SaaS Interviews with CEOs, Startups, Founders
1515 TrueAccord Passes $10m in Revenue Helping Banks Recover $40m+ in Defaulted Payments Over last 12 months
17 Sep 2019
Chapter 1: What is TrueAccord and how did it start?
True Accord launched in 2014, guys. Again, reimagining debt collection over the past four years. They've helped collect over $75 million in past payments or just, you know, payments that have been defaulted on. Over the past 12 months, he thinks it's around $40 million.
The way they make money so they can continue growing and scaling and investing in product is they take anywhere between 25% and 30% of revenues they recover. So that would mean, you know, call it $10 million about in revenue over the past 10 or 12 months. They've raised $40 million, that's 4-0, to keep growing this thing. They're a team of 130 people based in San Fran and San Jose.
Hello, everyone. My guest today is Ohad Samit. He's the CEO at a company called True Accord. He was Risk at Klarna.
Chapter 2: How does TrueAccord generate revenue from debt collection?
He co-founded Signified and Analyze, which was acquired by Klarna. He's also active at PayPal New Ventures and Analytics at Fraud Sciences, which is also acquired by PayPal. Ohad, are you ready to take us to the top? I am ready. Let's do it. You have a little affinity for FinTech, huh? I do. That's good. It's really interesting. It's a big deal. It is. It's a really big deal. Okay.
Let's focus on TrueRecord here. So what does the company do and what's your revenue model? How do you make money?
TrueRecord is a machine learning based digital first collection service. We built our own system. You can think about it as an almost completely automated marketing and sales campaign for debt collection. So if somebody owes you money as a company, For chargebacks, returns, loans, and so on, you come to us. We work with them.
We do it in a way that gets better results and leaves them positive about your product and about your brand. We have a net promoter score of 60. People really appreciate it. It's a whole new world, very different than the old model of doing debt collection.
Okay. So give me an example here. Um, and let's, let's do, let me see if I can tee this up so that I can best feature you to my audience. Right? So most of my audience are SAS CEOs. They understand chargebacks. They understand refunds.
If someone has committed to an annual contract with one of my listeners for a $10,000, um, and they missed their kind of their second payment, how would they use you to go get those payments?
Well, the first thing you want to do is you want to retain the consumer, right? You want to talk to them. You want to see if it's a temporary. But if you sent them a product, they're not paying, their card is expired, they don't really want to pay. At some point, you need help with that. You may want to try to reverse the chargeback, work with your bank, but a lot of these things don't work.
And then eventually you need someone to go and try to actually get them to pay you for what they owe you. And you either do it in-house and you build your own team, you start calling people and try to build this whole infrastructure, or you work with someone that you trust. It's going to be a good experience for the person owing you money.
But then again, be very successful in reaching them via email, via other digital channels, negotiating with them a payment plan or something that's working for them to actually get you paid for those charges and returns and the things that you're owed.
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Chapter 3: What is the role of machine learning in TrueAccord's services?
So you get the deal, you get the work, and thenā¦ You're supposed to pay for it. And then either you charge back on your payment or your card is expired and you actually don't make the payment and you disappear. And you owe Upwork $100, $500, $3,000. This thing happens all the time. And then Upwork tries to reach you for a few weeks.
And then after a while, if it doesn't work, they turn to us and they say, listen, this person owes us money. Go try to reach them. Go create a relationship with them and try to see why they're not paying and try to get try to get us paid. First step is to understand why didn't you pay? I mean, sometimes it's a financial difficulty. Sometimes it's a contract disagreement.
They didn't like the service. And there's a little bit of a dance around it to get them to say, okay, I know I owe this. This is why I didn't pay. This is what I can do. And then getting them to pay.
And because we're expert in doing that and doing that in a machine learning based, digital first friendly approach, that's why all of these SaaS companies, all of these services companies like to use us versus you know, traditional phone-based collection agency.
Okay, so let's role play here. I put a project through Upwork. It's a design project. I hired a designer. It was for $3,000. I paid 50% at the beginning. The designer sends me work. It was nowhere near the spec that I uploaded on Upwork. It was like horrible design, not what I expected. For that reason, I just ignore all of Upwork's emails and I don't pay the second 50%.
So there's 1500 outstanding there. Upwork can't reach me. They pass it to you. You reach out to me and I tell you what I just told you. How do you respond?
Well, this is a contract dispute, right? At the end of the day, you agreed to your contract and you agreed to work. And if you have an employee that does a bad job and they're employed with you, you don't say, well, I'm not going to pay you this month because I didn't like what you did. You may fire them. But you're not going to withhold the salary that you agreed to pay them.
