SaaS Interviews with CEOs, Startups, Founders
Look Back It's been a year since Bill acquired Divvy: Founder Sees Clear Path to $100m, 20k Customers, Most Revenue from CC fees, $1b+ in GMV
05 Sep 2022
Chapter 1: What is Divvy and how does it help businesses manage finances?
We'll easily top 20 and even with some growth pay on that. So we'll see. But we're going over 100%. So we expect that to continue. And that's customer count.
Are you also growing revenues 100% year over year? Yeah. How long can you keep doing that? I mean, it's hard to do that at big numbers. Not forever. Yeah.
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Hello, everyone. My guest today is Alex Bean. He's sitting on a rocket ship with Divi, but 10, 11 years ago, he was selling scooter parts. What happened? We're going to dive in today. Divi modernizes finance for businesses by combining expense management software and smart corporate cards into a single platform.
Finance leaders can now get real-time visibility into their company's spend and flexible controls that prevent teams from ever going over budget. You can check it out at getdivi.com. Alex, ready to take us to the top? Yeah. I wasn't ready for the scooter business reference, but we can dig into it. Well, it's crazy.
I mean, my research team was looking there going, wait, this guy went from basically being a GM at a scooter place to running like one of the fastest growing fintech businesses today. How the hell does this happen?
Yeah. So real quick on the scooter business. I mean, I actually feel like those are some of my most informative years or formative years. I mean, I was in my mid-20s, knew the owner of the business. He got sick and he said, hey, I'm sick. Can you come in and run it? Like, can you come in and build this thing? And
You know, at the time we were we thought we were going to like take over the X Games and take over skateboarding. So you kind of thought big, but we did some fun stuff, learned a lot about manufacturing and branding and he got healthy. So that's when we I gave it back to him and then got into tech. So learned a lot, a lot of fun, but definitely different than FinTech for sure.
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Chapter 2: How did Alex Bean transition from selling scooter parts to leading a fintech company?
And so we built it not as tech engineers, but as business owners and saying we're building something that we would have wanted to use in our prior companies.
And who's the customer target today? Is it the luckies of the world, SMBs?
Yep, luckies of the world. But just SMBs, we kind of have two audiences, I say, like 1 to 50 and 50 to 500. Slightly different use cases for the most part. But SMBs in general, that's what we're going after. The mom and pops of America, Main Street America, not just the VC-backed companies.
Yep. And talk to me about that segment, right? So if an SMB is listening right now and they're going, man, I'm currently using like six tools to do all these things Alex is talking about and they want to start with you. Like what's the average price point an SMB is going to pay you guys? Nothing. It's free. Okay. So how do you make money?
Yeah, so we basically take Amex, right? Like you're not paying for your Chase card or Wells Fargo card or whatever. We take your credit card. That's how we make money. So we make money just like the banks would. And then we give you the software that Expensify and others are giving you. So we really combine it into one platform.
And what we've found is by combining it, it's not only just that it's free, it's like the source of information is so much quicker and so much better. So the things we can do are much different. But yeah, it's free. And that's why we're super excited to offer it to the mom and pops of the world, because we can tell them, stop paying for those three softwares and come just use Divi.
And it's a win-win for both.
Yeah. I mean, you have four sort of things, buckets on your website, business credit, spend management, expense management, and AP management. There are multi-billion dollar companies competing in just one of those verticals. Just to be clear, I'll make sure I'm getting this right. You're giving away spend management, expense management, and AP management free.
You're making money on the credit card stuff and the credit fund. Yep. Exactly right. Yep. Wow. Okay. Interesting. So I guess the question I would have for you is this is not easy software to build. How did you fund it in the early days so that you could give it away for free?
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Chapter 3: What customer segments does Divvy target and why?
More than a billion, less than 10 million. And then I guess, can you maybe just so I can quickly understand this. So last 12 months, if you guys look at your total revenue, it just gave me percentages. What percent would you say is credit card versus paid software versus your credit fund returns?
Almost all, I would say majority of that is on interchange.
Oh, wow. So really, it's mostly credit card. Interesting. I was thinking you might have said that there's actually a massive balance sheet business here because you have unique insights data you can underwrite better than anybody else.
Yeah, there's definitely elements of that. But even if you talk to Brex and Ramp, like you're not making most of your money on that, right? Because again, underwriting just minimizes your losses. It doesn't actually add you. If you're really good at underwriting, it doesn't add revenue. It minimizes your loss rate.
Well, I mean, so look, I mean, there are cabbages, you know, cabbages of the world, right? That play in this space, right? Which it's, it's a, it's a purely balance sheet business. You drive your cost plus one or two, you have underwriting, you do deals, SMBs at a 35% effective APR, you make a big spread.
Yeah. So the difference on that, I think you'd see the same with Brex and Ram too. Right now when we're underwriting, we're not doing a lot of loans. We will be, you know, adding to that. We kind of have that beta. It's more underwriting like your credit card, like an Amex. So if you don't pay, if you don't pay, then there are fees.
And obviously there is revenue that comes from like, Hey, if you don't pay your credit card bill, you pay it late. You know, it's carried interest, et cetera. But cabbage is doing like loans, right there. There's just straight out saying, Hey, we're going to give you a hundred thousand dollar loan. And at this return, so.
Just to be clear, you're just doing the credit card stuff. You guys haven't went out and raised a billion dollars as a balance sheet credit fund to do small business loans into your partners.
We do have that set up. We are not fully launched on it simply from a product standpoint. We actually launched it pre-COVID. We pulled it, obviously, with COVID. Now, we're going to start launching it again. It's definitely in our wheelhouse. It's the same conversation Amix and all these guys have.
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Chapter 4: How does Divvy generate revenue despite offering free software?
It's not... Maybe in the way we do it, we feel like we'll have some innovation on it, but the concept of those loans is not innovative. Yeah. Talk to me about how many of these customers are serving out today.
What's the number?
Yeah, over 10,000 and adding quite a few every month. So we're super excited about our growth rate. And it just means that, I mean, our motto is spend smarter. So for us, it's about having more and more SMBs, mom and pops, you know, build lucky scooter size companies, you know, spend smarter, stay in budget, hit payroll, save money. I mean, that's kind of what we're all about.
So for us, seeing that number rise is exciting.
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Yeah. Your press release is 2019, a thousand customers, 2020, 4,500. It's even more than double in year where you're now that now breaking 10,000. What do you think you'll finish this year at? How many are you adding new like per month?
Yeah. I mean, I think we'll easily top 20 and even with some growth pay on that. So we'll see. But we're going over 100%. So we expect that to continue. And that's customer count.
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Chapter 5: What is the significance of customer growth and revenue projections for Divvy?
find the right people in the right companies, work with them, and you will learn so much that the rest will be taken care of. Money will come.
Guys, there you have it. Alex from Get Divvy. They launched back in 2017, financed with their own personal capital, did a first formal round of about $10 million, crossed 1,000 customers, SMBs mainly in 2019. Now over 10,000 customers with a clear path to break $100 million in AR over the next two years.
Most of their business, it's giveaway free software where they have multi-billion dollar competitors and the AP management space, expense space, really to make all their money on those 300 BIPs on the credit providing they process currently between a billion and a hundred billion. Nice big range there, Alex. Thanks for taking us to the top.
Anytime. Thank you.