John Mitchell, CEO & Co-Founder of Episode Six | Episode 347

Ever wondered how a prolific payments technology company gets started? Join us on Leaders in Payments as we chat with John Mitchell, CEO and Co-Founder of Episode Six, who recounts his intriguing journey from Colorado Springs to Austin, Texas. You'll gain insights into how Episode Six is innovating the payments landscape, helping financial institutions and brands move away from outdated systems. Discover the versatility of their platform that caters to a wide range of clients—from small banks to global financial behemoths—and learn how Episode Six's unique ability to virtualize hardened cores supports seamless international operations. 

John Mitchell dives deep into the story behind the founding of Episode Six, starting from a significant moment in 1999 that set the stage for building one of the largest prepaid processors. Fast forward to 2015, and the journey of Episode Six's creation unfolds, highlighting early triumphs like securing contracts with HSBC and Japan Airlines. Listen as John shares the highs and lows of penetrating the financial institutions market and emphasizes the importance of perseverance. Alongside his professional journey, John also opens up about his personal passions and provides invaluable advice for aspiring fintech professionals. Don't miss this engaging and insightful conversation with a true leader in payments technology.

Chapters

• 0:01 Future Trends in Payments Technology
• 12:02 Building a Successful Payments Company

Transcript

Greg Myers: 0:01

Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.

John Mitchell: 0:18

Hi everyone. I'm your host, greg Myers, and today's special guest is John Mitchell, the CEO and co-founder of Episode 6. Episode 6 helps banks and brands leave legacy payments technology behind, leapfrog their competition and build payments products their customers will love John and I talk about what makes Episode 6 unique in the marketplace and where he sees the payments industry headed in the future. We also talk about his personal and professional passions. We've got a great episode ahead, so let's get started. Hi John, thank you for being here and welcome to the Leaders in Payments podcast.

Speaker 3: 0:58

Thanks for having me. I really appreciate it.

John Mitchell: 1:00

Absolutely. Let's go ahead and dive right in, If you don't mind. Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that.

Speaker 3: 1:09

Yeah, you know, I currently live in Austin Texas where our company is headquartered, but I grew up in Colorado Springs, colorado, and I left to come to the University of Texas and have pretty much been in Austin Texas, in and out of Austin Texas for the remainder of that time.

John Mitchell: 1:25

Okay, great, so let's talk about Episode 6. So tell us what Episode 6 does.

Speaker 3: 1:30

Episode 6 offers payments technology that our clients use to build products and services to meet the discrete demands of their customers, whether they're consumers or commercial. Discreet demands of their customers, whether they're consumers or commercial. We offer it up via API and it's accessible via actually 15 AWS regions across the planet. Okay, and who are your customers? We're selling into financial institutions, both banks and non-bank financial institutions. We've got customers that are also e-commerce tech companies, whether they're large tech or fintech, and then some healthcare now as well.

John Mitchell: 2:09

Okay, and obviously when we talk about banks, there are small ones, medium-sized ones and large ones. Are there any targets in there, or pretty much any financial institution?

Speaker 3: 2:19

That's interesting because we're now doing business with two of the top 10 banks on the planet, but we also work with small banks sub $1 billion banks in the US, for example and so across all of these FIs, the problem statements are the same. They've got dated technology that needs to be replaced and we offer either that replacement or that sidecar that can work hand in hand with their existing tech, and so, literally, problem statements are the same. The bank's resources and capabilities are quite different, but because of the flexibility of our platform, we fit into really any size FI, and we're working with banks on four continents now and growing rapidly.

John Mitchell: 3:00

Okay, so if a bank or a fintech integrates your platform, what's typically sort of the path they take to like, what's the first product maybe that they launch?

Speaker 3: 3:13

There's a wide range of products that are available, and we're actually providing services to support a wide range of products, but what we're seeing a lot now in the market is a need for virtualization of what is essentially a hardened core, and so banks are interested in containing that core and then having a mechanism to virtualize so they can offer up products digitally, and so an example of that would be virtual accounts. Large banks are looking for a platform that can support their virtual account requirements so they can meet the needs of today's customers. And then also B2B payments, particularly around virtual cards within the card schemes MasterCard and Visa Huge opportunities. We've done some very large deals in that area as well, and so I think that those are probably the two areas that seem to be the hot picks at the moment. We've been doing this since 2015, and there seems to be changes over time, but right now, that's what we're seeing a lot of.

