In this episode, Legislate meets Daniel Secretan, co-founder of Xapien, a platform which identifies the background and reputation of the people and companies you engage with. Daniel shares the lessons learnt building Xapien and meeting the contractual demands of global clients.
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Charles: Would you like to share a bit of background about yourself and Xapien?
Daniel: Good morning Charles, thank you for having me on the podcast, it's great to be here. A bit of background to us and myself background's actually been in financial crime for the last 15 years anti-money laundering, anti-fraud solutions from a technology point of view. One of the things that I noticed there is that KYC felt like a bit of a tick-box exercise. So KYC is know your customer, know your client and it's the regulatory obligations that all financial services, institutions and lots of other companies as well like accountancies and lawyers have to go through. But it always felt like a misnomer, a tick-box exercise where you're just, like, 'I just need to do these things but I don't really want to know my client.' You don't really know them at the end of this process and actually there is data out there which allows you to truly know your client and we thought that this is going to be great for doing really good business, which is really where Xapien came about from. Growth of online data has meant that you can truly know who you're doing business with. Previously it was an unmanageable burden because the tools that were out there are really just search engines and whether you're doing PEPs and sanctions screening or whether you're doing corporate records, or whether you're doing even Google searches, they are just searches and they return thousands of results, hundreds of thousands of results in fractions of a second for you to then go and read. And really the genesis of Xapien is that we wanted to give a step beyond that, we wanted to become the research engine and we're going to go and read all those for you and work out which ones are actually right and relevant and which ones are actually just nothing to do with it and then we're going to summarise all that data for you. So going beyond search is really what we're all about.
Charles: Once you've done those searches, you're able to provide a complete profile of the customer that's going through that process is that correct?
Daniel: That's exactly it. So you can just understand much more about your customer and if you know much more about them upfront, then you can actually service them better. It's not just a matter of knowing yes I've seen their ID, their passport. I can actually understand where they're based, what businesses they run in, what is it about this person, or this organisation as well, Xapien runs on both, that will allow me to service them better, onboard them quicker, to give them a better level of service. Very similar to what you're doing with legislate as well in many ways, using technology to improve that onboarding and those experiences.
Charles: You mentioned that there's a story behind the name, are you able to share that?
Daniel: Yes that's right. One of the things that I wish I, kind of, knew before was how hard it was to name companies. Originally we called ourself Digital Insight because we provide insight in a digital world but we couldn't really own that. It wasn't protectable in any way, it was just 2 words in the English language. So we wanted something that we could own and we like the idea of sapient and this knowledge and wisdom and Homo Sapiens, it just means 'wise man' literally, so we took this sapien idea and we said, 'Well, we provide the equivalent of thousands of analysts at your fingertips,' so we changed the s for an x to give it that tech factor and also to give it the multiplication factor, having thousands of people plugged into you and so yes, Xapien was born. So that was great and it's a protectable word as well as you can imagine the legal space you can something which you can put behind your IP and then also we could get the .com which was also pretty important as well.
Charles: Since starting Xapien what's been your favourite moment?
Daniel: There's so many of them. I'm going to pick a couple. One of the really simple ones was actually when we could Google something other than Xapien and Xapien would come back. The thing that we targeted was donations, due diligence we're really working in the donations due diligence space, so who are you taking money from and what does that mean, who is this German millionaire that wants to give money to Harvard and what is their background and does that align with the university's or the charity's reputation and things like that. So one of the things you can now do is Google 'donor due diligence' and on page 1, thanks to all the great work that Jess and the marketing team has done we appear on that and that was something I never managed to achieve 10 years of working in a multinational organisation. It was bought by BA systems my previous career NetReveal I couldn't find a term that you could Google that brought up NetReveal, no matter how hard I tried so that was a real highlight. Then another one I'm just, kind of, picking up on, just a technical one was, for me I'm a techy at heart, I've been developing systems forever. There was a point at which I looked over one of the developer's shoulders and he was showing me risk summaries and it was something which he had just developed and it looked terrible, it was just on his code screen at the time it didn't look pretty but I just knew the work that we'd done to get there, the system had to do to produce this, sort of, one line of text. It was a timeline of risk items and it had had to do all the orchestration of all the searching, it had to retrieve all the content, it had to parse that fat text from thousands of websites. It had to discard all of the stuff about the wrong person, the wrong company and then it had to understand what was going on in each article and then it had to apply risk topics to it, what topics and themes are going on here. Then finally it could summarise these in a, sort of, date order of what had happened in this particular court case and I was like 'Oh my goodness'. It's amazing what had to go into generating this very short piece of text but that was a good highlight for me.
Charles: What do you wish you'd known before starting Xapien?
