SaaS Interviews with CEOs, Startups, Founders
1352 B2B Version of Venmo About to Pass $5m in ARR
07 Apr 2019
Chapter 1: What is the new book by Jeremy about?
My new book, How to Be a Capitalist Without Any Capital, is out. You can get it at capitalistbook.com. Here's what Nicholas said on March 6th on Amazon. Incredibly incisive, useful, and sensible. The author is not greedy and is in fact extremely generous and does not hold back on the knowledge he imparts.
I've barely made it halfway to the book, and I'm already gushing over the book because it's an absolute gem. Nathan gets to the point quick, shows proof, and best of all, shows you not just what to do, but how to do it in explicit detail. To say the book is actionable is an understatement.
Now, you guys that listen to the podcast know I'm detail-oriented, so that review might not surprise you, but I hope you grab the book. It's now a Wall Street Journal Instant National Bestseller. Grab it at capitalistbook.com. Audible version is available too.
life is a blessing enjoy the journey again back in 2014 launched paystand a b2b version of a of a thing like a b2b version of like a venmo or something like that paystand is growing fast 12 million dollars raised they went they grew about 4x year over year from 2016 to 2017 aiming to grow about 3x or 4x this year from 2017 to 2018 uh their customers pam called on average 1500 bucks per month
The innovation is they're not charging on a percentage of revenue through the platform model or percentage of receivables through the model. It really is a flat fee. So hoping to hit that $5 million ARR mark here in the next quarter, two quarters, or three quarters or so. Healthy economics, net negative revenue churn annually with our team of 30 based between California, Guadalajara, and Canada.
This is the Top Entrepreneurs Podcast where founders share how they started their companies and got filthy rich... or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Jeremy Almond.
He spent the last 15 years in the tech industry as a serial entrepreneur, startup advisor, and occasional investor. He's helped dozens of B2B companies drive adoption of digital commerce and is still an active board member at a number of fintech companies. He started his career in technology as an engineer at Nanotech Startup Digital Instruments, which was acquired by Vico.
Jeremy holds a BS in computer engineering from the University of California and a master's in business from the University of Massachusetts. All right, Jeremy, are you ready to take us to the top? Hey, how you doing, Nathan? I am doing well.
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Chapter 2: How is PayStand similar to Venmo for B2B transactions?
So I want to ask what the company does in a second, but you said you're at your investor's office. How much have you raised to date? I've raised about $12 million to date, more or less. Okay. And then break down the company for us. What do you guys do? How do you make money? Yeah. So PayStand is a B2B payment network.
So a simple way to think of us is what Venmo does between consumers, making payments digital. We do for commercial companies. So we help B2B companies actually get their money faster, cheaper, and in a more automated way. Jeremy, can I think bill.com here? Yeah, I think so. So bill.com is really about automation. And what we are is actually changing the payment network.
So most of the money movement itself is basically using technology before the internet. Most of the technology is sort of built in the 70s. We actually own our own payment network. We use something called the blockchain, which is sort of a really new way to think about financial services in general.
Okay, so at the risk of getting too technical here, walk me through how a company to another company might actually use this. Can you give a real example, name the customers, et cetera? Yeah.
Chapter 3: What innovative pricing model does PayStand use?
So classic example would be an insurance company. So we work with a lot of what we'd call unsexy industries where there's paper checks in the process. So we have insurance clients, for example, that are normally billing folks like you to take their claims payments or whatever, their monthly payments. Normally, it's a manual process. You're paying by paper check.
The critical thing for insurance is if you don't pay it on time, you don't have coverage. So it's really, really important for the insurance companies to get their money faster, cheaper, and automated. Insurance company has two bad choices today. They either can use paper checks, which means they have to wait, they have to collect, takes them a long time.
And then if they don't get the money on time, basically you lose your insurance coverage for their business. Or they run and they take credit card payments. So you named off one of the credit card companies. Problem with the credit card payment is basically it costs 3% for you to receive All credit companies cost this way. So if you're, let's say, we work with mid-sized companies.
So if you're a $50 or $100 million company, just to receive your money might cost you a million dollars, which is absolutely insanity for effectively moving ones and zeros back and forth between banks. So what we do is help them move their money automatically, digitally, and without fees. And so that's a big, big deal. Awesome. So I forget which chain it was.
Maybe it was Walmart just announced they weren't taking, I think, Visa credit cards anymore because of how aggressive they are. Are they about to announce that they have fallen in love with Jeremy Almond and PayStand as replacing Visa? Yeah, I mean, so honestly, the retailers hate credit card fees, but I think they've got a bigger challenge, which is, you know, we as consumers...
Um, we, we use credit cards all the time. I, you know, I've got a cup of coffee here. I swiped my credit card, uh, to, to do it. Um, but it's different in the commercial case.
So in our commercial case, right, these are companies that you've worked with for, you know, a decade, you have contract terms that salespeople have argued about for, for years, um, that say, I'm going to pay on net 30 terms, which means when I get an invoice, I'm going to pay 30 days later. Um, so there's very, very clear, uh, uh, sort of terms that dictate how you get paid.
