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Jun 6, 2019 · 22m · top-founders

1412 Passed $12m in ARR, Banks Use This API To Decrease Currency Risk

Darren Jer · 12m spoken Nathan Latka · 7m spoken
0:00 / 0:00

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Nathan Latka interviews MarketFactory co-founder and CEO Darren Jer, exploring how the fintech company reached twelve million dollars in ARR by providing mission-critical API infrastructure for institutional foreign exchange trading. Jer details their disruptive SaaS pricing model, enterprise unit economics, continuous market data architecture, and balanced approach to venture and non-dilutive debt financing.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 37.6% of the talking time here. How this is scored →

Nathan as informed peer 4.1 Guest teaching 2.8 Guest disagreement 1.0 Nathan pushing back 2.6
05100:0010:0020:000:00–2:01 · Nathan as informed peer 0/10 Nathan Latka Promotes New Bestselling Book Introductory solo promo by Nathan Latka reading book reviews and teasing high-level metrics for MarketFactory. Host monologue rules apply.2:02–6:11 · Nathan as informed peer 4/10 Introducing Darren Jer and Global FX Dynamics Nathan probes why currency risk builds up if transactions are continuous. Darren educates him on the peer-to-peer nature of global institutional FX markets and bank pricing structures.6:12–9:44 · Nathan as informed peer 6/10 Pioneering the SaaS Model in Currency Trading Nathan relates MarketFactory's pricing model to MailChimp's unit economics and calculates $1M MRR based on Darren's enterprise customer count and ARPU figures.9:46–11:54 · Nathan as informed peer 4/10 Super Bowl Trading Events vs Continuous Market Data Nathan asks if customers churn during non-peak trading periods. Darren clarifies that MarketFactory's data cleaning is continuous and essential daily infrastructure regardless of volatility spikes.11:54–15:23 · Nathan as informed peer 6/10 Net Revenue Retention and Expansion via Exchange Modules Nathan drills into net revenue retention metrics, customer payback periods, and calculates the multi-million dollar customer lifetime value.15:23–17:38 · Nathan as informed peer 6/10 Founding in 2008, Angel Funding, and Debt Financing Nathan investigates Darren's debt financing structure, specifically distinguishing between revenue-based financing from Lighter Capital and a credit line from Bridge Bank.17:38–20:05 · Nathan as informed peer 4/10 Scaling Operations, 30% YoY Growth, and EBITDA Break-Even Darren explains why operational scaling requires high-touch engineering given demanding enterprise SLAs, while Nathan checks EBITDA breakeven status.20:05–21:56 · Nathan as informed peer 3/10 The Famous Five Rapid-Fire Questions with Darren Jer Standard Famous Five rapid-fire segment and Nathan's summary of MarketFactory's key metrics.0:00–2:01 · Guest teaching 0/10 Nathan Latka Promotes New Bestselling Book Introductory solo promo by Nathan Latka reading book reviews and teasing high-level metrics for MarketFactory. Host monologue rules apply.2:02–6:11 · Guest teaching 6/10 Introducing Darren Jer and Global FX Dynamics Nathan probes why currency risk builds up if transactions are continuous. Darren educates him on the peer-to-peer nature of global institutional FX markets and bank pricing structures.6:12–9:44 · Guest teaching 3/10 Pioneering the SaaS Model in Currency Trading Nathan relates MarketFactory's pricing model to MailChimp's unit economics and calculates $1M MRR based on Darren's enterprise customer count and ARPU figures.9:46–11:54 · Guest teaching 5/10 Super Bowl Trading Events vs Continuous Market Data Nathan asks if customers churn during non-peak trading periods. Darren clarifies that MarketFactory's data cleaning is continuous and essential daily infrastructure regardless of volatility spikes.11:54–15:23 · Guest teaching 2/10 Net Revenue Retention and Expansion via Exchange Modules Nathan drills into net revenue retention metrics, customer payback periods, and calculates the multi-million dollar customer lifetime value.15:23–17:38 · Guest teaching 4/10 Founding in 2008, Angel Funding, and Debt Financing Nathan investigates Darren's debt financing structure, specifically distinguishing between revenue-based financing from Lighter Capital and a credit line from Bridge Bank.17:38–20:05 · Guest teaching 2/10 Scaling Operations, 30% YoY Growth, and EBITDA Break-Even Darren explains why operational scaling requires high-touch engineering given demanding enterprise SLAs, while Nathan checks EBITDA breakeven status.20:05–21:56 · Guest teaching 0/10 The Famous