Feb 11, 2021 · 34m · 20vc
20VC: Scaling to a $1.3Bn Valuation While in Stealth, The Power of Different Network Effects Within Payment Platforms & How To Leverage Your Board and Investor Base for the Most Value with Matan Bar, Founder & CEO @ Melio
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, host Harry Stebbings interviews Matan Bar, co-founder and CEO of Melio, about modernizing the $18 trillion B2B payments space and scaling to a $1.3 billion valuation. Matan discusses open network dynamics, product differentiation for small business owners, rapid hiring in stealth mode, and maintaining company culture during hypergrowth.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 27.7% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 3.0 Guest disagreement 0.6 Harry pushing back 1.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:12 Rejecting 'Accounts Payable Automation' Label
Matan forcefully pushes back against standard software terminology, labeling 'accounts payable automation' a terrible category name that fails to address the true cash flow needs of SMB owner-operators.
Hardest push from Harry ▶ 20:12 Citing Board Feedback on DelegationHarry directly challenges Matan by citing specific feedback from Melio board members Michael and Julian regarding Matan holding onto too many direct reports during rapid team expansion.
Biggest teaching moment ▶ 9:34 Open vs. Closed Network Dynamics in B2BMatan educates Harry on why consumer network effect models like Venmo cannot be applied directly to B2B payments, explaining that forcing vendor signups breaks platform adoption for small businesses.
Harry holds his own ▶ 9:12 Proposing Advanced Data Network EffectsHarry demonstrates strong domain knowledge by identifying secondary platform network effects like risk assessment, business verification, and historical credit scoring.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Opening Sponsorship Announcements | 1 | 2 | 0 | 0 | The segment begins with introductory sponsorship reads before Harry introduces Matan. Matan shares the founding origin of Melio, referencing Federal Reserve research on the $18 trillion in paper check B2B transactions. | |
| Co-Founder Selection & Fundamental Payment Principles | 2 | 3 | 0 | 0 | Harry asks foundational questions about co-founder criteria and essential transaction platform principles. Matan educates on payment dynamics, explaining why ubiquity and payment choice are the critical pillars of success. | |
| Volume vs. Revenue Strategy & Network Effects | 5 | 5 | 1 | 2 | Harry demonstrates strong domain awareness by raising data network effects like business risk scoring and credit ratings. Matan reframes the question by explaining why B2B networks must operate as open networks driven by cash flow incentives rather than closed consumer loops like Venmo. | |
| Building Customer Trust & Differentiating from Incumbents | 4 | 5 | 2 | 3 | Harry directly challenges Matan by naming established competitors like Bill.com and Routable in a crowded market. Matan responds by rejecting the category term 'accounts payable automation', arguing SMB owner-operators care about cash flow rather than complex accounting software. | |
| Product Expansion Strategy & Fundraising in Stealth | 4 | 3 | 1 | 2 | Harry asks an off-schedule question regarding product extension into credit and capital lending based on transactional data. Matan explains their strategy to partner rather than underwrite credit directly to maintain product focus. | |
| Cultural Maintenance, Leadership & Delegation | 4 | 2 | 1 | 4 | Harry presses Matan by citing feedback from board members regarding Matan's initial bottleneck of direct reports. Matan acknowledges the leadership challenge and explains how monthly reviews helped establish delegated organizational structures. | |
| Board Optimization & Workplace Diversity | 3 | 3 | 0 | 2 | Harry explores board engagement and asks how Melio built a 49% female workforce. Matan shares how early board feedback alerted them to diversity gaps, prompting flexible maternity return programs. | |
| Quickfire Questions & Five-Year Vision | 1 | 1 | 0 | 1 | Harry conducts a quickfire round covering books, leadership values, and board member selection. Matan highlights Roger Federer as an ideal model for effortless execution before sharing Melio's 5-year outlook. |
Statements from this episode (16)
Bar: Federal Reserve research shows $18T in US B2B payments remain on paper checks
“Hasn't happened yet in terms of how a business pays another business or how B to B payments are being done, and I remember this one number that I shared with Michael that I read the Federal Reserve research that indicated that there are around 18 trillion doll…”
Bar: Melio co-founders agreed to partner before having a business idea
“I think we've decided to work together in terms of our shared values. Like, we decided to work together before we had a specific concept in mind.”
Bar: Ubiquity drives winner-takes-all dynamics in payment networks
“And ubiquity wins. Like Venmo, PayPal, Zelle, Square Cash, all these payment networks, they became ubiquitous around the US, As more and more people started using them, and that's how its winner takes all, or winner takes most, I guess, with these types of pay…”
Bar: B2B payment platforms cannot rely on forced recipient sign-ups
“With B to B payments, and with Melio, it was interesting because we could not force a closed network. So, when a restaurant owner is paying its, I don't know, 15 suppliers, electricity company, the fish supplier, we need to make sure that the restaurant owner …”
Bar: Cash flow speed drives network effects in open B2B systems
“Cash flow is the main driver for network effect with an open network like the one Milio has built.”
Melio customers shift all transactions after two months of trust-building
“So I guess we have like a couple of months where We build trust with a new customer, and then they shift all of their transactions to Melio.”
Matan Bar: 8 million US small businesses are eligible for Melio
“There are different numbers, but let's say around eight million small businesses that are eligible, small businesses for our platform,”
Matan Bar: Bill.com targets finance pros; Melio targets owner-operators
“As these tools, Bill.com, Avid Exchange, all these wonderful accounts payable automation solutions are mostly built for finance professionals, like an accountant, a bookkeeper, a finance team, and Melio is targeting these owner operators, these small businesse…”
Matan Bar: Small businesses care about cash flow, not automation
“What these businesses care about is cash flow. Not automation.”
Bar: Melio will offer credit through partnerships, not in-house balance sheet
“I think we're most likely going to partner with a company that is doing credit well in order to provide this service as a Our focus is to become the best B to B payments platform and user experience, and that's a lot of work already. So getting into credit und…”
Bar: Melio grew headcount from 30 to 200 employees in one year
“We grew from 30 people in January, 20 20 to 200 this January.”
Matan Bar: Monthly HR reviews keep scaling startups ahead of org changes
“We meet every month. We have an HR review to see, evaluate specific performance topics, and just try to understand whether the structure that we have is the right one for the goals that we're trying to set. And it's not like every month we're changing the stru…”
Melio reaches 200 employees with 49% female gender breakdown
“Today, we're 200 people, 49% women, 51% men. This was the seed for us to become a truly diverse company. Most of our leadership are women.”
Bar: Setting strict 50-50 gender quotas is wrong approach for diversity
“So we didn't aspire to get to fifty-fifty. I don't think that's the right way to do that.”
Melio turned down higher valuations on every funding round
“We turned down higher valuations than the ones we took from our current investors on every round, really. Like, on our A, we had a higher valuation from another VC. On our B, on our C, this last round as well, we always received higher valuations, but we picke…”