would do this for you.” And the accounting got very funky for those deals, and it was called into question. And I think ultimately they were determined to not be, they were kind of fly in the face of antitrust things. So the kinds of balance of trade deals that I’m talking about are legal, but it’s a very real phenomenon that has come to exist. Not just in the payments world of course, but-

Yvette Bohanan:

It certainly is here.

Steve Klebe:

It certainly is here, and something you have to be conscious of.

Yvette Bohanan:

And obviously the first phone call you make is to the legal team going, “Is this okay?” Just don’t get into trouble, but don’t be caught off guard if this happens because it happens, I think is your point. And there’s a way to do it legally, but you have to be cognizant of what that is for whatever you’re doing.

Steve Klebe:

Yeah. You also have to know, which isn’t always easy, when to say no to one of your partner groups within your own company. When they approach you to partner with you to do one of these deals. Because there’s a point of diminishing returns, and you reach a point where you can only carve up your business so many ways to the point where the business you have to give out isn’t meaningful enough anymore to make sense.

Yvette Bohanan:

You have to sort of think about not just diminishing returns in the initial point of the partnership, but how might this play out over time? What are two or three or four scenarios here, and where are we really headed with this? Because it is strategic. It’s not just an in the moment thing. It’s not just make the revenue for the next quarter. It’s, how this going to look, how are we going to show up at five years down the road if we keep doing what we’re doing? And I think that foresight and putting some emphasis on when you’re actually in the moment is valuable is what it sounds like. If you can do that, if you can sort of project a little bit.

Steve Klebe:

Yeah, I would agree. And then I would also put a few asterisks around that. Because if you overthink the long-term consequences, I think you possibly might decide not to do something that could be really important and transformational. But yes, inevitably will acquire some baggage and have to be modified. And if you overthink or get too caught up in that, it’s possible that nothing good would ever happen.

And it’s one of the things that especially because I had so much experience in the industry, oftentimes I had to bite my lip when people would present ideas to me. And because I had seen something identical or similar tried before and failed, I would be pessimistic about it. And that’s okay.

The flip side is a lot of times, the people who were presenting these ideas to me had never bothered to do any research to see if something similar to what they thought was a magical idea had ever been thought of or tried before.

So it’s a slippery slope I would say, in terms of that. And also, the bigger the company you’re working for, the more you have to be cautious about overthinking issues like you were describing.

And this is one of my favorite adages about learning how to deal with these kinds of complex issues, is you have to have the intestinal fortitude to just ask for forgiveness, not for permission. Because if you’re especially working for a big company, if you have a good idea or you think you have a good idea… And being in a position to ask for forgiveness and not for permission, to have that as a mantra has a huge responsibility that goes along with it. It sounds macho, and bold, and all that good stuff, but it has a huge responsibility. If you haven’t taken the time to do your homework, then you probably ought to ask for permission first. Right?

Yvette Bohanan:

Exactly.

Steve Klebe:

Exactly. But if you’ve done your homework, then you reach a point where you come to learn, because I learned this the hard way during the early times of my career. I used to ask for permission and I would often get the answer no, because what I was asking about was strategic and was going to take time, was going to take away from the number of hours I could be spending on sales this quarter. And oftentimes, the answer was park it. No, fill in the blank.

And finally, as I got a little bit further along in my career, and my confidence level, and all that good stuff, I finally realized that I had to just go for it and be prepared to ask for forgiveness if something went sideways. But again, that takes an enormous amount of responsibility to do that.

Yvette Bohanan:

So it’s know your stuff, educate yourself, use some of those conversations where the idea is getting squashed or the concerns are being raised as, “Okay, that’s the concern. What do we do about it?” Versus, “Oh, that’s a concern? I’ll stop now.” I think that’s kind of what you’re saying.

Steve Klebe:

Yeah. I mean-

Yvette Bohanan:

How do you have the fortitude to be passionate, push past it, but push past it in a way that’s going to be addressable coming back around?

