With over 10,000 banks in the U.S., local credit unions and smaller banks know their communities better than anyone. But consumers and business owners have growing expectations of what their banks can do for them, especially when it comes to digital services.

Q2 Holdings (NYSE:QTWO) is stepping up to the plate to equip these regional and community financial institutions, or RCFIs, with tech-based solutions that allow them to best serve their customers.

In this Motley Fool interview, CEO Matt Flake talks about Q2's focus on the community, the long-term appeal of Saas (software-as-a-service) business models, and the challenges of being a leader in a fast-growing company.

A full transcript follows the video.

Ron Gross: Were you there for the entirety? I know you've been there for quite a while, but I don't remember what year Q2 came public.

Matt Flake: The company was founded in '04 by a guy named Hank Seale, who had started a couple of companies before. I worked at one of those companies prior to. The first people he hired were a couple of developers, and that was in late 2004. I joined in May or June of 2005, and I was titled the VP of sales, which is really, I was the sales guy. But, it was the title that I wanted. In 2008, I said to Hank, "Hank, we have 75 people here, we should probably start having meetings."

Gross: [laughs] Talk about some things.

Flake: He said, "Screw that, you're president." So, I became president in 2008. In 2011, I became CEO. We went public in March of '14.

Gross: Right, so it hasn't been that long.

Flake: We've been public for 16 quarters.

Gross: The company went public in 2014. Did you notice a change in how you all operated? You see all the time with companies that are private, suddenly, the pressure of the quarterly report weighs pretty heavily on companies.

Flake: Yeah, it did a couple of things. I definitely noticed all the machinery that you have to have around -- our accounting and finance team went from 10 to 75 people. There's a tremendous amount of work that has to get done on very tight deadlines. You finish the quarter March 31, and now our accounting team is knee-deep in what the numbers look like, along with EY, and the financial team is doing projections on what those numbers mean and what it looks like going forward. Yes, I did see that. 

The beauty of our business is, we have long-term contracts, low churn, and very predictable revenue. January 1 of end of year, 90% of our revenue is in the wood. If you think about the perpetual license companies, or things like that, if you remember that those days, which still kind of exist, your behavior changed depending on where your numbers are at the end of a quarter. You would sell deals, try to ship out this or whatever you're trying to do to book the revenue. Our revenue model is so conservative that I can't do that. I recognize one-60th of my revenue over a five-year contract. 

None of that behavior has had to change for us. It's more my behavior, the CFO, the energy that goes into preparing for an earnings call, preparing the numbers, and providing guidance. That's the part. I think we've really done a good job of insulating the rest of the company from that noise. We haven't had to change behaviors around delivery cycles or implementation. That's one of the reasons why I don't hear any complaining from our customers about, "Oh my god, you're public and you've changed," or even from our employees around, "Life is so different around here now that we're public."

Now, there are things that changed. Communication has changed drastically. You can't be a transparent about stuff in the future. You always have to talk historical. We do have future conversations, but you can't get into all the details of it, which I'm not crazy about. The trade-off was, today, we had more than a hundred people who are worth more than $1 million on paper doing that. Every employee gets stock and participates in the success of the business. It was a great experience. And there were some changes, but I think everybody has adapted to it pretty well.

Gross: That's great. If you could, maybe, talk about the culture of your company, how you got started, and what type of decisions that Hank made out of the gate that you think have really defined the success at Q2 to date.

Flake: Hank has a passion for community financial institutions. He set out in this journey to say, "How do we make them competitive?" The best way to do that was through technology. Technology is a great equalizer. We can level the playing field. When you think about, that's what we're trying to do, we put the mission around it, which is strengthening communities by building stronger community financial institutions. That drives our culture. Our mission drives our culture in that anything we build or do, we say, "This is going to be good for community banks or credit unions." And if it's good for them, it's going to be good for our country, because 75% of the small business loans goes through these financial institutions. 

We believe that financial choice is critical. Financial empowerment is based on having a lot of options. You can go to one credit union if you don't like your rate and go to another one. In 2004, we hadn't had the meltdown, so you hadn't seen what a concentration in power does in banking. Then you see Bank of America, Wells, Chase, Citigroup ruling the world, and how big of an impact that can have. It wasn't a good thing for the country, but it was a good lesson for us to go through. 

