Pay your partners anywhere in the world with Tipalti. Their global system supports payments to all countries by offering multiple payment methods and currencies.

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Transcript:

Angela: This episode of The Crowd is brought to you by Near Me. Want to build a peer-to-peer marketplace? Contact Near Me and let’s chat about your idea.

Kevin: Hello and welcome to The Crowd, a podcast by Near Me. We’re talking about peer-to-peer marketplaces. We’re talking collaborative economy. We’re talking about thought leadership. We’re talking about all these things, any and all of them, with some of the best minds in the field. And of course, I’m your host, Kevin Cohen.

Hi. I’m your host Kevin Cohen. I’m super excited about today’s interview. Today, I’ll be joined by Rob Israch. Rob is the Chief Marketing Officer of Tipalti. Rob, welcome to the show.

Rob: Thanks Kevin for having me.

Kevin: Of course, of course. Before we jump in to our discussion on the collaborative economy, I’ve got some rapid fire questions for you.

Rob: Shoot.

Kevin: All right. What book do you recommend most often?

Rob: You know, one of the books that I’ve read that I think is probably pretty relevant to your audience is What’s Mine is Yours: The Rise of Collaborative Consumption. A really great book by Rachel Botsman.

Kevin: Of course. Yeah. We’ve interviewed Rachel on the show. She’s fantastic.

Rob: Awesome. I have to watch that.

Kevin: Totally. What peer-to-peer marketplaces or on-demand services do you like o use?

Rob: So, I know at Tipalti we use oDesk a lot. We’ve used BoostMedia, Visually. Those are great services more on the B2B side. Personally, Lyft, Instacart. Ship is a great new service so I love that. Gone is also pretty cool. And so every day, there’s a new guy.

Kevin: Nice. So, what do you like to do when you’re not working? Give us some insight into the world of Rob outside of work.

Rob: Yeah, sure. I’m a big traveler. I don’t know how many countries I’ve been to but always travelling to new countries and love getting exposed to new cultures and ways of life. Painting on the weekend and just exploring the Bay Area really.

Kevin: Cool. What’s your favorite country that you’ve been to outside the US?

Rob: As of today, I’d say Vietnam maybe.

Kevin: Nice.

Rob: A really amazing country.

Kevin: Nice. And when you’re painting, what kind of medium are you painting in?

Rob: Usually oils, usually oils.

Kevin: Any specific subject matter?

Rob: Usually, it’s kind of like a combination of surrealism, abstract, a few different forms of art but the topics are all over the place.

Kevin: And do you sell your art or just paint for joy?

Rob: Yeah. More paint for joy and half of the paintings are ones that you know, so not really ones you hang up on the walls, no beaches.

Kevin: Okay. Very, very cool. So, give us your back story. What did you do before you joined Tipalti?

Rob: So I joined Tipalti almost a year ago, not quite. I was at NetSuite beforehand. So, I was at NetSuite for a good chunk of time before they were public when the company had about 200 employees and maybe the revenue was around the $40 million range. And I kind of grew up with the company as we grew up and took the, go through, taking the company public and kind of growing up to kind of one of the leaders in Cloud companies that they are today. So, it was quite a ride. I ran branding, international marketing and demand generation for NetSuite. And after maybe eight years, I was ready for my next challenge. And I really loved what Tipalti was doing and the space they were in and really high customer satisfaction and kind of some of those signs of word of mouth growth. And I thought this was the right time to make the jump and try my next startup and hopefully grow it up to as big as NetSuite as today once again.

Kevin: Cool. So, when you joined Tipalti, what was kind of the size and head count of the company?

Rob: So the company was somewhere in the range of like 15, 16 employees and now we’re well over double that in three different offices and three different places and grown really fast. So it’s already been quite a wild ride in 10 months.

Kevin: Great. So, for our listeners out there, why don’t you tell us, what does Tipalti do?

Rob: Sure. So, Tipalti basically is focused on the shared economy as well as the ad tech economies. If you think of those types of companies, you not only have to be successful, you don’t only have to generate demand, you also have a supply network of freelancers, contractors, suppliers on the back end. And if you don’t make sure you take care of that experience and pay those people effectively and manage those relationships effectively, that whole front and experience will fall apart. Think of Uber without their taxi drivers, not having enough taxi drivers, not having happy taxi drivers etc, the service would cease to be a positive experience for the front end customer. So, that’s really kind of where Tipalti comes in.

If you take 10, 15 years ago, you didn’t have business models where you had to pay thousands of people around the globe at once, meaning all these suppliers, freelancers, contractors, kind of shared economy suppliers if you will. And so Tipalti has really been created to pay those folks high volumes anywhere in the world, any country in the world in their local currency. It’s really a payment management system to automate that whole process that you need. You start a company like Uber to really satisfy demand in the marketplace but you don’t really start it to figure out how to create a whole accounts payable payment operation. Tipalti basically creates, takes away all that time that get spent trying to pay your partners as fast and effectively as possible across the world and automates it.

