Persona

My voice is my passport....

👋

Back with another early stage startup analysis. This time it is a recent Series A funded Identity Proofing platform called Persona. Because they are a bit further along than startups I have looked at before, i’m expecting a lot from them!

Each of these posts is a decent amount of time in research and writing (and i’m just not a fast writer). So if I’m going to do this it is probably going to be weekly, which right now means the name of this Newsletter mocks me and I’m probably going to change it. Any suggestions are super welcome. Coming next week is Iterative.ly then we are going to talk about AI generated marketing copy.

Best,

Stuart

(follow me on Twitter)

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Persona launched on Producthunt on February 1st 2021 hunted by Dylan Field, the CEO of Figma. They had just announced a $17.5M series A from First Round and Coatue a few days earlier. Persona was founded back in 2018 by former engineers Rick Song and Charles Yeh back in 2018

How They Position It

Persona describe themselves alternatively as an “Identity Platform” on their website or more specifically as an “Identity Verification Platform/Solution” in their launch announcements. From their website they say they “help(s) businesses securely collect, verify, manage, and make decisions about customers' identities from one place”. 

They also say that they can “Prevent fraud, build trust and safety, stay compliant with KYC/AML regulations” – meaning Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations required for financial institutions such as banks and insurance.

The key feature of Persona is the Identity Verification process which can be configured with a number of different methods including government ID, video selfies, database lookups and supplemental documents like utility bills and bank statements. The user experience of Persona can be integrated as either an embedded web experience, as a hosted solution with links that can be sent to a customer and a drop-in mobile component (both as a webview and native SDKs). The other key feature is the Global coverage for things like government ID verification and source databases.

Alongside the core identity verification process, Persona has additional features to customize the process for businesses. They offer the capabilities to customize the workflow of the identity verification process, including a manual case review process for identities that can’t be verified automatically. They also have a List feature to create/import manual lists of identity information that can be used to whitelist/blacklist individuals or use Persona provided third-party lists such as watchlists or sanctioned individuals.

How Would I Position It

“Identity Platforms” is really bad category terminology here because the industry also refers to solutions such as Okta, Auth0 and Ping Identity as Identity Platforms (or at least Identity Management) and there is no overlap at all with the kind of solution Persona is offering. This kind of confusion is common and why Gartner differentiates between Identity Access Management (Okta) and Identity Proofing (Persona). 

Identity Proofing solutions have been around since the deployment of credit approval processes in the 1980s and KYC/AML regulations in the 2000s. They have become increasingly automated in response to digital transformation across the financial industry and new FinTech startups being digital only. 

This means there is a spectrum of Identity Proofing from the oldest of old school credit agencies like Experian to new API-first companies like Persona. Along this spectrum of companies there are Jumio, Onfido, Mitek, Authenteq and many, many more offering similar solutions to Persona with varying methods, global coverage and go-to-market strategies.

Persona differentiate themselves with their focus on Developer Experience (DevX). Developer experience is all about how easy it is for a developer to start using an API service, the effort required to integrate it in their product and deploy it in live environments. It includes everything from the signup process, documentation, client libraries, sandbox/testing availability and monitoring tools. 

Once upon a time, no one cared about the Developer Experience of these services, instead differentiating on features, cost, coverage, security and other factors. Companies like Stripe and Twilio changed that by saying if you made the API so easy to use, developers would choose you over established providers because you would have better time to market, and reduce the friction in the process. This would lead to incredible viral word-of-mouth uptake as developers would recommend your product after using it. This strategy would be right on the money – a lot of money. Stripe, right now, is valued at over $100Bn on the secondary market.

Persona are aiming to be the Stripe of Identity Proofing with a free self service starter plan you can sign-up for without talking to a salesperson (crucial for this kind of GTM strategy). It also has great accessible documentation and an easy to integrate user experience that requires low to no code. A similar competitor based out of Europe called Passbase with a similar offering and strategy also launched 8 months earlier.