Ever since that meltdown, our employees, it's amazing to me, whether you're a 24-year-old or a 55-year-old, people get behind that. They don't want there to be four banks left in this country that determine who gets a loan and who gets a checking account. Every day, we build things, solve problems, try to create things that allow community financial institutions to compete.

If you go to a credit union or a bank and you talk to them about, "I want to do business with you," if you're a small business, their talk track has always been, "We're local. We know what you need and don't need. Our products are pretty much just as good, our rates are pretty much just as good. There isn't that much of a difference between what the other guys can do. But, our technology is not as good as the big guys." That third leg is the one I think we have flipped on its head. Now, people are able to say, "Local, great rates, and we have the best technology in the marketplace." You can have all of that with one provider. I think that's really, there's a sense of pride for us. 

We're not done. You have to keep doing it, because innovation has to keep happening. For us, that's what drives the culture. We spend a tremendous amount of time and culture and getting people to understand that. Every new employee that joins this company, we have breakfast with them to talk about how important they are. Hank goes through the mission, the vision, why he started the company. I go through our business objectives. Hank will talk in five, 10-year windows. I try to talk in one and three-year windows to the employees. But, everybody knows what they're here for. I think it's paid off in our ability to manage the growth over the years, as well as deliver great, innovative products.

Gross: That's great. What do you think are among the biggest technological risks for community banks? I know Q2's mission is to extend and give them technological firepower. But, do they also have risks, either from a business standpoint or a regulatory standpoint, that you could speak to?

Flake: I'll take the regulatory one first. The challenge that they've had, and I think it's beginning to change with some of the new guidelines, is that they were taking regs for a $1 trillion financial institution and basically letting it flow all the way down to a $1 billion financial institution, which is just not fair. They don't have the same systemic risk as these other guys. They don't have the resources to go through all these things. Wells Fargo is a great example. They wanted people that were sellers, then have somebody else that would open the account, somebody else that would support the account. Well, at a community bank, you can't do that.

Gross: [laughs] Right, it's just one guy.

Flake: But that regulation would have worked its way down to them in the past. From a regulatory perspective, that's getting better. There's always risk that we over-regulate the smaller guys, but they feel like it's getting better. 

On the technology side, we look at multiple facets. There's, what's Bank of America, Wells and Chase doing. I think those are easier to identify because you can look at what they're rolling out. Then, you have things that they need that are operational. How do we become more efficient in the back office, which is a big piece of what our platform does for them, as well. The third thing is, whether it's fintechs or Facebook or Amazon, how are they going to combat those. 

If you look at a lot of these fintech companies -- Personal Capital, Credit Karma, Acorns -- they're not necessarily saying, "I'm going to replace the banks," but they're taking one element of it for, a millennial or a saver, and offering options. What I worry about is a bunch of tiny little cuts that eat into these community financial institutions' opportunities and customer bases.

One of the things we try to do is partner with fintechs. When we partner with fintechs, we park their deposits at the community banks. There's a lot of reasons why it's advantageous for a fintech to partner with a community bank. One easy example is interchange rates. If you're less than $10 billion in assets, you get a 1.4% piece of interchange off of debit card transactions. If you're above $10 billion, you get 0.4%. So, there's more of the pie to split between a fintech and a community bank, so it draws them to these.

We don't view all fintechs as bad. They view some of them as, they need banks, whether it's cost of capital or the regulatory piece. The technology side of things, we have to merge what Bank of America is doing, operating efficiency, and what the rest of the world is doing, and put that on a road map and try to balance what's important. Sometimes you have to go more on the innovative side, and sometimes you have to go more on the operational side. But we try to balance that. I think we've done a really good job with that, but we're having to look at all three of those areas and continue to innovate for them. I think there are going to be a fewer of these guys just due to general consolidation. I think you could probably argue there are a little too many.

Gross: You're talking about the banks themselves?

