May 17, 2021 · 25m · top-founders
Divvy Founder Sees Clear Path to $100m, 20k Customers, Most Revenue from CC fees, $1b+ in GMV
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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 interview, Divvy co-founder Alex Bean sits down with Nathan Latka to break down Divvy's fintech disruption, explaining how offering free spend management software and monetizing via credit card interchange fees propelled the company to a $1.6 billion valuation with a clear trajectory toward $100 million in ARR.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 30.5% of the talking time here. How this is scored →
Nathan as informed peer 6.0 Guest teaching 3.1 Guest disagreement 2.0 Nathan pushing back 4.4
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:07 Stonewalling GMV disclosure
Bean firmly refuses to give specific transaction volume numbers, giving an excessively broad range of billions of dollars which Latka mocks as an enormous range.
Hardest push from Nathan ▶ 14:50 Latka boxes Bean into $100M revenue confirmationAfter Bean declines to provide current ARR figures, Latka reframes the question around a two-year timeline to force Bean to state on record that they will surpass $100M.
Biggest teaching moment ▶ 10:34 Explaining underwriting mechanics in card fintechBean educates Latka on fintech unit economics by clarifying that good underwriting reduces loss rates on credit rather than acting as a top-line growth driver.
Nathan holds their own ▶ 21:20 Latka deconstructs the gross vs net interchange take rateLatka demonstrates deep domain knowledge by pointing out that despite 300 bps of interchange, rebates and loss reserves squeeze true net margins down to 70-100 bps.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| From Scooter Business to Building Divvy | 4 | 2 | 1 | 2 | Latka opens by probing Bean's unusual background moving from running a scooter manufacturing company to scaling a major fintech platform. Bean cordially walks through how operational cash flow and expense reporting friction at Lucky Scooters directly inspired the creation of Divvy. | |
| Disrupting FinTech with a Free Software Model | 6 | 3 | 1 | 3 | Latka articulates Divvy's business model where software modules compete with standalone multi-billion dollar vendors while giving it away free. Bean explains that modern banking infrastructure and early venture fundraising enabled them to take a big swing at trillion-dollar markets. | |
| Founding Dynamics, Equity Splits, and Series D | 6 | 2 | 2 | 4 | Latka drills into co-founder equity splits and recent Series D metrics. Bean is open about having an unequal split with his co-founder Blake while playfully dodging the exact initial seed check. | |
| Interchange Economics, GMV Scale, and Lending Strategy | 7 | 5 | 3 | 6 | Latka pushes for specific GMV numbers and questions why Divvy isn't running a large balance-sheet lending operation like Kabbage. Bean pushes back, explaining that underwriting is primarily for loss mitigation rather than revenue expansion, and notes their revenue is overwhelmingly interchange-driven. | |
| Customer Growth Milestones and Path to $100M Run Rate | 7 | 3 | 3 | 7 | When Bean declines to share current revenue figures, Latka corners him by benchmarking against public SaaS comps and securing confirmation that Divvy has a clear trajectory to cross a $100M run rate in two years. | |
| AP Management Roadmap, Stickiness, and Brex Comparison | 6 | 4 | 3 | 5 | Latka investigates Divvy's sub-5% SMB churn rate and prods Bean to compare Divvy's performance against Brex. Bean defends their software stickiness via budgeting tools while acknowledging Brex's financial innovation. | |
| Monetization Flywheels, Retention, and Unit Economics | 7 | 4 | 2 | 5 | Latka breaks down the actual net take rate on 200-300 bps interchange after factoring in customer reward rebates and risk provisions. Bean illustrates how secondary monetization flywheels like expedited AP settlement generate incremental utility fees. | |
| Founder Liquidity and the Strategic Value of Secondaries | 5 | 2 | 1 | 3 | Latka discusses founder secondary liquidity and conducts the standard Famous Five rapid-fire closing before delivering a detailed summary of Divvy's metrics. |
Statements from this episode (15)
Bean: Divvy targets Main Street SMBs rather than just VC-backed companies
“Luckies of the world, but just SMBs, you know, we kind of have two audiences. I say like one to 50 and 50 to 500, slightly different use cases for the most part, but SMBs in general, that that's, we're going after the mom and pops of America, Main Street Ameri…”
Bean: Divvy offers free software by monetizing card interchange fees
“We make money just like the banks would. And then we give you the software that Expensify and others are giving you. So we really combine it into one platform.”
Bean: Co-founders can be true partners without a 50/50 equity split
“And the advice I would give a non CEO co-founder is you have to understand where you sit for me. I always knew Blake was the quarterback and I was the running back to use a football reference, meaning we were partners and he, I don't think he could have done i…”
Bean: The vast majority of Divvy's revenue comes from interchange fees
“Almost, almost all I would say majority of that is on interchange.”
Bean: Underwriting skill minimizes loss rates rather than increasing revenue
“Underwriting just minimizes your losses. It doesn't actually add you. If you're really good at underwriting, it doesn't add revenue. It minimizes your loss rate.”
Divvy paused its SMB lending product during COVID-19 and plans to relaunch
“Well, we do have that set up. We are not Fully launched on it simply from a product standpoint, we actually launched it pre COVID. We pulled it obviously with COVID. And now we're, you know, going to start launching it again.”
Alex Bean: Divvy will easily top 20,000 customers by year-end
“I mean, I think we'll easily top 20 and even with some growth pay on that, so we'll see, but we're going over a hundred percent, so we expect that to continue.”
Bean: Companies need $200M to $300M in revenue to go public
“So if you're going to go public now SPACs do make it a little bit different, but I think you see a lot of companies that go public and we would look at it and say, Hey, you gotta be doing like two hundred million of revenue, you know, three hundred million of …”
Alex Bean: Divvy will hit a $100M run rate within two years
“No, I'm very confident that we will achieve that.”
Bean: Divvy Maintains Annual Churn Rate Under 5 Percent
“Yeah, it's very fair. So which is crazy on a free product that people can walk away, right?”
Bean: Brex Innovated on Credit While Divvy Innovated on Software
“Brex drove innovation on the credit side and they deserve a lot of credit for it. We drove innovation on the software side and we deserve a lot of credit for it.”
Bean: Major Banks and Startups Will Emulate Divvy's Budgeting Features
“You're going to see the market, whether it's the big companies like Chase, Wells Fargo, Amex, et cetera, or other startups. Copying suit. Budget is one of those things that we've held to and we're super proud of, and it's super powerful for our customers. And …”
Bean: Ingesting invoices serves as customer acquisition for Divvy virtual cards
“Every invoice is a new vendor that we can talk to and say, do you want to accept a virtual card? Or do you still want to accept the ACH? And there are ways for us to make money in that flywheel and get new customers.”
Bean: Divvy captures 200 to 300 bps interchange on card spend
“Clearly, if someone's a hundred percent company spending a 100,000 dollars, you know, there's 200 to 300 bips, so you can do the math, right? Like, now, there's a lot that we have to account for, though, right? What people don't forget is we are giving rewards…”
Bean: Secondaries Done Right Give Founders Motivation to Keep Building
“Secondaries done right, can give motivation which allows, you know, early founders and early employees to keep going as opposed to, you know, stop, right? Cause it's easy to say, oh, I've been grinding away for however many years and I just need something out …”