Interviewing the YC-backed, ex-Platoon Commander who is building Stripe for ex-Soviet States
Solving for 240m+ people and $1.9T+ of GDP.
Welcome to the fourth instalment of our series, "Founders at the Frontier," brought to you by Sturgeon Capital. As we celebrate the successful first close of our latest venture fund and the onboarding of institutional investors such as the International Finance Corporation (IFC) and SBI Holdings, we wanted to take this opportunity to learn from and spotlight the visionary entrepreneurs behind our portfolio companies. These founders are tackling fundamental challenges and driving innovation across frontier and emerging markets, from Uzbekistan and Pakistan to Georgia, Azerbaijan, and beyond. Our previous interview was conducted with another Georgian founder who is making logistics more efficient across the Caucasus and Central Asia. You can read that interview here.
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Meet Giorgi Tsurtsumia - He is the CEO and Co-Founder of Payze, a company that is building payments infrastructure for the 240m+ people across Central Asia, Caucasus & Eastern Europe, which represents a total GDP of $1.9T, and is one of the most fragmented payments ecosystems in the world. Payze has the opportunity to simplify payments in a previously complex, somewhat arcane ecosystem, whilst benefiting from the region being in the early innings of e-commerce adoption. This represents a state of play that echoes Stripe’s early years in the US. Payze has a first class roster of investors, including YCombinator, Global Founders Fund, Ragnar Sass (Founder of Pipedrive), Ryan Peterson (Founder of Flexport), Zaza Pachulia (NBA Champion from Georgia), ourselves, at Sturgeon Capital, and more!
We spoke to Giorgi during Sturgeon Capital’s Annual General Meeting in Tbilisi, Georgia, where we brought together 150+ participants, including: LPs, institutional investors, regional founders, portfolio company founders, and regional economic leaders. This conversation covered:
Lessons from mixing Dutch, American, and Georgian cultures in port management and how it affects the way business is done.
The history of Georgian entrepreneurship and the stories behind some of the country's most successful businesses.
Practical tips for entering new markets and dealing with the constantly changing political situations in Eastern Europe.
Important lessons learned from big international payment companies like Stripe and Flutterwave, and how these lessons can be used by other businesses.
I really enjoyed this conversation - and hope you do too.
Origins and Inspirations
Krish: We’re currently in Georgia for Sturgeon Capital’s Annual General Meeting. It only feels appropriate to start by learning a bit of the history of the country: What's your version of the history of business in Georgia? What are some of the stories that have inspired you as an entrepreneur?
Giorgi: In the 1800s, we had an amazing entrepreneurial history in Georgia, starting with being on the Silk Road route. In the late 1800s, Baku was discovered as an oil production hub, and Georgia was the passthrough for this oil. We had amazing industrial entrepreneurs like Niko Nikoladze who built the Poti port.
We also had the likes of David Sarajishvili, a pioneer of Georgian brandy and the founder of Sarajishvili, which is the biggest brandy house in Georgia and probably the only surviving large brand from that era. Unfortunately, due to the 70-year stagnation during the Soviet Union era, we don't have long-standing Georgian wine brands, with newer ones being established after the Soviet Union's breakdown.
Despite the suppression of entrepreneurial spirit during the Soviet era, it revived immediately after its breakdown in the 1990s. We have amazing stories of investors, founders, and entrepreneurs who built huge, successful organisations and listed companies in Georgia.
As for me, I was entrepreneurial from childhood. When I was 13, my friend's uncle, who was the CEO of Coca-Cola Georgia, had a big stock of Coca-Cola at his summer house. We would get it for free and sell it to other kids from a small booth, making a 100% profit margin.
Krish: In terms of the Georgian startup ecosystem, who are some companies and founders that you think people should watch out for over the next few years?
Giorgi: I can name a lot, but I would say Ana from Theneo, who is building a developer tool API documentation automation platform. She's a really impressive founder, and I think she will do an amazing job. If we can naturalise him as a Georgian founder, Salim Dhanani and Pave Bank are also worth watching. My friends at Cargon, a fellow Sturgeon portfolio company, are doing an amazing job. And Givi is doing interesting stuff at Klipy, another Sturgeon portfolio company
Krish: What did you do before Payze?
Giorgi: I was initially an officer in the Georgian armed forces, heading a team in the Explosive Ordnance Disposal (EOD) unit. Afterwards, because my educational background is in ocean engineering, I worked on a deep seaport project, leading the engineering team of a consortium that was developing and building the project on the Black Sea coast of Georgia.