Flake: Yeah, the banks. There are 11,500 banks and credit unions combined. You going to see more consolidation. You have for a long time. The important thing to realize is, the assets for that demographic are still growing. The big banks aren't buying them, they're buying themselves, and we're in the right spot there. Our customers have acquired more end users than they're losing. Also, there's a general consensus out there, if you're going to start a new banking relationship, I think a lot of people are looking toward community financial institutions now, which is a good sign. If you look at the credit union industry, they've gone from 89 million credit union members to 95 million credit union members. That information is a little dated, but it still indicates that people want to bank with community financial institutions, you just have to have the right technology to do it.

I feel really good about their position in the marketplace. If you look, they're finally getting some interest rate lifts, which is helpful for them, and a little less regulatory burden. I think that's why you're seeing, we just came off of the best second half of the year, the best fourth quarter in sales for the history of the company. Q1, we're just getting out of it, but I feel pretty good about our performance on that one, as well. So, continued momentum there.

Gross: It's funny, when you were saying that, it reminded me that we actually found you because of a banking relationship that you had with Bank of the Cascades in Oregon. They had mentioned you all. They've since been acquired.

Flake: Yeah, they got bought.

Gross: Does it matter for you all? Thinking about the number of banks, it was interesting hearing you say it's 11,500 banks, and it's probably too many. What's more important to you -- the number of people who are using financial services through community banks, or is it the number of banks themselves?

Flake: No, it's the first one. Our revenue is driven off of people, the account holders that use the system. As long as people continue to bank with community financial institutions and they're competitive, we're going to be fine. I think there are 270 million people that have accounts at these financial institutions at $50 billion and below. We have 10 million. So, it's really early for us, from a penetration perspective, in the market. 

But, what drives us is, I want people banking with community financial institutions. We think we're on the right side of that trade right now, because people are wanting to go to those. The big guys closed their branches, lose their footprint in those communities, become less attached.

I have a quick story. A friend of mine works at a community bank here in Austin. Austin is exploding. There was a group of doctors that were trying to open an office in an area that isn't called Austin, it's called Cedar Park, but it's a suburb and it's growing. It's where all the neighborhoods are and everything else. He said that he went through that process, funded the doctors, and they started construction on their new offices. The doctors told him, at that point, Bank of America had reached back out to them and said, "Hey, we're good to go. I think we can do this loan." 

That's the difference. When you're a doctor trying to open an office, the community bank knows that that's a slam dunk in this area. They get the loan approved, the doctors get their money, begin construction, and start to practice. The response time, in not having your ear to the ground, not knowing the difference between Cedar Park and Austin, is going to become more and more problematic for the big guys, because you still have to understand what's going on in your specific geography and community. That's where we think they have a huge advantage.

Also, they keep that money in the community. When people begin to think about it, a lot of the money that the big guys make rolls up and goes into things that have nothing to do with your community. Whether it's banking local, shopping local, I believe that most people understand that that ecosystem and how they can participate in it.

Gross: Do you feel like the community banks are, by themselves, a growth industry? Or is it more that they are, in the U.S., at least, a bedrock institution for towns and cities?

Flake: I think it depends on the financial institution. There's clearly some community banks that are not interested in growing and taking on new markets or products. There are some of those out there. What we really try to align ourselves with are people that want to use technology as a way to compete and differentiate. That's where we're a great fit. 

If you're just looking to exist, waiting for somebody to buy you, you're probably not going to buy a new technology platform that's in the cost range of ours and go through this process. But if you are looking to grow your business and acquire new customers, you're going to start with technology. You're not going to say, "Where can we put a couple of new branches?" That's really why there's been this natural law of attraction that's occurred between us and those financial institutions. 

If you look, we have some of the most strategic community financial institutions in the country that are on this platform. We feel like that's a safeguard for us in this acquisition environment. They're the ones that are doing the acquiring. We had 13 customers acquired last year. Six of them were acquired by our existing customers. In total, our customers acquired more customers, in the bank, they acquired more end users, than we lost to acquisition. So, we're growing just by our customers doing acquisitions. 

