The Cofounder of SEON Talks About 'Accidentally' Falling Into The Fraud Protection Space
SEON Technologies was founded by Bence Jendruszak and Tamas Kadar. The Budapest based tech company uses software to comb through hundreds of data points across social media and IP address activity to flag suspicious email and phone numbers tied to a user. The digital detective software has raised more than $100 million to date, including a $94 million, Series B round led by IVP last April. SEON currently has about 250 employees across offices in London, Budapest, Singapore and Austin.
Bence Jendruszak, Cofounder and COO. speaks with Alex York at Founders Forum to discuss the founding of SEON, his Under 30 Alumni status, and what's next for the fraud-protection tech company.
Bence Jendruszak, Cofounder and COO. speaks with Alex York at Founders Forum to discuss the founding of SEON, his Under 30 Alumni status, and what's next for the fraud-protection tech company.
Transcript
00:00 Hi everyone, I'm Alex York.
00:04 We are at the Founders Forum in New York City.
00:07 I'm here with Bence Jendrissac, the COO and co-founder of Sian.
00:12 Welcome.
00:13 Thank you for having me.
00:14 It's good to be here.
00:15 So I want to talk about the inception of Sian and the business.
00:18 I heard that you kind of got into the fraud protection space accidentally.
00:22 You guys were doing something a little bit different before you found kind of this niche
00:26 that you wanted to, you know, venture into.
00:29 Talk me through that story.
00:30 Tell us about kind of your accidental approach.
00:33 Sure, absolutely.
00:35 Eight, nine years ago, we were good university friends with my co-founder.
00:39 We were crypto enthusiasts.
00:41 This was back when cryptos were nowhere near as popular as they are today.
00:45 And we started building a crypto exchange back then.
00:48 And after starting to accept credit card payments, we were faced with a bunch of fraud.
00:52 So people were filing chargebacks.
00:54 They were paying with fake credentials, fake identities.
00:58 And that's when we looked at the fraud prevention space.
01:01 We needed a solution.
01:04 We looked at the fraud space.
01:05 There was all these providers out there.
01:07 They were all aiming for an enterprise sales motion.
01:12 We were too small of a client to be considered by them.
01:15 So we built our own internal tool.
01:18 And here we are today, where we completely pivoted into developing this full-on fraud
01:23 prevention suite.
01:25 And today, we're serving over 400 clients, post-Series B, four different locations within
01:31 the world.
01:33 Yeah, very proud to be fighting fraud every day.
01:36 Yeah, very cool.
01:37 Walk me through the different iterations that you guys have come about in the growth of
01:42 the company.
01:43 With any business, so much changes year over year.
01:45 So when you started eight, nine years ago, I'm sure the idea that you had, or the idea
01:48 that you stumbled into, is very different from how the company functions today.
01:52 So what are some of those differences and similarities between the company function?
01:57 Very different, like you pointed out.
01:59 I mean, I can clearly recall us being a two-man operation, and then five people sitting in
02:07 a room together and iterating, and then slowly us renting a flat in the center of Budapest,
02:16 and sitting there, 15 people.
02:18 And now, just 250 employees sitting all over the world.
02:24 Very, very, very different.
02:25 I think the biggest thing I would point out is probably our last year and a half, where
02:32 it's been so transformational, up after a certain point, where we had to realize that
02:39 what we've built so far, from a go-to-market perspective, or even our processes of engineering,
02:47 we're probably going to have to strip it down and rebuild it.
02:50 So if you look at fat, muscle, and bone, let's make the leanest and the meanest version of
02:58 ourselves.
03:00 Definitely not cut into the bone, but then pretty much start rebuilding in some areas
03:08 from the ground up.
03:09 And that's from a go-to-market perspective.
03:12 We've done a huge transformation over the past year.
03:15 And also right now, we are doing a similar thing on the engineering side, where once
03:22 what we were doing was a wild west internally, from a process and framework perspective,
03:27 and now we're much more mature from that side.
03:32 And going through that process, what have been some of the things that you realized
03:34 are priorities, and things that you either do really want to focus on from the ground
03:38 up, or keep as part of that lean machine moving forward?
03:41 Sure, well, I think as with every company over the past year and a half, operational
03:47 excellence is a huge topic of discussion.
03:50 And I think right now, that is the focus area for us.
03:53 So if I think about what this year holds for us, what next year and the year after holds
03:59 for us, I think this year truly is about operational excellence.
