Everything You Wanted to Know About Involuntary Churn
with Butter Payments’ Vijay Menon
One of the great mysteries for me is why so many otherwise sophisticated companies don’t focus on involuntary churn. Also known as passive churn or accidental churn, involuntary churn happens when a payment issue raises a flag that causes a merchant to cancel a customer’s subscription. In 70% of these cases, there is no fraud, so the company is literally turning away excellent customers.
Involuntary churn routinely impacts about 10% of Accounting Rate of Return (ARR), according to some estimates.
In this episode, Vijay Menon, founder and CEO of Butter Payments, and I discuss what drives involuntary churn, why so many companies underinvest in this problem, and some key tactics to drive revenue growth through better payment management.
The following interview is adapted from my podcast, Subscription Stories: True Tales from the Trenches.
Robbie Baxter: Vijay, welcome to the show.
Vijay Menon: Wonderful to meet you, Robbie. Thanks for having me.
Robbie Baxter: I’m really excited to have you as a guest. Because we’re going to dig into a topic that I think is so important for so many subscription professionals which is involuntary churn.
You’re a real expert on this. How do you define involuntary churn?
Vijay Menon: We like to call it and it’s known among the industry in many different ways and think involuntary churn as the most obvious semantic way to describe it, but we describe it as accidental churn and I’ve heard it described variously as passive churn or billing churn but I think accidental churn kind of encompasses that the best because the type of churn that I’m focused on solving and that any subscription business should be focused on solving, is when a user truly has the intent to pay a willingness to pay but they don’t have an ability to pay and that’s the way that I would define involuntary churn. It’s the type of churn where you’re saying, “Hey Netflix take my $15, I want access to the service and they can’t get it because the card response comes back as a payment failure or transaction failure, and because of their inability to actually go get their payment from you get churned from the service and so the right way to think about involuntary churn is basically the opposite of how you’d classically think about churn in a classical churn scenario. I don’t want the service anymore and that’s my active churn, and that’s me saying, “Hey I don’t want Netflix. $15 is too much I paid for the times when it was $9,” and as a result, I’m going to call customer service or go to a downgrade cancellation flow, we are not talking about that when we talk involuntary churn we’re talking through I’ve put my card on file or my payment method on file you can’t collect my payment and your inability to process my payment is resulting in me not having access to the service. So that’s how I think about involuntary churn.
Robbie Baxter: I love how you explain that especially that bit at the end where you said, I want to pay but you are not able to receive my payment as the vendor or as the merchant and therefore you choose to end the relationship with me. What might be a reason for that to happen? Is the customer in the scenario a fraudster? Or are there more innocent ways that this can happen to somebody who actually does have the ability to pay but somehow the wires are getting crossed?
Vijay Menon: It’s a great question because there’s no intentionality on either side and I see that the world tends to view payment failure as a pretty binary problem, right? It’s either very black or very white. The world today views payment failure more on the side of well any payment failure must be genuine payment failure. It must be fraud or if it’s not fraud the user probably has to call up their bank and go get something fixed, they don’t acknowledge that actually, there’s an in-between world to your point Robbie, which is that there’s innocuous payment failure, so not every payment failure is a legitimate user trying to pay for the service. However, what may surprise you is that roughly 70% of payment failures across my experience on large subscription platforms and we’re talking all shapes and sizes, but generally 100 million dollar plus and recurring revenue is a good kind of full chrome to think about 70% of the payment failure on those platforms is actually a genuine user trying to pay for the service, who’s been caught to use your words with the wires crossed and it can be anything from a configuration error with how payment is formatted and presented which can be done a variety of ways to even a very, very small vagary of how the system is set up, as you think about an example and where I got my forte into this world not by thinking super actively about it but by realizing that over at Microsoft back in 2013 we did something that was very engineering optimal, which was to run cron jobs or batch payment billings and so we would say, “All the users who signed up for Xbox Live and signed up today called on April 10th, they’re going to get billed on May 10th and we’re going to run a billing queue at 12 noon local time in Seattle, Washington.” Well, Robbie, if I’d signed up from India it wouldn’t be 12 o’clock local time when they run my card it would be 1:30 in the morning and if the State Bank of India has issued this card they’re wondering what I’m doing swiping an Indian issued card in the United States at 1:30 in the morning and they’re thinking that might be a fraud and you would want them to think that might be fraud because I don’t want someone swiping my card in India at 1:30 in the morning at a gas station and as a result of that Microsoft’s getting a fraud response, and when they get that fraud response which is the result of optimal engineering design and the engineering manager will tell you the right way to run these payments is to build a cron job and consume the workers as fast as possible. So doing nothing wrong from a technical perspective but because of the way the payment system is set up they’re actually falsely flagging a bunch of payments and those are legitimate users. We’re going to wake up in the morning and realize they can’t play Halo anymore and wonder what’s going on and they can’t call the State Bank of India to fix that, Microsoft’s going to fix that for them and it turns out there are dozens and actually hundreds and thousands of reasons why these payments fail. But to answer your question directly about 70% of those payment failures are very innocuous, scenarios like this, and about 30% are legitimately fraud or card testers or not even necessarily nefarious, it might just be that a card got stolen well, I don’t want that card to be rerun if it was stolen so we have to be thoughtful around distinguishing between those cases that are remediable and fixable and innocuous and those cases that aren’t. But I think the industry basically views it as one way or another, and the industry mostly views a hundred percent of those payment failures are unfixable and that’s something that we need to change. We need to start to realize that the majority of payment failures are innocuous and fixable and we need to be thoughtful about how we distinguish between those two cases.
