From Babson to Fintech Trailblazer: Aron Schwarzkopf's Entrepreneurial Journey

[Music] [Applause] [Music] hi good morning everybody or good afternoon we're almost at noon so I appreciate everybody being here um Welcome to our panel we're very excited to talk to our bapson celebrity Aaron Schwartz can you Schwarz there we go I I did practice it before but it's um probably the nerves are getting me you know arbitrating me but um anyways happy to be here um Aaron was ABAB is AB Babson Alum class of 2010 and he is one of her best Role Models so thank you Erin for being here um I'm going to introduce him um a little bit about him he's a Serial entrepreneur with a remarkable track record in the fintech industry um he cured holds the position of co-founder and CEO of kushki which is a fintech company pioneering the digital payment solution across Latin America it started in Ecuador but it's really grown far and wide Beyond and right now it is valued um at over $1.5 billion doar so it is um also an honor to have a Latin American company um growing at that um stage Aaron did not start with with kushki there was another company before which is um Leaf which was a financial technology company that was acquired by Heartland payment system and is right now traded on the New York um Stock Exchange correct not not leave but the yes exactly the acquiring company um and so he serves in the you know he was elected as young Global leader of the world economic forum and he's a mentor to many entrepreneurs in Tech Stars MIT Angels New York angels and as I said before broad bson Alum so welcome Aaron thank you thank you for having me and glad to glad to represent bapson again after a really long time U yeah talk loud I think we can can you guys hear me or no yeah they can hear me now we can hear you great is there anything that I miss from your background no I think you did pretty good research basically So yeah thank you good and he does does have three daughters um so he does handle right building a company um running a dayto day with three daughters and a wife and he currently resides in Miami so I love that because Miami really has become the capital of you know Latin America we say it all the time um but that's why we're all here um so let's start from the beginning so you know um you were finishing at bapson um how many like 20 years ago and you were about 20 years years old and you had an early encounter in the payment solution walk us through that moment where you notice maybe a challenge an opportunity um how do you get started in the finck space yeah so I when I started in 2010 I started leave fintech the term fintech didn't exist still and uh I had no idea about payments at all uh I was in bapson in my last semester and I was really obsessed with trying to connect the offline world with the online world and I was very obsessed in seeing all of the receipts that come out of the credit card machines and trying to understand if we can use that data for something so uh I started Leaf in that way as soon as I graduated uh from University and the company then turned into a company that patented and created most of the technology you need to see like the new hpos here in the United States if you've ever seen coffee shop or somewhere an iPad looking Point of Sales a lot of that has the technology that we invented uh and then I I I stumbled into the payments world through that but when I started the company I I didn't know um that it was a payments company at all and perhaps one of the Lessons Learned after I've had the privilege to not only go through it myself but meet a lot of really inspiring entrepreneurs around the world you really don't have to be an expert right in your field to start a business as a as a matter of fact some of the leading entrepreneurs around the world and in history uh didn't know anything about the industry where they started their business right uh famous example that is Elon mus today he started companies and industries they had no idea or any experience uh on before yeah that I I hear you um I believe Elon Musk read like every single book um in the library when he was like by the ede of 10 or 11 and had to talk to the librarian so I I'm sure can use something but then if that's the case how do you you know you go out and you pitch we're here in the lunch patch stage there are many entrepreneurs listening to us so the first thing one of the biggest thing is the team right slide and why you um how can you tackle this project so talk to me a little bit about that then say I I notice this thing I that that opportunity then how do you go if you don't have the expertise yeah so in terms of talent and starting to assemble team from the beginning i' I've always had the same Mantra you have to find people that are smarter than you and sell them into believing to what you're doing right so when you're starting a business you have very little resources all you have is yourself and the confidence of building something big in a vision right so um throughout time that's how I I found my first co-founder he was the first person I hired in leaf he's been my co-founder there and then we started Kushi together as well and I've had employees that have been with me since I was 20 so for like around 15 years now uh in in both companies right um so yeah so you talked um I watched an interview um and you talked about Latin America as the promised land again being that we're all in Miami we understand the potential that's not necessarily the case for everybody around the world so what exactly makes it makes you call it that and what particular countries in Latin America today are you most excited about in terms of growth opportunities yeah I I definitely think Latin America is the