The Exchanges

Q That's good. Um, what is the, how do people get down to 50 bits? Like what are they, what do most people start at? Is it like 250 bits, 2.5%?

A No, ah, yeah, so the, the gross rate, ah, before we have to pay any of our providers is sort of, ah, we've got 270 bips in the US on credit card, and this is a headline rate, um, but we have a flat fee charge for ACH presently, and so if you're processing, ah, B to B payments, similar to say like a bill.com, but you're running it through us, ah, between the two parties, ah, they're paying a fixed fee of maximum one dollar, and so obviously you get a blended rate, that take rate comes right down, um, and so, Yeah. It's a fairly nice mix. We're just interested in being in the flow of commerce between two B to B parties and, you know, getting rid of checks, right? That's, it's kind of our main secret sauce. And it's a great platform for removing that admin layer. So everyone gets stuck in and has a good experience.

AI assessment note: “we've got 270 bips in the US on credit card... flat fee charge for ACH”

Q You remember, yeah, you did, I think you did like three seed rounds, a million in 2015 and 1.5 ish and two tranches in 2014 and then a 110 angel round, I think before that, right? Something like that.

A Yeah. So we had like, uh, family, friends and fools. So my brother, my best mate, and my old business partners and my old CPA firm. Then we had a bunch of angels, which was, um, anchored by a guy called Craig Wincott, who's, uh, uh, effectively like our Intuit founder, but just in Australia. Um, and on the back of that, we then raised from Real Ventures, which is up in Canada. I'm based in Sydney, Australia to sort of put how far we had to go. Um, and so John Stokes up there, I read our first seed check and kind of split the round in two and we had, uh, Enterprise, uh, software was the company founder here, lead the second part of the seed round a year later, so sort of split. And then it was on to Series A, uh, with, uh, Australian funding, particularly now it's great, and it keeps getting better, but we had four VC funds and two billionaires write us a five million Australian dollar check to give you an idea, so it's three and a half US. Um, at that point we were like, you know what, maybe, maybe this raising thing isn't for us. Uh, we actually got through the break even in 2019 and sat down with friends and advisors and whatnot and was sort of like, well, where to from here? We had this much of the share of the market. We had product market fit and we ended up going to look for the biggest and the baddest and had Tiger Global come along to lead our Series B, um, in 2019, whi…

AI assessment note: “we had like, uh, family, friends and fools... Then we had a bunch of angels”

Q What comes first, accounting firm putting a dollar revenue through you and you making that in the percentage of GMV or them buying the software first and then adding on invoicing later?

A Uh, the first one, so they buy the software, they'll run through, usually, like, accountants, as you can imagine, um, have a system currently for billing and collecting payment, and so typically what they do is they send a contract out to one of their teams or their friend who's a client, they start there, they build up trust in the platform as we start to manage the revenue, then they turn payments on, um, and the faster we build that trust, the faster they roll it out across their client base. Um, uh, the freemium Model is something we tried way back in the day, and that did not work. As soon as we turned pricing off and payments, or sorry, charging everyone for the software, we had a whole bunch of emails going, oh great, now I'll start using it. So, big lesson learned back in like, 2014 or 15, I was just like,

AI assessment note: “they buy the software, they'll run through... then they turn payments on”

Q Wait, hold on. How do you decide that? Like if you sell a million bucks of your personal shares, it's like a bad signal, but like, then you want to take enough where they're where you're like financially safe enough to worry about shit. Right. So like, how do you balance that?

A Oh, I mean, I guess that's, I'm a CPA by background. And so having the conversation with folks is like, look, if I don't have to worry about making a mortgage or payment at home and banks hate entrepreneurs, particularly in this country. And so it's like, well, I can, Grab the house or buy the apartment finally, and then I don't have to worry about that side. Maybe have a small mortgage and I'm focused on the company, but I don't have the sort of pressures of home like I did in the early days where you've got personal credit card debt because you're paying yourself 20 grand, flying around the world, sleeping on couches, trying to figure out how to make ends meet. Um, so the, the focus is just sort of laser in. And most people actually, JMI folks were great about it. Tiger was great about it.

