Meet the fintech founder fighting fraud. Credit card transactions carry little information about whom customers are paying. This makes it hard for banks to know whether they’re sending money to a bakery, a marijuana dispensary . . . or a fraud ring. “Banks are relying on data infrastructure from the 1960s,” says Oban MacTavish, who cofounded Spade along with Cooper Hart, 29. Through data partnerships, AI and human review, the three-year-old New York City–based startup builds expansive databases covering tens of millions of businesses to provide banks with precise details about the merchant, business category and location. The information is valuable to financial institutions in the complex battle against credit and debit card crime, which, according to Nilson, cost banks $36 billion globally in 2023. Today, Spade is an 18-person outfit processing more than $1 billion in monthly transactions for over 20 customers, including Stripe and Corpay. It has raised $16 million.
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Category
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LifestyleTranscript
00:00I think a lot of the time when you're starting a business, your first thought is like,
00:03you look really far ahead in the future. What could the future look like? I wanted to make
00:07sure that when I built a company, the first product was going to be tackling a massive problem.
00:15Thank you so much, Obin, for joining us today. Why don't you start off by telling me a little
00:18bit about yourself and what you are building with Spade? My name is Obin McTavish. I'm the
00:22co-founder and CEO of Spade, and we're building data infrastructure for banks. And what that means
00:27is we can tell any bank in the United States exactly where and with who a card payment took
00:31place with in under 50 milliseconds. And we help them stop fraud. We help them make sure your money
00:36for your rewards actually gets deposited in your bank account and all sorts of other cool stuff.
00:40My background is a little all over the place. I worked at a SaaS company during my summers in
00:44college and traded stocks. And then when I graduated, I was kind of debating between
00:49becoming an investment banker and going to the dark side or doing something a little different.
00:53So I actually started my first company right out of college. We were building vertical SaaS for
00:58wealth managers, and it was a pretty good experience. I learned a lot about what not to do.
01:04COVID-19 sort of, you know, led to a situation where the company was kind of winding down,
01:08and I decided to step away. And I was actually pretty convinced I wanted to go down the
01:12traditional finance route. But I ended up finding the opportunity that would be Spade
01:16right at the end of 2021. And then, you know, raise some money and went off to the races.
01:20It's a super exciting journey that you've had. There are multiple kind of phases of your life
01:24as a founder. In the financial space, especially in the credit card space, though, this is something
01:28that everybody almost deals with on a day-to-day basis. What pointed you in the direction that
01:32this is something that you really wanted to tackle from a business?
01:36It's interesting. I feel like I was talking to a lot of fintech companies
01:40when I sort of left my last company and was trying to pay my bills. I was literally consulting with
01:44these people, trying to help them out. Like, oh, I'll build you, you know, sales decks. I'll help
01:48with the financial model. Just sort of, like, hustling to literally to make rent. And I kept
01:53hearing the same problem. They were like, oh, the data we work with is so terrible. Like,
01:57it's shocking when you think that your bank doesn't actually know where you're spending your
02:00money. Like, when you pull up your app or, you know, maybe your online portal, depending on who
02:05you bank with, like, sometimes that data you get where it's a description, it's like a jumble of
02:09characters. That's all the bank knows, too. Banks are relying on literally data infrastructure from
02:15the 1960s. Like, this is bits and bytes being moved by Visa and MasterCard and all the merchants.