But I would say salary and project base is very different. That's why people use Upwork is because it's per project. Part of it is to mitigate this exact risk.
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Chapter 4: How does TrueAccord handle chargebacks and refunds for clients?
Right. But then again, if you committed to say, well, 10 hours of work, I'm going to pay you five up front. You're going to do five more. And I'm going to see what you come up with. You can absolutely fire the person after 10 hours. but you're not going to withhold their payment for the first 10 hours.
Yeah, sorry. What I'm trying to get at is it's usually not this black and white. It's usually like I gave them a spec. They didn't deliver the spec. I'm not paying the rest. How do you handle this? Especially, I mean, we're having difficulty doing it human to human. And you're saying you're doing this with pure automation. I'm just trying to understand how you do this.
Well, because at the end of the day, you make an argument. The person makes a counter argument. most people understand that they signed a contract and the contract says that you need to pay for the hours that you contracted.
Yeah. Well, and the contract also says that they have to deliver, right? So what I'm saying is that's where the dispute happens, right? As I'm saying, they didn't deliver. That's why I'm not paying. If they delivered, I'd, you'd pay.
Um, That's a question of what's a delivery. That's kind of a legal deep question.
But isn't that, especially for Fiverr, isn't that usually where these things would pop up? There was a spec for code that wasn't written on TopTal. There was a spec for design on Fiverr.
No, not really.
Okay.
Not really. A lot of people have difficulty paying. They have expired cards. Their business has cash flow issues. They need help working that out. Okay. Yeah, in some cases, it's I didn't like the service. But yeah, part of that collection is talking about, well, here's what's written in the contract and here's what we think the situation is. And you don't have to accept it.
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Chapter 5: What are the benefits of using TrueAccord for debt recovery?
It works for everyone.
Yeah. So let's, let's, let's, let's role play there. So you're trying to get 1500 for me. It's the second 50% of the 3000. I'm saying, listen, Ohad, like I understand your point of view. It was a crap product. She didn't, you know, he or she didn't deliver, but here I'll give you 500 bucks. Where do you want me to send it? Where, how, how do you then process that back to Fiverr?
And what do you take or Upwork? And how do you, what do you take?
Well, you know, that's why I have, when it gets to a point where somebody wants to get on the phone and have this discussion, I have super talented, super experienced customer care agents that work with a person to explain what the situation is. So I'm less into that role playing.
Part of being a CEO of a startup is hiring the best people possible to be able to engage with people with empathy and say, well, this is the position. What can you do? What can we do?
Okay, you didn't answer my question. I'm trying to understand what you do. So you said you handle a lot of this in an automated machine learning kind of way, but you're saying no, it's actually, you're calling it human every time?
No, no, no. I'm saying if it gets to a point where you want to have this type of role playing and have a discussion, you can call in. or you can email in and have a discussion with us.
Okay. So let's, let's say I haven't talked to anyone. Your code, your tool has gotten me to basically say, I'm willing to give you 500 of the 1500 that I owe.
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Chapter 6: How does TrueAccord work with companies like Upwork?
I push a button and send you 500 bucks. What happens to that 500 bucks?
Uh, if you send us the 500 bucks, then, and that's fine. That, that, um, satisfies upward. They're happy. We're happy. You're happy. Everything's okay. Then, um, The balance is closed. We pay it out to our fee and we move on with our lives.
Okay, so your model is, your revenue model is you take a fee on what you recover. Is that it or is there a SaaS component as well?
It depends on the size. With very small companies, we have a little bit of a monthly fee, but once you get to a certain size, it's mostly percentage of recoveries, yeah.
Now, you guys have heard me on the show interview a lot of people playing in the e-commerce space and they are crushing it. In fact, if you guys are following e-commerce as a trend in general, you know that e-commerce brings in over $500 billion in sales each year and is expected to grow to 1 trillion in the next decade. You've got to be selling online.
Now, here's the thing, it's very difficult to do this. A lot of these platforms charge expensive transaction fees, which is fine if I'm an investor in the business, but it also means a small business has to pay more money. Right. Here's the thing.
I found this tool called Volusion, which maybe their business model is not a good one, but it's great for the merchants because the merchants make on average two X more than on other platforms. That's you, the seller with the e-commerce idea, the physical products you want to sell online. Again, great.
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This is exclusive just for you guys. So get a free 14 day, no risk trial, no credit card required. Visit Volusion, that's V-O-L-U-S-I-O-N.com forward slash the top and get 50% off your first month's plan with code the top. I wanna discover though, I mean, what you really are here, SaaS or kind of percentage of what you recover.
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