And so really what Paystand's focused on is making sure that process can be automated. And those don't really need to go through credit cards because, you know, at the end of the day, I know this company, I've got terms associated to it. So the credit card model just doesn't work there. How do you make money if you're not taking a percentage?
Yeah, so we kind of think of us as like the Netflix of the industry, which is we're trying to move the industry from a transactional model, sort of this blockbuster go in and rent something, to a fixed cost SaaS model. And so we charge a monthly subscription amount for a customer, and it's sort of all you can eat.
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Chapter 4: How does PayStand help companies get paid faster?
And our point of view on that is it's sort of like Netflix, right? These days, you and I We binge watch Netflix on Saturday watching Stranger Things or whatever. It's all digital. It's all HD directly to our living room. But when Netflix started, there were still a lot of DVDs. So what did they start doing?
They shipped red envelopes everywhere just to get people into the behavior of, hey, don't go into Blockbuster. Instead, move to this model that's going to be a different pricing model, an all-you-can-eat model. And we're going to move you over to this digital thing over time. And so we're sort of in that process right now. People still... You know, very heavily reliant on commercial banks.
And so a lot of our cost is sort of using the legacy infrastructure to move people over to the digital. How do you incentivize those banks? Is there a kickback per person they sign up or no, it's not that straightforward? Yeah, so we don't sell. It's interesting. We don't sell to the banks. We certainly partner with them.
We had a big announcement about a partnership a couple weeks ago with Silicon Valley Bank and First Data. But we generally look at the banks as partners, not as sort of economic drivers for us. And the thing that with banks is... This might have been different five years ago, but the banks know where they're good at and what they're not good at.
And the reality is they're not software companies and companies like us are not banks. Right. And so, you know, I think we're kind of learning who's who's the right lanes to stay in, which is we can create great enabling software for a digital age.
And, you know, a bank can do all of the things that they're good at, which is around regular regulatory licensing, compliance, sort of trust risk models, those sorts of things. What does your term look like? Yeah. So that's one of the things I think we're really proud of is, you know, from a net basis, we have negative churn.
Um, and you're talking, you're talking, you have net negative revenue churn annually. Yeah, correct. So, and I, and I, and again, I think that's because if you, once, once you get people in the payment network, that's entirely digital, you're not moving back to paper check. Right.
Um, and so, you know, I think we have a very, uh, defensible business, which, you know, we feel very blessed about and, you know, we're continuing to make the product more mature over time. What's your team size say, Jeremy? We're still small, 30 people. We're trying to, you know, like everybody in the Valley, I think grow as fast as we can. So you said 30 or one, three, 30. So yeah.
So very lean team. Yeah. Sorry, Jeremy, I can't three, zero or one, three, three, zero, three, zero. Great. And is everyone based? Where's everybody based? Yeah, most everyone is based in our California office, which is in Scotts Valley, which is great. It's not far from San Francisco, and it's also very close to the beach, which is a great mix.
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Chapter 5: What challenges do insurance companies face with payment processing?
So that office, we opened up at the beginning of this year. And then we have a very, very small office in Canada, which is basically a fulfillment center. Got it. Very good. Let's wrap up here with the famous five. Number one, what's your favorite business book? A famous business book, Founders at Work, probably. Number two, is there a CEO you're following or studying right now?
Oh, I would say that, I mean, you know, you have to follow Benioff, right, in the B2B world. Yeah. Number three, what's your favorite online tool for building your business? Right now, I'd say we're big HubSpot fans. Number four, how many hours of sleep are you getting every night? Probably four to six. Okay, so not bad. And what's your situation, married, single, kids?
Married, very, very happily married and excited to be going on vacation with the love of my life in a week. And no kids? No kids. All right. And how old are you, Jeremy? I am, let's see, how old am I? I believe I'm 36. 36. All right. Last question. What do you wish your 20-year-old self knew? I don't know. My 20 year old self was very happy and my 30 year old self is even more happy.
So, you know, I think life is just is it's a blessing and I feel grateful for kind of the journey. Guys, life is a blessing. Enjoy the journey. Again, back in 2014, launched paystand, a B2B version of a thing like a B2B version of like a Venmo or something like that paystand. Paystand is growing fast, $12 million raised.
They grew about 4X year over year from 2016 to 2017, aiming to grow about 3X or 4X this year from 2017 to 2018. Their customers, Pam, call it on average $1,500 per month. The innovation is they're not charging on a percentage of revenue through the platform model or percentage of receivables through the model. It really is a flat fee.
So hoping to hit that $5 million ARR mark here in the next quarter, two quarters, or three quarters or so. healthy economics, net negative revenue churn annually with our team of 30 based between California, Guadalajara, and Canada. Jeremy, thanks for taking us to the top. Awesome. Thanks, Nathan. Appreciate the time, buddy.
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