Visa

**Ben Gilbert** (0:00)
It's funny, when we picked this episode, I was like, oh, this is going to be pretty down the middle and easy. And then, of course, as we get into the research, as always, it's like, oh, no, big story here.

**David Rosenthal** (0:09)
There's always a story.
Is it you, is it you, is it you?
Is it you, is it you, is it you?

**Ben Gilbert** (0:28)
welcome to Season 13, Episode 4 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

**David Rosenthal** (0:36)
I'm David Rosenthal.

**Ben Gilbert** (0:38)
We are your hosts. Today, we tell the story of an absolutely incredible system. You can show up anywhere in the entire world with a piece of plastic and transact for anything you want in any currency. The merchant doesn't need to know you or trust you, and you do not need to know or trust the merchant. And Visa, along with just one other competitor, MasterCard, has tirelessly spent decades stitching together all the banks, merchants and the relationships with consumers to make this possible. Now, this is just the rosy side of the story, and merchants may harbor far less rosy feelings about Visa given how much of their profits go to interchange fees. But the duality of the story is what makes it so interesting to understand. Today, we will explore how the whole thing came to be and try to understand the value that the credit and debit card system creates compared with how much it captures and by whom in what situations. So here are some astonishing stats on Visa. It is the 11th most valuable company in the world. It is worth more than any bank in the world, including every bank involved in creating it.
Visa's brand is among the very most trusted in the world associated with reliability and security. But that said, if you asked most people what Visa does, they could not actually articulate it. Visa does not extend credit. They do not issue cards. They do not work directly with merchants. They do not work directly with consumers. They are not a bank or a financial institution. They don't ever bear any risk. They are merely a network connecting banks to other banks. David, it is insane.

**David Rosenthal** (2:20)
This is such an insane story. I can't believe we're all the way in season 13 and we haven't talked about this company yet. But as we will get into, it's always been overlooked and underrated.

**Ben Gilbert** (2:30)
Well, perhaps not underrated the last decade or so. If you listeners want to know every time an episode drops, you can sign up for email updates at acquired.fm slash email. Two new fun things. One, emails now include little hints and some teasers about what next episode will be. So if you want to play the guessing game, sign up at acquired.fm slash email. And the emails have another new feature. We are including follow ups from previous episodes when we learn new things from you after release. Come talk about this episode with us after listening at acquired.fm slash Slack. And if you want more from David and I outside of these big, long, main acquired episodes, check out ACQ2, our interviews on the second podcast feed. Now, without further ado, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David Rosenthal, where are we starting today?

**David Rosenthal** (3:28)
Well, we are starting actually with a big thank you to Dave Stearns, author of what is undeniably the very best book on Visa and its history, Electronic Value Exchange. And we owe a thank you to Dave both for writing the book and for talking to us as we researched and helping us sift through everything as we're preparing here.

**Ben Gilbert** (3:46)
Fellow Seattleite and the book, which is so wonderfully esoterically named Electronic Value Exchange, was his, I think, PhD thesis that they sort of turned into a book.

**David Rosenthal** (3:55)
Correct.

**Ben Gilbert** (3:56)
All right, take us back in time.

**David Rosenthal** (3:59)
So Dee Hock, the founder of Visa, who we will talk a lot about as we go along here, he told this great story of how after his time at Visa and his kind of older age, he would start his speaking engagements with a little thought exercise for the audience. He would get up on stage, he'd hold up his Visa card, and he would ask, how many of you recognize this? And of course, every single hand in the room would go up as I assume all of yours listening are going up now too. Then he would say, okay, now how many of you can tell me who owns this company? And every single hand in the room would always go down. And then he would say, how did this company start? No hands. Who runs it and who governs it? No hands. Where is it headquartered? No hands. It's just wild, as we were saying in the intro, how important this company is. And yet still to this day, I think, you know, maybe a few more people than in Dee's time know the answer to these questions, but not many.