The Exchanges

Q and the board deck sounds more like FinTech plus percent of GMV valuations were higher. Uh, it's a sexier, it's there's more lock-in you're closer to the customers, et cetera. Um, do you anticipate the desire for folks to move into Payments, right, with their current customers who already have a SaaS platform, will that continue as markets sort of compress here and venture dollars are a little more reserved?

A Well, I think it's, it's going to accelerate because let's say that there are venture dollars are reserved. Sure. But that vertical SAS company, let's say dollars are reserved at this particular period of time for them acquiring new customers even. So then, you know, getting greater value out of, and, and, uh, you know, wallet share of the customers they do have, that's a big part of embedded payments in FinTech. So if you have, you know, A hundred million or ten million of funds flow. How do you better monetize that with not just payments, but other fintech products that you can offer them? Of course, always thinking about how can you add as a vertical platform, you know, value to the customer lending is a great example. You know, a lot of times with these small, medium sized businesses, you know, very quick hit lending embedded lending products are, um, you're competing against them using their credit card. Which really, you know, as long as the UI and the UX is, is, is good, you shouldn't have, that shouldn't be very difficult from a rate standpoint. So we like to think about let's get payments right and, and, and then use that underwriting and, and all of that and take, take someone beyond because it's going to, uh, at the end of the day, even if pre-money gets compressed and other things, it's going to be a vertical SaaS platform is going to be judged on You know, the stic…

AI assessment note: “Well, I think it's, it's going to accelerate because”

Q you look at cohort analysis in terms of net dollar retention on folks that have done and paid you for services. It's always higher, almost always higher than folks that don't pay that setup fee or don't pay the service fee as well. So how are you embedding services? Uh, and is it on the front end or the back end of them installing a justify in the first place?

A You know, there's nothing to install it. It's, it's more on a modular basis. So we, we have insights dashboard. So think about insights is a scoreboard. If you're in the vertical SAS business, your game is payments and embedded FinTech. So if you're going to play a game, we think it's particularly important to keep score at the game. So we've created one pane of glass for executives to say, how are we doing in the payments game? So that's that they can purchase that. And then we have engage, which is if you're in a game, it's good to have coaches. It's good to have folks that help you sharpen the sword. So engage is our virtual FinTech team where we have an LMS platform and a team that, that they can purchase. And then we have our usage based, you know, tech platform with the sub account architecture. So, um, we have some very large platforms that are just purchasing insights and engage right now, because on the roadmap, it's not the time to do a migration.

AI assessment note: “there's nothing to install it. It's, it's more on a modular basis.”

Q It's interesting how you describe it, sort of a virtual FinDeck department, sort of turn it on or off, almost like racks based and managed servers, right? Turn on the team on or off. Is that sort of how you're thinking about this long-term as a service component? There's a SAS component. There's maybe a percentage EMV component.

A That's right. So we have, uh, you know, payment infrastructure for vertical SaaS that allows them to monetize payments. And very quickly, you're seeing that become, frankly, not that unique. There are a number of folks that are out there to do that. The cat's out of the bag if you're a vertical SaaS platform or marketplace that you ought to monetize payments. But there, and you need to have the infrastructure to do that. And we have that. And we have some very interesting, I think, product features that make us different. What I think is, is Really, the next phase, though, is going beyond payments, and we can talk a little bit more about that and bringing in lending and card issuing and insurance, but back to the service side of it is there's a big difference between doing something and doing something extraordinarily well. So when I think about, you know, monetizing payments for a vertical SaaS platform, you can have all the infrastructure you want, but if SaaS platform or using your payments? Well, one could say you're not really meeting your full potential. So what you might need isn't actually, you know, a remarkable amount of new technology. You might have the stack you need, but what you need is sales enablement training. So, you know, sometimes I think that, you know, and we have a platform that delivers that content and our virtual FinTech team can, can lean in, but we,…

AI assessment note: “That's right... back to the service side of it is there's a big difference”

Q That's great. So call it like 24, 36, 48, something like that platforms today, actively using the platform. Are you seeing a pattern? Are you having just way more success with the LMS or the insights or the basis point model only, or they're all using all of them?

A No, there's a mix and it depends on stage. I think when, when a platform's, uh, early, you know, there, there isn't as much to analyze and help on the cost side. Really it's, and it's easier to embed the, you know, the, the processing platform right away. And then what we're often doing is, is really providing a, you know, a discounted part of that strategy because we want to invest in, uh, emerging platforms because the catch-twenty-two in the industry, of course, is, well, come talk to us when you, When you have five hundred million dollars of volume, it's like, well, yeah. How can I get there if no one ever sort of helps me accelerate this? So we, we really have a soft place in our heart for there, but, you know, and then larger platforms tend to start, you know, we have, you know, five hundred million, a billion dollar platforms. They like to start on the strategy side to, to really, cause there's more, there's more nooks and crannies to dig into. They might have multiple processor integrations. So, but ultimately, you You know, to go on this journey. And we do think it's a journey. We think of ourselves a little bit like, you know, payment and fintech Sherpas in a way. We're here to, to develop the map. We're here to carry the load. And, um, so it, it oftentimes leads to using all of them together because, um, the return is so material for a vertical SaaS platform.

AI assessment note: “No, there's a mix and it depends on stage.”

Q Super smart. Okay. Now did the origin story of the company, do you start off with one of these things or do you just launch with all three at the same time?

A So if we go way back, I mean, my background is I grew a, uh, you know, it started as a service company, and then we embedded our own vertical SaaS platform and, uh, you know, real-time booking for 15 years in the babysitting and childcare space, actually. Uh, so we had 10,000 employees in the U.S. and U.K., and I sold that to Bright Horizons, a public company out of Boston, and then my co-founder, co-founder started Sports Engine. Sports Engine is a vertical SaaS platform that Provided these software tools for youth sports teams, and it turns out that hockey and soccer is really expensive, uh, because they processed about four billion dollars, and they built this sort of, this fintech stack and this strategy where 85% of their revenue as a vertical SaaS platform came from what we're doing today. So we got together and said, um, there must be a better way than that sort of walk in the desert, and that's why we started Justify to say, you know, something's not right. We started that in January of 21.

AI assessment note: “So we got together and said, um, there must be a better way”

Q And then I imagine you probably staff up pretty heavily in your LMS side, right? A bunch of coaches, trainers, tech folks.

A Yeah, exactly. Um, we, we expect that to, you know, we're, we're still, my, my operational co-founder is our chief payments officer, Casey Kipfer. Um, he led the payments team at Sports Engine and then NBC Comcast acquired them. So, uh, you know, he's really leading that team and, um, it, it's an awful lot of fun to lean in with, with other entrepreneurs. Um, cause you know, even very large, you know, GMV vertical SaaS companies are, you know, can be not so Large businesses. And for me personally, and with Casey, it's just, it's terrific to just really lean in and get to know their business and, and, and be more than just providing them with technology, because I think technology enables us as entrepreneurs to do great things, but, but the human part is very real too.

AI assessment note: “my operational co-founder is our chief payments officer, Casey Kipfer.”