Launching a FinTech-For-Good: An Interview with Goodworld CFO & Cofounder & Army veteran John Gossart

It was through running this operation for Mastercard that we realized the market opportunity was way bigger than just the 1.8 million nonprofits in the US. To truly solve the problem we were attacking we needed to include brands [businesses] as well as causes [charities] and people [donors/employees]. So that was a breakthrough there. — John Gossart; Goodworld Cofounder & CFO

After a very successful 21 years as a U.S. Army Officer, John Gossart began a new career in technology entrepreneurship when close friend Steve Carroll convinced him to leave the service and join three fellow Army veteran to found RideScout as Vice President of Corporate Development and ‘the numbers guy’ in 2013. RideScout helped users find the easiest way to get from one point to another using different modes of transportation, including public transit, car- or bike-share.

Gossart on RideScout and getting started in tech entrepreneurship:

I was a deputy director of Special Operations and counterterrorism policy at the Pentagon. I got to spend a lot of time in Yemen and Pakistan, obviously Iraq and Afghanistan, East Africa, Mali, so a great, great experience. So I was in Yemen, and I got a NIPR [unclassified] email from Steve Carroll

We had only raised a couple million dollars for RideScout before we were acquired. You know, it’s far less than I’ve raised for my current company, but it was all convertible note pain. I think we had 59 people on the cap table at RideScout that we were managing, so we even had to create an LLC of unaccredited investors. Really the reason that I felt confident enough — or at least not too crazy — to launch Goodworld is, I learned a lot of lessons about what not to do. Everything from the revenue model, to burn, to the way we prioritize sprints in the engineering effort, to investor meetings, all these things that I watched crumble in front of me at various times with RideScout. However, in the end, the big RidesScout vision and the people won out, and it ended with a very successful exit.

But those less successful things stuck longer with me, a lot to about leadership and team. There was no shortage of discontent, and a lot of that fomented by me. So I’m thankful for that, because all that was in my kit bag to take with me to the next thing. And I turned around and not only did I launch Goodworld very quickly, but I negotiated my way out of the longer term deal with Daimler post acquisition.”

RideScout was in the right place at the right time as Daimler consolidated its mobility services business under Moovel GmbH, and acquired mytaxi in 2012. Less than three years after launch, Daimler acquired RideScout, in an undisclosed but reportedly eight-figure exit. Coming off a win, John co-founded Goodworld in early 2015 with Dale Pfeiffer as CEO.

Gossart on the problem Goodworld tackled:

Our bet was that people wanted to make payments at the moment that they were inspired to make a consumption decision. The problem we wanted to solve was $3 trillion dollars of card abandonment. We went to market in the charitable giving space so that we could go to market quietly and not raise the ire of PayPal or Google who could crush us in a second. You see something that inspired you to click: Oh, I like these shoes, I like this shirt, this call to action from Save the Children, and I get redirected. I get redirected to this kind of onerous experience. And I’m gone, and I’ll never be back. More than nine out of ten transactions end like that. So, cart abandonment is a massive problem.

Gossart on timing Goodworld’s priced funding round:

I had some shine, we had just been acquired, and I wanted to take advantage of that and raise money on this idea. So we came right out the door with a priced round that was anchored by Nyca Partners, which is run by the former President of Visa, he’s the Managing Partner. So a powerhouse FinTech Venture firm. So we brought in an adult priced round right out of the gate with this company [Goodworld] as opposed to convertible debt. And I just think if I had waited a year to 18 months to finish my hitch with Daimler, I wouldn’t have been able to lean on that RideScout story nearly as much.

Gossart on fundraising:

I didn’t realize the capital market was going to snap back like it did. And it did, and right now, the VC market is much more fundamental. Valuation is back to being based on multiples of revenue or preferably multiples of EBIT — as it should be. Unless you’re a rock star that’s exited a couple of times, if you’re trying to talk to people in the valley or even East Coast money in New York, and you’re pre-revenue, and you’re saying: I want money to build a prototype, they’re not interested in it. They’re like: Oh, we went through that between ’10 and ’15, and a lot of those didn’t work out. So they really want to test the mettle of the founders, and say: will you tap into your friends and family? Will you bootstrap? Will you personally invest?

Gossart on the Goodworld prototype:

Our 1st prototype was hashtag donate on Facebook and Twitter: I see a post from Save the Children, I’m inspired by that post so I comment #donate $10, and that triggers an instant donation and reply in your feed, an email receipt, et cetera. There’s an initial onboarding, but it’s all in your newsfeed, not even inside [Facebook] Messenger, and if I’m a repeat donor, I just get a reply to that comment in my feed — just like people talk to each other on Facebook — that says: Hey, thanks for your $10 donation.

We got a special permission from Facebook because technically what we’re doing is responding on behalf of the nonprofits page, so we’re actually not saying: Hey, the nonprofit wanted to say thank you, we are triggering replies from the actual charity.