02:20And it's, you know, it was shocking to me. And I realized that, like, if you look at how big the
02:24card market is and you look at how big the problem is and all of the individual issues it creates for
02:29consumers and businesses and the people who, like, the downstream of the banks, for me, it was just,
02:33like, if I was going to start another company, I wanted to tackle a massive issue. And Spade
02:38fundamentally felt like an opportunity to do that. What are some of the initial steps that you took
02:42to go down this route, realizing that this was, like, an issue in your own day-to-day life and
02:46then turning that into, like, a full-fledged business? There must have been so many steps
02:50along the way. So what were some of the initial ones that you kind of embarked on? I wish there
02:54was, like, a scientific method to this, but I think I'd be lying if I said there was. It was
02:58really just a slew of conversations with other really smart people who were trying to solve a
03:03problem. And I called up one of my co-founders, Cooper, who's a good friend of mine from high
03:07school, who's a software engineer, and I gave him a call. I was like, hey, how hard would it be to
03:12build an API that takes in these, like, strings of data from banks and gives them a logo? And that's
03:17all it was. He was like, oh, that sounds like a weekend project. I'll just do it, because he also
03:20was underemployed at the time, I guess would be the way to say it. And, you know, it just got spun
03:26up. And then I was just messaging people on LinkedIn, my contacts, just like, hey, you want
03:30logos on transactions? Like, we weren't even an incorporated business. We were just, like, two
03:34guys sort of giving something a shot. And at that point, I think it was just about seeing how much
03:40demand there was. I think whenever you put something in the market, you're going to pretty
03:43quickly feel some type of demand, whether it be a lot or very little. And for us, it was just like,
03:49oh, there's a lot of people who want this very simple thing. And as you talk to your customers,
03:52you're going to hear more, they're going to say, hey, like, what if instead of just a logo, there
03:56was an address and a phone number and all this other information and sort of just snowballed
04:00into what would become Spade. I wish it was like I knew from the start, but I think even right
04:06before I was raising my pre-seed, I didn't, I wasn't convinced there was a whole business there.
04:12I actually had to get on a call with a founder of a much larger company. And I started talking
04:17about what we did. And I actually said, I remember super clearly, I was like, yeah, but you guys
04:21have already solved that problem, you know, so I'm not sure what I really want to do with this.
04:24And he's like, no, no, that's a problem for us too. And they, you know, they were, you know,
04:27unicorn that over a billion dollar valuation, 400 plus people, like very big company. And I
04:31think that was sort of the moment I was like, oh, I had assumed that this was a problem for
04:35really small businesses, but not big businesses. And I think it was actually the opposite where
04:39larger companies actually have a much bigger problem. That's really sort of the path we've
04:43gone down since then. So are the larger companies, the ones that you're really targeting today,
04:46or how has your like approach and, you know, your target consumer base, your target audience
04:51changed over time? Yeah. So we really focus on selling to, we would describe as like mid-market
04:56and enterprise. So think like card issuers, like we have S&P 500 company as our customers,
05:02we have very large fintech companies, like, you know, over $50 billion valuation kind of people.
05:06And then we also have sort of the mid-market where, you know, they didn't just start. I think
05:10there's a lot of times you'll find someone like who just came out of YC or just raised their
05:13preseed round. They're generally not the customer base for us. We can definitely work with them,
05:17but they're usually more concerned about growing their customer base or, you know, making sure
05:22they have like, they're going to survive and be able to pay their people, right? Like they want
05:26to raise more money. We're really focused on sort of that optimization problem where you get to a
05:30scale where fraud is a really big problem. And I think, you know, fraud's only getting that bigger
05:35for both like the banking universe and the fintech companies. So that's where we focus.
05:39And speaking of like automated things and kind of making, you know, our day-to-day lives so much
05:45easier and so much more automatic with AI being such a hot topic in the business industry,
05:50especially in the investment space. How has AI impacted the way that you're running your
05:55business? Whether that's like the technologies that you're building and bringing to the table
05:59or like your day-to-day life as a co-founder? I don't use AI much personally. And maybe I'm like
06:06maybe the one person who's going to be talking about that if you speak to a lot of founders. But
06:10I think there are really specific areas it's good at. And we've found some really, really cool things
06:15inside our own business where they would have previously been done by a person, like a really
06:21expensive data scientist who would like go through the data and make sure there's no mistakes.