Steve Klebe:

Yeah. Not everything that was tried before and failed means it’s going to necessarily fail. Things could have changed. But if you show, up and you’re presenting ideas to me, and you haven’t even bothered to research, there’s this thing called Google. I know some people…

Yvette Bohanan:

Search engines. Yeah.

Steve Klebe:

And I would say, have you studied whether or not that has ever been tried before? Have you done any research? And the answer would be no. They just had a brainstorm out of the blue, and they’re pitching this idea to me. And again, it always put me in this awkward position. Because again, I had been around for 40 years, I had seen a lot. Not at all, because no one’s seen it all. But I had seen a lot, and I had seen kind of what it takes to make something work and what it takes to have something go sideways. And it’s a roll of the dice in many respects, but there’s a lot of things you can do to improve your odds.

Yvette Bohanan:

That’s a great way to put it actually. You’re sort of touching on all these conversations that you end up having internally, right? Do talk to the legal team. You do talk to product and engineering, you do get feedback, you do your research. One of the terms in the industry I’ve heard now is holistic payments. And it’s actually the idea that we often say at Glenbrook when we’re talking to people, payments is a team sport. Partnerships is interesting because you’re striking this balance of having the idea and having the passion to be the, what’s the term? Bear the standard. Basically, you’re the one out there and you don’t want it to die on the vine. You got to see it through. You got to get it off the ground even. What are the internal relationships that are actually critical, when you’re in this role and you’re contemplating a new partnership?

Steve Klebe:

So in thinking about answering that, I think the word context comes to mind. So there are no absolutes in answering that question, because it’s always in context of the circumstances the partner finds itself in, the circumstances that your company happens to be in, in terms of resources, credibility. I mean, there are so many factors. So you have to really keep an open mind.

And critical to this is not just showing up when you need something from somebody, but showing up consistently, even when you don’t directly need something from someone. So an example of this would be in terms of how I established my credibility, was I’ve always been very generous with offering to train people who come new into the industry. And to any company I’ve been in for the last three decades, I’ve always conducted classes. I’ve always made myself available to answer questions.

And then when you show up and you need something, it’s like they know who you are. They’ve learned something from you. It’s not that they owe you anything, but you’ve established your credibility.

So I think that one of the things, honestly, that drives me crazy these days is I have 7,000 LinkedIn contacts. I’ve always been a super user of LinkedIn. And a lot of those are just casual connections. May have been in one meeting with somebody 17 years ago, and I reached out to connect on LinkedIn.

But there’s always a smaller group that you’re engaged with on a regular basis. And this ties somewhat to the work I’ve done over the years with the various industry trade groups.

But back to the point is, I think the critical things that I’ve learned is the teams that you have to really partner up with and are critical to forging these partnerships through all the different steps of the journey through to execution is engineering, product management, legal, finance.

Less so sales. And again, because I was oftentimes running both strategic alliances and sales, I knew ultimately this would benefit the sales team, the things I was working on. But they didn’t really play a super big role in the early stages. They were going to be the beneficiaries of these activities, but they weren’t going to necessarily be that critical during the early stages.

And so those are the teams that come to mind. One of the things, now… Again, this is not going to be common, or everyone’s not going to come at it from this perspective. But in my heart of hearts, I’ve always been kind of a product person. I’m enamored with product. And I know enough to know that I could never be a product manager. I don’t have the skills, although I ran product management for a year at Verifone, which I was terrible at by the way. But it was just something that needed a gap that needed to be filled.

But really, there are numerous product managers over the years. I’m picturing several of them in my mind as I’m speaking, that I really worked closely with. And my opinion in general about any FinTech or tech company is that product management is the heart and soul. I don’t think they’re given their due as much as they should. But I really came to believe that product management was the heart and soul of how you accomplished things.

And matter of fact, it’s interesting. Of the 10 companies I worked with over 44 years, most of them were early stage companies. And you typically had engineers and sales. I mean, those were the two groups. And product management usually came later as companies grew, and oftentimes didn’t get the respect that they deserved.