Robbie Baxter: So you started a company Butter Payments to dig in on all of the many reasons that involuntary churn happens, can you walk me through it? You alluded to your time at Microsoft and working with the Xbox team, but I know you’ve worked at several different places where involuntary churn has reared its ugly head can you walk me through your journey of discovery that led you to the point where you said, “I need to build a solution to solve this problem.”
We need to start to realize that the majority of payment failures are innocuous and fixable. — Vijay Menon
Vijay Menon: Absolutely and it’s a journey that spans across three different subscription organizations. In fact, in all 3 cases, 100 million dollars plus recurring revenue these 3 particular cases happen to be B2C subscription businesses but over the years I’ve found that it’s not just B2C subscription businesses that have this problem it’s B2B self-serve businesses where there’s a lot of card volume on sign up. So things like Zoom, Figma, Notion, etc. and it’s also direct-to-consumer brands. Right? That ship boxes where actually you can imagine a payment failure is more salient because in a digital world. If a payment fails, we can continue giving you access to our product for a while without any physical repercussions, if I’m slowing diapers, I’m going to notice the diapers are not here in 3 days and we have to fix that problem quickly. So it applies across all those 3 scenarios. But to come back to my specific experience you mentioned it’s a journey of discovery, right? And I can imagine similar to your case, you didn’t wake up in the crib and say, “Hey, one day I’m going to be the world’s payment and subscription expert,” but you got it over a process of discovery, and I didn’t wake up thinking from the crib that I was going to become premium payments expert but my path to getting there was involved with a couple of core interests for myself growing up those would be sports and video games. Sports got me very deep into statistics and understanding the why making arguments for sabermetrics and other kinds of tools and I ended up getting a degree in statistics and the video game aspect brought me to Xbox for my first job. Between 2013 and 2016, I started diving deeply into the causes of churn on the retention side from a product perspective and at the time the industry was focused heavily around the temperature and we talked about upfront which is active churn, which is to say, users will be stickier on a subscription service if they use that service more, this is true if you’re more engaged with playing games or adding friends or hours of activity you’re more likely to continue to stick on Xbox Live just as if you watch 50 hours of movies a month you’re more likely to stay on Netflix than if you watch 50 minutes of movies a month and so teams should be doing good work here. However, what was overlooked was that actually the leading driver the single biggest cause of churn was involuntary churn or accidental churn and at Microsoft, it was roughly 20% of the overall churn. I moved to Dropbox before their IPO back in 2016 and the first thing I looked into of course was the accidental churn or the involuntary churn component and this might blow to minds. But I now see this is normal across the industry at Dropbox, at the time more than half of the churn was involuntary or payment failure, it’s about 55% and I moved later on in my career into Script, and at Script another 100 million plus subscription service and consumer side. Another massive black hole when it came to involuntary churn to the point where roughly 40% of our transactions were being declined due to payment failure reasons at a transaction level and this is my process of discovery and to say well, if these 3 large 100 million dollar plus B2C subscription organizations have not gotten a full handle on solving accidental churn and the biggest singular thing they’ve done within the organization to drive revenue is to fix this problem there’s a solution to build at scale here, and the market is not caught up, and that led me on my journey to building Butter.
