Pivot Until You Find Your Market Niche: Startup Lessons from Ronald Magleo, Founder and CTO of Paynamics

Ronald Magleo, Founder and Chief Technology Officer of Paynamics, proves why he is the master of the pivot.

Paynamics, the payment gateway led by Founder and Chief Technology Officer Ronald Magleo, is the master of the pivot. Among business startups–and tech startups especially–entrepreneurs constantly talk about “the pivot.” Simply put, it is a change in focus or strategy that allows a company to take the business to the next level. Paynamics, more than other startups, embodies this philosophy as it has pivoted not once, not twice, but three times since its founding in 2010. And despite having found a solid business plan for today, Magleo already has his eye on pivot number four.

Today, Paynamics has found success as a payment gateway to a legion of payment channels from credit cards to online banks and mobile payment services. Its clients include an impressive list of merchants such as Lazada, Mynt, SM Markets, Converge, AirAsia, Abenson, and PowerMac Center. In fact, if you recently had a financial transaction online or through your phone, there’s a good chance that Paynamics was involved.

As The Business Manual puts a spotlight on technology this month, we spoke to the company’s founder, Founder and Chief Technology Officer Ronald Magleo. He shares lessons the startup has learned throughout Paynamics’ 14 years and the 22 years the founders have been in the tech industry.

Paynamics’ Payment Gateway

Tech startups, with their humble beginnings and scalable zero-to-hero business models, are the darling of today’s businesses. Yet to the layman, what Paynamics does as a payment gateway can be difficult to explain. After all, when Paynamics is doing its job of facilitating online payments from bank, e-wallet or mobile payment service to merchants, it is invisible to the consumer.

When asked to simplify what Paynamics does, Magleo takes the point of view of his customers, the merchants, saying, “Imagine a person going online and instead of them collecting [from] a physical outlet, you collect it through [the] Internet. So we enable businesses to fulfill payments in a seamless manner. It’s like a person inside the Internet collecting payments. It’s as simple as that.”

Unlike most founders, Ronald Magleo, is the Chief Technology Officer (CTO) of the company he began together with his wife, Mylene Magleo, the current Chief Executive Officer (CEO). After a period as CEO himself, Ronald chose to focus on the CTO role.

Explaining his current role, Magleo says, “I’m always on the lookout for the next best thing on how to improve the business, how to improve the client’s user experience. So being out there, being able to grasp [opportunities], and being able to direct the overall strategy of what Paynamics can do and what Paynamics can offer, that’s my job.”

Of course, as a startup founder, directing the overall strategy of the company has always been one of the hats Ronald Magleo wears. But in its inception and early days, Paynamics was a very different company.

‘Take that Leap of Faith’

Paynamics began during Magleo’s stint at a foreign payments processor and financial services provider. Working in this company where he gained invaluable experience, he saw an opportunity.

Where did this desire to start a company of his own come from? Magleo says, “I think I can sum it up in two words: Be curious. And at the same time, be opportunistic… So my experience with other companies in the payment space, it [gave] me a certain level of experience and confidence that ‘Hey I can do this. I can be a payments company. And I can make this work.’”

Magleo compares the jump into the world of entrepreneurship as a leap of faith: one grounded in his experience and his belief in the opportunity at hand. He says, “You need to take that leap of faith as well. So you need to be able to tell yourself, ‘Hey I want to make that opportunity work.’ So for me, it’s more of that culmination of understanding those two that made me who I am and made me do Paynamics.”

‘Believe in the Vision’

While many startups often pursue financing from OPM, or Other People’s Money, Ronald and Mylene Magleo chose to bootstrap their fledgling company. “Bootstrapping is what we did [in the] early days,” he recalls. “It’s actually a culmination of my savings from my previous company, the savings of my mom and my wife.”

Magleo refers to Paynamics as “our first baby,” recounting how all their funds went to their business. He says, “Even all of the wedding pabuya [gifts] that we got from our ninongs [godfathers] we put it in our company because we believe in it.”

This belief in the future of online payments and belief in their capability to make the company a reality, led the couple to take on the risk and underwrite their own destiny. Magleo says,  “As long as you believe in the idea, believe in the vision, I think money is secondary. With that, we put everything here when we started out.”