Kevin: Very cool. So, if I’m a marketplace, why should I switch to Tipalti from an existing solution like eBay, or excuse me PayPal? Why would I –

Rob: Sure.

Kevin: Why would I use Tipalti over PayPal?

Rob: Sure. A lot of other companies either are – a lot of customers start off a process –when you’re paying 50 people a month or 30 people a month, maybe if you’re only paying contractors in the US, it’s not that painful problem. It’s once you start expanding your company, trying to grow rapidly, you’ve passed that threshold of maybe 100 payments a month, maybe you’re thinking of expanding to Europe or South America or other parts of world, Asia, etc. and at that point, the process of collecting, these different paying methods – every country has different requirements for which paying method is preferred, what fields you have to gather, there are local currency requirements, regulatory requirements.

It starts becoming a real burden and people start – you know, most of our customers say they’re spending 10 hours a week paying their suppliers and sometimes that’s really senior people, a CEO, a CFO, a controller, a finance director spending valuable time, let alone the account managers who are working with all your different partners and contractors around the world listening to them complain about getting paid inefficiently. In certain countries, people really don’t like being paid in PayPal. There’s a pretty high percentage fee that’s being taken out of that payment and various different issues around it.

But the bigger thing is usually the internal time requirements that your – every one's got limited time and dollars. And you’re choosing to use that time to manage a routine process of payments rather than to help your company grow and expand globally. And so when the pain threshold gets high enough and you realize you’re just spending too many hours trying to figure out how to pay your partners efficiently, that’s often when people will say okay, it’s time to – I need more payment methods. I need to pay people locally. And I just shouldn’t be spending 5, 10 hours a week on a routine task like this.

Kevin: Okay, okay. So what are some of the marketplaces or on-demand service providers that you guys are currently working with that you can talk about?

Rob: Sure, sure. So companies like Visibo which is kind of an event management platform, outsource.com, Article One Partners, Seeking Alpha folks maybe through a crowd sourced news network, Touch of Modern which is a large ecommerce flash ecommerce site that use – so, a lot of these types of sharing economy companies have moved to Tipalti for the reason – some of them were paying hundreds, thousands of different, you know, partners and freelancers and contractors around the world. And they just didn’t want to kind of deal with that time burden that’s required and they want to use their time more effectively.

Kevin: Very cool. Are any of your customers affiliate networks? That was just something I was thinking of as you were talking about the need for mass payments.

Rob: Yeah, yeah. Actually, it’s funny you bring it up. So our customer base tends to be a 50/50 split between sharing economy companies, crowd sourcing, marketplaces, etc and then the other half is really the ad tech space. So affiliate networks, ad networks, a lot of these app, gaming, monetization networks use us as well. And of course, those industries that we mentioned are all ecommerce companies that use us. So, all those industries are kind of interlinked together of course. So, many people would say I’m an affiliate network and another person would call that company a crowd source company.

Kevin: Totally.

Rob: But yeah, we definitely have a lot of affiliate networks as well using us.

Kevin: Very good. What are some of the macro-level trends that you guys are following at Tipalti?

Rob: Yeah. I mean, the one thing we really have to keep our eye on is the changing tax and regulatory environment, particularly on the global basis. So you might have noticed recently Obama recently changed the do not pay blacklist rules to include cyber source, cyber security companies so cyber criminals are no longer people you can cut a check to. And if you pay them by accident, you can get penalized pretty severely from a dollar perspective and even a legal perspective. So we’re really keeping our eye on all these databases out there so that our system can prevent you from paying someone that shouldn’t be paid that can get you in trouble.

Watching tax and regulatory requirements literally every week. Some country changes which fields of bank information you need to gather and what requirements you need to gather before you pay a person in a certain region. And the payment methods that people want and accept are changing all the time. So, from a regulatory tax and compliance perspective, we’re really watching these changes as they change rapidly. They’re some pretty overwhelming stuff that you don’t want to spend your time concerned with as you keep growing.

Kevin: And am I correct in assuming that the way you interface with various marketplaces and affiliate networks is through an API integration?

Rob: Yeah, exactly. Essentially when you know – we have a few different options but the primary way most of our customers choose to use us is they typically already have a website. Almost every company who’s used us is a digital economy company and they have a website that both their customers use as well as their payees often use. And so, essentially what we do is we embed within that website experience and so our product actually becomes an extension of your product. And as your payees on-board or set themselves up within your payment system and join your network so to speak, they enter their banking information, their payment preferences, their currency preferences. To them, it looks like they’re using – let’s take outsource.com. It looks like they’re registering with outsource.com with all their partner payment preferences, their choice of payment methods and currency. And then from there, we know all the details. And as soon as the finance person tells us who to pay and when, we are able to make that happen across whatever payment method and currency the partner told us they want to be paid in.

Kevin: Very cool.

Rob: So it just embeds within the website basically in eye frame.