promised land nowadays uh it used to be for a really long time in a global stage uh a flyover region for most businesses it no longer is that and it's starting to have more and more re relevance around the world and uh the reason I think it's a Promised Land uh for many of you that live either here or in Europe most of the developing world or the northern hemisphere starting to have a lot of population problems right so most most most of their population demographics are aging right you have a lot of Boomers right the usually the majority or a big chunk of their population and Latin America is is the opposite it's actually what it has the best demographics for you to start a business or for the future that's why I think it's a promised land so in Latin America about a quarter of Latinos are gen seers and about another quarter are millennials so more than half of the population is 40 and younger right so if you if you match that with entrepreneurship and Innovation it is the promised land right you have the best consumers you've ever had in history right that are digitally connected that are educated that have access to pretty much any knowledge or technology that you need today with a cell phone right so I think Latin America is the best Market to start businesses now because of that demographic right and that's one of the reasons we started kushki so kushki is my second company when I was 26 years old I found my myself bored after I sold my first company in New York and uh believe what a great problem to have right thank you um but believe it or not we decided there to to do the opposite of an American Dream we we decided to go for a Latino dream right where we were 26 we had uh we had uh created not only wealth but you know some sort of a career for ourselves in the in the United States by being you know successful technology entrepreneurs and we decided the opposite we decided to BAS basically fly back to our our native Ecuador and start a company there right uh because we knew that it was the promise then and uh uh the funny thing is now kushki is uh it's probably like it's going to be probably 50 or 100 times bigger than the first company that I did in an American Dream in the United States right so uh we went back to Latin America uh to build Kochi and uh I I I do think that Latin America has an incredibly bright future right uh so expand a little more about kushki like what was that opportunity you saw then in Latin America cuz yes you were bored you have experienced in the financial so when he said when I'm going to Latin America what was the problem you saw what solution you built um and what is kushki today because fintech right we know it's Financial Solutions that use technology to obviously fix so many things um when it comes to access efficiency but um for the ones that might not be as knowledgeable about kushki per se um take us in a deeper dive into what you saw and what you built yeah so the first thing we saw in Latin America was nothing's built yet pretty much right and and you're living in a time where it's very clear to see an old economy that's starting to shrink uh all around the world and you have a new economy that's usually powered by emerging Technologies like we can do a lot of stuff that we couldn't do 10 years ago as as humans and that that that we couldn't do 20 years ago right and probably the next 5 to 10 years um like Peter in the other stage you can explain there's a lot of exponential technologies that are really democratizing the access and making things cheap for everybody in Atlant America nothing is built yet right and there's a lot to be built uh and then the other thing that we saw in Kushi that inspired us was to build a new business in the new economy you you really need three things right you need you need to be able uh to have servers or digital real estate right at that sense and that's a global problem that has a global solution today for very cheaply you can open an account in Google cloud or Amazon web service you know I I wish when I graduated bapson that you know see how fast thing when I graduated back in 2010 you have to buy a server and a rack to be able to host a website to be able to host an app and whatnot today you can pay probably 100 I don't know I think Amazon probably gives it for free for entrepreneurs basically you you know within 5 minutes you have digital real estate so that's not an issue you need in Latin America anymore but then you need Logistics and you need a way to easily move money right those are the three pillars to start a a company in the new economy more or less and uh and we took on the challenge to to do that third part and kushki for us and our vision in kushki is to be a pillar for that is we we want to be the pillar in which the new economy uh gets created on right we want to make sure that anybody that needs to move money be between themselves uh or in between a company and a and a client right are able to have Fast Access Regional asset with good technology um in Latin America which is a gigantic task and and it's kind of fun and it pisses pisses a lot of people off right but like we we we pick Latin America that it's usually a a very restricted monopolized market in terms of banking sectors all over the place right and our job is to standardize it make it democratic make it cheaper for everybody that's pretty much what kushki does right so that's been the vision for us and the reason we kind of got excited on doing it cuz it was like a gigantic challenge more or less right how many years are you into kushki kushki is in its eight year right now so yeah okay so in two more we'll be like emerg celebrating the 10y year anniversary so your last race was in 2022 correct and it was for $100 million um at that point your value ation was $1.5 billion when you went into that fundraising process did you raise from Latin America from the US did you tap any markets in Miami was it New York what was your approach to fundraising and can you share any lessons learned during that process that might benefit inspiring entrepreneurs great so um when we started kushki we wanted it to be only Latin and Latin Capital um but it got to a point where we kind of extinguish most of Latin Capital so like uh most of kushi's beginning maybe the first two or three years until the company was worth around $600 million it was only Latin Capital so we we had some small Venture funds that were just starting in Latin America right uh and uh and the few family offices and and but but all Latinos basically and it got to a point the company started growing so fast that we basically had to start taking both us and European Capital so today we have capital from all over the world we're very proud in a couple things right the probably the first one is we've been able to be the first large investment for a lot of funds that had never invested in Latin America uh before so it's created some sort of a bridge right and and now they're investing in more entrepreneurs and more startups uh around Latin America and the other one is um when we wanted to do this in Latin America we we wanted to put our native Ecuador in the map basically right so uh we we when we raised in 2022 it was the largest round Ever Ever Raised uh at that point I hope someone beat me by now I'm not sure but like uh at that point in 2022 is the largest round ever raised in Latin America uh and then uh the other thing is we were able to coin to be the first unicorn Ecuador uh and that was something very special for I mean not because of the Unicorn valuation but because in Ecuador you have this culture that you have in a couple of other places around Latin America uh where people think that that that you can't follow your dreams and that it's very very hard basically to do extraordinary things and uh I'm actually in this stage today because there's a new Babson entrepreneur uh sorry bapson um um student that sent me an email saying I'm going to bson I'm going to build a gigantic the company cuz you know you did it right so I'm actually in the stage today cuz he gave me that invitation so uh super happy to inspire that and to put Ecuador on the map to be quite Frank which is a very very small country that's never had you know a technology problem before right yeah we're we're um very proud of our Ecuadorian alumni community that goes to bson um so talking about you know emerging Technologies we I don't think there's a panel at Emer that's not going to touch it whether you are in the artificial intelligence stage or not but obviously you know it's impacting everywhere so what are your thoughts on AI and how would my best support the fintech space and what use cases are you seeing when it comes to kushies and your industry yeah so first of all I think that in the next five or 10 years we're very lucky as humans uh that we're going to live a before and after that humankind probably hasn't seen since the the the discovery of fire right that's how big kind of AI is for us and how much is going to change everything we do right to be quite Frank so we're we're very lucky as humans to be able to see that before and after I have a feeling if you're having kids right now they'll never understand what it was you know before this decade right you know uh from not being able to you know uh they're going to be taking flying cars that are operated by AI they'll never drive there's the majority of jobs that that you guys thought you know our our grandparents even you know people today do will disappear right and we'll have new different jobs the work weeks are going to change so AI is probably the most Transcendent it's probably the most significant and impactful Technology since the discovery of fire right um so uh please enjoy that while while you live and don't be scared of it I think you have to embrace it as much as possible uh in terms of AI for fintech and I have a passion for Latin America if you haven't noed so uh speak a little bit about Emerging Markets uh what I'm most excited about AI is most Emerging Markets have had very elitist Financial Services uh in which companies are usually private privately owned they build a bank or a lending you know platform and um they they don't end up offering it to everybody right so they'll end up covering 5 10 20% uh of the market and it's usually because of economics right and uh it's usually hard to underwrite uh risky people people that are poorer people that are in rural areas and being able to replace humans and that cost with machines to be able to do super good underwriting in terms of risk can change all the risk profile of a country like a country like Ecuador right I'll be able to give cheaper and better access for the whole population for the first time right so terms of fintech what really really excite me excites me in emerging markets that that it's actually going to democratize the aess of financial services for a lot of people CU it's going to change the business models right even today at Kushi which we're uh you know I would say more of a new tech you we're not we're not as old school as a bank we have a limit of how much we can reach today right in Latin America and with artificial intelligence I think those costs are going to plummet right and it's going to allow us to build cheaper and better business models for us to get to everybody right so Financial Services should be become ubiquitous for the first time in Emerging Markets because of artificial intelligence um so