After Life or Death Pivot, Sezzle Heats Up

When Charlie Youakim and Paul Paradis started Sezzle in 2016, their grand plan was to lower ACH merchant processing fees while rewarding consumers.

A model that essentially pitted them up against the likes of PayPal — a dominant leader in the B2C payments market.

While ambitious and overdue, this fix never really caught on with consumers, and while merchants liked the idea of lowering processing fees, they weren’t jumping at the chance to sign up.

“After about 3-4 months we realized that it just wasn’t working,” Youakim sums up, without going into all the details. “So we looked around and found an opportunity to pursue a completely new model.”

“We had just enough time and money to solve a different problem,” Paradis says of the pivot.

So in June they switched it up at Sezzle, transitioning into a ‘reverse layaway’ service for online merchants to offer their customers — especially those with little to no credit — a new way to pay through small installments.  Interest free.

“The premise that young people ages 18-35 don’t have any or good credit is generally true,” explains Youakim. “And there’s an endless demand from merchants who want to increase sales.”

Without even using a credit report, just analyzing the individual’s bank statements, Sezzle enables consumers to ‘buy now and pay later’ to foster purchases that otherwise wouldn’t happen.

“So far, we’re processing over 5% of the orders at our merchant partners’ stores and customers are spending 50% more when they pay with Sezzle” Paradis says of the adoption.

“And our repayment rates are phenomenal,” as the kicker is Sezzle’s installment plans don’t even qualify as loans, which means they don’t have to go through any of the traditional lending bureaucracy.

“To sum it up, we basically went from lights out to lights on,” Youakim summarizes. “It was like the flick of a switch.”

With 80 customer merchants now on board, each paying around 6% per transaction, Sezzle believes they’ve found the product-market fit that evaded them initially.  It’s a huge market: potential customers are any online retailer that ships to any resident of the US.  They’ve started with a niche, focused on women’s fashion, due to the high frequency of purchases made in this space among 18-35 year olds.

The irony in the pivot is the 180 change, they’ve basically gone from a value prop of competing on fees to actually charging higher fees, but by lifting sales in the process and focusing on the net.

“We’re adding new customers and processing more transactions for each merchant every week right now…our KPIs are off the charts and the hockey stick is happening,” says Paradis.

Sezzle has seven full time employees and has previously raised $1.8m to date with the goal of “closing on a large round of capital by end of the year” supported by their newfound traction ($)


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  • Daren Cotter

    Congrats to the Sezzle team on a phenomenally well-executed pivot! Perfect data point to illustrate why early-stage investors are truly investing in teams more than ideas. Charlie and Paul are top notch.

  • Evan Zaruba

    I’ve had this idea forever and I think it’s awesome that someone is executing it and that it’s working. I wish I could invest.