06:25Or, you know, if you throw somebody a list of businesses and ask them, hey, can you like
06:30classify these within a set of categories? Like AI has a lot of, it's weird to say skills,
06:37but like has a lot of areas that it creates a lot of value. And I think thankfully we're in
06:41the business of dealing with lots of data and AI can create a lot of efficiency there.
06:45And that's sort of, I think that's how it's impacted us the most. But I think
06:48I get excited because we're on the beginning of a very long sort of growth curve of AI demand,
06:54especially in the enterprise space. Like banks are still kind of hesitant and that's okay,
06:58but there's going to come a time when banks who have the most data about their consumers
07:02are in need of better information to make their AI actually effective. Like any sort of artificial
07:08intelligence or model or ML is only as valuable as the underlying data. And I think we're really
07:13aligned with that and seeing as we work with more banks, the value they're getting out of their sort
07:17of like second order effects of that data is where we're really seeing an impact. So we're really
07:22excited. Do you see any hesitancy, especially knowing that there's like so much consumer data
07:26and people are giving their own consumer data to these banks through these transactions,
07:31especially when it comes to AI and kind of like scraping or other pulls of information,
07:36is there hesitancy there from the banking side or the consumer side in terms of what you're building?
07:40Well, I think the beauty of it is, is we don't accept any PII. In our system, we have no concept
07:45of a consumer. And there are businesses who do that, who help banks like track consumer behavior
07:50and like help, you know, if someone steals your credit card, you want to know that someone stole
07:53your credit card immediately. But that's not at all where we specialize in. We're really focused
07:58on the merchant portion. So we don't even have the concept of a consumer. So thankfully, it actually
08:02makes things much easier when we're to go to a bank and we're like, hey, we're working with you,
08:05but like do not send us any PII, don't send us card numbers, names, et cetera. Like that just
08:09isn't where we at all interface with them. And I think that's honestly, it's nice. I think a lot
08:15of what we're doing is about helping the bank and helping the end customer. And I think making it
08:19in a sort of compliant and PII free way is unique because I think we all have had the experience of
08:25somebody sort of taking our data and sending it somewhere else we weren't interested in it being.
08:30Yeah, definitely. And then in terms of the conversations that you're having with
08:33investors, whether it is surrounding AI, which so many of them are interested in boosting right now
08:38in terms of the places that they are investing money in, but also just in sharing your story with
08:43them, what are those conversations looked like and why was going the investor route even something
08:46that you decided to do in the first place? Yeah, I think when you're building software
08:51infrastructure, like if you're trying to replace an old system, like there's literally a data
08:56protocol from the 1960s that we're not competing with, but we're certainly augmenting. And the
09:00reality is, is you can't build, building a small version of that doesn't really work.
09:06And engineers are really expensive, especially the good ones. And for us, it just made the most
09:10sense to say, Hey, like let's invest, let's raise capital from venture capitalists and really build
09:15something great. That's going to have a large impact and can operate at the scale that's
09:18required. I mean, there's over a trillion card transactions every single year. That's a really
09:24big scale. You can't have a system that's going to break or maybe like not be available. And we
09:28have customers relying on our data to make informed authorization decisions. So like when
09:33some of our customers, their end customers are swiping their credit card in that little window
09:37where it's like processing, that's where we operate. And if we're not available for them,
09:40they're going to make the wrong decision. That could result in fraud. It could result in a false
09:43decline, which everyone hates. So for us, it just made sense that we wanted to bring in capital
09:49and position ourselves as like a player who could support the enterprise need.