let's talk a little you kind of mentioned you know um the landscape in Latin America and um a little bit about regulations how has that been because you're growing into different markets and that is one I think one topic that really um what what what I say like worries people that are not necessarily Latino and say like oh but is that every country is different and if I group them together they don't all work together the same way so how have you navigated your growth um strategies as you go open in different markets maybe talk to us a little bit about that yeah so what we decided to do in kushki was kind of ludicrous right so going back we're in our mid 20s we had success in New York decide to do something inl America that's highly regulated that The Regulators between Queen countries don't talk to each other Latin America isn't like the states like you know if you go to Dominican Republic or to Ecuador Brazil you know you know there's nothing in common right different legal laws different working laws different markets different competitors when it comes to the financial sector um so it's was really hard and at the beginning it was a gamble really it's like let's go talk to regulators and tell them that they need to open up and democratize some of them started working some of them didn't and you know we've always had this approach uh of being super Progressive Rive right with regulators and to be frank I I've been super shocked cuz the one you know the ones that worked worked really well and started colonizing all the other ones right so we're not in all of Latin America today we have an excellent relationship that's an educational relationship with Regulators that allow us basically to to teach them what needs to happen give them perspective um give them resources a lot of regulators in Latin America don't have the resources to understand technology right so we we we basically spend a lot of time with the regular just educating them on all of fintech actually we're only in payments but we educate them on all of fintech and um as a matter of fact one of The Regulators I actually think they're probably the best Regulators now in the world for fintech the Central Bank of Brazil uh started exporting their regulations and their products to different places around the world right so um don't don't be scared of Latin America I really think there's a before and after between the old economies and new economies in in Latin America if you would have asked your father or if you would have asked somebody 10 years ago if the Central Bank of Brazil would be giving classes to the Federal Reserve here on how to do real-time Payment Systems in crypto you you we'd be called The Lunatic right you know no no one would believe that a Brazilian would come to Washington and teach them about financial technology but that's happening today right so um you got to lose those conceptions about Latin America especially Latin American regulators is just just being useless to be frank cuz I I've never I haven't found that in my experience right that's great to hear so you talked about basically relationship and you're building that on the regulation side as you grow um Partnerships are also big collaborations um were any did you leverage any and if so which ones yeah so going back to how we started we're going on these Banks each country has two or three Banks they're not City Bank or Wells Fargo they're owned by a person right usually and they're all different the bank in Colombia and the bank in Chile and the bank in Mexico they they all have different owners different banks and they've all been used to monopolies before so we came in and be like we're starting this don't be scared of us we're not going to dis intermediate let's try to partner it worked in some places in other places they hate us basically right um but what we've done now that we're regulated and have our own two legs to stand on in most of these countries is open up the industry right so in several countries we started this in Mexico about 2 years ago and we allow anybody now any business owner to build a payments company on top of us that was impossible to do in Mexico until we did it and we're doing the same now in Chile and Colombia and Peru this year right where if you want to start a payments company or if you're a software company or or if you're you know we actually have like a tortilla manufacturer in Mexico that now has a payment and fintech Company the we power right and um my marketing team is going to kill me cuz that's launching in a video but it we have a tortilla manufacturer that makes tortillas in the state of Mexico and gets to five or 6,000 retail stores all around Mexico and now they have a point of sales device they have a digital relationship with the client where they can procure through that POS device they can do payments through that POS device they're going to start doing lending for them with an underwriting model that's not a banking under writing model cuz Banks don't reach uh those business owners so we provide a lot of access that wasn't possible before in Latin America and that that's kind of our vision is to create Partnerships and and create a big spot for entrepreneurs right uh to be able to you know easily Connect into payments in Latin America make money on payments uh and we have a lot of those entrepreneurs now like I hope we help coin the next generation of unicorns in Latin America that are using our apis and our technology uh to move forward yeah so I I actually was not thinking of asking you about marketing but since you mentioned them I mean trust is important when you're dealing with anything with money right so how does that tortilla entrepreneur um trust you and you know how do