There are some banks that probably don't look at it as strategically, but we really try to focus on the ones that do. We hope the other ones come around to understanding that technology is going to be the great equalizer in this and allow them to take more market share and growth.

Gross: I don't like criticizing by name, but do you wake up in the morning and see, when some large financial institution has been found to have been opening and closing accounts in its customers names, do you wake up and say, "Boy, that's good for us," or is that irrelevant?

Flake: I just wake up and say, "These things have become so big that we shouldn't be surprised by that." But it doesn't hurt. I think a lot of people hear that news ... I'm not somebody who cheers on negative stuff, I just feel like it's a karma thing, it comes back to you at some point. 

I think in general, what happens is, when the public goes to do an auto loan, or they want to refinance their house, or they want to start a business, I think it maybe makes them think, "I'm going to go to a community bank or a credit union to do that," which I encourage everybody to do. I think you get just as good a product, much better service, and you can actually talk to somebody, get them on the phone if you have certain needs. 

Yeah, I think all that stuff is probably ultimately positive for the community and community financial institutions market, when these guys get so big that they become unwieldy and have no control, and you find out about this stuff ten years after it happened.

Gross: My wife and I absolutely moved our account, following some of the revelations at our bank, from one of the big banks. Matt, Tom Gardner has joined us. I just wanted to introduce you to him, as well.

Tom Gardner: Hey, Matt!

Flake: Hi, Tom! How are you?

Gardner: Doing great. I'll jump in with a couple of questions. I've really enjoyed listening to this conversation over the last five to ten minutes, since I joined. My first question would be -- I want to benefit from some free insights from you, this is very selfish -- if I asked you to elevate up above Q2 and talk about SaaS business models overall, if you were taking your own capital in your own portfolio and looking SaaS businesses to invest in, can you talk about, what are some of the key things you'd be looking for? These business models are proliferating out there, and we're optimists about them. We think they're scalable, there are many beneficial things to them. But rather than identify them myself, I'd love to hear, what is it you'd be looking for? And what might concern you and cause you not to invest in a SaaS business?

Flake: What I would say is, I think that SaaS subscription revenue is clearly going to be the winner in the long run. What you have to start with, like any good business, is, what problem are you solving? It feels like sometimes, people are just creating problems to solve as opposed to really solving a problem. If you look at the flagship viva service now, Shopify, those guys are out there, these high-flyers, HubSpot. They're really solving a problem for people. 

So, to start with, what is your problem that you're solving, and get your arms around it. For us, we believe community financial institutions are way behind on technology. There was nobody else that was out there innovating for different reasons. That's one thing.

Also, how difficult is it to solve that problem? A bunch of people can jump in, and a bunch of money will follow it. How defensible is your technology? 

Also, the experience of the team. We see several SaaS companies that jump into the banking space, and they didn't come from the banking space. So, you really see them struggle. You could be talking with financial institutions or even products that missed the mark. Is the team qualified? 

Then, what I love about our business, and I think many SaaS companies have these components, is you're able to find longer-term contracts. The technology is very sticky. You're looking for it to be sticky. Ours is very sticky. It's a very difficult system to get off of. And you have to buy more and more products. The land-and-expand model is in there.

So, long term contracts, how hard is in the churn, are you able to control the churn, how big is the market. There are SaaS companies popping up for flower shops and things like that. I just don't know how big those markets are going to be for people. As a guy running a company, I've learned how important TAM is. That's a big part of it.

The other thing is, it takes a long time to get profitable in a SaaS model, because you don't have those licensing dollars. Revenue is so conservative that you have to have patience in these things. This is our 14th year. We raised $40 million primary for this company prior to going public, and we had $14 million on the balance sheet. I say that because I'm really proud of how efficient we have been with cash. 

What I would say that you have to be worried about with some of these guys is, are they going to be able to get cash flow positive? Are they going to borrow so much money that, as an investor, you're going to get diluted out? You've seen investors shift this model to grow at all costs, to grow, but I want to know when you're going to be profitable. If you continue to add on the sales line and your costs keep going up, you're not really accomplishing anything. 

