Zach Perret, cofounder and CEO of 12-year-old Plaid, took the stage at the company’s annual customers conference in June, dressed all in black, his blond hair down to his shoulders, surfer-style. Standing before a backdrop of floating purple, ice-cube-shaped images, the 37-year-old opened with a pitch that evoked fintech’s go-go days of 2021—a time when San Francisco-based Plaid raised $425 million in funding at a $13.4 billion valuation, making Perret briefly a paper billionaire. “The optimism and the energy in fintech is back,” he said, later adding, “the fintech-ification of everything is happening everywhere.”

Despite such public bravado, Perret is clear-eyed about the challenges he faces as he tries to recharge Plaid’s mojo and ready it for going public, perhaps in 2026. He made his mark building the data plumbing for fintech–connecting consumers and their bank accounts to new services provided by the likes of Venmo, Chime, Robinhood and Affirm. Now he’s aiming to build products, too, by leveraging that connectivity and the vast troves of financial information Plaid continuously collects on 100 million-plus consumers. Perret is creating services in three lines of business: credit-risk analytics, fraud prevention and pay-by-bank (where you pay directly from your bank account instead of with a credit or debit card). What they all have in common is that Plaid’s existing network of connections could give it an edge.

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Perret admits that launching all three at once is ambitious and that he’s not sure which is most likely to succeed. “Imagine a huge snake and it eats an elephant. And then you see this elephant slowly digesting as it goes through the snake. That's kind of what we've done,’’ he says. “It's been difficult. We’ve had to be very focused on how we spend our time and resources.”

It would be folly to count Perret out. In the fintech world of hype-masters and marketers, he’s built a real business. With many of the fintechs it serves in the doldrums, Plaid’s revenues grew only 12% in 2023, down from a 23% growth rate in 2022, according to people familiar with its financials. Yet it still booked $308 million in revenue and is on track for 20% top-line growth in 2024, sources say.

Plaid isn’t profitable yet. But it’s been paring losses, from $70 million last year to an expected $50 million or less this year, and still has about $140 million in the bank. Its gross profit margins are around 80%, above average for business-to-business software.

Plaid is certainly not worth $13.4 billion now; estimates put it at anywhere from $3.8 billion (per secondary marketplace analytics firm Caplight) to $8 billion (an internal valuation by one of its investors)—making Perret’s stake still worth hundreds of millions. The CEO of another fintech unicorn neatly sums up the questions around Plaid’s future: “Is it a business that, in a steady-state world, does $300 to $400 million of annual revenue? Or is it a business that does billions of annual revenue as it scales? I don’t think anyone knows.”

Perret and Plaid cofounder William Hockey met as junior consultants at Bain in Atlanta. Perret had studied chemistry and biology at Duke; Hockey, two years younger, was an Emory computer science grad. They bonded over a love of coding and rock climbing and a disdain for conventional financial services. By 2012, they had ditched Bain and launched a personal finance assistant that made budgeting recommendations. Users hated it.

So they pivoted to something they had developed along the way: software that helped consumers quickly transfer money from their traditional bank accounts to fintech apps. Selling the product and raising venture capital funding were a slog initially, but in 2014 they landed peer-to-peer payment service Venmo as a customer. When Venmo took off the following year, Plaid started gaining street cred. (Perret and Hockey also made Forbes’ 2015 30 under 30 list.) In mid-2016, Plaid was valued at $225 million as it raised a Series B funding round of $44 million from backers including American Express, Citi Ventures, Goldman Sachs and NEA. By 2019, it was a unicorn, valued at $2.65 billion.

From the first, Perret and Hockey adopted a strategy of what they called “selling through the basement”—they designed Plaid’s software and documentation to be easy for coders to use, believing developer enthusiasm would drive sales without lots of salespeople and marketing dollars needed. It worked. Plaid expanded much faster than competitors already in the bank-linking business, including Silicon Valley-based Yodlee and Utah-based businesses Finicity and MX.

It wasn’t all organic growth. In early 2019, Plaid spent about $200 million to acquire New York-based competitor Quovo, which had 200 employees–roughly the same as Plaid. “They purchased us to eliminate a competitor,” says Quovo cofounder Michael Del Monte, who’s now cofounder and CTO of Plaid competitor MoneyKit. Plaid rejects that interpretation, saying Quovo had strong traction with a different set of customers: brokerages and investment apps. That June, cofounder Hockey left Plaid, though he remained on Plaid’s board of directors, and he later launched a fintech-friendly bank, Column, where he’s CEO.

The initial approach Plaid and its fellow data aggregators took to connecting fintech apps to bank data was bold–and controversial. It created a bot that would prompt customers to enter their bank usernames and passwords, loen g in on their behalf, scrape any information it needed and transfer the requested data to a fintech app. Banks were enraged and terrified of the potential cybersecurity risks. What if Plaid got hacked? Of course, they also worried that Plaid’s technology would make it easier for consumers to switch their primary bank........

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