Krish: What are some fond memories or anecdotes from your time working on those projects?
Giorgi: One interesting story from my time at the port project, which involved Georgians, Americans, and Dutch (mostly American developers and financiers, Georgian management, and Dutch engineers and contractors), was when I asked one of my mentors, an American entrepreneur and co-founder of the consortium, about how to deal with the Dutch in business. He said, "Georgians in business are 50% business, 50% emotion. Americans are 80% business, 20% emotion. The Dutch are 100% business." By understanding that insight, I learned how to deal with them, and they are some of the best business people I have met, even though i do believe you still need emotion in business.
Krish: When you think of your entrepreneurial career and your work on foundational infrastructure for the financial system in the Caucasus and Central Asian regions, what was the journey that led to that?
Giorgi: We started Payze as a feature, catering to a specific need of online marketplaces in Georgia. Over time, our vision became more ambitious. By being students of history, we saw the evolution of companies like Visa, which started as the Bank of America card, and Stripe, which made online payments more accessible when banks had the infrastructure but lacked a middle layer between businesses and banks.
These stories, along with those of Adyen, inspired us to dream big. Luckily, we got into YC, the incubator of startups like Stripe, Razorpay, Paystack, and Flutterwave. YC saw the niche we were targeting – one of the last frontiers where a large payments player was not available, uniting the former Soviet Union countries via our payment rails.
Since the war started, Russia has been out of our markets, and we have not yet entered Ukraine. As of February 2024, we are licensed and fully operational in Georgia and Uzbekistan, with a mission to be the primary payment rails for any enterprise business in digital products or e-commerce operating in the Caucasus, Central Asia, and Eastern Europe.
Getting in on the Ground Floor for Growth in Frontier Markets
Krish: What are some numbers that help understand the size of the opportunity you're tackling?
Giorgi: The markets we are targeting in the Caucasus and Central Asia are emerging markets with growing digital GDP, either in high single digits or double digits in the case of Uzbekistan. The population is young and growing, and the penetration of e-commerce and digital products has not yet happened. For example, in the US or Western world, the percentage of e-commerce retail is around 15-20%, while in our markets, it is close to 1%. This shows the room for growth in digital payments and online businesses.
We see a good tendency of larger foreign players entering this market, and they are our perfect potential clients and partners because we offer localised payment tools with the highest acceptance rate and most payment methods in the region. For instance, Setanta Sports was using Stripe but integrated with us to accept Uzcard and HUMO, a local card network in Uzbekistan with almost 25 million cards that foreign payment providers don't recognize.
Krish: How do the financial systems differ and how are they similar across the regions you operate in, in terms of penetration of credit products and broader institutional structure?
Giorgi: It varies from country to country. As Georgians, we culturally understand Uzbeks, Kazakhs, Armenians, and Eastern Europeans due to our shared history. Georgia has implemented many reforms over the years, and its regulatory frameworks, particularly those related to the National Bank of Georgia, are relevant for countries like Uzbekistan that are undergoing similar reforms.
Business-wise, there are differences and similarities. The banking industry is quite different – in Georgia, it's very concentrated between two large players who are technologically advanced but closed to players like us, as they don't want to challenge the status quo. In Uzbekistan, the market is more balanced, with no single dominant player, and banks are eager to work with payment service providers like us because we potentially bring volume and business to them.
Strategic Lessons: Market Entry and Geopolitical Volatility:
Krish: How do you think about market entry sequencing? What's the framework you use to determine criteria, signals, and timing for entering new markets based on your resources?
Giorgi: Initially, we had a "growth at all cost" mindset, trying to get licences, do integrations, and enter markets simultaneously. We made mistakes with this approach. Later, we changed our criteria for choosing markets. Entering Uzbekistan before the war started was a correct gamble, even though our YC partners were pushing us to enter the largest markets like Ukraine and Russia. We didn't foresee the war, but chose the third-largest and most stable country at that point.
Now, we have a straightforward path to break even in these two markets. Once we're financially stable, we'll discuss the next stages, which will be more market-driven. We plan to have revenue from day one when entering new markets, leveraging our strong enterprise merchant network.
Krish: How do you think about the geopolitical aspect, like the US using the financial payment system against its enemies (e.g., kicking Russia off SWIFT)? What's your framework for thinking about this?
Giorgi: In emerging markets, the only constant is change. You have to be nimble and adaptable to changing realities while staying compliant as a financial institution. The key is adaptability and working closely with your ideal customer base, listening to their feedback and needs. That's your North Star while adapting to changing regulations, sanctions, and geopolitical risks.