Robbie Baxter: There are still companies that are not focusing on involuntary churn and from my perspective working with businesses that are often trying to optimize their existing subscription model and particularly in the last year or 2, retention has been such a big focus for so many businesses it’s baffling to me why, organizations wouldn’t do a deep dive into what’s driving this accidental form of churn of customer loss, what are the reasons? Assuming that these people, Xbox, Dropbox, Script smart people work there, people who want to make money, people who are trying to do right by their shareholders. What are the reasons that you see for why people don’t invest in this accidental churn?
Vijay Menon: Well, it’s a great question, actually very multi-layered. I would say this to begin with and it’s kind of as you’ve kind of heard the experience here, I myself didn’t actively choose to get involved in the payments or involuntary terms space. So I think the first reason is that every organization would rather outsource payments because they’re smart and their brightest people want to work on stuff that is core to the product and the value prop. If I’m at Netflix I probably want to work on sourcing fantastic content, or if I’m on the technical side I probably want to work on building fantastic machine learning algorithms to recommend great content to Robbie and Vijay. I probably don’t come to Netflix to say well, I want to work on transacting payments and similarly, it’s Spotify I want to work on music and similarly, if I’m over on the Xbox team, I want to work on building a great video game product and getting more involved in that and so most organizations are going to outsource payments and they’re smart as people aren’t necessarily even want to work on payments in the first place and so if they have the opportunity to do that they will do that as a person that has led back end teams across, not just payments but I also led back in teams across search and recommendations. I can see that firsthand when we go to outsource search or go to outsource recommendations the organization throws some bloody elbows up because the people in-house want to work on that stuff it’s core to their identity and their algorithms nobody is fighting to own any part of the payment stack they’re ready to outsource it, so I think it’s interesting there first that just foundationally makes sense from a human perspective. But what I would say beyond that and to get even more layered into like, why organizations don’t look at it, the first piece is they need to realize how big the problem is so most organizations view failed payments as like a minor cost of doing business then I have a conversation with someone that’s in a large subscription organization even all the way up to the finance suite. They’re kind of broadly aware of involuntary churn and failed payments they don’t have a clue how big it is, they think it’s roughly 1–2% of the top line and maybe you can get a little bit back but the majority of it has been fixed and they just assume that there’s not a whole lot they can do there now the reality is that when I go into organizations, and I pull data directly from their payment service providers, 95% of cases I find a minimum of 10% of the organization’s top-line revenue has gone into a failed payments bucket in the last year. Be very concrete about that, it’s a hundred 1 million dollar business 95% of the time sight unseen, I can guarantee there have been 10 million dollars and failed payments volume in the last year at an invoice level and I think if there were broad awareness of that then everyone would say, this is the number 1 thing I should be doing right because if I can say “Hey, 100 million dollar business has 10 million and failed payments and we can probably give you 5 million back” and I can say that and I am saying that then I think most organizations would say that 5% ARR lift is probably the number one activity. I’m going to prioritize this year and again I can say that having been on AB testing teams and product teams in the past and growth teams in the past. If we ran an experiment that drove top line ARR by half a percentage point, it was the best thing we did all year and we’re going out to Alexander’s and we’re having a big meal and so if you can come in and say well, actually involuntary turn could be 10 times that impact if you focus on it correctly and you prioritize it correctly. I think the market would say, “I need to prioritize that” but I think the first and most foundational answer to your question of why companies aren’t really running after it, is they know it exists but they just don’t think it’s that big because teams don’t really look into that and similarly, again, as you go back to search for recommendations teams everywhere they all look at latency and they look at recommendation success and the metrics are kind of the same across the board. Payments teams across the board they’re not the same, sometimes they don’t exist, sometimes they’re the biggest organization but sometimes they’re just one person and sometimes we don’t even track the core authorization metrics. So that’s scratching the surface but I would say foundationally it’s an awareness problem and then even when you get past the awareness problem it becomes an incredibly difficult problem to solve, and I’m happy to spend a lot more time there diving into that but that’s the very high level.
Robbie Baxter: No, that’s super helpful and I would like to go into the specifics. Remembering that there are a lot of lay people here in the audience who may not be in the payments team, but might be more generalists or leading other parts of the organization. What are some of the tactics that chip away at a big involuntary churn number? I understand that it’s a lot of little things that add up to that, that 5% of ARR, what are some of those elements?
