An exclusive interview with Russell Comer, founder of Paidy, the company behind the highest-valued M&A deal in Japanese venture history

Russell Cummer is the founder and chairman of Paidy, Japan's leading BNPL service.

In 2021, Paidy was bought out by PayPal for approximately $2.7 billion, making it the highest valuation ever for a Japanese venture company.

Cummer is also the founder of AltX Research, a Japan-focused Web 3.0 startup.

Prior to founding the company, he worked at Goldman Sachs' Hong Kong and Japan offices. We delved deeper into the vision of Paidy's founder and the potential of cryptocurrency payments through an exclusive interview.

How did you come to participate in the conference?

Russell Cummer (hereinafter, Cummer): Because I thought the X&KSK Fund and the conference were very unique. In fact, when I saw the speakers they invited to the conference, I was very excited to have the opportunity to participate, and Keisuke Honda's ideas really resonated with me. I am confident in building the startup market in Japan. I feel very honored to have this opportunity to participate.

What are your thoughts on blockchain and Web3.0?

Cummer: I also find the prospects for Web3.0 in Japan very exciting. I am very interested in how it will mature in the future. I believe that if a trusted and secure infrastructure is in place, the possibilities for the future will expand even further.

I am interested and excited about the potential of blockchain, but I am also paying attention to how the Web 3.0 field as a whole will mature and develop in the future.

What kind of startups are you looking forward to?

Cummer: My area of ​​expertise is the fintech payment business. I have invested in and worked with fintech startups in Japan and various countries around the world, so of course I am looking forward to that field. I am particularly interested in the area of ​​blockchain and blockchain infrastructure.

Please tell us about the key points when deciding to invest in a startup.

Cummer: It is true that there are some points to be cautious about when investing in a startup in its early phase. As Keisuke said, it is not so simple when you consider the founders, their durability and ideas, and the market, which is also a factor in making investment decisions.

I like founders who are in some sense motivated, durable, and adaptable, but at the same time, who I can coach and who strive to get better, and who have an open style.

It is not easy to become a founder. It requires completely different skills and knowledge than a doctor or lawyer who goes to school and takes a qualification exam. They always need "on the job training". I think the most successful people are those who have the attitude of actually learning and moving forward.

First of all, it's very important to get feedback and be open to coaching. In my career as an entrepreneur, I've been blessed with some very good and experienced investors. I was very lucky to have them take the time to help me get better.

So from now on, I think it's also my role to help them mature as leaders in organizations. It may be a small role.

I'm very passionate about playing that role. I don't want to be just an investor, but I want to be an investor who helps startup founders grow as people.

I don't know if that will lead to money. I don't know if it will be good or bad, but I want to be an investor who develops people.

Is there a possibility of expanding into the cryptocurrency field?

Cummer: Payday is owned by PayPal. PayPal has already established itself as a global payment company and has issued its own stablecoin.

Therefore, although we have nothing specific to announce, cryptocurrencies and stablecoins will continue to be important tools for PayPal.

We bought out PayPal because we thought they would understand our business and help us grow.

I can't give you any figures, but becoming part of PayPal has allowed the company to grow significantly.

Of course, we thought it would be possible to list on the Japanese market on our own, but when we heard the offer from PayPal, we came to the conclusion that it would be natural to join a larger platform.

By the way, in terms of BNPL services, Square acquired Afterpay around the same time. For Payday, we thought that joining the PayPal group would be a great way to grow our business.

Was there an option to list in Japan instead of being bought out?

Cummer: Listing in Japan was also an option. On the other hand, I think entrepreneurs should understand that going public is not the only way to grow a business.

This is also important for the Japanese ecosystem. Our business, the BNPL service, makes sense by partnering with a large market.

It would be easy to say now that we knew Paidy would be successful, but that wasn't the case.

Customers liked the service because there were many challenges in online shopping. I think entrepreneurs need to understand that even if you create a solution, your business won't work if there is no real problem.

When Paidy was founded, our mission was to solve the problem of cash on delivery. It doesn't matter if you are an e-commerce merchant, whether it is Amazon or a small shop.

The market needed a payment service that was better than cash on delivery. Cash on delivery is a hassle for everyone, and the problem was that there were people who used cash on delivery because they didn't want to use credit cards.

It was a hassle for e-commerce merchants, and cash on delivery was a hassle for consumers.

So we offered Paidy to solve that problem. It's as easy as cash on delivery, but it's as powerful as a credit card.

For affiliated stores, it offers refunds, deposit guarantees, and installment payments with no fees (direct debit and bank transfer only), so although it may seem like a credit card, in reality it is not.

Did you have any difficulties in expanding your business in Japan?

Cummer: At the time, there were already many companies that were doing online payments. Some of them understood what kind of payment services were needed, but few of them understood how to take on the credit risk of the service.

There were companies in Japan that took on credit risk, but I think there were few of them that understood how to build a payment service.

We were really lucky that we understood both (how to build a payment service and how to take credit risk) because we had no other choice to make our business successful.

I have experience as a credit trader at Goldman Sachs, so I had some knowledge of credit risk.

You can make a profit by taking risk. That's the essence of business. So we take risk for our customers in our own way. Credit card companies need to review documents, which takes time.

You can't get a credit card unless you pass the review before that. It takes time to use it, and it's very slow. We start by trusting the consumer.

Of course, we have our own review, but you can use it even if you don't even register. So I think that this leads to our customers loving our service.

I think it's also unique in that it can be used for convenience store payments and bank transfers. What's more, there are no installment fees even if you pay in installments. This kind of BNPL service is very popular in Europe and the United States. PayPal has expanded its BNPL business in Europe and the United States and is doing well.

What are your future prospects?

Cummer: Payday's vision is to help people realize their dreams. We will continue to grow our business, partner with more merchants, and provide experience value to make purchasing and shopping easier for consumers.

We are currently considering adding some tools to improve our customers' shopping life.

With the aim of providing a system that allows people to manage their cash flow transparently and easily, we would be happy to support people in accessing the things they want as soon as possible without worrying about interest rates.

We want to support people's dreams and self-investment through "shopping."

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