you build that trust in again this communities um what have you guys done I guess Innovative in terms of marketing is it yeah there's a saying in Span called parar Pedra which is you know taking a little hammer and start you know hitting the brick wall like little by little right so that's what we've done uh I have some funny stories right because we're like a small startup uh you know in Colombia or in Peru and we're you know competing against the largest banks so you know people don't know if to trust us at the end what we do is hold your money and move your money right so you know trust is in the middle of everything and um we're so good at underwriting underwriting is when you check a client if they're okay if they're not doing money laundering and and whatnot that our our our underwriting in Mexico is much stronger than most of the banks so one of the first large businesses that came and was like I don't know if I should trust you or not and I try to convince the owner to trust us inent of the bank do the pilot by the time we started the underwriting process he got angry because we actually asked him for financials and he came back saying no one's ever asked me for financial statements in Mexico before you know who I am so we couldn't underwrite him for like a year because he wouldn't give us his information and we didn't trust him as opposed to him trusting us right so it was kind of funny you do it little by little you know um in general lesson for startups it's great to have a big Vision but you know standing on your two feet and walking the first meter and then the next 10 meters is probably the best advice I can give you from when you're planning your deck right your vision's great but your vision's out there and you know if you don't make it past a month or 6 months or 12 months just go little by little right um that actually take us back to our start and how we were trained right so at Babson we have a methodology which is called ETA entrepreneurial thought and action and it really does start with what resources you have at hand how do you get started with those resources take that first step once you take it right you re-evaluate you analyze what data points you have what you gain from it so now you have new resources and you go again so I think um not to toot our own horn but I am tooting our own horn I think popson entrepreneurs are great at just you know really starting with that first step and adjusting measuring again pivoting and continue so that that makes a lot of sense so since we're talking about that and um we are an educational institution I always like to talk about um insightful nuggets powerful information that we can ideally share with others as they going on their entrepreneurial Journey so how do you believe that your education at Babson influenced your approach to entrepreneurship and might have I might be leading to it by the way so maybe change the answer um but your your ability as well to navigate that um fintech industry with its own challenges great so uh what did I learn at bson basically that help enable um I'd say the first thing um I met my wife in and she's probably the cutest and the fiercest boss lady I've ever met in my life and without her basically and her guidance and support I probably uh would have never started anything right um that's a that's another story for bson but like I literally graduated bapson I was dirt poor and I lived in couches and I actually lived for some months in bapson after graduation to be able to start my business I didn't have any money to do anything basically at the at the time so I'm very grateful for for bson in general I I'd say you know I learned a lot of tools and processes and knowledge and bapson but probably what what comes out the most for me of what I remember and think bapson for was was the mindset a little bit right so I uh before going to M bapson as I told you I I grew up in in Ecuador I didn't even know the word entrepreneurship before I got to bapson when I got there I realized that it's I don't know why they picked such a hard word for you know something so simple in that sense but um I come from a culture where not following your dreams or people having social envy and putting you down is the norm and that's the norm in most of the Southern Hemisphere you know in places in South Asia in Africa in Latin America it's not a yes we can right to the point that you know when a national team wins everybody says yes we can or something like that and all these C I came from a Debbie Downer culture right and being able to go to bapson and learn from professors there and just kind of the whole ambient that whatever you put you know your work and effort into you'll be able to achieve it um and that got me to when I decided to do my first company when I was leaving bapson I I I I told my mother I'm going to start my first company and I'm going to build a billion dollar company in my 20s and she was like oh that's great I love that you have dreams now come work with your father basically that's what she told me so um I'm very thankful baps in that of like infusing kind of like a jet fuel of yes we can attitude and positive attitude that you can do it and if I can give back and I'm I'm pretty happy of being here an invitation of someone that I inspired that's a bapson student so uh I'll take that with me forever right um but if you want to start a company the the biggest limitation you have is is yourself right and uh what I learned in bapson is if you put hard work on something and passion uh you're you're you're going to be able to take risks and and and get get to the place that that you want to get to so yeah okay and then um how how do you I mean everything's changing every day when