Daniel: One of the things I wish I'd have known is how many cold calls you get from recruitment firms as soon as I published a phone number for the company. I felt like we ought to have a phone number, but I just got phone calls from recruitment agents and I still don't know quite how to deal with that. But that was one of my learnings and Yes there are many things we've learnt obviously as we all do as founders. In some ways I wonder though if I'd have known it before, if somebody had told me this before, many of the lessons you have to learn yourself. First time founder and entrepreneur you just almost need to make those mistakes yourself and that would be to do with employment law contracts and things like that which I umm'd and ahh'd and agonised over to start with and actually haven't really thought about it again 4 years later. Or other things, you need to learn those things yourself.
Charles: And what's the vision for your business and for the next 5 years?
Daniel: Yes the vision for the business is a really big one. What we want to do is we want to democratise access to high quality background research and due diligence. At the moment it's only organisations who've got the money and the time to be able to do this and so there are organisations which do an absolutely fantastic job using human analysts but that just comes with time and cost and we think that every organisation wants to know who they're doing business with whether that be supply chain due diligence, whether that be employee onboarding, whether that be giving money to people or taking money from people you always want to know who you're doing business with and in a digital world you don't even get to meet people to build the relationships like we used to and so doing this due diligence is important but we want to just democratize access to it so that it's quick, it's simple, it's clean and it's cost-effective for anyone to run it so we're on this journey of making Xapien a verb so, just like, 'Did you Xapien them?' and that's what we want to provide.
Charles: I imagine you interact with quite a few contracts. What are the key ones and what can you share about them?
Daniel: Yes sure. They vary tremendously so some contracts are many tens of pages and they can be quite simple things and then sometimes you end up with a contract which is actually quite short and this was something quite strategically important for us which I think is quite ironic sometimes, it's just that they seem to be the inverse to the importance of them. It's not always the case. But Yes we buy quite a lot of stuff, we've got procurement type contracts. One that I deal with the most is our contract, is our order form, talking to our customers about that and which bits they're happy with and which bits they're not and dealing with the legal team on the other side. In terms of, sort of, HR and NDAs and things like that I've actually found that to be relatively simple. As I say we set up these templates right up front when we founded the company and they've managed to survive, I guess we must have done something right at that point in time.
Charles: The common areas where you get pushback or clients who are requesting certain things, how do you dissipate all of those?
Daniel: We're quite an international business, Xapien works in 132 languages and so it's relevant at all of the different organisations all around the world. One of the challenges to get back is people look at our order form and they say 'I'd quite like this to be done under the jurisdiction of the blah blah blah,' and we're like, 'Hmm, I don't really know what that means and I don't really want to go and look into what that means that all sounds a bit tricky.' So I would say geographical issues are probably one of the ones which worry me the most or maybe just cause me to think like, 'How much money do I need to invest in working out if this is a problem for me or can I accept it?' That's quite a difficult question for me to ask because our contracts are sometimes quite cheap here they're literally just a few thousand pounds. So if it's a few thousand pound contract can you really justify going to change these terms? So one of the bits that I find difficult is how hard to say no, it's a SaaS service, all you're doing is logging on to our website, it's really straightforward, just accept these terms vs how much do we have to get in with the legal procurement teams.
Charles: For any founders watching us for the first time, what tips can you share with them?
Daniel: I think it's try and take in proportionality. As a founder of a small organisation, your biggest risks are existential risks of not being able to sell or deliver your service, not of being hauled over the coals in some random jurisdiction or doing something like that and so it's, you know, running out of cash and it's things like that. It's very plain black and white things. So I think my advice would be you are taking a big risk on starting the company in the first place and therefore I think you should allow yourself the ability to take calculated risks on your contracts where you think this is just not likely to be an issue, it's a real issue for my client, they've got a big legal team behind it, this caught them out once and that's why it's in there it's just not going to really be an issue for us. So that's my counsel anyway and that's not legal advice. Caveat that.
Charles: If you are being sent a contract assigned today what would impress you?
Daniel: What impresses me most in contracts that I've seen are the ones which are written cleanly and plainly and simply and they articulate the understanding that we have between 2 people and what we've been discussing. It's not all buried in legalese where sentences are the length of a paragraph with commas and all the legal jargon which is just difficult to decipher. If they are written as a short contract which says exactly the bullet points and what we're trying to get into rather than trying to protect against every eventuality I think that's what, like, 'What are we going to do? If we actually ever bring this contract out and have to fight it out in a court of law, like, things have gone really badly with this but what we're trying to do with the contract is just to come to a common understanding, just write down what we both think we've heard and what we both think we've agreed to the best of our ability and sign that.' Then things like e-signatures are, like, amazing on an e-signature portal and making it easy to do business with. I guess maybe I'd summarise everything as try not to dress up and make those contracts too complicated that require lawyers then to go and decipher them for you.
Charles: So simple and clear language and terms if you want to onboard clients?
Daniel: Precisely, exactly that.