ACQ2 by Acquired Episode: "Undoing a $5 Billion Acquisition and Building a Durable Standalone Plaid" featuring Zach Perret, CEO of Plaid Release Date: May 27, 2025

Introduction and Background

In this compelling episode of ACQ2 by Acquired, hosts Ben Gilbert and David Rosenthal engage in an in-depth conversation with Zach Perret, the co-founder and CEO of Plaid. Plaid, renowned for enabling seamless bank account linking to fintech applications, has navigated a tumultuous journey marked by a high-profile acquisition attempt by Visa, subsequent antitrust challenges, and strategic pivots to build a robust standalone enterprise.

The Visa Acquisition Attempt

The discussion kicks off with Zach recounting the pivotal moment in January 2020 when Visa announced its intent to acquire Plaid for approximately $5 billion.

[02:51] Zach Perret: "In January of 2020, we announced that Visa was acquiring Plaid for a big valuation, just above $5 billion. It was the culmination of a lot of back and forth over the past three to four months."

However, this acquisition faced significant hurdles when the U.S. Department of Justice (DOJ) filed an antitrust lawsuit, leading Plaid to terminate the deal.

[05:59] Zach Perret: "Despite the fact that the DOJ later investigated this transaction for antitrust and alleged that Visa was a monopolist, I have never thought that our products directly compete."

Navigating Antitrust Scrutiny

Zach delves into the complexities of the acquisition fallout, emphasizing that Plaid and Visa operated in complementary, rather than directly competitive, spaces.

[05:17] Zach Perret: "In some meta sense, you could say we produce substitutes, meaning you could pay for something with a bank account or you could pay for something with a credit card, but even those in almost no single transaction would you consider both of those payment methods to be viable."

The DOJ's scrutiny was unexpected, particularly Zach's belief that the acquisition wouldn't raise significant antitrust concerns.

Life After the Failed Acquisition

Following the termination of the Visa deal, Plaid experienced a surge in growth, fueled by the increasing reliance on fintech products during the COVID-19 pandemic.

[08:41] Zach Perret: "Consumers were stuck at home. They realized they still needed financial services. So usage of Plaid-powered products just caught on fire."

However, as the antitrust lawsuit progressed, the uncertainty surrounding the acquisition began to weigh on Plaid's leadership, prompting discussions about the company's future independent trajectory.

Post-Acquisition Business Growth & Decision to Walk Away

Despite the looming antitrust challenges, Plaid continued to operate independently and aggressively grow its business. This strategic decision paid off when, in January 2021, Plaid chose to walk away from the Visa acquisition, recognizing that their standalone valuation had significantly surpassed the initial offer.

[11:35] Zach Perret: "We ended up closing and had tons of team messaging, so on and so forth. One of the hardest things is explaining this level of change management within the organization. But we got through all that stuff."

The subsequent fundraising round saw Plaid's valuation rise from $5 billion during the Visa acquisition to $13 billion, later adjusting to $6 billion amid fluctuating market conditions.

[13:30] David Rosenthal: "How close then were you to the Altimeter financing? Because that was a big step up. What was it, 5 billion to 14 billion at the valuation of that round."

Diversifying Plaid’s Business

Transitioning from a primarily bank account linking service, Plaid embarked on a strategic pivot to build a comprehensive analytics platform leveraging its extensive data ecosystem.

[33:33] Zach Perret: "We definitely would have [diversified]. Our strategy has always been to build the API for your bank account, but in the long term, we believe we can build a much more valuable Analytics Business."

Plaid expanded into anti-fraud solutions, real-time credit scoring, and enhanced payment analytics, positioning itself as a pivotal player in the modern financial landscape.

[35:10] Zach Perret: "We've created three major new product areas: anti-fraud analytics, a real-time credit system, and payments analytics. These leverage our aggregate data set in unprecedented ways."

These initiatives not only diversified Plaid's revenue streams but also strengthened its position in the fintech ecosystem by providing indispensable tools to both fintech startups and traditional financial institutions.

