When Western Union formally began building out its connection to the fintech community, it partnered with Techstars, a well-respected accelerator in Boulder, Colorado. The Techstars and Western Union Accelerator focuses on startups looking to shape the future of how money moves, from artificial intelligence and machine learning to crypto and blockchain.
Joining the podcast today are two leaders of the program: Tyler McPherson-Wiman is the global vp of corporate strategy and development at Western Union and Elle Bruno is managing director for the Techstars and Western Union Accelerator.
We discuss the decision behind launching an accelerator and the nature of the Western Union and Techstars partnership. We dive into the role the accelerator plays in Western Union’s innovation program and how both partners measure the success of the program.
The rationale behind an accelerator
Tyler McPherson-Wiman, Western Union: It’s pretty straightforward. It really helps us think about innovation from a different perspective, sort of from the outside. We’ve got a long history of innovating at this company. I think we’ve been around about 170 years or so. So, we have a long history of innovation and we can certainly continue to drive innovation from within with products and services, and find new ways to make money. But there are a lot of innovators and founders out there thinking about completely new and innovative ways to do things, things that can help products complement what we do, and we really wanted to tap into some of that thinking to benefit ultimately, our customers. That’s really the core of it.
Elle Bruno, Techstars: I think the Western Union partnership was a very obvious one for us. The fintech space is a very interesting and exciting space to be in right now. When we think through who our partners are going to be, when we build out these accelerator programs, we really saw Western Union as one of the foremost innovators in the space. So that marriage between early stage founders and this team at Western Union who just has such depth and breadth in the fintech space — it felt pretty obvious to us that it would be a great pairing.
Western Union’s approach to innovation
Tyler McPherson-Wiman, Western Union: The way I think about it is, the accelerator really complements the inside-out innovation that we do. It complements all of our product development efforts. It helps us bring a different dimension of outside-in thinking. We think of it as supplemental to help drive a different set of initiatives that support our portfolio of innovation. And it helps us look a little bit further into the future.
I think large companies have a tendency to think about innovation that is close to what they do today. It’s just sort of a natural thing. We were constantly talking with our customers, listening to them, and really trying to find ways to improve what we already do. Not to say we’re not innovating and driving other new products, but this really helps us think totally differently.
We don’t have a venture capital arm, but we do have formal product development teams that are driving innovation on our existing products. My group and the function that I work within, we do a lot of internal development, as well as partnership innovation. We are formally building out new capabilities, and we are actively working with external partners, small companies and large ones, to find new products that we can bring to market, either that we develop or through partnerships.
For example, we’re working with AXA in France, and bringing an insurance product to our customers jointly, a continuity of income insurance that really complements nicely our money transfer products. So receivers depend on money transfer receipts that their senders provide to them for their daily livelihood in many ways, whether it’s just to pay bills, buy groceries, or pay for education. Having that continuity of income insurance, along with the the ongoing flow of money that comes to them, is really important for peace of mind.
Measuring the success of the accelerator
Elle Bruno, Techstars: When we look at the startup space, you really are looking at eight to 10 years out to measure success of a company and see how they do down the road. For the shorter term, KPIs tend to be a little bit more qualitative. We look at NPS scores and feedback from the founders after they’ve exited the program. That to us is the most important in the short term. And then, it’s really a waiting game at that point to see what story is told for each of our founders.
Tyler McPherson-Wiman, Western Union: When we embarked on on this partnership with Techstars, we laid out three metrics of success for us in order of importance. First, we’re looking to enhance our culture of innovation. We’ve been around for over a century — how can we drive that outside-in thinking? We measure this through a level of interaction with the startups and their founders. A key element to that interaction is the mentorship program. In fact, it was one of the key reasons we were so attracted to the Techstars program. Our mentors help founders solve problems and bring industry expertise. The startups also bring us that new way of thinking, how they move fast, fail fast — all those great things that startups have.
Second, we’re looking to generate commercial results working with startups. We’re a for profit company, so we’re pushing around pilots, proof of concept tests, and hope to eventually leverage startups’ capabilities to help us do things better, faster, or cheaper, or take new solutions to market to help our customers.
Lastly, we hope to get a return on investment. We look out very much to the long term for that. It’s the 10 year kind of thing. But, of course, it aligns our our objectives with not only our company’s, but also the startups and Techstars.
Tyler McPherson-Wiman, Western Union: This is an early stage startup program, so we’re looking for pre-seed or pre-series A funding. In terms of the types of companies, we’re certainly looking for diversity geographically. We’re looking for diversity in founders. We really believe that founders from underrepresented groups, founders from countries all around the world are important to us. As a company, we probably serve one of the most diverse base of customers of any large company in the world. We operate in 200 countries and territories. And so it’s important for us that the blend of the types of founders and companies sort of match our diverse customer base.
We buy into this mantra of Techstars in terms of what these founders have that it’s “team team team product market”. We want founders that have this desire, this hustle, this grit to make it happen — founders that either demonstrated that or we think have that potential.
Broadly, I would say there are probably three types of companies. First, we want companies that potentially can help us make one of our core functions operate better, faster, cheaper. So companies in the current class like Logicluster which helps enhance our pricing capabilities, or Heights Labs in compliance.
Second, we’re looking for companies that are developing innovations that could potentially be complementary products or services that we think we could offer our customers and partnerships. So in this year’s class, for example, Line and Rise Capital. These are good examples of companies that are trying to help drive financial inclusion.
Lastly, we’re really looking for companies that we think might be disruptive in our space, companies that are finding interesting and new innovative ways how to move money cross-border and cross-currency.
Elle Bruno, Techstars: We are known as an early stage accelerator. But it really depends what the founders and the companies are looking to get out of the program. Many come in for access to mentors and network. Some come in for access to investment. And then there are others who are really looking for guidance on how to build their companies from the ground up. It’s the companies that are focused on the latter, though, that tend to take interest in the program.
A great example of that is Gig Wage, which is a modern payments platform for the gig economy. They’re five years in, they were closing a $6 million plus round during the program. So, they were a little bit later stage. They didn’t need the network or the investment strategy as much. They were just looking to understand how to build better and stronger and faster.
We look at what the problem is that they’re solving and whether we see it as a worthwhile problem to solve or if somebody’s already solving it. Are they doing it in a better way? Ultimately, it does come down to the founders. You are looking at team team team, first and foremost, and there’s a lot we look for. We spend a lot of time with founders. The goal is to talk to between 800 and 1000 founders before we launch the program. So that’s what I’ll be spending most of the next six months doing. We try to narrow that group down to 10.
For me, personally, I’m really looking at EQ and grit. I think those are the two most important traits in a founder. And by EQ, I mean, simply, just a strong self awareness around your strengths and weaknesses, and the team you build around yourself is very important, and becomes more important in the long term. And then grit — people who are seeking us out who really have something to gain from the program. Diversity is hugely important to both of our companies. And so it’s not just focusing on who you know or companies that are referred to us. It’s the people who reach out on LinkedIn, who don’t have any mutual connections with me — those are the people that I want to talk to, who don’t necessarily have that ecosystem advantage going into it.
When we say diversity, we mean racial diversity and I think we did a really good job of that in the 2020 program. For 2021, I’d really like to focus on gender diversity. There’s a lot of room for improvement for women in fintech.