From Idea to Global Leader in E-Gift Cards
Tango Card CEO and Founder David Leeds shares how he grew the company to serve thousands of customers by focusing on research, continual learning and product simplicity.
Tango Card is the world leader in fulfilling digital rewards and incentives, enabling enterprise clients in over 80 countries to send their employees and customers e-gift cards. Founded in 2009, the company has grown rapidly. Around 4,000 customers use Tango Card to deliver millions of e-gift cards from more than 1,000 brands each month.
Tango Card’s technology platform includes its flagship Rewards as a Service (RaaS) API that allows customers to easily embed rewards and incentives into their existing employee and customer loyalty platforms. Its Reward Link platform enables companies to send rewards via email or postal service, allowing recipients to choose their own virtual or plastic gift cards, or charity donations.
FTV first invested in Tango Card in 2018, providing $35 million in growth capital at a crucial moment in the company’s growth journey. In the four years since our investment, Tango Card has grown overall reward issuance by over 400% and is on track to exceed 500% growth in net revenue by the end of 2022.
We recently sat down with Tango Card CEO and Founder David Leeds. He shared lessons learned, including important how-tos on bootstrapping during a downturn, developing ideas into companies with longevity and picking your first outside investors.
You founded Tango Card in 2009, and it’s now one of the world’s largest providers of e-gift cards, helping thousands of companies reward and incentivize millions of employees and customers each month. What is a key business decision you made early on that set Tango Card on this growth trajectory?
Tango Card was the third company I founded, and the way I start every company is the same: I do deep research to find a problem that needs fixing. In the case of Tango, I had no experience in the rewards space. But my previous company, FiberTower, was in telecoms, and after taking it public in 2006, I began researching the idea of starting a payments company. I stumbled on the fact that companies were spending $140 billion a year on rewards and incentives for their employees and customers – and the market is of course far bigger today. Yet, back in 2008-2009, the vast majority of these rewards were plastic gift cards. And that’s how I realized a company like Tango Card could upend a multibillion-dollar market by digitizing it.
When FTV invested $35 million in 2018, Tango Card already had almost 1,000 customers and over 400 gift-card brand partners. Most of that growth was through bootstrapping. Would you recommend bootstrapping to founders? When should you bring on an outside investor?
I was fortunate to have taken my last company public, so I had the flexibility to not have to raise capital right away. Turns out I was really lucky, since I started Tango Card right after the global financial crisis and capital was scarce. I knew at some point we’d need to raise capital, but I didn’t want to do that until the company was achieving stable and predictable growth. I knew raising substantial capital would come with a lot of responsibility to deliver continual growth and an eventual exit. When that time came, FTV was the perfect institutional investor – they didn’t just write a check, but more importantly have been a strategic day-to-day partner helping us make smart decisions at every step.
You’re a three-time founder. What is one thing that you did differently when starting Tango Card based on your past experience as a founder?
I learned one big lesson with my previous company, FiberTower, which is to choose an industry that has lots of potential customers. We were in the wireless space, and there were really only five customers, including Verizon and AT&T. So for my next company, I looked for a market with a vast number of potential customers. Today, over two million companies worldwide use rewards and incentives, meaning Tango Card has an almost limitless supply of potential customers.
On the flipside, what is one strategy that you’ve used consistently?
I’ve used a three-part strategy for all three companies I’ve founded. First, I do tons of deep research on the sector to really understand the market. Second, I spend a lot of time thinking about the type of business I want to create and define a clear goal – a north star – that’s ambitious but achievable. Third, I never stop learning. I attend many conferences both in my sector and in adjacent ones. I go to engineering events; learn about advances in AI, fintech and other future technologies; and generally just remain really curious about what’s coming in the next two or three years.
You’ve built companies during up and down markets. In the current environment, what is your advice for one of the most important things a founder can do to ensure their company weathers an economic downturn?
When I started my last company it was right after the dotcom crash, and I started Tango Card right after the global financial crisis. So both times were challenging. But to be honest, I think the best time to start a company is when times are tough. First, there’s less competition for top talent. Recessions are great opportunities to lean into innovation and development because you can hire top engineering talent far more easily. Second, in really good times, VC and PE firms are investing in everything to make sure not to miss out, so there is a lot more competition for investor attention. In a downturn, investors are more discerning, but if you have a really well-researched idea and a strong team, you’ll still get funding.
Delivering millions of e-gift cards each month requires sophisticated backend technology, integration into a company’s rewards and incentives programs, and secured connections to payments and accounting systems. Tell us a bit about how Tango Card’s Rewards as a Service platform works.
What our customers want is simple – for their rewards and incentives to just work. And they want access to a global catalog of digital gift cards. So we make that happen. We offer 1,000+ of digital gift cards via a single API, so companies can offer them through their existing rewards and incentives platforms, marketing and sales systems, and more. We remove all of the complexity so their rewards just work – in multiple currencies, languages and countries.
Of course on the backend, it’s a complex financial payments engine with an incredibly secure layer that does fraud detection and protection. Our platform is highly available and scalable so that thousands of e-gift cards can be delivered securely all at once in real-time. But what our customers see is a simple experience for both the giver and receiver.
What’s next for Tango Card?
Our customers want a global partner, so that’s what we’re becoming. Right now, we’re an international company with customers in more than 80 countries. But we will become a truly global company, one that covers 99 percent of the world’s population. Most companies still use plastic gift cards, so we have millions of customers left to acquire. Lastly, we’re at the beginning of a fintech evolution where rewards and payments will become more intertwined. You’ll be able to use a reward to make a payment on a student loan, or easily re-gift it to someone else. Many other embedded payment processes will emerge and that’s a really exciting area we’re moving into. Tango Card is really just getting started.
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