You have to have a big problem you're solving, you have to have defensible technology, you have to have a team that knows what they're doing in the space. Then, you have to think about things like long-term contracts, stickiness of the product, how big is the market, and then, the funding mechanisms which they're going to use. 

I was once told that you always say this amount of money is going to do it, and then you always burn through that money and need more money. I've found that to be true. We thought the $10 million we took in 2008 would be the last we'd ever take. Well, we took $30 million more after that. That's the SaaS business model. It's just hard to do it. We came up with creative ways to cash flow along the way, but it's a long run. We're 14 years into this and we're crossing the $200 million revenue mark this year. But we have a long tail on the revenue, it's sticky and it's very predictable, and we have minimum that lock in. There are a lot of mechanics around financials. 

That's how I view the SaaS space. I don't know if that's what you were looking for or not.

Gardner: That's incredibly helpful. Do you all have professional services and onboarding revenue to set people up with the technology? Or is that all woven in to the subscription?

Flake: We have services fees that are associated with that. That's our manual labor costs. We charge for that. Then, the subscription fees jump in. 

It's always interesting. When you talk to people, bankers in particular, that have licensed software before, I always have to sit down and explain to them, look, in the model you used to be in, you would write a check for $1 million for a licensing fee. You'd have about a 20% of that maintenance fee every year, and you'd have $200,000 in services or something like that to deliver the software. In year one, you're handing me $1.4 million. Then, you cross your fingers and hope that I don't screw you, disappear, go out of business. In our model, I don't take that $1 million up front. I'm going to get that $1 million from you, but we're going to do it together. I have to earn it every month, I have to earn it every quarter. We're in alignment on how the business model flows. 

I think bankers begin to realize, "I may not be spending less, but at least I know I'm not writing you this check and you can go do whatever you want to do with it, and you may or may not deliver." When we sign those long contracts, we're going to get that $1 million and probably more out of it, but we're also innovating along the way.

The other thing the SaaS model protects from is on downside. If you think about, heaven forbid, another 9/11 happened, but I was at a company that was licensing software at that time. They got rid of implementations people, they got rid of developers, they got rid of support people, but they kept the salespeople. We were like, "Nobody's going to buy anything right now, because everything's shut down because of 9/11." It didn't matter. They had to have people out there selling. 

In our model, if, heaven forbid, something like that happened or another tragedy happened, our customers would be in the best place, because we don't live off of licensing software. I could get rid of salespeople, I could get rid of net new implementations people, but I'm going to continue to invest in support, implementations, development, IT infrastructure, because that's where my revenue comes from. It doesn't come from net new licensing. That model safeguards itself in down times, and in up times, you're able to invest, as well. 

I answered bigger than your question on the services side, but there's so much more to the SaaS model than, you get in the cloud, you don't have to have it on premise, and those things. There's downside protection, too, when your business doesn't live off of selling licensing deals every quarter.

Gardner: When you talk about the efficient use of capital, I looked at your SG&A line vs. your revenue growth, it's an extremely well-run business. That's one indication of it. I'm wondering to what extent you all have cracked, or believe that you could, selling through digital landing pages rather than salesforce, face-to-face conversation? Is there any opportunity for that? Have you explored that at all? Or, this definitely has to be a relationship-based sale?

Flake: There are elements where we're beginning to use more and more digital to familiarize banks and credit unions with who we are, what we do, how our solutions are different. But for the most part, where we are right now, dealing with these financial institutions, they're large in the community bank and credit union space. But they're not large compared to the big guys. 

In general, keep in mind, this is B2B2C. There's an enterprise layer of this technology that we have to go deliver, get into their network, get systems set up and talking to each other. There's almost always going to be a face-to-face, or at a minimum, Webex presentations. 

But, that's how we build these relationships. We're not in the hamburger business, we're more in the steak business. We want to sign the right financial institutions. I'm not trying to sign every single bank on the planet, I want to sign the strategic ones. When we go through that sales process, almost every customer that we sign has come to this office, come to Austin, met with the broad leadership team, met with me, met with the other executives, toured the building, met the employees, and they get a really good feel for who we are and what we're doing in that model.