‘Nurture Yourself’

Remarkably, Magleo’s background is not in technology. He graduated from De Lasalle University with a degree in Business Management with a major in Entrepreneurship. To fill the knowledge gap, he advises young entrepreneurs to “nurture yourself.”

His top-of-mind method for nurturing himself? Reading. While decidedly unsexy in the age of TikTok, Magleo turns to books for knowledge. 

“What I basically did in the early days,” Magleo recounts, “was read a lot.” Like Bill Gates who can be seen in the documentary Inside Bill’s Brain: Decoding Bill Gates always with a tote bag of books, Magleo immersed himself in the knowledge he needed through books.

“I nurtured myself,” he continues. “I [taught] myself, I invested myself in that knowledge. I went to the tech gatherings… And from there I also surrounded myself with capable people who know tech. And with that you discern, and you create that direction for them.”

He also acknowledges that as CTO, he leads a team that gets the job done. “It’s that culmination of knowledge and self-nurturing that allowed me to be able to nourish or create that technological staff,” he says.

Pivot Until You Make It

For Paynamics, it was not a straight line to success. In fact, the company had to pivot three times before it found a strategy that led them to sustainable growth.

Magleo compares the startup to Airbnb. Today the app is well-known as a place where travelers can find affordable accommodations and connect to the local scene. Yet when it began, it was literally renting out air mattresses to San Francisco conference goers who couldn’t book a hotel. A single pivot changed all that. By shifting its focus to travelers seeking an alternative to hotels, Airbnb was born.

In the case of Paynamics, the problems were never on the tech side. Like Airbnb, the challenges were in finding the right market.

Pivot #1

Speaking about the company’s first pivot, Magleo says, “Initially we were positioning ourselves as a software vendor for other companies to use our software.” However, in retrospect, Magleo believes that by following this strategy, they were not solving enough pain points for their customers.

Pivot #2

Paynamics’ second pivot involved looking for clients in markets outside the Philippines. “We tried to compete with global companies,” Magleo says. “Unfortunately, that type of mindset requires a big cash burn, and at the same time, a lot of investment.” 

This strategy proved costly, but during that time, they signed their first big client. And it kept them going until their third pivot.

Pivot #3

The third pivot happened at an opportune time. Around 2014, online shopping was beginning to take off, and more businesses were seeking a way to accept payments digitally.

Magleo says, “[We saw] the maturity of companies accepting payments online. So that’s where we pivoted that [we said], ‘Hey we need to be more merchant-centric in the local market.’ That became our big break.”

Paynamics had found its focus; it had found its market. And that was to provide payment solutions to local merchants. When the company found that, Magleo says, “Suddenly everything [was] alive. When we catered to that market, everything followed.”

He further explains, “In a nutshell, for my clients… the real benefit really is operational efficiency. Meaning we help them drive down costs of payment accepting or cashless payments… Without us it would cost them 10 to 20 times more if they build the infrastructure on their own while with Paynamics, it’s turnkey. To their end clients, meaning to those people who are paying, it’s a seamless experience.”

From there, the company grew rapidly, across different industries. “The third pivot allowed us to be more, and [gain] more leverage,” Magleo explains. “So that big client was both an initial blessing to us, but it also gave us the realization that in order to survive the market, we need to target the bigger base, which is different industries altogether. So we started to plant our seeds, me and my wife…

“We planted seeds in insurance, schools, government, even big retailers alike. So those seeds, surprisingly, gave us a quick base and a very, very stable base.” 

‘Win the Trust’

With its newfound focus on providing payment solutions to merchants, Paynamics then went in search of these merchants. But rather than prove their solutions worked with small clients then work their way up to big clients, did it in reverse. They chose to go after the big fish right away. Their previous experience proved key.

“We went immediately to the large clients and tried to prove to them that our technology works and it can really fulfill the service and the need,” Magleo says. “Simply put, our experience in enterprise in my previous company was very very valuable at that time. And luckily during that time, we were able to win the bids of these companies and we were able to win the trust. And it’s always being able to retain that trust that is important.”

How do you win the trust of big companies? Magleo emphasizes that being a tech company isn’t solely about technology.

He continues, saying, “We built our business not only on the tech…which is half of it, but making sure that there is a service layer attached to it, that these clients can call us at any given time, even 24/7 sometimes if they have concerns. Just being there as well really mattered when we were beginning the business.”