09:54So throughout that journey, whether it's an investor that you guys have brought on,
09:57some of your co-founders that you've worked with, has there been one person that without them,
10:01you would not be where you are today? This is going to sound super cheesy, but definitely my
10:06wife. I think as a founder, like, you know, there's lots of amazing investors on our cap table. And
10:12like, obviously my co-founders have been instrumental in building the business, but I do
10:15think there's like a human element of building a company that often gets forgotten where, you know,
10:20the reality is, yeah, even if you spend 10 hours, 12 hours a day on your company, there's another
10:2412 hours in the day. And I think I'm lucky enough to have a partner who's been there from like this
10:29start. She was, we had just moved in together when we were raising our pre-C and she was sitting
10:35on a couch and like during COVID and like a tiny one bedroom box apartment studio, probably, I think
10:41technically, but, and was listening to me pitch and pitch and pitch. And I think having a partner
10:45who's there to support you in those times and like, because startup journeys are not up and to
10:49the right always. And having someone at home who's able to like support you and like, honestly be
10:54like a sounding board who's been there, who knows you better than even probably your co-founders
10:59has been really lucky for me. And I wouldn't be here without that.
11:01Is there something that you do to unwind, to like get back to that other 12 hours of
11:06the day when you have had like a crazy work day or something stressful that's happened with the company?
11:12I like to cook.
11:13Nice.
11:14I think that's like a big part of my way of sort of like taking a step back, which is
11:19tough in a small New York apartment sometimes. But yeah, I think cooking is probably the biggest
11:23thing for me. It's like a way to like de-stress. It also is nice. Like, you know, it's like a share
11:28a meal with friends. Like we even started doing like a weekly dinner with some of our
11:32neighbors who live in our building. And like, that feels really amazing to be able to like,
11:35just not think about anything. You put your phone down, you just like cook, make dinner,
11:39get to sort of relax after the fact with your family and your loved ones or whomever. And I
11:42think that's probably my sort of number one de-stressor. I've been baking a little bit,
11:46but I'm not as, I'm not as proficient. I'm definitely more of a cook guy.
11:49Yeah. Baking is totally a science. I feel like it's hard to get it without an exact
11:54recipe for sure. And I just want to go back. You mentioned there, you and your wife have,
11:58you know, kind of been through this journey together. Even in the early days of this company,
12:03you mentioned at the beginning of the interview that you had another company prior to this that
12:07you really learned a lot from. What were some of those lessons that you have taken into spade,
12:12whether that's things that you definitely want to repeat or definitely don't want to repeat?
12:16Yeah. I think the number one lesson was that I, if I was ever going to build a company again,
12:20I wanted to build a company where the first product was a big opportunity. I think a lot
12:24of the time when you're starting a business, your first thought is like, you look really far ahead
12:28in the future and you say like, what could the future look like? And that's what you build
12:31towards, which makes sense. But the reality is to get there, you need to sort of cross a lot of
12:35really difficult, you know, rivers. I guess it's a weird analogy, but you know, I think for me,
12:41I wanted to make sure that when I built a company, the first product was going to be
12:44tackling a massive problem. If I could just do that really well for an extended period of time,
12:49we would get to a scale to then sort of enact whatever vision we had on the world.
12:52And I think that was like the number one learning lesson for me, because with the first company,
12:57we, you know, we were always trying to figure out like, what's that next product? Like the
13:00market we were in was a little small. How can we sort of like find ways to move to a different
13:04market? And I was like, no, I think this is just like, I need something that does one thing really
13:07well for one group of companies. And we're just going to do that over and over again. That was
13:11like the number one thing. And I think the other piece was just, I think I certainly learned the
13:14lesson of like, just being okay with the ups and downs, like Spade as a whole on compared to my
13:21last experience has been much easier. I think partially because choosing a different, you know,
13:26target market and a different product. So it's really hard to compare the two, but fundamentally,
13:30like with, I really experienced a period of like with the first company, like, okay, like no one
13:36wanted to buy our thing. The market was small. There were only so many people, like really like
13:40every step of trying to build something and just like smashing your head against the wall being
13:43like, oh my God, like the, we just can't break through. People aren't interested in this or they
13:47don't have the money to buy it. Like it really was a lesson in like persistence. And I think
13:51it's a really positive one because when things are easy, it's really easy to forget how hard it was,
13:57you know, a couple months ago, or when you, you know, we're trying to raise that round and you
14:00weren't sure if it was going to close. Like I've been through both sort of sides and I'm really
14:03happy. It's nice to be on the, on the good side, but I, you know, I'm very happy that I got to
14:07experience more challenging, maybe experience of building a company that very few people were
14:12interested. Yeah. And I, on the other side of that, if you have throughout that experience,
14:16one like big piece of advice for young founders today who are in whatever phase it might be of
14:22scaling their company, what would it be? I think just, just, just launch it. I think a lot of
14:26people get caught up in this idea of like, it needs to be perfect. But I think Spade was born
14:32of a solving a really small problem for a group of people before we were incorporated as a free
14:37product for businesses and just talking to customers and doing the thing. And I think so
14:41many people got caught up in this idea that there's like a perfect path and they're going to
14:44write it all down and they're going to do it. But, you know, it's never, I don't know anyone
14:48where it's worked like that. And I think really just, just launch the product, do the thing,
14:52stop waiting, stop sort of waiting for a sign. If you want to do it, you should just try.