Krish: Where do you foresee things going in the future from a macro perspective, both in terms of the financial/economic war and the region as a whole?
Giorgi: Geopolitically, there are two powerhouses - China and the US - trying to assert dominance and partnerships with smaller emerging nations. It's time for emerging markets to capitalise on this and negotiate the best deals. Being on the ancient Silk Road, which is being revived, we see opportunities for tech companies to leverage government infrastructure projects.
As a financial technology provider connecting East and West, we can leverage that history. We have strong American backing and would be happy to have Asian backing as well. We've met amazing investors from Singapore, so we are looking eastwards as well.
Krish: It's interesting how you can play off different macro tailwinds to tap into funding for your projects. What features or developments would you love to see built on your platform in a 5-10 year horizon?
Giorgi: To be frank, I don't think much about the long-term future yet. As a founder, I have concrete tasks to reach financial stability. Once we achieve that, we'll have the firepower to think about what's next.
There are many potential directions - getting licensed in Europe to serve our merchant base there, introducing lending or card issuing, etc. Fintech runs the infrastructure for the world, and there will be more innovation and opportunities.
Bundling and Unbundling in Payments:
Krish: Can we do a back-and-forth where I name companies like Adyen and Stripe, and you share insights you've learned from their stories?
Giorgi: Stripe was a wrong example for us. They initially targeted everyone, and we copied that strategy, which was a mistake. In our region, you need to have a specific niche customer base and tailor products for them first.
Adyen has amazing insights. They are "inch wide and mile deep" in products - they don't have many offerings but are super professional in what they do have. They fine-tune their products with high acceptance rates, amazing data and reporting for merchants, and excellent fraud tools, all within the framework of a few core products.
Krish: What metrics matter most in your sector?
Giorgi: From a financial and investor standpoint, it's transaction volume and take rate. From a customer perspective, it depends on the customer base. Solopreneurs love quick time to market and no-code tools, but that was the wrong focus for us at this stage. For large enterprises, it's stability, acceptance rate, security, and compliance with standards like ISO and PCI.
Krish: What aspects of building financial payments apps do you find most interesting?
Giorgi: Working with enterprise merchants is great because they openly share specific business insights. The more insight they share, the better we can serve them. You learn about different business models like delivery companies or subscription-based companies.
Payments open doors to learn amazing insights about businesses, which allows you to tailor and make even better payment products. For example, during a discovery phase with a large food delivery platform, they shared a vendor questionnaire that revealed they wanted their own 3D security provider natively integrated into their app for a fully customizable UX. We implemented this to close the client, even though we didn't have it at that stage.
Krish: When you think about product development, how do you balance between accommodating specific client requests that might be too niche or onerous, turning you into a services company, versus focusing on important, repeatable, and scalable features that align with your long-term goals?
Giorgi: That's a very good question. Sometimes you become a services company when there's a merchant that's too big and you have to do something to keep them. In many cases, their requests translate to other merchants as well, because the type of merchant base you are targeting is quite similar. So if one asks, there's a high likelihood that others need it too. But you have to learn to say no when you understand that it's not a deal-breaker and a merchant is asking for nice-to-have tools. If there is a priority that brings more revenue or merchant conversion, then you go that way. We have our own methods to prioritise product development, and we follow that closely.
Negotiation and the Inner Game of Being a Founder
Krish: What are some tactics you've learned that have helped increase sales velocity when dealing with enterprise clients and getting those deals over the line faster?
Giorgi: There's a really good book called "Never Split the Difference" by Chris Voss. One of the best things is that you can't push too hard with large merchants; they have their own buying and decision-making processes. You can have very good hooks and insights to push the process faster and always have control over the communication. Never leave the communication without having a hook or clearly outlining the next stage or action step between the two of you.
Krish: What has the emotional journey been like for you as a startup founder?
Giorgi: I joke that the emotional roller coaster of a startup founder, or an entrepreneur in general, is the same as the emotional roller coaster of a drug addict. The highs are super high, and the lows are super low.
Krish: Any final advice or prompts for startup founders reading this?
Giorgi: To any startup founder who's struggling, I would say push on. Things will get better, and having that belief is most important.
Krish: I agree. I like Earnest Shakelton’s quote on this: ‘By Endurance, We Conquer.’ Thank you so much for taking the time for this interview!
Editor’s Note: Endurance can be fun - as seen by this photo of the Payze team :)