04:03 And our whole company is very much aware of that and oriented towards that.
04:08 Next year, I think is refining some of our features so that we can pretty much become
04:16 a full on fraud prevention system of record to fraud managers.
04:22 So the sole fraud provider to any company out there, whether that's around identity
04:29 verification all the way to analyzing the digital footprint, which was our unique selling
04:34 proposition from day one.
04:36 And then if I look at two years from now, that's really about like, how are we going
04:40 to be the market leaders within this segment of fraud prevention?
04:44 And what are the innovative technologies which we have to bet on today, in order for us to
04:49 be the market leader and for companies to look at us as an innovative company out there?
04:54 Yeah, speaking of product innovation, so much has happened over the past five years, the
04:59 past two years in terms of new technologies popping up.
05:02 How do you see those new technologies, whether that is just the surgence of crypto or AI
05:07 or all those sorts of things?
05:08 How do you see your company functioning, knowing that more and more of those are going to pop
05:12 up in the future, and you're going to have to navigate while still staying ahead of the
05:15 curve?
05:16 Sure.
05:17 I have a couple thoughts around that.
05:19 I mean, you mentioned AI, everybody's talking about AI, there's an AI craze.
05:24 Is it here to stay or not?
05:26 Too early to tell?
05:28 Probably.
05:29 I mean, it's not too early to tell.
05:31 It's here to stay, but who the winner is going to be, that's too early to tell.
05:35 And I think if you're not a company like OpenAI or Google, then you really have to focus on
05:45 what the particular use case is that you're serving, and can you build AI on top of your
05:51 application layer that is going to serve a specific use case and is going to make the
05:55 life of your customers much easier?
05:57 Because probably Google or OpenAI is not going to develop any of those features, because
06:01 they're focusing on their core products, right?
06:04 And in our case, what that means to us is how can we apply any form of AI technology
06:12 on top of our current application layer, which is going to make the life of our customers
06:16 easier or even result in cost-saving or higher accuracy for them?
06:21 And that is what the future horizon holds for us, which I was alluding to as in who's
06:26 going to come out as a winner within the fraud prevention space, and that's what we're actively
06:31 working on right now.
06:32 Yeah.
06:33 You mentioned there that it'll help your customers, but I'm sure that it will help you as well
06:36 to start tapping into those technologies and implementing it into your company.
06:39 How are you thinking about those decisions moving forward while still staying lean, like
06:42 you were mentioning?
06:45 The good thing is there's a lot of companies at our stage who raised capital over the past
06:52 two years, and I think the winners, it's hard, again, hard to tell what the series see on
07:00 words is going to hold for us in the next year and a half, because there's talks even
07:07 out here that all these mid to late-stage investors, it's kind of going cold that area,
07:13 nobody knows what the valuations are, so it's unclear.
07:16 The good thing is as we've become the leanest and the meanest version of ourselves, our
07:21 cash burn rate has become very efficient.
07:25 So we've extended our runway.
07:31 Most of our company is based out of Hungary, which from a cost perspective, we're very
07:36 efficient.
07:38 And so I think truly we still have enough buffer and room to make some bets, which we've
07:46 taken a look at the market, and again, they are bets, but we do think that as we're placing
07:51 our chips, we're betting on the future of fraud prevention, and this is what's going
07:55 to result in us becoming the best player out there, the market leader in a couple of years'
08:01 time.
08:02 Yeah.
08:03 From both a consumer-based perspective and also a business-running perspective, what
08:07 are the biggest differences between how the business functions in Hungary or in Europe
08:13 versus in the US?
08:14 Are the markets very different?
08:15 Are you approaching either customers or your teams differently?
08:18 Very different.
08:20 From an employer perspective, but all the way to just a go-to-market perspective, the
08:26 EMEA market, the Asia-Pacific market, the LATAM region, and the US region are very different.
08:33 And hence the reason why we didn't focus on the US market for a very long time.
08:39 We had plenty of revenue from LATAM, APAC, and EMEA, but maybe between 5% and 10% of
08:46 our revenue share two years ago was from the US market, and we consciously wanted to start
08:53 building out a team here because we knew that if we don't have a team sitting out of the
08:57 US, we're not going to be able to sell here.
08:59 I mentioned to you just off the record that through COVID, we started building out this
09:05 team.
09:06 We initially failed because there was no leadership here.
09:08 So then I moved over beginning of this year.