Vijay Menon: I would say several things, the first thing that makes it particularly difficult to solve is that there is no 80–20 rule for solving failed payments. When we talked up front I kind of brought up my AHA moment and my AHA moment was wow, these engineering optimal cron jobs actually result in some payments being flagged for fraud and we can anticipate this and see this in our minds because we can say, “If somebody did take my card and selected it at 1 in the morning I don’t think it would go through and so we can think about that particular use case. But, like I said, there are lots and lots of reasons why payments fail so if you’re trying to chip away at the problem I’ll start to break it down a little bit. The first thing we need to do, we need to identify the volume of payments that have failed in the last year, then we need to go categorize them and at a very high level we can put them into 2 categories we can say hard errors, and these are things that should not be retried and cannot be fixed and hard errors include things like a stolen card, hard errors include things like actual fraud when we see those cases and we get those error codes back. We don’t want to try and fix that, you want to let that drop not fixable so then I need to look at what portion of my failed payments are soft errors and those are things that we can fix, soft errors are things like processor error, well, if there’s a processor what do we do? We don’t want to wait a week to rerun the payment, we probably want to do it in a couple of hours so just differentiating between those two, soft versus hard is somewhat difficult as we talked upfront roughly, two-thirds of payment errors are soft and retriable but it’s going to depend on your business if we need to go look into your data.
Robbie Baxter: The example you gave at the beginning is the Bank of India midnight charge. Would that be a soft error or a process error, because of the time of the processing?
Vijay Menon: Right and it’s tricky to go make those calls in real time because there’s so much volume that’s coming in right and in particular, if you’re a very large enterprise you might get 50 failed payments just in the last hour alone so if a human is going in trying to categorize and do all of that, it’s really difficult to do and so ultimately what you need to do is build a system to figure that out in real-time to address that in real-time, which is very difficult. Well, let’s assume that you don’t have a machine learning function in-house and you don’t have a cloud platform to make those decisions well, what else can you do? The first thing you would do if you’re savvy is go into your payment service provider like an add-in or a Stripe or a Braintree and just start to look at the error codes right, look at the reasons that are being given for why the payments are failing and you can again make some progress here, so you might find again some of these things that say processor error or some of these things that say generic failure. Some of these things might say stolen cards, some of these things might say card have raw codes associated with them, and the reason why it becomes really difficult to make sense of all those error codes is because each of the payment service providers are rolling up the error codes from the downstream issuers, and when I say the issue is I mean the banks and when I say the banks I’m talking about Wells Fargo, Chase, PNC, Banamex, BBVA, Bank of America, Bank of Colombia, Carton Care, there’s over a thousand different banks in the world the problem is all those banks have their own rules and the problem is that those rules are not unified so when you go into a dashboard for instance within Stripe or an add-in and you see something that says generic failure you are not able to make sense of that because it means something different depending on whether that payment failure came from an issue or in France versus an issue in Colombia and so high level that it gets really difficult to break down and now, if you actually do understand the volume of failed payments, you can differentiate well between hard and soft and you can start to understand the actual issuer level error response. This is when you can start to think about the strategy. The strategy is the timing and the metadata timing, knowing what time to run the transaction to maximize the likelihood of success. Metadata means what field should I present with the authorization? And if you’re wondering, what does that mean? Well, there are actually up to 128 different data elements you can present when you’re transacting on a card most businesses are presenting it one way. But let’s just take one of those elements, for instance, a zip code well, if I go look at a Barclays-issued card from the UK the zip code format is different than when I’m looking at you and I are both in the Bay Area and we have Chase issued cards well, there are 5 digits involved there or depending on how much complexity we want 5 digits plus 4 digits. So we could do something like 9, 4, 1, 1, 5, or it could be formatted as 941–15–1719 to go 5 plus 4. But then, if that was a Barclays-issued card it would have to include some J’s and some C’s and some K’s and some characters so now there’s that element to consider and it gets really hard and really fast to consider all that complexity for every payment, failure in every case from every issuer, so there are ways that you can start to address the problem and start to get better and the first step, of course, is to say, “Well let me just try and group the world into soft versus hard. Let me try and do a little bit better on the soft errors and maybe getting a little bit better means saying well at least I’ll run the cards at noon local time and I’ll try and do a little bit of that intermixing to look into my data to see if there’s more to uncover.” But you also get to a point where you say if you want to get an A plus on the test, you’ve got to build a machine learning platform to go figure some of this stuff out.