Pandemic Boost

Since the company’s third pivot, business steadily grew. But this would all change in 2020. Like many tech companies, Paynamics experienced a boost from the COVID-19 pandemic. According to Magleo, it “catapulted the company [to] more than three times the growth that we had from the pre-pandemic phase.”

As the world found itself in lockdown, businesses had to find a way to keep on going. The answer was online, and Paynamics was ready to serve the merchants who needed their services now more than ever.

“Because of the need of companies wanting to accept payments online, that drive also [built] the overall business altogether. So we were very, very lucky and very, very timely in that opportunity.”

Businesses across different industries were experiencing a need to shift online. And Paynamics had the solutions to remove the pain points to help them in that transformation. According to Magleo, “they put their frontline service, they collect cash, they have branches and the like. Now, even the schools were forced to or wanting to already accept online payments. So with that, the beauty of Paynamics is we already have solutions built from the other industries where we just reinvested those technologies into these other industries. That allowed us and propelled us to capture the value during the pandemic and made the brand out of that.”

Family and Humility

Aside from the products, services, and the technology of Paynamics, one aspect of the company that makes it unique is the role family plays in the organization. While Ronald Magleo is the Founder and CTO, Mylene Chua-Magleo, co-founder of Paynamics and Ronald’s wife, is the CEO. Meanwhile, Esther Magleo, Ronald’s mother, holds the CFO position.

Ronald sees this as an advantage. He says, “I think being a family has really good advantages because it allowed us to realize early on what needs to be done in the business in order for it to thrive. Being family also allowed us to care more for the business. With that care, we extended that to our clients.”

He also admits that the circumstances are out-of-the-ordinary, saying, “It’s very seldom that [you have] that opportunity where your mom is the CFO and your wife is the CEO.” The key, for Magleo, is corporate governance to ensure professionalism.

“In the Paynamics company,” he continues, “even if we are the majority on the board level, we are the minority, meaning we have independent directors also who are managing us. So in a nutshell, we also try to strike a balance and be accountable to everyone.”

It is this kind of humility that is a hallmark of Magleo’s leadership. In 2015, he was CEO, but rather than hold on to the reins of the company, he recognized his own and his partner’s strengths and took the CTO role.

He says, I realized that I’m more tech-oriented, meaning I’m more passionate on creating solutions and being out there, while my wife wants getting things more done in a manner that is safe and secure. So that realization made me realize that I need to give up the CEO position and give it to more capable hands.”

The Future of Paynamics

With a successful strategy in place serving online merchants, Paynamics is poised to reap the benefits of our increasingly digital world. And yet, Ronald Magleo already has his eye on a possible fourth pivot.

“We’re starting to realize that data is a very important element,” he says, “and the data that we’ve accumulated on a global or in a nationwide level is very, very important to other industries.”

“We can actually empower business insight,” he continues, “business intelligence, even artificial intelligence. Because these big models out there, especially artificial intelligence, need to have large language or large data sets for them to be able to study and to be refined. So I think that the next pivot really is how to provide infrastructure to those new technologies out there.”

‘Become More of a Learner’

The entrepreneurial journey of Ronald Magleo has led him to build a company that is pioneering a cashless society in the Philippines. What advice does he have for other tech entrepreneurs on the cusp of their own journey?

“I think being an entrepreneur nowadays,” Magleo says, “you need to become more of a learner. 80% of the time, you need to do a lot of stuff, reading, researching, and all of that. Really know the market that you’re coming in because entrepreneurs, at the end of the day, we’re all risk takers. We take calculated risk. We’re not gamblers… I think your entrepreneurial journey should start on really reading, basic industry comprehension, growth rates, market trends…” In that way, he advises, you can be the master of your domain.

He explains, “Master, meaning, at least in your own domain, in your space, you know that you are the most knowledgeable. Not necessarily the most competent, but most knowledgeable.” And it is this knowledge, like Ronald Magleo has proven, that will guide your decisions, your pivots, and your success.

Text VINCENT SALES

Photography KIM SANTOS of KLIQ, INC

Videography EXCEL PANLAQUE of KLIQ, INC

Art Direction ANDREA SANGCO

Sittings Editor RJ LEDESMA

Shoot Coordination TONI MENDOZA

Shot on Location PAYNAMICS TECHNOLOGIES INC., PACIFIC STAR BUILDING, MAKATI