Five Rapid-Fire Questions with Darren Jer Standard Famous Five rapid-fire segment and Nathan's summary of MarketFactory's key metrics.0:00–2:01 · Guest disagreement 0/10 Nathan Latka Promotes New Bestselling Book Introductory solo promo by Nathan Latka reading book reviews and teasing high-level metrics for MarketFactory. Host monologue rules apply.2:02–6:11 · Guest disagreement 2/10 Introducing Darren Jer and Global FX Dynamics Nathan probes why currency risk builds up if transactions are continuous. Darren educates him on the peer-to-peer nature of global institutional FX markets and bank pricing structures.6:12–9:44 · Guest disagreement 1/10 Pioneering the SaaS Model in Currency Trading Nathan relates MarketFactory's pricing model to MailChimp's unit economics and calculates $1M MRR based on Darren's enterprise customer count and ARPU figures.9:46–11:54 · Guest disagreement 1/10 Super Bowl Trading Events vs Continuous Market Data Nathan asks if customers churn during non-peak trading periods. Darren clarifies that MarketFactory's data cleaning is continuous and essential daily infrastructure regardless of volatility spikes.11:54–15:23 · Guest disagreement 1/10 Net Revenue Retention and Expansion via Exchange Modules Nathan drills into net revenue retention metrics, customer payback periods, and calculates the multi-million dollar customer lifetime value.15:23–17:38 · Guest disagreement 2/10 Founding in 2008, Angel Funding, and Debt Financing Nathan investigates Darren's debt financing structure, specifically distinguishing between revenue-based financing from Lighter Capital and a credit line from Bridge Bank.17:38–20:05 · Guest disagreement 1/10 Scaling Operations, 30% YoY Growth, and EBITDA Break-Even Darren explains why operational scaling requires high-touch engineering given demanding enterprise SLAs, while Nathan checks EBITDA breakeven status.20:05–21:56 · Guest disagreement 0/10 The Famous Five Rapid-Fire Questions with Darren Jer Standard Famous Five rapid-fire segment and Nathan's summary of MarketFactory's key metrics.0:00–2:01 · Nathan pushing back 0/10 Nathan Latka Promotes New Bestselling Book Introductory solo promo by Nathan Latka reading book reviews and teasing high-level metrics for MarketFactory. Host monologue rules apply.2:02–6:11 · Nathan pushing back 4/10 Introducing Darren Jer and Global FX Dynamics Nathan probes why currency risk builds up if transactions are continuous. Darren educates him on the peer-to-peer nature of global institutional FX markets and bank pricing structures.6:12–9:44 · Nathan pushing back 3/10 Pioneering the SaaS Model in Currency Trading Nathan relates MarketFactory's pricing model to MailChimp's unit economics and calculates $1M MRR based on Darren's enterprise customer count and ARPU figures.9:46–11:54 · Nathan pushing back 4/10 Super Bowl Trading Events vs Continuous Market Data Nathan asks if customers churn during non-peak trading periods. Darren clarifies that MarketFactory's data cleaning is continuous and essential daily infrastructure regardless of volatility spikes.11:54–15:23 · Nathan pushing back 3/10 Net Revenue Retention and Expansion via Exchange Modules Nathan drills into net revenue retention metrics, customer payback periods, and calculates the multi-million dollar customer lifetime value.15:23–17:38 · Nathan pushing back 4/10 Founding in 2008, Angel Funding, and Debt Financing Nathan investigates Darren's debt financing structure, specifically distinguishing between revenue-based financing from Lighter Capital and a credit line from Bridge Bank.17:38–20:05 · Nathan pushing back 2/10 Scaling Operations, 30% YoY Growth, and EBITDA Break-Even Darren explains why operational scaling requires high-touch engineering given demanding enterprise SLAs, while Nathan checks EBITDA breakeven status.20:05–21:56 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions with Darren Jer Standard Famous Five rapid-fire segment and Nathan's summary of MarketFactory's key metrics.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 83.6% · guest 16.4%0:00 · Nathan 83.6% · guest 16.4%3:00 · Nathan 13% · guest 87%3:00 · Nathan 13% · guest 87%6:00 · Nathan 40.2% · guest 59.8%6:00 · Nathan 40.2% · guest 59.8%9:00 · Nathan 41.6% · guest 58.4%9:00 · Nathan 41.6% · guest 58.4%12:00 · Nathan 23.5% · guest 76.5%12:00 · Nathan 23.5% · guest 76.5%15:00 · Nathan 29.5% · guest 70.5%15:00 · Nathan 29.5% · guest 70.5%18:00 · Nathan 17.4% · guest 82.6%18:00 · Nathan 17.4% · guest 82.6%21:00 · Nathan 79.7% · guest 20.3%21:00 · Nathan 79.7% · guest 20.3%
Sharpest disagreement ▶ 3:56 Darren reassures Nathan on bank risk mechanisms