it comes to you know learning we got to stay up todate um we believe about um at Babson about lifelong Learners and being that so how do you stay informed and continue to learn in this e ftech space yeah it it's really hard so once your startup grows to a certain level the biggest problem you have is time right so time becomes like you know your your most precious thing so I wish I you know today you have everything in your fingertips is impressive like you can learn about everything anytime wherever you are and I wish I I had more time to be a lifelong learner or get to the point in AI where that you can actually just inject it in your brain in two minutes and you know know everything there um what I tried to do is I have a a pretty strict breathing schedule right so uh in my calendar I have blocked off this stuff to read books and once day I also am reading on stuff that I'm trying to catch up on um so it's all about organizing yourself but in general you if you're leading a company you you should be a lifelong learner there there's there's no other way around it basically yeah especially in technology I love working out um listening to podcasts or Audi books it's just like you know you kill two birds with one Stones so as we wrap this up what is your vision for kushki and again it's not and and also your vision for yourself cuz you're so young still you've done so much I'm pretty sure you could you know start another venture I mean what's the big idea I guess in the next few years yeah so I'll give you like the vision for kushki first just in stats Latin America is is the fastest growing region in the world where cash is dwindling for electronic payments right that's in my industry um Brazil is a g great case of that if there's any Brazilians here talk to the non- Brazilians uh if you're not from Brazil when you visit can't bring cash like if you want to buy a coconut in the beach nobody no one accepts cash anymore it's incredible what's happened there in the term of again if you would have asked five years ago if that was possible you know everybody would be like you're crazy like I'm going to buy a coconut I need to go to the ATM in Brazil change my dollars and buy a coconut in the beach nobody takes uh cash anymore in Brazil so just as a stat uh in Latin America there's about one and a half trillion dollars that moves every year today and it's growing about 35 to 40% year of a year that's not in cash right so it's credit cards pics transfers whatever you want to call it kushki today is about a 12 billion company so we we we're not even 1% of that uh sorry we're we're a little over 1% of of what moves there we've been able to do that in seven years we want to be the biggest right so for kushi's vision is to become the biggest and in the platform where everybody moves their money in Latin America right so kushi's vision for the future is just continue fulfilling until we get to the vision that when we started the company for in terms of my vision I uh I want to help Latin America a little bit more right so uh I would love in the next couple years to spend more time outside of kushki doing stuff for Latin America uh especially technology stuff right and enabling people um to have better resources to build technology companies in Latin America oh yeah sounds good and then last last question what should have asked you that I didn't I think you were pretty thorough you know I think it was great uh first an Applause for her she's super sick and she came here basically just to interview me so thanks so much for that um no I I think you cover it all so yeah any last words of wisdom I got a great brain next to me and great human so I just want to make sure that we channeling it they they told me you know kind of message here I don't know there's a lot of prospective entrepreneurs here or entrepreneurs in early stages uh probably the best lessons I've had in my life is believe in yourself you're you're your biggest enemy when you're an entrepreneur um entrepreneurship sucks okay so you're you're supposed to feel bad lose your friends don't have time lose your hair if you're a guy really fast that's part part of the gig right more or less but it's very very rewarding on the other side right so keep at it and uh believe in yourself right that's probably the best advice I can give you from an entrepreneur to the other one when possible reach out to other entrepreneurs you'll be super surprised how late stage entrepreneurs when I graduated Babson nobody knew me I didn't have access to anything and it was the early stages of LinkedIn where you can actually reply you know send a message to a very famous person they reply right at you I had great mentors like you know I I have mentors that are like very famous entrepreneurs more or less so don't be surprised if you can find an entrepreneur that that that can that can mentor you they'll always want to Mentor you it's like an entrepreneurship code right so um make sure to find one of those for you guys you know the the ride can get lonely so uh yeah cool thank you so much we really appreciate you giving back the time sharing your knowledge and insights it's been great I've enjoyed it I hope you guys all have um and we do have a booth right there so if you do want to hear anything else about bapson or students or other alums we have five bapson companies showcasing in and starting in the emerge competition so make sure you stop by because I'm sure that they'll be doing a lot of big things in the future as well yeah last thing if you guys want to start a billion dollar company get involved with mapson basically okay that's good thanks for the plog thank you everybody awesome let's hear for Carlin Aaron thank you guys we appreciate you