We are using landing pages and stuff like that to educate and form and build our brand, but really, the sales process is always going to be, we're going to have to get in front of somebody and talk about the inner workings of how the system is going to work in their environment.

Gross: Matt, do you have an ideal client? I love the allegory of hamburger vs. steak. That would suggest that there are certain types of financial institutions that you're not willing to work with, or they're not your preferred types. Who is it that you're looking for, that you think are absolute perfect Q2 clients?

Flake: There are some who just aren't fits for us. If we start a conversation, and all they talk about is, "How cheap is it, how cheap can you do it, is this person cheap, we don't really care about your road map." That does happen, believe it or not, in some of these conversations. There could be reasons why they view it that way. That's not a good fit for us. That's that date you go on, and they haven't even brought the water out and you know it's not going to work.

Gross: [laughs] Yeah, that's Tom. [laughs] 

Flake: The ones where they come in and say, "We want to talk about strategy, direction," and then, cost is always a part of it, but, that's really a better fit for us, and that's where we try to land. Sometimes we walk away from deals because of that. We try to do it with respect and make sure they know the door's never closed, it just might not be a good fit now. 

I'll tell you, I have a lot of customers that said no to us for many different reasons ten years ago that are coming back now and signing up with us. It's about being patient, and remembering it's the long game, not the short game. We've always viewed it that way.

Gross: It's so funny, of all the types of businesses, I would say that the small banks, from an investors' perspective, are the hardest ones to really differentiate. It's interesting to hear -- of course, these are all entities that are run by and staffed by human beings, but it's interesting to hear about the culture from one to another. It really is that they are different entities, and they have different areas where they focus.

Flake: Yeah, for sure. It's really interesting, when you start to dig into them. Some of them are dying for auto loans, some of them want home improvement, some of them want commercial lending, some of them don't care about retail deposits, some only care about retail deposits. They all have their own market, geography. 

That kind of goes to why they exist, if you think about it. You can be in Louisiana and have completely different needs from someone in New Hampshire or Washington or Chicago. Believe it or not, they do serve a purpose. Bank of America, Wells, and Chase can only specialize in so much stuff. That's why we believe they're an important part of the economy and our country, and we're going to continue to try to help them compete and win business.

Gross: What do you think it is about the U.S. -- again, we found you all through our interest in community banks. I wouldn't try to do the same thing in Europe. There's literally 150 banks for the entire continent. What do you think it is about the U.S. that makes community banks such a part of the fabric here?

Flake: If you think about the way it started, people used to gather, and we migrated west, and somebody would say, "We've taken over the town and we're living in a hut. Can we maybe have a store and a restaurant and a doctor's office and houses and a town hall?"

Gross: And what comes next. [laughs] 

Flake: And it worked its way through that. Some of these banks have been around for more than a hundred years. We didn't start off with big banks. They just ended up just getting big over time. In the 80s and 90s, there was a lot of consolidation with JP Morgan, and Bank One and Chase, they all came together that way. 

I think it was really a function of the capitalism and our economy and how we view the world, as opposed to banking systems in other parts of the world that are state-sponsored, had been around for longer periods of time. You don't have the same capitalistic spirit that we have here in some of those places.

Gross: Kind of a nitty-gritty question -- I was reading recently about the strategic partnership, and you mentioned Acorns. Could you talk a little bit about what that is, and what that means to Q2?

Flake: I have to be a little careful, because Acorns, I want them to be able to tell their story the way they want to tell it. I'll just tell you, in general, it's a great example of how our Q2 Open product can be used to help a fintech provide banking services and partner with banks. 

If you broaden it more than just Acorns, a company like Qapital, which is out and up and running, is an app that's a goal-based savings app. You go in and say, "I'm saving for vacation, I'm saving for college, I'm saving for a new car." That information is really valuable. Qapital grew, and people started saying, "We want to deposit money into this, rather than just look at an imaginary figure."

So, we partnered Qapital with Lincoln Savings Bank, a bank in Iowa. Lincoln Savings Bank runs our Q2 Open product. Qapital has deposited more than $15 million with them today. That money is used, they get interchange off it, they get float, and then they're able to loan out money, as well. That $15 million never would have come to that Lincoln Savings Bank. It came from a fintech that was started in Scandinavia that does goal-based savings. 