Gossart on the only question in investment meetings:

If you can build something, pilot it in three city blocks (or some similar small functional or regional bounds), and show me that every time you put $1 into this machine, $1.20 comes out, you have evidence of product market fit. So you’re not making a lot of money, but the results are consistent and measurable, and most importantly people are willing to pay for what you are offering. You wish you could scale it to a thousand-fold and keep the company and profits for yourself, but of course it takes millions of dollars to go to market at scale. So you take your pilot traction, market assumptions and go to market plan, and you go back to the VC.

When it comes to investor pitches, ultimately, you’re only ever answering one question in investment meetings. And that’s: How are you de-risking my investment? Whether it’s team, revenue model, go-to-market strategy, it’s all about: How are you de-risking my investment? So if you show them: I’ve got these three things running, they’re very small. But every time you put $1, in $1.20, comes out. And I wish I didn’t need you, because I wish I could be in 60 cities tomorrow, but I can’t without money. So you give me the money, and I’m going to replicate these three little blocks in 60 cities. Here’s my plan to do it over the next 12 months.

Gossart on the development of Goodworld’s influencer feature:

Almost every nonprofit signed up, because they’re like: This is the future. But they weren’t activating in a way that was providing meaningful revenue, so with another million and a half [of funding] we created the 2.0 version that brought in new features and integrations, including what we call our ‘influencer feature’, which allows a non-profit to connect their #donate trigger to the Facebook page or Twitter account of a celebrity, or a band, or musician, actor, and then the call to action comes from a famous person that you’re following.

So we’ve had Sia, Lorde, William Shatner did a tweet for the Scott Hamilton foundation. The band American Authors made a music video around Giving Tuesday and #donate. So now even if I’m not following the charity, but because I’m following the celebrity, I comment #donate and I get a reply from the celebrity in my news feed. That’s: ‘Hey, John, thanks for helping us support Save the Children’ from a celebrity for my friends and family to see, and hopefully also be inspired to donate. So with that next million and a half we definitely made strides. We continued to pick up partners, but realized we were never going to get these organizations to activate in a way that was enough to sustain us from transaction fees. So we either needed to introduce some serious subscription fees, which the market was not going to bear, that we already knew. Or we had to offer something that could replace their current Donor Management System as opposed to supplement it.

We were interviewing our partners and asking: Why aren’t you doing more posts or more volume? What we figured out — and I should have been able to figure out much sooner — was that we were giving them an additive platform. So they’re using Salesforce, or Blackbaud, or Classy, or Kindful. They love the idea of social donations. But it’s not like another feature inside their core platform: It’s another platform altogether to maintain. It’s another data dashboard, another stream of revenue that’s coming in through Stripe that they would have to figure out how to reconcile from an accounting perspective. We were creating value for them, but also creating work.

Gossart on Goodworld’s acquisition of Bstow (operating as Cheerful) in December 2019:

The head of PBS was like: I love this. But if it doesn’t do $5 million for me at least, it’s not worth the human work required to reconcile this and download CSVs. And so even our seven figure clients, if they do a million dollars, that’s only $40,000 to us with our old revenue model. So we’re in an existential position in mid 2019 that we had to either build out or build backwards and say: Hey, we want to replace your donor management system.

And just coincidentally we ran into Bstow and Cheerful, and they were going after differentiation based on innovative digital tools just like we were. We’re running low on money, we’re running out of ways to generate sustainable revenue purely on Social Donations. But what if we acquire this other company that combined would give us a full suite offering — balance sheet acquisition — go out to investors and ask for a little bit of money to cover that. We did get them for like three times ARR [Annually Recurring Revenue], so it’s good value. Cheerful is like a CRM [Customer Relationship Management System] light. It’s about eight features, everything from pages to embedded forms, and all the normal stuff, but also ‘text to give’, round-ups, e-gift cards, digital auctions, and some other stuff we built out since we acquired them.

So I signed those papers December 20 of 2019. So now we’ve got three offices, a DC office, a Denver Office, and a Rio office. We met the original architect of the Cheerful technology in Denver, he’s Brazilian. We said: Why don’t you go back to Brazil and hire your team.

