TheCustomer’s conversation with Gunter Pfau, CEO of Stuzo on their recent announcements and wins.
I had the chance to talk with Gunter at length some months ago and understood very quickly that he is someone driven by, and focused on, his customers’ business outcomes. Of course, you could say that about almost any successful CEO but Gunter’s efforts are particularly energized.
In this most recent conversation we were to discuss, among other topics, Stuzo’s recent investment from venerable Longshore Capital Partners and what that might mean for the company. Earlier, Gunter had made it clear that one of the things that has enabled him to drive the company to the heights he has, is the fact that he hasn’t had to spend time attending to outside investors and instead could focus on driving the business forward. So, I was interested in the thinking behind Stuzo’s newly-formed relationship with Longshore.
Along the way, though, Stuzo has been reporting an increasing number of wins with successively larger clients. Much of the company’s work is done in and around the C-store / Fuel space and while Gunter noted that Stuzo entered not long ago as an outsider to that industry, their current customer roster shows their rapid move from outsider to industry leader. They now count several of the biggest operators in the country, and some of the largest fuel brands in the world, as members of their portfolio. And it seems they’re still building momentum.
TheCustomer
You talk a lot about “Can” versus “Should”. Can you explain?
Gunter Pfau
We’ve been on this mission to differentiate ourselves, and to, in general, focus the business on competing, not on features – but competing on business outcomes. I like to say that we have a very awesome and amazing set of product folks, software engineers, designers, etc., that can build anything we dream up. There are also a lot of new shiny product features that we can build, which current and potential customers ask for. But we always ask: Why should we? While we can build many shiny new product features, we should build only those that deliver business outcomes. And sometimes that’s at odds with what prospects or customers may want because our competitors or others in the marketplace are building a lot of new shiny product features. Many of which, from our viewpoint, will not deliver meaningful business outcomes.
TheCustomer
What is the 1.5X Guarantee? Talk to me about how that works and how you can put that kind of language out there?
Gunter Pfau
We put our money where our mouth is. We feel very confident in what we call our Wallet Steering™ System, which is a combination of our software products, our Know and Activate method, as well as a set of wraparound services, and when we bring those three to bear under a customer engagement, we will outperform anybody you put in front of us. And we believe that, in spite of not having absolutely all of the features that our competitors might have. We are here to compete on business outcomes and we’ve proven that we can deliver business outcomes better and at scale. We have a better mousetrap than what some others do, which enables us to commit to a 1.5X improvement.
This is a contractual commitment that says if our customer, the retailer, moves from another vendor to Stuzo, we guarantee contractually that we will hit 150% of two metrics: number of program members and transactions. Period.
TheCustomer
When you and I spoke last, you were particularly proud of Stuzo’s financial independence. As someone who’s brought Stuzo through several different turns and iterations without outside capital, talk to me about what started your interest in taking on a strategic investor.
Gunter Pfau
I was very proud of what we had achieved relative to our competitors, who were all either VC funded, or Private Equity owned, or some mix of that. And I still am. We started to get inbound interest from growth equity right around the time that we published a few of the customer launches we had, as well as our acquisition of Hatch. It started with maybe one to two emails a month and then went to about one to two, three emails every week. I had not responded to any of them for a period of six, seven months and was very flattered that we were getting these outreaches from companies that had in the hundreds of millions and then some into billions under management.
TheCustomer
What changed your thinking?
Gunter Pfau
What made me start to reconsider and think harder about this? We were in an RFP with a Fortune 50. And we were asked a question during the RFP around our capability to invest in our products relative to our competitors – who are PE and VC funded. That question stuck with us. I knew the answer, and we don’t share financials with prospects or with our customers. So even though I know as the CEO, I had much more control in terms of where we invest our money and how we spend our money than, perhaps some of our competitors did, I couldn’t give our prospects the level of comfort that I needed to, given that I was the only one out of our competitive set that was self-funded. It really got me thinking critically about what our next phase of growth looks like.
TheCustomer
Talk to us about the decision to go with Longshore. Stuzo was being courted by some sizable players – what was it about Longshore that caused you to move forward with them?
Gunter Pfau
We chose Longshore because they bought into our vision and because also, at the board level, we’re going to have folks that really understand what we’re doing, specifically the potential of operating at the intersection of payments, experience and loyalty. Longshore is also a very active investor who can help us grow even faster while improving the product and service levels for our customers.
TheCustomer
You’ve mentioned several times that you see Stuzo as an outsider to the sector you operate in, yet your portfolio of clients are some of the largest players in C-store and fuel.
Gunter Pfau
Entering c-store and fuel as an outsider empowered us to start thinking differently – to take a different approach focused on delivering business outcomes – not just building technology. We committed to building a system that delivers business outcomes. And as a part of that system, we have technology, we’ve got products, but the core thing was to deliver business outcomes at scale. We need to be able to say that if we are going to ask a retailer to spend, at an enterprise level, millions of dollars with us, then we need to deliver back multiples of that in terms of business outcomes. And not just a technology that can turn on a pump on in the cloud, right? That’s not a business outcome. It’s a capability. It’s a shiny product feature but it’s not a business outcome. And so, bringing it back to Longshore, they have the wherewithal and are aligned with us on the power that can be unlocked at the intersection of loyalty, payments and experience. And they have folks that understand that very, very well – and who buy into it and can enhance what we are already doing.
TheCustomer
I feel like we could take this conversation into some really interesting directions and thank you for being so forthcoming with what many leaders would probably consider house secrets. Gunter, it’s always a pleasure and I’m looking forward to our next conversation.
Gunter Pfau
Same here. Thanks Mike.
Photo credit: Philadelphia Inquirer