And I figured out early on. Again, not that these other groups were not important cogs in the wheel, but I figured out early on that if you could get a product manager to buy into your vision, and they could have the most impact on actually facilitating getting these difficult partnerships done, and they could do soft things. They would join you on calls during the formative stages, and then they were critical during the stage of execution of actually building whatever it was that the partnership was about. And then they were critical when it came time to deployment and execution as well.

And if it was just like, what’s the phrase? If they were punching a clock, that was not going to help yo. But if they actually were passionate along with you about the initiative, a lot of things that if you had to build a fancy PowerPoint presentation, and get everybody in the company to buy in, and all that good stuff, you could do that until you were blue in the face. But if you didn’t have a senior leader in product management to buy into your vision and join you for the journey, it probably would not happen.

All the things I can think about that were pivotal moments in my career where I worked on partnerships, there’s a senior product person who was absolutely critical to those journeys.

Yvette Bohanan:

So putting that mentor hat on and looking at all of the work being done in payments and new tech, right? Tech always is driving payments innovation. So we have NLMs, we have Web3, we have down down the road quantum, not too far down the road, but down the road quantum, kind of redefining the whole space again, the way it was being redefined in the ’90s and into 2000, 2005. What should teams be focused on right now to identify and form meaningful partnerships, keeping in mind the tech that’s evolving right under our feet?

Steve Klebe:

Yeah, it’s interesting that when I think about the things that I’ve personally had the benefit of being around, the electronification of the point of sale, the emergence of the internet as a commerce platform, the mobile taking over the world, those were the three most profound things that I’ve personally had the pleasure of participating in these major turning points.

Over the last 10 years or so, there’s been a lot of things that have been pontificated that they were going to be the next big thing. And we have the metaverse, kind of a yawn. We have cryptocurrency, kind of a yawn. We have the proliferation of new payment methods. Not so much a yawn, become reasonably relevant in our world. And now, there’s a lot of talk about open banking.

And I think that especially in the current economic climate with the pressure, investments, and how difficult it is for companies to raise money, and how challenging it is to focus on profitability and the like. I think it takes a lot of intestinal fortitude to not get caught up in the latest buzzword. And obviously, AI is the banter of the day.

And it’s not that these things aren’t going to be important. But I think especially in the current climate, blocking and tackling… Played football in high school, so I believe in team sports and the notion of blocking and tackling. I think there’s an argument that says be open-minded, but be careful. And it’s okay to be a fast follower on things.

And because the payment industry is so big, so fragmented, and the needs of the buying community are so diverse that things that are going to be profound… And I haven’t seen anything. The argument about AI, I’m still not 100%… It’s going to matter, but I’m not sure exactly in what ways it’s going to matter.

Things like the electronification of the point of sale, the internet coming into being, and mobile, there’s nothing that’s happening in my opinion right now that is as profound change than those things were.

I’m sure that there’s going to be one of these things, like you mentioned quantum, you mentioned NLMs, which AI. I’ve still to this day not really understood what Web3 is. Maybe you can explain it to me.

But it’s interesting. I’m actually an advisor and an investor in a quantum security company. And I believe strongly, I spent a couple of years at a company that got acquired by RSA, so I’m somewhat familiar with the world of cryptography and the like. And not only will quantum, which is somewhat tied to the AI revolution, because in order for AI to be effective, the amount of computing power you need is profoundly bigger than what is commonplace today. And so theoretically, AI and quantum end up going together.

But the payments industry, because at the end of the day, payments is about risk management. And one of the biggest threats from AI and quantum, there’s a lot of things that it can do positive for the industry. But there’s a lot of things that could potentially cause the industry a lot of grief as well.

And we’ve seen this time and time again. The bad guys oftentimes avail themselves of the latest technology before the good guys do, and they use it for not so good things, right?