John Mitchell: 4:12

Okay, and what would you say makes Episode 6 different or unique in the market?

Speaker 3: 4:18

I think there are a lot of things when we put this together. We had tremendous experience around payments, particularly in the space that, or the section of payments that we operate in. We built a platform that not only could do everything that we couldn't do in the past, but it could be changed. It could be altered, augmented as the payment space adopts new forms of payments and that rate of change is accelerating. Our platform can keep up with it.

Speaker 3: 4:48

So our clients are able to not only get what they are interested in doing on day one, but when day two and three roll around, they're able to make adjustments very quickly, oftentimes without their IT departments. That's a big shift compared to what's generally in the market departments. That's a big shift compared to what's generally in the market. And then I think when you add in the fact that we're just using this sort of highly configurable mechanism that can operate anywhere on the planet, that's a differentiator as well. So, for example, we're processing revolving credit with the same system in Vietnam, uk, hong Kong. That's a big differentiator. It makes it easier for our international clients to actually grow from one region to another. I keep consistency across their product sets Some examples. There's quite a few more, but we might not have time to go into all of it.

John Mitchell: 5:35

Okay, and when you go to market, how do you typically do that? Do you have a direct sales team? Do you go through partnership channels? How do you go to market?

Speaker 3: 5:48

We've leveraged partnerships. As a startup, it's fairly difficult to have enough sales people to actually take an enterprise class system to market, especially one that's brand new. So we forged really strong partnerships with cloud providers, with cards games, with consultancies, system integrators, and they've taken us into many, many accounts. We do have a direct sales team and we've strategically placed this team sort of at the intersection of financial hubs and tech hubs. So we've got big teams in Singapore, Tokyo, London, and then we've got outposts in Australia, in Chennai, in India. Yeah, so we do go direct, but usually it's via relationships and partnerships that ultimately sort of drive the business.

John Mitchell: 6:30

Okay. So when you're doing these international type of deals, are the banks typically offering something that's like only in-country, or is this more for, like, their clients who are doing international things? So it's a lot of cross-border stuff.

Speaker 3: 6:43

You know, really it's a lot of cross-border stuff. You know, really there's a range. Mostly our clients are engaged in domestic product and domestic use cases, and that can you know. If we're talking about issuer processing, we're talking about debit, credit and prepaid, and that's almost all direct domestic. However, there are multiple use cases on our platform that are related to cross-border, related to FX, currency exchange, that type of arena. Our system is predicated on a concept of not being tied to fiat currency or to a particular currency, a specific currency, and so it leaves a lot of flexibility for use cases that cross over time zones, currencies, regulatory etc.

John Mitchell: 7:32

Okay, and you mentioned B2B. You want to expound on that a little, just to make sure we cover that.

Speaker 3: 7:39

Much of the B2B infrastructure is built based on requirements that really aren't existent anymore. It's dated. Just similar to what I, such as uptime and reliability and resilience is very important, and so, because our system is bank grade, it's proven to be resilient, meets the needs, as I said, of some of the world's largest financial institutions some of the world's largest financial institutions. There's been a lot of interest and more and more opportunities for us around B2B. It's just a huge space. Historically, it was less, I think, less sexy than retail and so probably got less attention from less hype maybe. But it's out there, it's massive and we have carved a niche out for episode six.

John Mitchell: 8:34

Okay, well, let's talk about the payments industry as a whole. Where do you feel like the industry's headed, say, in the next three to five years?

Speaker 3: 8:42

You know, I think there was some turbulent times over the last couple of years, and that was preceded by just an insane bull run, and I think things are starting to normalize now. I expect, over the next several years, to see more M&A, more consolidation in the industry and also just a complete shift in movement. Everything will need to be real-time. There needs to be more seamless technology to provide some of these new applications at scale. So I think that, while I don't think the product sets will, we'll see dramatic shifts. We'll. We'll see dramatic shifts in the infrastructure and then also who's providing that infrastructure?