The Bull Case (Why is this going to be the next big thing)

The tailwind behind the Identity Proofing category is hurricane-force. Some of the last big industries to move fully online are those that require a strong burden of proof for who they are transacting with over the internet. This includes not only Fintech but also any business that is dealing with expensive assets, human-powered services or high-volume transactions. Along with increased governmental regulation in KYC/AML coming out of Europe it is easy to see why McKinsey thinks the market will be worth $20Bn by 2022 and some of the older public company competitors in this market say they are growing 40% YoY.

So can Persona take a big slice out of this high-growth market with lots of competitors with a DevX strategy? Well it looks awfully similar to Stripe’s position ten years ago. The online payments market was high growth with lots of traditional competition in Cybersource, Authorize.net, Worldpay and others but Stripe was able to capture so much of the coming growth in payments because it was just so much easier to get started and get integrated. None of these competitors were able to match Stripe’s developer experience, who used this growth to leverage funding that enabled them to innovate. Today, Stripe and Paypal (who also bought the other DevX focused payment company Braintree when they bought Venmo) form an online payments duopoly.

The Identity Proofing market looks a lot like the online payments market did 10 years ago with large Enterprise companies that are difficult to buy from and difficult to integrate, alongside newer startups trying to crack them. But none look like they have embraced the DevX strategy as fully as Persona. 

If there is a lot of market growth in new companies then Persona could capture a lot of that share and grow with those companies without needing to displace competitors right now. Their current customer list shows this kind of potential with high-growth businesses like Square Capital, Brex and Postmates.   

The Bear Case (Why is this going to fail)

The DevX strategy requires exceptional execution with both the Product and the GTM. If either of these components are sub-standard then the entire strategy will fail. 

If the Product does not work well or is unreliable then a developer who is trying the product will not convert to paid contracts. Enterprise sales with great GTM and that rely on a pre-sales process can get away with a poor product, but a company relying on its DevX and a product-led-growth conversion strategy will not.

Similarly the GTM has to be excellent to drive awareness, explain the value differentiator and make developers successful without hand-holding through the process. Stripe, for all its excellence and ease of use as a product, was brilliant at this with great explanations, graphics, documentation and content. 

It is incredibly hard to be culturally excellent at both Product and GTM. The best companies are good at both; many SaaS startups are successful where excellence at one covered for weakness at the other. For Persona to succeed there is a lot of executional risk across both of these to pull off this strategy.

Grading for the launch/announcement: A

Persona’s Product Hunt post is 100% perfect with customers, investors and fans supporting the product and the founders.  The Persona website is excellent with great value articulation, customer case studies and accessible documentation. 

It is also great to see this company offering a free self service starter plan which is essential for a PLG strategy which will capture leads from any company which may be interested in trying the product. The only real negative on their GTM is the lack of transparent pricing after the free starter program. Transparent pricing can drive more conversions and works well with a PLG/DevX approach.

Grading for potential A+

I can easily see this being a $1Bn+ business if the execution is excellent, and based on current customer responses it looks like an excellent solution that is easy to integrate into your next product. While the competition in this market is fierce, if Persona continues to differentiate with a great DevX and expand the range of identification methods then its verification business alone can hit Unicorn status within a few years.

Beyond Identity proofing there are lots of business line extensions Persona can get into such as business ID verification and fraud risk analysis using the same DevX strategy and replicate Stripe’s success with things like Stripe Capital and Stripe Treasury. This increases the potential chances for Persona to become a multi-billion dollar business. 

Unsolicited advice for the founders

I would love to see more developer orientated content on the Persona website that shows how easy it is to integrate the verification process such as video tutorials and step-by-step guides. I also think the website could do with more content to demonstrate the range of capabilities in Persona as well; this feels somewhat hidden in the documentation and on the Pricing page (which really needs some prices on it).

They should make sure they commit fully to the strategy and follow Stripe’s playbook by making it easy to sign-up, use and move to a paid plan as currently it looks like you still need to talk to a salesperson to get fully signed up with Persona. This does make me think it's expensive and maybe I should try Passbase first which does show its pricing upfront. 

Aside from that, if they relentlessly execute on both the Product and GTM, they should consider what capital allocation can ensure they capitalize on growth and stay ahead of competitors.