And so the biggest threat to the payments industry, let’s say around quantum is most of our security these days is based on encryption keys of a certain length. And the fact that it takes so much computing power to try to break one of those encryption keys usually makes it not cost-effective to spend a lot of time trying to break encryption keys. And that’s why people have turned their efforts to things like phishing for login credentials, versus trying to guess your login credentials. They’ll just convince you to give them-

Yvette Bohanan:

Give them to them, yeah.

Steve Klebe:

Give them to them. Exactly. But with quantum, the potential exists for all the cryptography that has been the foundation for everything we do in payments, which is not the hottest topic that everyone talks about, because everyone sort of takes it for granted at this point. But all of that will become vulnerable once quantum computing power is available.

So there’s a lot of things that many of us take for granted that have to be given consideration. And these technology changes are important. But as payments professionals, we need to think where do those things have the most, both potential asset, but also where could they bite us as well?

And more often than not, the potentially sexy thing we can do with some new technology is what garners all the attention, rather than the downsides that might come.

You commented earlier, I cannot tell you how many times because I was involved in internet commerce from the very beginning, how many times was going to be the very first time a merchant took an order card not present. And they were so used to taking business, taking cards at the physical point of sale where they have virtually no fraud exposure. And they opened up their internet store and figured if they got an authorization, they were good to go. They didn’t even realize that the rules around liability were different for card not present transactions versus card present transactions. 1,000 conversations over the years, where it became obvious that the new excited merchants who were setting up stores on the internet for the first time didn’t realize that they had to be concerned about this. Anyway…

Yvette Bohanan:

Lots of learnings just in that. So before we go, we’ve covered a ton of ground and I appreciate it. The one question I have is, is there anything we didn’t cover that you want to make sure in terms of partnerships, that you want to make sure people are cognizant of? What didn’t I ask you?

Steve Klebe:

Yeah, I think we have covered an awful lot of ground and this has been super fun. Hope we get to do it again sometime. So the one thing we didn’t cover, which I also think is extraordinarily important to anyone in our industry who really wants to play in the partnership sandbox, is get involved in the various industry trade groups. Not the pure conferences that are just there to get your money, to get you to speak on the podium. But the trade associations, the generally nonprofit trade associations that do amazingly good work. And I’ve been on the boards of just about all of them that matter. And I devoted a lot of energy over my career. And again, I asked for forgiveness, not for permission. Because every time early in my career I asked for permission to go to one of these conferences or join a board, I was always told no because it was going to take away from closing a deal that month, which it never did of course.

So organizations like the ETA, Electronic Transactions Association, the MRC, MAG – the Merchant Advisory Group, PaymentsEd Forum, those four come to mind, and I’m sure I’m probably missing something. But don’t just attend their conferences, volunteer to be on their committees. It’s not the most compelling use of your time. The specific activity of participating in some of those committees and things in and of itself is not the most productive use of your time.

But demonstrating your willingness to share your time and contribute your time, and the friendships that you build by participating. And again, not just attending their conferences, because that doesn’t get you anywhere. Those relationships have been the genesis of many partnerships that I have ultimately then worked on.

And even if it wasn’t a specific thing that I did with somebody that I met and worked with at one of those groups, the other valuable aspect of that, aside from building your resume and all that good stuff. I remember early on when I first met, and now it’s Scott Loftesness, the founder of Glenbrook, and he and I used to have coffee once a quarter. He commented once about my black book.

And the truth of the matter was I’ve been around payments enough to know what I don’t know. But the amazing thing is that if I have a question, I’ve developed so many relationships over the year. And people don’t think of me as abusing the privilege. But I’m able to basically no matter what I need an answer to, or someone asks me for an answer to something that I don’t know, but I know where to go to get the answer.

And a lot of that has come from devoting the time volunteering to be on committees and things at these various organizations that are all nonprofits. They’re there to add value to the industry, to provide education to the industry, etc.

And I’m shocked actually, the small percentage of people that are active in those activities. And I think people are really missing the boat by not investing in that aspect of their journey, their career, etc.