Kevin: Okay. Just talking in terms of mechanics of getting paid, one of the criticisms of PayPal is that they hold on to your money for a couple of days or even up to 10 days at some situations. What is the typical process in terms of – if I process a payment using your system, how quickly do my vendors inside my marketplace get their money? What is the typical turnaround time for money getting sent?

Rob: So we basically pay at exactly the same pace as a bank will pay you through whichever paying method you prefer. So there’s none of that process of holding money in a separate account and you can only take it out if it hits a certain threshold or over a certain time period. If a certain partner in some part of the world wants to be paid via e-check or ACH or wire or PayPal or prepaid debit card, they choose that. And as soon as that clears with the bank, you have your money in the account. So those types of limitations aren’t there with the system because essentially we’re just clearing the money by the way that you want to be paid.

Kevin: Right. In terms of discount rate, how does a marketplace solution for payments like you guys differ than a traditional credit card processor? Are you competitive with those rates? Is it slightly higher? I mean, obviously you have to price risk into your discount rate. How is your pricing related? How does it compare to traditional merchant processing?

Rob: So you know, our system – if you compare us to a Stripe or Square sort to speak those guys are in what we call the pay-in space. So an ecommerce store or a sharing economy company needs to collect the money. That’s what Stripe or Braintree or some of those systems out there do very well.

Kevin: Yup.

Rob: What our system really handles is the very complex process of paying out to all your suppliers and partners across the word. So you can still use a Stripe or still use Braintree or whatever kind of payment collection system, AMX, or the such you want on the front-end. And then on the back-end, you use us to automate the whole back office process of paying out to your suppliers efficiently.

Kevin: Okay.

Rob: And in terms of the rate we charge, it’s essentially what you typically see from a bank if you want to get paid via wire or ACH or PayPal or prepaid debit card of the such. It’s essentially those similar types of fees. And then depending on the sharing economy network or crowd sourcing company of the such, they will choose whether they internally want to absorb those fees 100 percent or they want to split a 50-50 or push it to the partners and they can also choose depending on the payment method – if someone wants a wire, of course, that’s a more expensive payment mechanism because you get paid faster but you can have the partners pay a certain premium to receive that payment method. But if they choose a different payment method, they’ll have a lower fee. So it’s pretty flexible from the perspective of the crowd source or the marketplace company who is using Tipalti.

Kevin: Very cool. What do you guys have on the horizon for Tipalti in 2015 and beyond? What are some of the big objectives you guys are looking to tackle?

Rob: Yeah, sure. So really, what our focus is largely – we’ve got a very strong customer base and we kind of hear their feedback over the course of time. A lot of them, they’re consistently expanding globally and trying to scale their business. So we have to continually stay on top of the different payment methods that are popular by different regions and expand our global reach. In the payment methods, we fulfill from that perspective certainly. On the regulatory side, there are different tax form requirements for W8, W9 collection and we’re continually getting stronger on that front. Fraud continues to be an important piece so we’re strengthening that.

And then if you think about what we’re really solving, we’re really solving a general accounts payable problem of how do you pay a lot of people at once across the world. So we’ll continually become stronger in that space. So to give you an example, a lot of our customers using QuickBooks, NetSuite, other ERP systems and they need to, they not only want to expedite their process of paying out their suppliers across the world but they also want to make that a streamlined process with their management of their business and accounting and the such and their metrics payment reconciliation and recording processes. So it’s important for us to help those customers make that overall process of accounts payable more and more seamless.

Kevin: Very good, very good. Well, for all of our listeners who are interested in you and Tipalti, where can they find out more information about you guys?

Rob: Certainly, visit our website tipalti.com. I know it’s not an easy, easy spelling to remember off the bat but visit us at the website of course. And always feel free to connect with me on LinkedIn or and ask many questions you have and I’ll be more than happy to help you out.

Kevin: Wonderful. We’ll make sure to put your website information in the show notes so people can reach out to you and connect and learn more about what you guys are doing.

Rob: Absolutely. I really appreciate the time today and thank you for spending some time with me.

Kevin: Of course. It’s been great to connect with you. We look forward to seeing what you guys do in this next year. Obviously, the payment space is a hot subject. And you guys have the advantage of being the first mover and also you have an incumbent that’s not necessarily providing a full solution. So you guys are well poised for this market.

Rob: Yeah. Those are always good qualities to have.

Kevin: Definitely. Well, thanks so much. And as I said before, we will have all your information in the show notes. So take care, Rob. And I really appreciate you being here today. We look forward to seeing what you guys do in the future.

Rob: Sounds good.

Kevin: So that’s it for today’s show everybody. I’d like to thank Tipalti for joining us here today. They’re doing great stuff so check them out. If you want to learn more about them, we’ve got all of their information in the show notes. Go to www.near-me.com. Click on the blog and then go to the podcast listing. Also, if you like today’s show, we’d really appreciate it if you go to iTunes and leave us a five-star review. It really helps us out. Make sure to subscribe while you’re there as well. Thank you and have a great day.