Darren firmly dismisses Nathan's premise that banks convert risk immediately, telling him not to worry about banks because they purposely price and manage their spreads.

 Hardest push from Nathan ▶ 10:45 Nathan challenges renewal value during down periods

Nathan presses Darren on why banks wouldn't push back on subscription renewals if they only heavily utilize the system during rare high-volatility events.

 Biggest teaching moment ▶ 2:54 Darren explains the 24/7 decentralized FX structure

Darren educates Nathan on how global FX trading functions like a peer-to-peer network rather than a centralized exchange like the NYSE.

 Nathan holds their own ▶ 17:05 Nathan details debt financing structures

Nathan demonstrates domain expertise by precisely breaking down the difference between Lighter Capital's revenue-based financing and venture bank term loans.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Nathan Latka Promotes New Bestselling Book 0000 Introductory solo promo by Nathan Latka reading book reviews and teasing high-level metrics for MarketFactory. Host monologue rules apply.
Introducing Darren Jer and Global FX Dynamics 4624 Nathan probes why currency risk builds up if transactions are continuous. Darren educates him on the peer-to-peer nature of global institutional FX markets and bank pricing structures.
Pioneering the SaaS Model in Currency Trading 6313 Nathan relates MarketFactory's pricing model to MailChimp's unit economics and calculates $1M MRR based on Darren's enterprise customer count and ARPU figures.
Super Bowl Trading Events vs Continuous Market Data 4514 Nathan asks if customers churn during non-peak trading periods. Darren clarifies that MarketFactory's data cleaning is continuous and essential daily infrastructure regardless of volatility spikes.
Net Revenue Retention and Expansion via Exchange Modules 6213 Nathan drills into net revenue retention metrics, customer payback periods, and calculates the multi-million dollar customer lifetime value.
Founding in 2008, Angel Funding, and Debt Financing 6424 Nathan investigates Darren's debt financing structure, specifically distinguishing between revenue-based financing from Lighter Capital and a credit line from Bridge Bank.
Scaling Operations, 30% YoY Growth, and EBITDA Break-Even 4212 Darren explains why operational scaling requires high-touch engineering given demanding enterprise SLAs, while Nathan checks EBITDA breakeven status.
The Famous Five Rapid-Fire Questions with Darren Jer 3001 Standard Famous Five rapid-fire segment and Nathan's summary of MarketFactory's key metrics.