14:56Definitely. You mentioned too, and you know, throughout this building process of yours,
15:01not wanting to look too far ahead in the future, focusing on the now, but in the future, in the
15:07next one to three years, like what do you think is the future of the financial space? Are there
15:11any like trends that you're really tapping into or, you know, parts of the market that you're
15:15really trying to take advantage of knowing and trying to predict in terms of what's coming?
15:21Yeah. I think cards aren't, I think my first thing would be like, cards aren't going away.
15:27I think if you're sort of deep in the FinTech universe, a lot of people will be like, well,
15:31there's like pay by bank and there's other sort of methods of payment. And I think that's sort
15:35of the first thing, obviously I'm kind of selling my own book there, but I do think that's like a
15:38fundamental truth and it's only growing. I think the, another big trend is just like fraud. Fraud
15:43is up every single year. It's easier to commit fraud. More consumers are suffering from it.
15:47And I saw a really interesting statistic that literally said the amount of card declines year
15:53over year is up, but the amount of card fraud is up too. So banks are trying to stop fraud,
15:57but they're doing kind of a, you know, that's called a so-so job. And I think we're really
16:02obviously tapping into that by focusing on solving that problem for customers. But I think
16:05in the future, I think we're definitely going to see an improvement, like AI and MLs is going to
16:10come. It's going to take a while. I don't know if it'll be three years, given some of the financial
16:13institutions we're talking to and the hesitance there, but I think that sort of transformation
16:18is going to be there. And it makes me really excited because I think, you know, if you're
16:22going to be building something on top of your data, it's only as good as what you're putting
16:26into it. And I think we've all had that experience where your bank is like, here's this new thing,
16:30this is your spending breakdown. And it says you spent a thousand dollars at bookstores and you're
16:33like, no, that's Amazon actually. It's just completely wrong. So I think that's one of
16:37the things like AI and ML are on the way. And I think we want to be positioned to take care of
16:41that when it comes. Yeah. I'll keep it at bookstores for now. That's better. It makes me
16:45look better. My last question for you is being part of this, you know, under the age of 30 cohort
16:52in business is kind of a rare thing to do. What do you think being a young founder, being an under
16:5830 years old founder means to you? I think it, I mean, it's interesting. I think you got to get
17:04comfortable talking to, and like listening to people who have a lot more experience than you,
17:07because I think so much of the time that every sort of challenge you face is building a business,
17:12being a founder, reaching out to people you trust. And generally you want to talk to people who've
17:15done it before. Like it's good to surround yourself with people who are experiencing
17:19similar things and you can sort of like ruminate or like complain together. But I do think there's
17:23a, you know, I've felt so lucky to have people surrounding me, other founders, people who've
17:28done it before. We're a lot older. So I think if you're going to be young, you got to be humble
17:31and willing to ask for help from people who've done it before. Yeah. Love it. Well, thank you
17:34so much for joining us today. It was great to chat with you.