John Mitchell: 9:22

okay, are there any specific trends within financial institutions that you guys are keeping a close eye on?

Speaker 3: 9:29

well, you know, we, we work with fis every single day and so we're sort of immersed in it. I think in the late 2010s, there was this whole idea of replacing cores and I think there's an understanding now that that's not easy and it's probably not achievable in the next many years and the costs are prohibitive and the resource requirements and the risk, which is something that a lot of FIs don't have the appetite to undergo now A lot of FIs don't have the appetite to undergo now Some do, but I think on the larger scale, there's more of a desire to do what we were talking about earlier in this conversation, which is to contain the core and to provide a mechanism to digitize. So how do you do that seamlessly? And that's what Episode 6 provides.

John Mitchell: 10:11

Right and you mentioned maybe an increase in M&A coming up, or maybe we're starting to see that. Any thoughts on how that would affect your business? Do you see competitors combining or are you thinking these are more pure play payments companies?

Speaker 3: 10:28

Given the challenges that some of the smaller companies face related to financing, that there will be buying opportunities for larger entities. I do think that not all companies are equal, and so the strong will survive, obviously, and so we think that the landscape will change. We'll still be out providing bank-grade, resilient infrastructure, but I think, where things are at now, the obvious next move are, you know, zm&a. We're seeing some of that in the market.

John Mitchell: 11:01

Okay, all right. Well, let's switch gears a little bit and talk about you. So tell us about your journey to your role there, maybe talk about what you did before co-founding the company and a little bit about your background you know I started working in Colorado very early in life.

Speaker 3: 11:19

I think in sixth grade I had a paper route, and so work ethic is something that has been instilled in me, for, you know, since early on. And then I, you know, I moved from that into sales and so I've had a sales background since I was really in junior high school. And then I think there was just sort of a desire to build something from nothing and I started out building airplane and naval vessel models when I was a kid and I'd sit down and I wouldn't stop until it was complete, and so I think all of that sort of is in my blood and that's led to sort of my history of payments. In 1999, I got involved with some colleagues around a payments company that was struggling. I ended up paying their payroll and I liked the idea, just thought it needed some tweaks and so jumped into that. It helped to redirect that business and eventually became one of the largest prepaid processors and program managers on the planet in the early 2000s.

Speaker 3: 12:27

But after leaving that went to different parts of the globe to put different payment programs in place but to try to use more technology. The market was changing, although the API ideas and the ideas around cloud hadn't started just yet. We did use technology in ways that the other market hadn't seen. And then 2015, sort of after having worked with my two co-founders for Fute for 15 years and Charmaine for four or five we decided technology's changed, the world has changed. Why don't we start from scratch and build something that will do everything that we wanted to do? So we decided in 2015 to put this together and spent a couple of years building an enterprise class platform and then took it to two very large, referenceable accounts. Early on, we were fortunate enough to sign them. One was HSBC, one was Japan Airlines and so we started off with just two huge, huge accounts, and then that sort of developed and led to where we're at now.

John Mitchell: 13:33

Okay, and I'm sure people are wondering what the name Episode 6 means, so maybe can you explain the name.

Speaker 3: 13:40

Yeah. So when we started the company sitting on my back porch in Austin, Texas, and we just started talking about what do we want to do next, how many ventures have we been a part of, if we come together? And this was our sixth episode in the aggregate, and so we just thought about episode six. We actually looked up the domain and it was available. We grabbed it and paid some online company, some kid in Indonesia, 39 bucks to get a logo and we started with episode six. But that was the origin.

John Mitchell: 14:12

Okay, so were any of your backgrounds in sort of serving the financial institutions, or was that a new market that you had to break into?

Speaker 3: 14:21

That was a new market, yes, and we broke into it. We just broke into it. So I want to tell you that we plan to do a business with the seventh largest company banked by assets on the planet, but that probably was not our original design. Our POC was with a sub of a French bank in a French territory, in Tahiti actually, and so that sort of put us into the banking space from day one, and then, when you work in the banking sector, one thing leads to another. Suddenly, we're selling into other big banks in Hong Kong, and that leads you to Singapore and London, new York. So we've just been immersed in the space for nine years now. We just celebrated our ninth anniversary.