Yvette Bohanan:

That’s a great point. Excellent point. And a shout out to all the people that do volunteer to keep the industry going in that way. Because there are a lot of people behind the scenes that help these organizations and they’re all great.

Steve Klebe:

Absolutely.

Yvette Bohanan:

And some of the most knowledgeable people you’ll ever meet in payments. So wrapping it up, besides getting out there, and getting in the industry, and volunteering, which I just heard you say, what are maybe two more, your top three after you listen to all of this go out if you’re involved in partnerships and payments, and make sure you’re doing A, B, and C? Get involved. What’s B and C?

Steve Klebe:

Well, I can’t not repeat once again, ask for forgiveness, not for permission. But fully appreciate the responsibility that goes with that phrase. So that’s my number one.

The other thing I would say, which I was fortunate enough to have this accidentally happen to me early in my career, because I just fell into a sales role right out of college.

And like I said, I was put through a fairly extensive sales training class early in my career, and I had never contemplated being in sales. It just kind of happened. So this was pure accident.

And even though both of my parents, my father part-time, my mother full-time were both in sales, but maybe that was the reason why I never particularly was interested in doing it. But I think having sales skills, not just if you’re going to be in direct sales, but if you’re going to be in partnerships, it’s absolutely paramount.

And again, I’ll use Google as an example. A lot of my younger colleagues who joined our partnerships team came out of Ivy League schools. They had MBAs. But very few MBA programs have sales training skills programs, and there is no substitute for knowing. And I would actually say living, just taking a course is probably, there’s nothing wrong with taking a course. But unless you’re willing to hit the pavement and learn what it means to really do it yourself, and overcome objections, and close sales, and the like.

So I would inspire anybody in the industry almost regardless of the role that you think you might want to play to be close to the revenue. At some point in your career, know what it takes to actually get somebody to say yes and sign on the dotted line. Of course, I missed that by the way. Early in my career, one of the favorite moments was literally handing the pen across to the person who was signing your deal. And kudos to DocuSign, but took all the fun out of it-

Yvette Bohanan:

Took all the fun out of inking the deal?

Steve Klebe:

It took all the fun out of inking the deal. Exactly. So I can’t say that that’s ever going to come back. But I do believe that it would benefit a lot of people in the industry, especially if you’re going to do anything in sales, BD, or partnerships, to at some point be willing to take a direct sales role. And even if you only do it for 12 to 18 months, I think the impact that it would have on someone’s career over the long term would be profound.

Yvette Bohanan:

Great advice. It is that special time when we’re going to wrap things up. So I just want to start by saying thank you. It’s always a pleasure to sit down and talk with you, and we’ve done so in many capacities over the years. And this has been a treat.

So thanks for sharing just a fraction of what you’ve learned in a very successful career so far, because I don’t believe you’ve retired. Thanks for giving us the uncut version of things. I feel like I’ve just sat down with my uncle who spent a career in business partnerships to tell me the ropes, and I’m hoping that some of our listeners feel that way too and appreciate the value you’ve just given out to the industry. Thanks for being on the episode, and I look forward to talking to you again in the future very soon. Maybe in person. How’s that?

Steve Klebe:

That would be great. My pleasure Yvette, as always. The secret that you and I work together at two different, and it was just a profound opportunity and pleasure to do that. And this has been great, so thank you.

Yvette Bohanan:

Thanks. And thanks to all of you listening. We hope you find this and all of our episodes valuable in your career journeys. And until next time, keep up the good work. Bye for now.

If you enjoy Payments On Fire, someone else might too. So please feel free to share this podcast on your favorite social media outlet. Payments On Fire is a production of Glenbrook Partners. Glenbrook is a leading global consulting and education firm to the payments industry. Learn more and connect with us by visiting our website at glenbrook.com.

All opinions expressed on our podcast are those of our hosts and guests. While companies featured or mentioned on our show may be clients of Glenbrook, Glenbrook receives no compensation for podcasts. No mention of any company or specific offering should be construed as an endorsement of that company’s products or services.

 

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