Robbie Baxter: Got it. I know you guys talk about friction. Free fixes. What is a friction-free fix and what doesn’t that include in terms of this big pool of rejected payments?
Vijay Menon: One of the things that you want to think about when you’re thinking about friction-free fixes is that it’s part of the canonical knowledge on payment failure is that when there’s a payment failure event, I need to text my user, I should email my user, I should essentially harass them. Right? The payments failed so let’s get to Robbie and make sure she updates it.
When we’re talking about friction-free, what we’re trying to say is most payment failures are remediable without end-user intervention — Vijay Menon
When we talk about friction-free. What we basically mean is to say that well, hopefully, we’ve identified and clarified for several of the folks here that in many cases we don’t need to be calling Robbie or texting Robbie, and it’s annoying for us to put that on us on our customer to go fix the payment failure when it can be something that we can actually simply do ourselves by cleaning up our back end and when we’re talking about friction-free, what we’re trying to say is most payment failures are remediable without end-user intervention I don’t actually need to reach out to the customer or make the customer do something, and this is something that the industry doesn’t understand the industry thinks that all of these payment failure cases I need Robbie and Vijay to go call up their bank and go fix a problem that they’ve created and they’re not acknowledging that I’ve created the problem and I can fix it without that end-user intervention so what we like to do is make sure that for that 70% of payment failures is actually fixable take that out of the bucket of customer support, emails, and notifications. Now I could say I myself, as a consumer, I get annoyed when that stuff happens to me because you could have just fixed it for me and so take that bucket out, and then for cases where legitimately you need a user to actually update their credentials or go to a bank or be notified that there’s fraud happening. Then be very selective around how you do that and so that’s what we’re talking about when we say friction-free and the other element that we wanted to really address when we’re talking about friction-free is to say that there are businesses that don’t do this level of differentiation between fixable payment failure and nonfixable payment failure. And so instead you can actually go overboard on the other side of the problem and going overboard on the other side of the problem is to not understand that actually by not being nuanced if you see a payment failure and every single time you try to recover it 10 to 15 times which I’ve seen a lot of businesses do because now they’re like, “Oh, Vijay you have convinced me this is a big problem. Here’s my way of investing in.” It slams payment retries and just runs the payment over and over and over again and they’re like, what’s the downside right because they’re like well, if the payments failed and he owes me the money then I should just keep trying to run the card, no no no there is a downside there; Number one, you’re creating friction for the customer which should be the only reason I need to give you right that you’re running Robbie’s card 20–25 times failing and filling and filling they’re getting these notifications, that’s a problem but even if you’re not convinced by that there’s actually a downside to over attempting to retry failed payments which is that the transaction authorization rate goes down and if the transaction authorization rate goes down the banks, the issuers, the downstream network start to see your business as a shady merchant because they say, wait a minute is your business a hub for card testing? Is that why so many payments are failing? And because of that, they start to penalize you and they say, “Hey, when I think about accepting or rejecting a card payment I’m going to make the rules harsher now because I see your business as a shady merchant” And so that’s the nuance that comes to this problem is that friction-free means let’s go solve the problems that are fixable without calling up our customers. It also means do not overdo it when it comes to trying to solve the problem, so if you overdo it there’s a downside with a negative feedback loop that’s created there, not just for the customer, but also for your business in your bottom line and that’s where nuance needs to come into play.
Robbie Baxter: Super interesting and I wanted to stay on this topic of friction-free versus when you have to communicate with the customer, with the subscriber in that, the messages, at a minimum are annoying but they can also be hurtful when, if I say to you as even the language of your payment failed right it implies that you did something wrong and that it’s not just something wrong but something dishonest and I think even if it’s fixed I know that in many cases that consumer has changed their attitude about the company and they said, this is a company that doesn’t trust me and in our world of subscriptions, trust is everything right this is all about a relationship where someone is automatically charging your payment your credit card or whatever your payment method, they’re charging it automatically without touching base with you first and so the level of trust and goodwill has to be high.