Statements from this episode (15)

Assertion Supported
FX operates like Napster: a decentralized, 24/7 global trading network
“If you trade stocks, there's probably three major exchanges, New York Stock Exchange, NASDAQ, and some others in the US. But if you trade currencies, it's a very global market, right? It's almost like Napster for trading, which is every single bank, every sing…”
Darren Jer Jun 6, 2019 ▶ 3:16
Disclosure
MarketFactory provides a single API to connect institutional FX traders
“So what Market Factory does is provide a single platform, a single API that connects all these different B to B institutions to one another to trade all these foreign currencies, and it's very much an institutional market.”
Darren Jer Jun 6, 2019 ▶ 5:38
Assertion Supported
The minimum trade size in institutional FX is $1 million
“Minimum trade size is one million US dollars, right?”
Darren Jer Jun 6, 2019 ▶ 5:50
Assertion Not checkable as stated
MarketFactory was likely the first to bring a SaaS model to FX
“We actually brought the SAS model. We're probably the first ones to bring the SAS model to foreign exchange. So we are strictly, you know, MRR, ARR based.”
Darren Jer Jun 6, 2019 ▶ 6:27
Disclosure
MarketFactory charges ARR per module, offering unlimited API calls
“We actually just charge it by functionality module. So let's say a bank typically needs, you know 20 exchanges to start to trade with to begin, but they'll scale up to 35, 40 exchanges. So we'll charge an ARR per exchange per module. Right. And it's unlimited …”
Darren Jer Jun 6, 2019 ▶ 6:44
Assertion Not checkable as stated
Jer: MarketFactory customers are 45% banks, 45% funds, 10% brokers
“We're probably like 45% banks, 45% funds, you know, the buy side. And then about 10% brokers.”
Darren Jer Jun 6, 2019 ▶ 8:17
Assertion Not checkable as stated
MarketFactory's 30 enterprise customers average a massive $400k ARR
“Our average revenue per account is 400,000 ARR. Dollars. Our range of, we have about 30 enterprise customers who pay us between a hundred K and over a million dollars a year.”
Darren Jer Jun 6, 2019 ▶ 8:27
Disclosure
MarketFactory achieves elite 125% to 138% annual net revenue retention
“Yeah, net, net, it's like one 25 to one 38.”
Darren Jer Jun 6, 2019 ▶ 12:48
Disclosure
MarketFactory's CAC payback period is an efficient four to six months
“Our cap, okay, our customer, our cap is probably four to six months.”
Darren Jer Jun 6, 2019 ▶ 13:53
Disclosure
MarketFactory lands $400k ACV enterprise contracts with only three salespeople
“Company is 36 people between New York and London, mostly engineers. We actually only have three salespeople, three, three salespeople who also do some account management.”
Darren Jer Jun 6, 2019 ▶ 14:33
Disclosure
MarketFactory's enterprise customer lifetime averages eight years
“So our LTV is about is about eight years. Okay. We have one customer that's at nine years.”
Darren Jer Jun 6, 2019 ▶ 14:44
Insight
Jer: Deep vertical software companies can reach 80% to 90% market share
“And also because of the deep vertical nature, you know, I think you read the S ones for various deep vertical companies and they, you know, the, really it's, you know, as you grow, you can approach 80, 90%, you know, market share.”
Darren Jer Jun 6, 2019 ▶ 15:12
Disclosure
Jer: $5.7M of MarketFactory's $7M Series A came from angel investors
“Our entire series A was seven million, right? And 1.3 million is from a great venture partner first mark capital in New York. But the remainder of 5.7 is all from individuals.”
Darren Jer Jun 6, 2019 ▶ 15:58
Disclosure
MarketFactory used a $500k loan from Lighter Capital to bridge cash crunches
“Found a great partner in lighter capital based in Seattle. You know, they gave us like a 500 K AR 500 K loan.”
Darren Jer Jun 6, 2019 ▶ 16:54
Assertion Not checkable as stated
Jer: MarketFactory operates at roughly EBITDA break-even
“No, we're pretty much like EBITDA break even. So, you know, 50 grand, 200 grand plus, you know, maybe like 600 K minus depending on the last couple of years.”
Darren Jer Jun 6, 2019 ▶ 19:55
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