Startup Q&A: Assaf Feldman, Co-Founder & CTO, Riskified
RTIH: Tell us about Riskified
AF: Riskified is an AI platform that offers a suite of products and solutions to help e-commerce reach its full potential. Our platform can instantly and accurately recognise legitimate customers and keep them moving towards checkout.
The massive growth and great success stories of the e-commerce revolution have overshadowed a real problem - it’s running on old tech. Most of the systems that underpin e-commerce have been around for decades now, but the way we shop is changing moment to moment. Our solutions use the latest technology and deep expertise to make those systems function more efficiently.
As a result, merchants increase revenue, shoppers have a better experience, financial institutions can cut costs and reduce customer frustration, and most importantly more people can participate in the global economy.
We work with some of the world’s most-impactful brands across nearly all industries – from airlines to luxury fashion houses, to gift card marketplaces – to approve more orders, manage risk, and eliminate customer friction.
Our suite of solutions can review transactions for fraud, protect customer accounts and save information, increase bank authorisation rates and help good customers complete purchases that they otherwise wouldn’t have been able to. We do all of that instantly and behind the scenes, so merchants can focus on serving their customers and growing their business.
RTIH: What was the inspiration behind setting the company up?
AF: The inspiration was twofold. First, my co-founder - Eido Gal - and I had an entrepreneurial streak, and we knew we wanted to start our own business. Second, we saw a better way to do things.
We knew that merchants were taking an unnecessarily cautious approach to reviewing and approving orders. They were losing revenue and frustrating customers as a result. We wanted to fix that problem, which meant approving orders that we believed were good, but that the merchants felt were too risky.
In order to push the boundaries and get to the level of results that we believed possible, we had to take ownership of the risks that were part of their business. Convincing them to give us the control that we needed meant guaranteeing the transactions, which is how our chargeback-guarantee model was born.
For all the orders that we approve, we guarantee that income for the merchant. If we're wrong, we pay. We strongly believed in our concept - at a time when not everyone else did - and our chargeback guarantee was a "prove it" approach.
RTIH: What has been the industry reaction thus far?
AF: It’s been amazing. When we started in 2012, we had to prove a brand-new approach and business model. It’s fair to say there was some scepticism. But once we were able to show merchants the results of working with Riskified, we really took off.
We now work with hundreds of the largest and most influential merchants in e-commerce, such as Finish Line, Lastminute.com and giftcards.com. We passed $100 million in annual recurring revenues last year, and in the past five years, our compound annual growth rate was 250%.
And, it’s not just our numbers that show the how the market has embraced us. Merchants that partner with us regularly see increased revenue, reduced costs and happier customers. They’re able to safely sell to more geographies and expand their product mix and fulfilment options. I’m particularly proud of the fact that, on average, merchants working with us grow at a faster rate than e-commerce as a whole.
“Providing a great omnichannel experience can increase revenue and lead to lifetime brand loyalists. But all those great offerings - in-app purchases, social media offers, Click & Collect, delivery to lockers - pose new risks and challenges that merchants have to address”
RTIH: What has been your biggest challenge/setback?
AF: I’m really fortunate to say is that we haven’t had any major setbacks, but we have definitely had our share of challenges.
Riskified now is a fully automated solution where decisions are made instantly and without human input. That’s a huge advantage for e-commerce, but it took a lot of work to get there. For the first two years of our existence, we were taking our clients riskiest orders and reviewing them manually as we built up the data and expertise needed to accurately automate our solution. It was a huge challenge.
We looked recently, and our longest-tenured analyst reviewed more than 70,000 orders before we fully made the shift to automation. But that experience can’t be replaced, and we wouldn’t be where we are now if we hadn’t invested all of that time and effort.
RTIH: What are the biggest challenges facing the omnichannel retail sector right now?
AF: How to do it right! Everyone is talking about the benefits of omnichannel because it’s one of the best ways to win in an extremely competitive environment. Providing a great omnichannel experience can increase revenue and lead to lifetime brand loyalists. But all those great offerings - in-app purchases, social media offers, Click & Collect, delivery to lockers - pose new risks and challenges that merchants have to address.
Smart retailers find the right balance between security and revenue, and they do it in a way that makes omnichannel a win for customers and not another hassle. At Riskified we think the key is embracing technology. We work behind the scenes to stop bad actors and keep legitimate customers moving forward. By doing so, merchants can meet their customers where they’re shopping - wherever that is.
RTIH: What’s the best question about your company or the market asked of you recently by a customer?
AF: How can you apply your technology to help me with payment declines and pre-authorisations?
It’s a great question, and we love the challenge. Merchants want to tackle fraud but also provide customers with the level of service and customer experience they have become accustomed to. Being able to conduct a risk analysis before payment allows merchants to maintain positive customer experience and maximise revenue.
Our “secret sauce” here is actually being able to filter out fraud before bank authorisation, which gets more transactions approved. This way, the merchants retain a better standing with the bank and fraud is blocked without negatively impacting shoppers’ experience.
This is also extremely useful for merchants when it comes to taking a proactive approach to the Payment Services Directive 2 (PSD2) in Europe, as providing a pre-authorisation capability can dramatically help in preventing friction and customer drop-off by taking advantage of exemptions.
As readers may know, under PSD2, online payments with European issuers and acquirers must undergo Strong Customer Authentication (SCA), which adds friction at checkout. Our pre-authorisation and PSD2 Optimisation products route orders that can be exempt from SCA, undergoing frictionless Transaction Risk Analysis (TRA) instead.
RTIH: What can we expect to see from Riskified over the next 12 months?
AF: We’re uniquely positioned at the intersection of billions of customers, millions of merchants and thousands of financial institutions, and we believe we can help commerce realise its full potential. We take that seriously. We want everyone to have the opportunity to benefit from this sea change.
We’ll keep expanding our offerings and finding ways to help merchants better serve their customers and help customers have a better shopping experience.