Managing Growth and Market Cycles

Plaid’s growth trajectory was significantly influenced by macroeconomic factors, particularly interest rate fluctuations that affected the fintech sector.

[27:58] David Rosenthal: "Financial services has these big cycles that they go through, basically driven by interest rates."

During periods of Zero Interest Rate Policy (ZIRP), Plaid benefited from heightened activity, but the rapid increase in interest rates in late 2022 posed challenges as investment and lending markets frozen.

[28:34] Zach Perret: "Consumers rapidly sign up for and purchase stocks when stock prices are high. When the prices drop, then the usage drops."

Despite these cyclical pressures, Plaid maintained stable revenue streams by focusing on per user per month fees and existing customer repayment collections, mitigating the impact of reduced new user signups.

Building Trust and Brand

A critical aspect of Plaid’s success hinged on building and maintaining trust with both developers and end consumers.

[48:58] Zach Perret: "We think quite a lot about how to build a brand on three sides: developers, financial institutions, and consumers."

By ensuring a secure and seamless user experience, Plaid fostered consumer confidence, even among demographics traditionally wary of sharing financial credentials.

[53:24] Zach Perret: "The feeling that we want to create is a sense of, oh, that just worked, or, oh, that was simple, and a sense that, oh, I trust this."

Additionally, developer-centric initiatives such as providing comprehensive documentation and adopting REST architecture over the more cumbersome SOAP protocols solidified Plaid’s reputation as a developer-friendly platform.

Future Outlook and Strategy

Looking ahead, Plaid is poised to further expand its analytics capabilities, leveraging its vast and unique data set to introduce innovative solutions in fraud detection, credit scoring, and payment analytics.

[38:34] Zach Perret: "Our thesis on product development is not just that we have a large data set, but it is that we have a unique set of things that come together in a way that no one has ever analyzed for fraud before, or no one has ever analyzed in order to build credit scores before."

Zach also highlights the importance of network effects, both in user onboarding and data aggregation, as foundational elements that differentiate Plaid from potential competitors.

[51:08] Zach Perret: "First and foremost, we get onboarding right, and we do that a lot of that through network effects. Second is that there are data network effects on the backend as well."

Furthermore, Plaid remains strategically agile, continuously adapting to evolving technological landscapes and market demands, ensuring its sustained relevance and growth in the fintech industry.

Conclusion

Zach Perret’s journey with Plaid exemplifies resilience and strategic foresight in the face of significant challenges, including a high-stakes acquisition attempt and antitrust battles. By pivoting towards analytics, building robust developer and consumer trust, and navigating market cycles adeptly, Plaid has not only survived but thrived, positioning itself as a cornerstone in the modern financial ecosystem.

[60:29] Zach Perret: "To find Plaid is just plaid.com or Plaid on X. If you want to find me, I'm Zach Perret on X. I would love to hear your thoughts or feedback on Plaid products."

Notable Quotes:

• Zach Perret [02:51]: "In January of 2020, we announced that Visa was acquiring Plaid for a big valuation, just above $5 billion."

• Zach Perret [05:17]: "In some meta sense, you could say we produce substitutes, meaning you could pay for something with a bank account or you could pay for something with a credit card, but even those in almost no single transaction would you consider both of those payment methods to be viable."

• David Rosenthal [27:58]: "Financial services has these big cycles that they go through, basically driven by interest rates."

• Zach Perret [33:33]: "We definitely would have [diversified]. Our strategy has always been to build the API for your bank account, but in the long term, we believe we can build a much more valuable Analytics Business."

• Zach Perret [53:24]: "The feeling that we want to create is a sense of, oh, that just worked, or, oh, that was simple, and a sense that, oh, I trust this."

This episode offers invaluable insights into strategic decision-making, antitrust navigation, and business diversification within the fintech landscape, making it a must-listen for entrepreneurs, investors, and anyone interested in the dynamics of successful tech companies.