From geophysics to payments

An interview with Robert Kraal, co-founder of Silverflow

The next interview from our trip to Money20/20 saw Robert Welbourn speak to Robert Kraal, geophysicist turned payments expert. 

Silverflow is a cloud-based acquirer processor; Kraal spoke about founding multiple companies, why he was attracted to working in payments, and how he made the transition from a geophysics student to payments expert.

Other Money20/20 interviews: Monica Eaton, chief executive officer of Chargebacks911.

Hi Robert! Please can you give me a brief background. 

I’ve been working in fintech since the late 90s, straight from university. The first payment company I started was called Bibit, which was sold to Royal Bank of Scotland in 2004 and is currently better known as WorldPay. 

I then joined Google here in Amsterdam; whilst I normally like to join smaller companies, I joined Google because they were launching payments solutions – and they were a pretty small company in Europe back then! 

I was happy at Google, but then some of my former Bibit colleagues said, “Hey, we’re starting something new, would you like to join?” So I joined Adyen in the very early stages with a key foundational role as chief operating officer, focusing on all operational activities which included regulatory licences and card acquiring licenses.

Fast forward to now, I got together with a few people from my past and said, “Listen, there’s something cool we can do, serving a real need, let’s do that.” And we started Silverflow. 

You’re almost a serial founder; do you particularly like founding companies, or do you just see these gaps and want to plug them? 

I’m more of a startup person, somebody who likes to be there in the early days; until, in my mind, it gets too big. There’s not really a specific point that it gets too big, it’s more how the company changes as it grows. If you have too many meetings, too many processes, too much waiting to get stuff done, I lose interest. 

When I joined Google, it was because they were a startup in Europe at that time. In the Netherlands it was a small company; there were about 20 people here! But you could see that actually on the global scale, it was quite a big company already. 

The other question is: why do you found these things? Well, for Silverflow it’s a very specific gap in the market. How do you find that gap? We knew because my co-founders and I have all worked in this space for many years. You know where the weak points of the current system are. 

Silverflow is cloud-based; being able to facilitate globalisation in that way must give you a big competitive edge? 

It does; it allows us essentially to spread across the globe at a very rapid pace. Silverflow has existed legally for four and half years; with the systems that we’re building, we needed roughly two and a half of those years to be tested and certified. There’s a lot of development, work, testing, and certification, you’re not allowed to go live if the platform is not certified. So, from a commercial point of view, we’re only about two years old. 

We have customers spread all over Europe and North America, and we’re active in four or five countries in Southeast Asia; that shows how easy it is to spread this product. 

I’ve been speaking to a lot of companies here at Money20/20 who are almost drowning in data. They have so much data that they don’t have the ability to analyse it; people must be falling over themselves for the analytics side of it. 

Of course there are other companies that do what we do. But most of those companies were originally built in the 80s, some even in the 70s; at that time, you wouldn’t design your system as a data system. Not because you didn’t want to, but simply because that wasn’t what was happening at the time. 

We had the opportunity to change the way it should be; we could be a data system from day one. And that’s what we’ve built. 

There’s so much data out there, and sometimes our customers don’t know what to do with it. Sometimes you can get to the raw data if you know what you’re doing, but very few customers actually do. So we say, “OK, listen, you can get the raw data the same, but we also give you pre-process data where it can actually have tangible effects and it’s easy to work with.” 

Think of smart reconciliation, settlement forecasting, interchange scheme fees, for example; very few people actually have that data. But having it allows for completely different business processes.  

We have a customer that provides lending facilities. They take away the money that retailers repay them from settlements. Because we can accurately forecast when and how much they’ll receive, they can pre-pay the retailers, simplifying the whole process for both companies. 

I’m sure you get asked this all the time; you’ve got an advanced degree in geophysics and now you work in payments. How did that happen? 

It’s actually a funny story. Geophysics, in the Netherlands, is very close to actual physics; it’s physics but with the geo component. So there’s lots of people you meet from physics, and one of my friends, he studied physics. 

One day he said, “I’m going to found a company with my brother.” He didn’t finish his physics degree. When I graduated he said, “We have this company, we’re not really sure what we’re doing yet, do you want to join?” They were looking for people who programmed a little bit. 

At the time, the oil price was down to $10 a barrel. Geophysicists were almost guaranteed to start working in oil and gas exploration, but with the oil price very low, people were not really being recruited. One of the oil projects which was offered was very far away in another country where I didn’t want to be at that moment.

So I told my friend I’d have a call, a discussion. They asked me if I could programme Java. No. Did I know anything about accounting? No. Could I write HTML? No. They asked me what I could do, and I said Fortran, Pascal, C and some compiler languages, essentially the physics programming languages. And they said, “Ok well, let’s go for it.” 

We were four people in the little office, that’s how it happened. In payments, we all joke that it’s like Hotel California: you can check in any time but you can never leave. Many payment people, even if they make a detour, they always come back. 

It must help having people with varied backgrounds and degrees because I imagine a lot of payments people studied finance at uni and then have worked in finance their entire life, so they have quite entrenched views. Having people from different educational backgrounds must bring lots of different approaches to problems? 

Back in the early days at Bibit we had quite a few people who indeed studied physics. Maybe it’s also partly because information science programming was bit smaller back in the 90s; it did exist, but physical was really bigger. If I look at the people that we have employed at Silverflow, I think a fairly large number of people also have physics, theoretical physics, astrophysics, or geophysics degrees. 

In the payments space, there’s a certain degree of complexity and to some extent you’re trying to model the financial world. That’s of course what you do with physics as well. Maybe that’s an attraction; but for me personally, it’s more interesting working at a payments company than in a lab. 

I think that if you’ve studied physics, you’ve gone through this complex study, afterwards you want a job where you can use your brain a little bit. We have to think about complex things, because let’s be honest: payments can be very complex.

Image: Robert Kraal

Robert Welbourn Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.