Vijay Menon: Agreed, and I think it leaves a bad taste in the consumer’s mouth because it’s the standard practice. Standard practice is not necessarily best practice as this industry shows you but the standard practice today is every time I run Robbie’s card and it doesn’t go through, I tie an email to it and in that email say, “Hi, Robbie your payment failed and you need to go fix it” which as you said is putting the responsibility on you to go fix the card and saying, “Hey, you are presenting fraudulent information” But we’ve all had that experience where we’re like I didn’t do anything wrong, this is my card why is it being declined? You’ve particularly had that experience if you’ve tried to sign up for something cross-border, maybe a service or product headquartered somewhere else and that does violate trust. It tells the consumer that you’re not taking responsibility for the issue that you have created and we see because of that if a user ultimately gets involuntary churn from a service in 75% of cases they never sign back up for that service and that’s a question that I get quite a bit which is well, like even if they get turned if they really like the service wouldn’t they just go sign back up it’s not that simple and the reason for that is because they’ve lost trust in your service and so there’s generally other alternatives out there for them to consider and so if I’ve lost trust in Box I might go to Dropbox because of a payment failure related issue that has nothing to do with how I appreciated the product or not and so that’s what you need to be mindful and wary of when you’re working with your customers and I’ll say, I saw that first hand and part of the motivation for starting my business was large companies, when we see high volumes of payment failure we tend to put it on the customer. What we say is, “Hey, why are 80% of Indian payments failing? Or why is India a small market? Why is Indonesia a small market?” And we say, “Well, it’s because they don’t want to pay for the service.” I’m a well-traveled guy, I know people all over the world want to read books and people all over the world want to play games, it’s not that simple, right? And so if we’re not setting up in a way that these people can actually pay us and then we’re just throwing up our hands say, “Well, they don’t want to pay” We’re missing out on lots of volumes, and lots of opportunity because the reality is when you do address these fundamental issues, you can guarantee if you address some fundamental payments issues, for instance, providing local payment methods, people don’t pay by card these places they might play by the direct carrier, billing or otherwise put that into your product flows give them a way to pay that’s not US-centric that allows them to pay and then come back and tell me if their volume is spiked or not. And I can say I’ve seen that firsthand right just by introducing a way for users to pay you, you can make those markets become top 5 overnight because the demand was already there. The ability just wasn’t. So take away the onus from it’s your fault to how can I make it easier for someone to come in and pay for the service?
If a user ultimately gets involuntary churn from a service, in 75% of cases they never sign back up. — Vijay Menon
Robbie Baxter: The moral of the story is that the Payments Department is actually a pretty powerful department to be in if you want to have a big impact on revenue growth.
Vijay Menon: I would argue it’s the single biggest lever towards revenue growth because you would know on the other hand, what’s the reputation of payments. It’s slow, there are minor improvements, it’s basis points and little optimal optimizations that you can make I’m like no, this is the big, singular biggest revenue driver. I’ve made a career out of it this is why I’m in this industry, right? Because there’s not a whole lot of other things that you can put on your product roadmap that literally bleed 10% of your top line and that can give you 5 to 10 points back to top-line revenue and if you think about what solving involuntary turn does for your business, it really means you’re improving your LTV to CAC and you’re flowing through to your contribution margin and what it means is that businesses that are contracting even top level. Right? You’re contracting from a top-level perspective. If you solve downstream payment failure and you improve that LTV to CAC ratio and you improve those contribution margins. Your CMO now has money to spend on new acquisition channels and go fix the top of the funnel problem but if you completely ignore that downstream then you’re going to have 2 problems. Which is that in a global macroeconomic downturn, you’re going to have a harder time with acquisition but now, because you haven’t solved downstream, you certainly are not going to have that money to go invest in upstream and acquisition channels and otherwise and so I think it’s the singular biggest thing you can do to drive revenue and essentially I view myself as on a mission of bringing awareness and shedding a light on that and having subscription organizations start to realize this and invest the proper levels of investment that they should be making in solving this problem.
Robbie Baxter: It’s fascinating and the involuntary churn piece that you work on and solve at Butter as well as your kind of offhand point about having the right payment method for the local market before you say they don’t want to pay, make sure they’re able to pay before you decide whether they want to pay or not. It’s such an important area of your subscription strategy and I’m so delighted that you joined us today.
Before I let you go, do you have time for a speed round?
Vijay Menon: Let’s do it.
Robbie Baxter: Okay. First subscription you ever had?