09:12 We also hired our CRO out of Austin about six months ago, and now we're building a truly
09:20 sales engine in the US and a team who's going to be able to serve this market effectively,
09:25 and we're already seeing signs of that revenue share gaining traction within our portfolio.
09:32 All founders, young or old, are inevitably going to come up on some sort of failure,
09:37 like you mentioned.
09:38 What is your advice for young founders today and how to pivot or how to determine what
09:42 the next step is?
09:44 I think embrace the failure.
09:47 That's one.
09:48 We've always done that.
09:50 Second thing is optimize for ... I think we were a little late to realize when we had
09:57 to cut back into some of the muscle, using that analogy again.
10:06 Don't be afraid to go back a couple of steps and start rebuilding from there, even if that
10:11 means tearing down and breaking away from previous thought processes.
10:16 I think we were a bit late at times to do that, but now that I see the pattern, I would
10:24 advise anybody, if you feel something is going off, it probably is going off, and try to
10:30 bring everything back onto the correct trail and don't be afraid to even tear into previous
10:35 processes that you built already.
10:38 It's going to work out better once you come out the other end.
10:40 Yeah.
10:41 What do you see as the biggest opportunity for you and the company in fraud prevention
10:45 or new technologies right now?
10:47 Like I mentioned, AI is ... Everybody's talking about it, and I do think whoever's going to
10:53 be winners in the market, building on top of ... I don't want to repeat myself, but
10:58 building on top of your application layer, that is a big thing.
11:02 In fraud prevention, you have to understand that these fraud managers who are using our
11:06 tool and the companies that we're selling to, they're heavily reliant on our system
11:10 because we're monitoring their transactions or registrations 24/7, 365.
11:17 So if, even incrementally, they can more easily understand their own data, their own fraud
11:25 trends, or even incrementally, we can suggest better rules for them with the help of AI,
11:31 or it's easier to interact with our graphical user interface through an LLM, rather than
11:37 them trying to set up their own filters and so forth, then clearly we're going to be a
11:44 net value add to them.
11:48 If we deeper dive into how we can adapt this technology within the fraud prevention space,
11:54 then I do believe we're going to be winners coming out of it.
11:57 What are the biggest risks in venturing into this space as an entrepreneur?
12:02 Biggest risk in venturing into fraud prevention?
12:07 I think the market is ... There's all sorts of ... It's not Greenfield, it's not Blue
12:15 Ocean, call it whatever you want.
12:18 It is a market that is somewhat diluted.
12:23 There's been fraud ever since somebody put the first checkout button on a website, like
12:27 30, 40, how many ever years ago, and people started doing dishonest activity related to
12:34 that, so there had to have been solutions way back.
12:37 The question is, what is the best new solution and the best next solution?
12:42 Year over year, I do see new fraud prevention startups popping up, focusing on niche, smaller
12:49 niche fine details and feature sets.
12:53 I think that's why I mentioned, from our perspective, it's mainly about becoming that system of
13:01 records, so you can actually rip and replace those old dinosaur solutions that existed,
13:07 that started 10, 15 years ago, who've been acquired since, but we've seen a lack of innovation
13:11 from them.
13:12 Yeah.
13:13 My last question for you, as an under 30 Europe alum, what is one thing that you want to tell
13:18 the under 30 community?
13:19 Is there a piece of advice and they don't know about you?
13:21 What is your message to the under 30s?
13:24 To the under 30s, there's a quote I love, which is, "You cannot teach a man anything,
13:31 you can only help him to find it within himself."
13:35 That's a quote I like.
13:36 If you're leading people, always keep that in mind.
13:40 You shouldn't be, "I'm not a micromanager type, I do like to give direction and lead."
13:49 Lead in a way where it's best for me if you find the solution and I've helped you, guide
13:55 you to the path of finding it.
13:57 That's my main ... Something that I've been thinking about in terms of growing as a leader
14:01 over the past year or two, I'd say now that we're 250 person operation.
14:09 Maybe that's a good takeaway and a good way to close up this conversation.
14:12 Totally.
14:13 Well, thank you so much.
14:14 I appreciate you taking the time to talk.
14:15 Thank you very much.
14:16 Thank you for having me.
14:16 Thank you for having me.
14:17 Thank you.
14:17 Thank you.
14:17 Thank you.
14:18 Thank you.
14:18 Thank you.
14:19 Thank you.
14:19 Thank you.
14:20 Thank you.
14:20 Thank you.
14:21 Thank you.
14:21 Thank you.
14:22 Thank you.
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