AI assessment note: “focused on the company, but I don't have the sort of pressures of home”

Q Come on, guy. What's the cut? What's, what's the smallest?

A Uh, smallest, uh, we take about, well, I mean, it's on the websites. It's very easy to see, but the blended take rate for ourselves is about 50 bips at the moment. Um, we're looking to push that up, um, through getting the volume up there and negotiating on our cost side, but also just thinking about how we, how we charge smartly for people, so people are feeling like they're paying the right amount for the right service. Ultimately, what we're trying to do is just make sure there's no administration, Make sure they don't have to use another system. Make sure the clients can see their payments and understand where they're coming from and that everyone's kind of a happy on the two side of the game.

AI assessment note: “the blended take rate for ourselves is about 50 bips at the moment”

Q And if that's where you are today, what is growth over the past 12 months?

A Uh, it's funny. COVID's been an accelerator and a headwind for us, uh, cause you've got accountants looking after their clients doing forecasts and all these things they never would have done probably for years. And then you've got the wanting to get paid and having moved online. Uh, so we've grown at about 70 plus percent last two years running, which is not terrible, but we would have liked to have grown more and, you know, hopefully that's what's coming as a, as accountants particularly look forward to getting paid and, Yeah. I've taken care of their clients and now they need to take care of their own business. And so what we're seeing is an acceleration and we've run back some really great partnerships recently to help us sort of conquer the U.S. Augusto, Thomson Reuters, Intuit, PCG Group. Um, so we're kind of off, off into the races and we're looking forward to, you know, coming, coming to bring all the goodness that we've got down here into the U.S. market and ramp up that market there.

AI assessment note: “we've grown at about 70 plus percent last two years running”

Q Okay, got it. So, 50 pre, call it like 56 to eight, like 70 posts, something like that. Yeah. Okay, very cool. Great story there. Um, or did you feel like you were at a disadvantage being based in Sydney, or do you feel like you got a multiple, like, same multiple you'd get if you were based in New York?

A It's a good question. I think most of my American teammates have been with us for a while. Uh, I think I'm disadvantaged because I didn't go to Stanford, to be frank, but, but, um, uh, no, not so much. Um, I'm sure, you know, uh, there's definitely like people like you being on the continent, right? So like, it'd probably be easier to raise certain rounds or have more investors interested if, you know, they feel like they can fly and pay us a visit much easier. Um, but I'm quite happy building an Australian company. I mean, I'm not sure, you know, but Canva, uh, Campaign Monitor, Atlassian, Zeros from this end of the world, and all this kind of goes on. Uh, we're just trying to throw a hat in the ring and create another, another great company from this end of the world and bring that culture that allows a 150 people to stay with us, you know, to the world and Yeah. Do it, do it our way. Um, not super patriotic in terms of like beating my chest, but I would really like to, you know, sort of help us. Uh, Australia has a history of digging things out of the ground, farming things and building things on top of it. We really like us to sell our smarts. So that's the reason to stay down here. Um, also great R&D incentives. It's only developers that want a job. Coming out.

AI assessment note: “it'd probably be easier to raise certain rounds or have more investors interested”

Q to build a big business and also try and preserve as much ownership for you and your co-founders and your brother, your best mate as you can over time. Right? So when you guys went out and did that 3.6 us, uh, USD dot around back in the series a, back in 2017. Do you remember what valuation you raised that at? Was it, was it, was it very dilutive?

A It was, it was, uh, we, so Australians, uh, how would you put this? Um, they like to see efficiency and capital deployment. Um, as a mindset, we're used to profitable companies. And so when you've got something that's not profitable, but growing quickly, people sort of struggle. Um, we really needed the capital. Uh, we found great partners once, you know, the price was on the low end. Um, but we also were sick of raising. So like, this is going to be our last round. So that obviously played into, played into the price as well. Um, but we brought on some great partners. So those people who joined us actually helped us get to the, the B round and onwards. So there's a mix of what if, um, you know, what's the number though?

AI assessment note: “the price was on the low end”