May 29, 2024 · 33m · saastr
René Lacerte, CEO Bill + Jason Lemkin: "It's Just Getting Good for SMB SaaS"
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this conversation, Bill.com founder and CEO René Lacerte joins SaaStr's Jason Lemkin to detail the long-term journey of scaling a B2B FinTech powerhouse through multi-channel distribution, embedded payments infrastructure, and continuous product evolution.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Jason holds 29% of the talking time here. How this is scored →
Jason as informed peer 6.2 Guest teaching 5.0 Guest disagreement 0.2 Jason pushing back 0.7
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:12 Guest reframes embedded FinTech optimism
René pushes back against the trend of every SaaS becoming a FinTech, emphasizing the steep compliance and fraud risks that most founders underestimate.
Hardest push from Jason ▶ 20:18 Host presses on channel alignment and comp structureLemkin challenges René on how indirect accounting channels can be managed and motivated effectively when direct commission structures do not apply.
Biggest teaching moment ▶ 29:09 Guest explains technological breakthrough behind DiviRené explains to Lemkin that spend management did not surge merely from software UI, but from the cascading infrastructure of real-time card control APIs.
Jason holds their own ▶ 9:57 Host compares monetization model to ShopifyLemkin demonstrates strong domain expertise by contextualizing Bill.com's revenue transformation from pure SaaS to an embedded 50/50 payments business like Shopify.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Origins of Bill.com and Sticking to Long-Term Vision | 6 | 3 | 0 | 0 | Lemkin establishes deep familiarity with René's history, citing early Emergence Capital portfolio peers and René's previous venture PayCycle. René expands on his generational entrepreneurial background and long-term cloud product vision. | |
| Bridging the Digital Divide to Build a Two-Sided Network | 5 | 5 | 1 | 1 | Lemkin inquires about the difficulty of onboarding merchants before network effects kick in. René explains the strategic necessity of building bridges like faxing and paper checks alongside price incentives rather than forcing users across the digital divide. | |
| Key Inflection Points and Expanding into International Payments | 6 | 6 | 0 | 1 | Lemkin probes the inflection points where Bill.com felt de-risked. René educates on evolving from a workflow tool into a system of record and engagement after discovering users tracked external international bank wires inside Bill. | |
| Monetization Shift and Complexity of Embedded FinTech | 7 | 5 | 0 | 1 | Lemkin draws an insightful comparison to Shopify's monetization split and cites Bill.com's S-1 numbers. René explains the strategic transition from fixed-fee checks to variable-rate international and virtual card transactions. | |
| Managing Fraud Risk and Scaling Compliance Infrastructure | 6 | 6 | 1 | 1 | Lemkin asks whether every SaaS platform should embed FinTech. René offers a sobering warning regarding regulatory overhead, banking partner compliance, and compounding fraud risks. | |
| Multi-Pronged Go-to-Market Strategy and Expanding NRR | 7 | 5 | 0 | 1 | Lemkin highlights the challenge of unit economics on a $2k ACV and contrasts accounting channels with traditional agency models. René describes the wholesale model used with accounting firms to drive adoption. | |
| Aligning Channel Incentives and Overcoming Adoption Barriers | 6 | 5 | 0 | 1 | Lemkin asks how channel partner KPIs and quotas are structured without standard direct sales incentives. René outlines account-level commitments and explains how adoption among non-early adopters requires handholding to expand NRR. | |
| Transforming Spend Management Through Strategic Acquisitions | 6 | 6 | 0 | 0 | Lemkin asks about large-scale M&A like Divi and why spend management exploded so late in cloud maturity. René breaks down how real-time card control APIs unlocked decentralized corporate cards with granular budgeting. | |
| Expanding Addressable Market and Future Outlook for SMB SaaS | 7 | 4 | 0 | 0 | Lemkin benchmarks Bill.com's 121k customer count against the public SaaS average of 30k, making the case for 20x TAM expansion. René confirms the vast addressable market of 6M domestic and 20M global employers. |
Statements from this episode (19)
Lemkin: Bill.com is worth around $25 billion
“Build.com was worth something like twenty-five billion dollars today, but it took a long time.”
Lacerte: Bill.com took a decade to achieve meaningful revenue before IPO
“It took us, like you said, it was probably, 10 years before we started having meaningful revenue that others like, huh, that company might go public. And then you fast forward kind of two years later, three years later, we're filing for the IPO. We're launchin…”
Lacerte: Startups must bridge legacy habits to cross the digital divide
“You can't force a crossing of the digital divide overnight. So all of your listeners, everybody's trying to force that crossing. They had this great idea. We're trying to force that, but you can't, you have to have a bridge.”
Lacerte: Bill grew its network by pricing ACH at 29¢ versus checks
“And on the payment side, we'd be like, we'll just cut you a check. So we didn't force people to connect their vendors, but then we did incentives from a pricing perspective, a check was A dollar 49 or whatever, a dollar 69 a day, and an ACH was 29 cents. So th…”
Lacerte: Bill Scaled Gross Margins From 50% to Near 80%
“We worked hard and probably within five years, we had gross margins that were probably north of 50%, right? And so now our gross margins are close to 75 to 80, somewhere in that range.”
Lacerte: B2B payment software defensibility comes from workflow over payment execution
“And I would always start with the payment is the last thing that a customer does, right? It's everything before that matters. Like you're not going to just sign a check or use bill.com to essentially sign a check or actually not trying to pay unless you know w…”
Lacerte: Bill processes $170 billion in run-rate payment volume
“And since all the money goes through us on a run rate basis, a hundred and seventy billion dollars now, since all that money goes through us, we're able to do other things that other players can't.”
Lacerte: An early Bill investor brought in outside counsel for regulatory compliance
“I think it was probably our series E or D. So we ended up getting to I for IPO. But in one of our investments, one of the investors is you know what? I'm not sure you guys have all the right regulatory stuff. I'm going to bring my outside counsel in to really …”
Lacerte: Bill made heavy infrastructure investments that drove no direct revenue
“There's plenty of investment that we made over the years that didn't help us acquire customers. It didn't help us increase revenue. It was like, no, we just have to build infrastructure.”
Lacerte: Scaled fintechs must own infrastructure because bank partners cannot keep up
“If you're trying to, we wanted the ability to be able to do any type of payment because that's what customers needed. You have to, you know, make sure that you're owning that infrastructure. Versus you're lying on some third party in the bank that's going to h…”
Lacerte: Accounting firms make up bulk of Bill's client base
“So the accounting firms do represent a big bulk of client base.”
Lacerte: Bill net revenue retention increased to 124%
“In fact, I think in the last quarter numbers, we announced that the net revenue retention had bumped up to one 24, right?”
Lacerte: Bill quotas accounting channel reps on revenue and client count
“The accounts, we look at it signed in the same way as it would direct, but we look at the account, the revenue per accounting firm, right? So the quota is driven off of that. I see. And then they have an incentive to get X clients on board.”
Lacerte: Bill.com requires upfront contractual commitments from bank partners
“The banks are very different, right? That's kind of elephant hunting. And so the teams there, they get the bank committed upfront and we drive that commitment in the contract to make sure that there is a commitment.”
Lacerte: Bill Went Public Partly to Fund M&A with Stock Currency
“When we went public, one of the reasons was to have a currency to be able to add onto the platform to serve more customers with better products.”
Lacerte: Real-Time Payment APIs Enabled the Modern Spend Management Boom
“So one of the things that cascaded with the technology for card payments Is the ability to control card payments, their APIs, real time. And so that's essentially what Divi is doing, right?”