Whether it's those guys, Acorns, Chime Bank, we're trying to not necessarily pick the winners and losers of this, but we're trying to find the people who need to collaborate with banks for cost of capital or regulatory reasons or whatever, and tie those together, rather than saying they're all bad and we can't partner. It's really early in the Q2 Open stages, but I'm really excited about the opportunities that are presenting themselves to us, and they continue to be more interesting. 

I think our customers, the financial institutions, are starting to warm up to it, as well. At first, they kind of looked us it like, "What are you doing here?" Now they're starting to understand that this fulfills our mission, we're helping communities by putting deposits in these community financial institutions, we're helping with interchange fees, we're getting them deposits so they can loan out more money. So, whether it's Acorns or Qapital or Chime Bank, we've had some nice early wins with that, and we're going to continue to take more market share in that area.

Gardner: When we deliver new solutions into our membership base -- we're a subscription-based business -- we're usually trying to do at least two things: one, help people generate above-average returns after tax, long-term business-focused investing; we're also trying to teach them something about how to evaluate businesses to invest in. We're about to launch a new solution here in the next month or so. It's really going to be focused on leadership. It will be teaching people how to evaluate a board, a CEO, the capital and ownership structure of the business, how to look at 14A filings and strengthen that side of your evaluative process, while also trying to pick great companies that live up to our ideals. 

I'd love to talk to you a little bit about that at Q2. It might start with, maybe, Matt, what motivates you? You've been at Q2 for, it looks to me like 12, 13 years. You've been CEO for the last seven or eight years. I'll give you an example of a question to see what motivates you. If I told you, "I don't think you're ever going to get to $500 million in sales and a $5 billion valuation," does that motivate you? To be doubted, challenged? Or is it financial metrics? What's causing you to work as hard as you are 12-plus years into your journey at Q2?

Flake: There was definitely a time, to build this business, where you had to have a chip on your shoulder about people doubting you, whether you were going to make it or not. That was some of the early motivation. I just found some of that stuff can be negative and grind on you. It's hard to live like that forever. You certainly know people who are like that, that always have a chip on their shoulders. There's an element where you have that. 

But in general, I love the idea of Hank putting a little bit of money down and funding people's payroll, taking a risk. This wasn't a slam dunk when he started it in 2004. But, to take his money out of his pocket. He funded this business until 2008 without taking any money. And like I said, we have 75 or 80 people. Hank has done very well now, but that was flying pretty close to the sun. But, the guy takes that chance, he hires people. Then you look at it, and we ended last year with 850 employees, we paid more than $500 million to payroll in the history of the company, we provide benefits for people. When you're in my position, you get to see how those benefits get used for people, and it's pretty powerful. 

So, doing that, and driving a mission to help community financial institutions, I feel good about myself every day. That's not really what it's about, but selfishly, people like to feel good about what they're doing. That's really, in my evolution as a leader, where I've gotten joy, seeing people succeed. I had somebody come in the other day, tell me, "I just wanted to tell you thank you, because I paid off my house with the stock." You're like, "Wow, that's awesome." Those are the things that really matter. 

But you have to have that grit in your teeth, where you're not going to lose, the late nights and the early mornings and the issues. I tell entrepreneurs all the time, "You'll know you have a real business when you go to bed at night and don't think about the millions you're going to make, and you think about all the problems you have." You start a company, and everybody starts to think, "We're going to make a bunch of money on it." You haven't done anything yet. Until you have customers and real problems, I don't think you've accomplished much. Anybody I've known that's built a successful business, nobody ever says, "It's easy, just turn it on and they start paying you." 

That's what drives me. Leadership is constantly evolving. I'm in a leadership program right now, a year-long course, trying to become better at it and evolve my game, and understanding how to motivate people and keep them engaged. My biggest concern -- eliminating things like tax and stuff like that -- is around the culture of the company. How do we keep people excited about the company here? How do we keep people excited about doing their job every day? In a growth company -- we've grown over 30% for 13 straight years in a row -- last year was 29%, but we can round up. That's hard.

