The Exchanges

Q The equivalent in the consumer space would be I'm buying a mattress for five or 4000 bucks. I use the little affirm button to pay monthly over time. That's sort of the equivalent here, right?

A That's, that's exactly right. Affirm, Klarna, Afterpay are the leaders in the consumer space. One of the key differences in the B to B space is, you know, Affirm, Klarna, and Afterpay use an iframe and kind of take over that checkout experience. We view our tool as strictly complimentary to the existing workflows of a business. So we can actually get you onboarded and integrated within minutes, as opposed to taking engineering hours to integrate in a long sales cycle. So we can have you get started Finance your customers in minutes, um, and we view it really as a complimentary tool to expand TAM, expand market share, and close customers a lot quicker than you, you know, historically were able to. When you think about pricing negotiations as well as part of the sales cycle, it is a significant portion of the sales cycle, and if you can limit that by 50% or 20% by allowing customers to pay over time, it's also an amazing value add.

AI assessment note: “That's, that's exactly right. Affirm, Klarna, Afterpay are the leaders in the consumer space.”

Q I'm not paying, you know, I can't, and let's say my quote from Salesforce is 10,000 bucks, right? For the, for one seat annually, SMB can't pay that. So I'm, I'm going to stop engaging with the Salesforce sales rep. What you're saying is a Salesforce sales rep could offer the purchaser, right? And SMB a payment plan for that 10,000 dollars. Now, what might that payment plan look like?

A That's exactly right, Nathan. And so the easiest way to, to think about it is, is our existing generic plan is, is six months of payment terms. So you would break that 10,000 dollar contract into six payments of about 1600 dollars. And we would front the capital to Salesforce on day one. So Salesforce is ultimately able to basically close that contract on day two. So there's no, not even net 30 days payables for Salesforce. They receive 95% of 10,000. So we take a five percent fee. Um, so we'd wire them 9500 dollars upon closing, and then we'd collect from the customer 1600 dollars over six months. And that allows that small business to ultimately start to generate an ROI on the Salesforce CRM solution and start to expand their business. So now they can afford that solution. They can drive revenue at growth at the same time. Another interesting example that you see all the time is, is even with really, really large companies. If you look at their software spend, a lot of it's concentrated in January, February or specific months. And so their P and L and their budget is, you know, call it negative a million and a half and then zero, zero, zero for software spent. You know, they want to attach an ROI to that dollar spend. And so that their P and L's and their budgets are, are properly balanced and they're able to generate revenue based off of that spend.

AI assessment note: “our existing generic plan is, is six months of payment terms.”

Q That's, that is how you build a great company here, right? And get like the best of both worlds on all sides. This makes total sense. Okay. Let's go back to talking about market. Now we understand economics. I mean, How do you go convince like right Salesforce and all these guys to sort of adopt you? What's that playbook look like?

A The playbook actually is, is, is, is quite simple. And it's all about revenue growth, right? I mean, we're charging five percent, which to some companies, I mean, the way we think about it is it's really two percent above what credit card fees are. Uh, so if you're using Stripe for your payables, we're charging two percent incremental to, to Stripe on, on collections. And it's really all about revenue growth and the ability to cross sell, upsell and drive price increases. So within our existing beta Beta customer group, we've seen ACVs rise by about 25%, and we've seen a sales cycle decline by about 15%, driving just under 50% revenue growth, and so the opportunity is really in that in a nutshell, is how do you upsell, cross-sell, drive price increases, and then how do you pivot from a monthly subscription strategy and plan to really upfront contracted revenue? So we also have a number of businesses who You know, to get started into the market started with a monthly subscription plan because it's a little bit more amenable from the customer side. And now we're getting those customers to pivot to upfront contracted pricing using our pay over time, flexible financing solutions as the incentive to the end customer.

AI assessment note: “The playbook actually is, is, is, is quite simple. And it's all about revenue growth”

Q Uh, so tell, tell me more. I mean, if people look at your website and they don't have a deep understanding of fintech, they might go, wait, this is an invoicing tool. FreshBooks sort of is great here. There's a lot of invoicing tools. How are these guys different? Yeah.

A So we, we see our product as really a sales enablement tool, uh, to ultimately unlock, uh, customer acquisition, drive, and deliver flexible payment solutions to your end customers to drive revenue growth by increasing average contract values and decreasing the sales cycle. So it's funny you, you bring this up. I received a bill the other day for 10 dollars and 50 cents from a publicly traded software company. They said, Pay by wire. I said, 10 dollars and 50 cents. You'd like me to pay by wire. That's going to cost me 20 dollars to send the wire. They had no other payment solutions. Now, that's just the tip of the iceberg in this market. When you then look at, you know, a 5000 dollar invoice or a 10,000 dollar invoice, you know, they're really only two solutions. Pay by ACH, pay by wire. And ultimately, what we're doing is we're arming sales teams, arming collections teams, arming revenue ops teams, To have another flexible payment solution to allow them to pay over time. Now, what does this create and what does this do? It expands a whole new market for a lot of these companies. If you're Salesforce and you're interested in getting into the SMB space, a lot of people can't afford 80,000 dollars upfront. And ultimately we offer pay over time solutions that are fully customizable for that specific customer. And it's just a really interesting, interesting solution that doesn't e…

AI assessment note: “we see our product as really a sales enablement tool, uh, to ultimately unlock”

Q So how do you do that? People are going to hear you charge five percent, but then they're going to go, wait, how does he earn 25% IRR? How does that work?

A So the goal is in terms of recycling capital. So each one of these transactions, if you take out 9500 dollars, take out 10,000 dollars, you're, you know, you're paying just over 1600 dollars for that invoice. We then receive that payment and then lend that out again. And so we're able to earn multiple fees on every single deal that we have outstanding. Um, and it's the way in which a lot of these lending platforms work. Um, and ultimately the goal is really to return that to our end borrower and the ability to Decrease the cost of funds and able to pay up front for, you know, these large software purchases that they wouldn't be able to afford previously.

AI assessment note: “the goal is in terms of recycling capital... earn multiple fees”

Q No, hell no. But the question is, right? Can you keep redeploying all those payments as they come back? As your fund grows to a hundred million and a billion, you're going to be getting payments back monthly that are a million and then ten million. And like, can you get them out quick enough? Right?

A That's exactly right. Capital efficiency in any of these lending businesses and fintech models is super important. And I think the, you know, the core of the product, which is even more important is how do you drive value for your partners and customers? And that's really what we're more focused on as opposed to capital efficiency in these early days. It's how can we create a software solution that drives value and is a win-win solution for both Salesforce and their end customer. We're doing it today, but the goal is to keep it up, keep the innovation, keep the technology, you know, machine moving, um, and really advance the B to B payment space, which as we all know is very antiquated.

AI assessment note: “that's really what we're more focused on as opposed to capital efficiency”