Gossart on what he thinks is next for Goodworld:

So it’s 2020, Covid is killing companies as well as people and we find ourselves serving more and more non-charity partners, like corporates and municipalities. We got about four credit unions that we’re doing integrations for with Mastercard. We did the ‘All for Small’ business campaign with Citi bank, and getting ready do a big bank campaign in April that’s not public yet. And then we’re still selling sales subscriptions in the background, and we’ve got other strategic partners. But we realized in 2020 that the missing pillar in our model was going to market with small and medium sized businesses who need an affordable, innovative, white label CSR platform — because their customers and employees are demanding social impact be part of the company mission

The social part was where MasterCard originally needed us, they weren’t integrating meaningfully into any of it [Facebook, Twitter, Instagram] from a cause enablement standpoint. But once Covid hit, Goodworld quickly became MasterCard’s break glass in case of emergency: An agile rapid response unit to provide Mastercard branded solutions to charity partners, municipal governments, and customers. So all year, responding to Covid, racial justice protests, Beirut explosion, et cetera, we’ve rapidly brought on about 64 new charity partners they asked us to bring on. We ran probably 30 to 35 campaigns, raised millions under the Mastercard brand. In fact, Goodworld is now running their flagship donation portal — Give.Mastercard.com — that’s us. It was through running this operation for Mastercard that we realized the market opportunity was way bigger than just the 1.8 million nonprofits in the US. To truly solve the problem we were attacking we needed to include brands (businesses) as well as causes (charities) and people (donors/employees). So that was a breakthrough there.

Almost 65% of our revenue is coming from these corporate SAAS agreements. If you take them away, long term, then we’re in a world of hurt. We’re doing probably $10K to $20K new sales every month, but $10K to $20K isn’t helping me crack my $60–70K burn rate. So the light kind of went on for us and Dale and our CTO Fernando said: Let’s start researching the need small to medium sized enterprise companies have for a plug and play CSR [Corporate Social Responsibility] capability. CSR in a box: they can point that at their customers, but also point inward at their employees.

So there are companies like Benevity that do this. But if you have less than 10,000 employees, they’re not even interested in you. So how do you do CSR as a brick and mortar small business? You’re not going to pay like $10K for the Benevity platform. So what you’re probably doing is one of your employees is running an Excel spreadsheet as an additional duty. And maybe you’re doing like a fundraiser on GoFundMe, or a mobile cause or something once a year. And maybe you get prizes, have a fundraising event, but it’s really analog, an add-on, not integrated in your HR and consumer facing platforms.

But what if you could have a completely integrated plug and play payroll, giving, teams matching, and then you could take our nonprofit tools, and use them in consumer facing ways so your current owners and consumers can enjoy digital auctions, digital ticketing for live events, donation pages, text to give, hashtag donate, all that stuff? So the more we researched this, and we brought in hundreds of companies, and did phone interviews, we just learned that there was a huge demand here. So instead of competing linearly along the nonprofit software line with Classy, Kindful, Network for Good, and Blackbaud, we’re competing across a sweet spot of three addressable markets — causes, people and BRANDS. Our differentiation is our price point is lower, and our tools are much more digitally innovative.”

Gossart on the most common founder mistake:

The biggest mistake that I see most guys out there make is they think they’ve come up with this specific idea that’s gonna change the world. And they’re so wedded to that specific solution that, even though they might be in the right space, and they got the right problem, they don’t listen to the problem. They’re so stuck on their idea that they end up pointing not at that big opportunity, that big addressable market, but at a tangent of the problem because they’re so enamored with their specific solution when they should be enamored with the problem.

Gossart on validating a startup idea:

You only think you have identified the problem until you confirm it with data. That’s the reason research is the most important place to start — and I don’t think this is where a lot of unsuccessful founders did start in the 2010’s — some of those founders sat their bedrooms, and they think they’ve got a great idea, and they talk to some friends about it at parties, and their friends go, “Yeah, that’s a great idea,” and they think okay, it’s validated. That’s not the way to do it. And in 2021, that’s not going to get you investment.

Research is important because number one, it confirms that you’ve identified an actual problem, which is where you find an addressable market of paying customers. It confirms that you’ve identified a potential solution. And in my opinion the solution is far less important than the problem. In the military there are two types of plans: Ones that won’t work, and ones that might work.

The second thing research does is identify that the potential solution might work. If it’s too early, then it’s not gonna resonate with people, and you have to be able to raise money. And if you’re too late, then you’re going to be chasing somebody that’s got first mover on you, or several people that have first mover on you.

Gossart on what’s most important:

I think it’s bullshit when people say team is the most important element if your startup is to succeed. A solid team is critical, sure, but if you give me a real problem, with a real addressable market, a solution that might work and great timing, you can give me a very competent but average person to lead that organization and you have a good chance. If you give me the Washington Redskins offensive line from 1983, you can put a competent, but relatively unknown guy like Timmy Smith behind that line, and he’s gonna run them for a lot of yards, because all he has to do is stay on his feet running through those massive holes they create. Now I’m exaggerating a little bit, you can’t have a crook. And you can’t have an idiot. But you can put a good guy or a good team together and that’s great. You don’t have to be the most brilliant if you identify a real problem, a solution that might work, and have good timing.

To learn more about Goodworld or to partner with Goodworld and John Gossart, go to goodworld.me.

To share more stories about technology and business and military veteran leadership reach out to John Bradley at jhb352@cornell.edu.