John Mitchell: 15:05

That's awesome. Congratulations for that. Any startup that can make it nine years is no longer a startup. In my opinion, that's right.

Speaker 3: 15:12

We're a scale up. Things are going well right now. We're very fortunate. I believe in perseverance and hard work and that's what we've done. We haven't shifted. We've been focused on the same thing for nine years and we're going to continue to do so and every day we get stronger and reputation's building and our platform's highly performing. So it's very well reviewed and things are just looking up for this company and so super excited about where we're at right now.

John Mitchell: 15:41

Great, great. Well, what are some things you're passionate about? Maybe one work-related passion and one personal passion.

Speaker 3: 15:48

I'm passionate about winning and what that means is that when we go into a scenario where perhaps we're the underdog, I don't believe in that. I believe in yes, we can and let's go get it and let's do this. And I know those are all just crazy cliches and meaningless mostly on the surface, but I don't believe in no-win situations. And so when we are confronted with a new opportunity, we sit down as a team and we figure out how do we win, what is it going to take and what are we going to do to come out on top. And that's what we've done consistently with deals that probably you know we certainly were coming in from not the pole position, but we end up coming out on top. So I think that's sort of our mentality here. You know, I'm very passionate about that. I'm passionate about what we do. I'm passionate about our goal of making sure that our clients are referenceable and that they love their products, they love the service they get from episode six, and that's sort of what we focus on and we've been fortunate.

Speaker 3: 16:54

My personal life we focus on and we've been fortunate my personal life, which you know, heavy work in the work-life balance as you build a company. I'm passionate about stopping and smelling the roses and so so often in so many business trips where you know, maybe we land in Tokyo and we look around but we don't know where we're at and we leave and we just were in a great city and didn't get to really experience it. That's happened over and over and over and over. I know that's pretty common within business travel, but I want to understand where I've been, what I've seen, want it to resonate. So I'm very passionate about sort of stopping and just sort of inhaling and seizing the moment. So also passionate about sports. That's a pastime and watching the Olympics. Now it's just been a great Olympiad, I'm just really into it. So those are some of the things that I'm passionate about.

John Mitchell: 17:43

Okay, great. So if someone is say, they're at UT and they're graduating and they're interested in a career and they look at the payments and fintech space and they say, hey, I want to build my career in payments and fintech space. And they say, hey, I want to build my career in payments and fintech. And they come to you and say, John, what advice would you give me to be successful? What would you tell them?

Speaker 3: 18:03

You know. The first thing is I would want to understand why they want to build their career in fintech and payments. Is this something that they're really interested in? Because if you're not really interested in something, it's hard to be passionate, it's hard to really dive in and give it your all. But what I would tell them on top of that is that do what you believe in what you want to do.

Speaker 3: 18:30

There will always be people telling you that you can't do something. Don't listen to it. Take advice, though it's free, and make decisions that are going to help you get to where you want to be from a professional standpoint. So if we listen to all of the no's, I would not be in payments right now. I remember the first time I held up a prepaid card in 2000,. Some of my friends telling what I was doing. They were laughing. You know what is that. Go in the direction that you want to go in, but persevere, work hard and just go for it, especially straight out of college. You've got plenty of time to shape your career and get to where you want to be.

Greg Myers: 19:08

Yeah.

John Mitchell: 19:09

You've used that word persevere several times. I think that's a great thing for people to remember and some great advice. Well, john, we've covered a lot of ground so far, obviously about the company, what you guys do, the market you serve, obviously a little about you. Is there anything else you'd like to add before we wrap up the show?

Speaker 3: 19:25

No, I think this has been great. I really appreciate the time and the opportunity to speak with you.

John Mitchell: 19:30

Great Well, John, thank you so much for being on the show. I know your time is very valuable, so I really appreciate you being here today.

Speaker 3: 19:36

Thank you very much, appreciate it.

John Mitchell: 19:39

And to all you listeners out there. I thank you for your time as well, and until the next story.

Greg Myers: 19:46

Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.