Vijay Menon: I was very OG Xbox Live, so that’s actually a very full circle for me so early, The Halo one probably would have been like 2005 or so is probably the first one that I had.
Robbie Baxter: Favorite subscription you’re using right now?
Vijay Menon: Spotify for me is my go to. I use it every day for podcasts and, 1-hour commute to Bay Area traffic, it keeps my sanity.
Robbie Baxter: You wrote a book, A Brown Man in Russia.
What motivated you to write it and what advice do you have for others who would be memoirists?
Vijay Menon: That is a great question. So big reader myself, big writer, and big backpacker so prior to starting Butter. Today, people are aware of these cheap flight finders like Scott’s Cheap Flights. But back in the day, you had to do the heavy lifting yourself and so I would change my geolocation to figure out the best prices, best flights, the best places to go and I did end up going to Russia with a backpack in the winter of 2013. As someone who grew up in California that was the first time I’d seen snow in my life so it’s a little bit of a crazy experience. Went third class the whole way, took it across from Saint Petersburg and ended up ultimately in Ulaanbaatar, Mongolia. I had a series of crazy experiences. I think my takeaway from that was to travel not to a place that’s unique to you but where you are unique to the place, I kind of call that my golden rule of travel, because when you do that you create experiences out of thin air. Everyone comes to you and is like what the hell are you doing here which creates connection and experiences. It burns down a lot of understanding when it comes to people who want to write a memoir.
For me, I would say it wasn’t planned I’d given a Ted Talk on it, and a publisher approached me and said, “Hey, this would make for a good book”, which led to the book. But if you are a memoirist out there, actually sitting down and scheduling time to write. I would just force my ass into a seat and just start writing. But also keep a journal, a diary, and a couple of notes every day that just remind you of times and places and the idea will come to you.
Robbie Baxter: If you want to be a writer, rule number one is to start writing.
Okay, last question. You’ve said you believe in karma and in paying it forward, how does that manifest in your life today?
Vijay Menon: In so many ways, I think coming in to start this company a lot of people start companies because they have always had that dream, right? A serial entrepreneur or I come from an entrepreneurship background or wanting to run the thing is what you want to do. I don’t come from that world, I don’t have serial entrepreneurship within my family or background, and not a very risk-taking group or culture. I ended up here because of the favor of lots of different people who recognized some of my talents over at Microsoft and we’re able to spotlight me moving into Dropbox was a function of a very serendipitous meeting that I was able to take with. So lots of very different meetings and interactions that I hadn’t even started this company and getting acquainted with JD Ross, who was the founder of OpenDoor, who I didn’t have contact with, but who a friend of a friend introduced me to and we had a very similar conversation to the one you and I are having right now Robbie where he just kind of asked me and picked my brain on all of these things that I knew about payment failure and said, “Holy crap! I think you should start this company” and that resulted in me saying no for a month or 2 before deciding what I’m actually going to do, and of course since there things have taken off and we’ve built a amazing product in the market and solve the real need and are growing like wildfire, and I never would change anything for the world.
So I would say, it has manifested a role in my life that these serendipitous meetings and these favors that people have done to acknowledge things that I’ve delivered have resulted in me being able to have this platform in the stage and so for me, that’s very important as well to continue to give others opportunities who may come from more non-traditional entrepreneurship backgrounds, but may have a lot to offer right literally no more about a certain space, domain, or niche or have something to offer the world and maybe you’re not thinking through, well maybe I’m the person do it and why not me. So I think everyone should just embrace that mentality a little bit more and if in a position of power be able to have those conversations with people so they can start to challenge themselves, say, “Well, why not me? I should be the one to go run that and do that” And so that has played a huge part of my life, and that’s why, I’m a believer in it.
Robbie Baxter: Appreciate that. That’s such wise counsel, and the idea of recognizing talent and others who might not see it yet and opportunity for them is one of the most generous acts I think that you can commit.
This has been a wonderful, wonderful conversation. Vijay. Thank you so much, I hope to have you back on the show sometime soon, and appreciate you taking the time and being so thoughtful.
Vijay Menon: I likewise appreciate it, and thank you so much for having me and hope we were able to share a couple of gems that get people thinking happy to have anyone contact me, and easy to find me. Vijay of Butter Payments.
Robbie Baxter: Thanks again, Vijay!
Vijay Menon: Thank you very much.