Gross: You're shrinking! [laughs] 

Flake: Yeah, no, trust me, you hear that from the Street all the time. 13 straight years of over 30% top line revenue growth is a grind on human beings, on people. How do you make sure that they connect with what you're trying to do? That's why we spend all this time on new hiring and getting to know people. It gets harder and harder as you get bigger. We're not a start-up anymore, we're a company. Things change in some of those places. People are looking for a work-life balance, and I respect that, and I try to figure out ways to do it. We try to come up with new ways to do that. But, that's my job. I enjoy that challenge.

Gardner: Only because we are running out of time, I'm going to ask this follow up, and you can give whatever you view as the crucial point. If you don't think it's good question, just blow it off. Jeff Bezos at Amazon, I learned from his recruiter for board directors, that he had an outlier factor criteria for board selection. Of course, he was in a control position as an owner and founder of the business. He would not welcome anyone on the board who had less than a 10-year time horizon on the stock performance. He was like, "I just don't want to talk about the stock. If you're worried about that, if there are going to be debates about that, if you view it as a liability because the stock will be volatile, I don't want you on the board. I want a 10-year time horizon."

Dovetailing two things together there -- what's the biggest benefit you're getting from your board? What's the time horizon you're using to evaluate your success from here?

Flake: The benefit from the board is, we have an overpowered board for the size of the company we are. I get tremendous feedback from them on strategy, direction, looking around corners that I might not be looking around, ideas. They all have a long-term view on the business. They're all very successful people that have done a lot of things. I really like that element of it. They're very balanced. 

They have different backgrounds and experience, from enterprise software to banking to financials. We just added Lynn Atchison, who was the CFO of HomeAway, she was at Hoover's, and now she's at Spredfast. She has really interesting dynamics. I look to them for advice and counsel. My duty is, ultimately, to report to them what's going on with the business.

Gardner: What's your time horizon by which you evaluate your performance, or you think your performance should be evaluated? What would be the greatest length of time? Obviously quarterly, there's a check --

Gross: Half an hour. [laughs] 

Gardner: Every 15 minutes, we hope you're doing a couple of hundred push-ups for your shareholders. What's the fair time period?

Flake: To be fair, when you go public, you sign up for reporting information quarterly. That's what you signed up for. So, I feel obligated to perform every quarter. I think we have performed every single quarter we've been publicly traded. We've been very transparent about challenges in the business well ahead of other people in the space. At least one quarter ahead, we've given bad news if there's bad news. 

There is an element of quarterly that you have to look at, but I think I try to look at the world on a three to five-year basis and make investments and plays in that area. If you think about it, corporate banking is really gaining momentum now. I was telling the Street about how we were excited about it in 2014 when we went public. Q2 opened, we bought that business at the end of 2015, talked about how we thought it was optimistic, but it really hasn't shown much until the end of 2017, it started to see momentum. So, I try to think about things in the three to five-year window. But, I signed up for going public, so I have to deliver every quarter. 

Then, you have guys like Hank as the chairman. I don't think he thinks about anything less than five. It's always seven, ten years. He always talks about how he has a 20-year vision. We're 14 years into it. I said, "You're going to have to start extending that to a 30-year vision or something." 

So, I have a balance of people. Our chief strategy officer is always thinking far out there, our CTO. It's a balancing act to be delivered on, because you'll get your butt handed to you if you don't deliver it, but you'll also get your butt handed to you if you don't deliver on innovation and new products to continue to grow the business.

Gross: Yeah. Matt, I just want to thank you again for your time. I was really delighted to get to know a little bit more about you and more about Q2. We'll make sure that we continue the conversation.

Flake: Thank you for your interest and your time! You guys keep up the good work!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Ron Gross owns shares of Amazon and Facebook. Tom Gardner owns shares of Facebook and Shopify. The Motley Fool owns shares of and recommends Amazon, Facebook, HubSpot, and Shopify. The Motley Fool owns shares of Q2 Holdings. The Motley Fool has a disclosure policy.