Show 125 – Unicorn Interviews – Chen Amit – Tipalti
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In the 12th in our special series of interviews that we’re recording in partnership with the European PR agency Tyto and their own ‘Without Borders’ podcast, Russell Goldsmith and Tyto’s Founder, Brendon Craigie were joined online from Israel by Chen Amit, Co-Founder and CEO of Tipalti, a fintech start-up that reached unicorn status in October 2020 after raising $150m in a Series E round.
Chen explained that Tipalti solves the global accounts payable challenge for fast growing companies and the mid-market. He said the challenge is that, especially with mid-market companies, the CFOs are trying to become reputable to play the high game, they’ve gone through audits, they understand compliance but in a mid-market company, finance is not where CEOs want to devote resources. Therefore, he explained that when they acquire a solution, it needs to be very broad, comprehensive and deep and that’s what they do. Chen added that they cover the gamut of accounts payable, a very broad set of challenges, that it’s really a set and many discrete functions under one umbrella. He said they do it in a holistic, organically grown, integrated easy to consume solution and are a financial institution called money transmitter, they are processing around $18bn annually, growing roughly 100 percent year over year. He added that one of the key metrics they are most proud of is 99 percent annual gross, dollar retention, when they sign up customers, they stay with them for the remainder of their life.
Chen explained that some of their customers include Amazon, Twitch, Twitter, GoDaddy, Duolingo GitLab, Medium, many of those fast-growing tech leaders and they are the early adopters. He added that they are those Forward-Looking CFOs who want to spend their time on strategic topics, they don’t want to spend their time on mundane, cumbersome, risky labour-intensive, relatively low value add tasks that are around accounts payable. He said they expect things to be automated and that’s why they are the early adopters. Chen said that it’s typical to their customers they will be forward looking thought leaders, strategic CFOs who understand they need to automate those AP functions.
Impact of Coronavirus
Chen said that COVID-19 actually amplified the need for digitisation in the finance department. He explained that you now need better financial controls because businesses are under pressure and need to do more but with less people so, they need the automation. He added that all of those drivers increase the need for digitisation in general in the finance office, and accelerating specifically a global account payable, like Tipalti does. Chen said that more so, a part of their mission is to really integrate the financial operations with the business operations, to be coexistent and merged and move from one decision to an action and not to be so separated as it is today. He explained that they’re looking to integrate as many of the functions into the business workflow and it is really part of the vision, to make it natural integration of business processes and financial operations. He added that this also allows them to bring enterprise great capabilities to the mid-market, like Amazon did for computing, they are doing that for financial capabilities and are bringing some of those that are only available for enterprise customers accessible to the mid-market.
Becoming a Unicorn
Chen said that becoming a unicorn definitely adds credibility, for example when they see serious investors of the leaders of growth and crossover, its recognition. He added that other developments in their category are also strengthening the positioning of the category as a whole but now when they speak with candidates and customers, they know Tipalti. Chen said they’ve been a hidden gem, so to speak, not very vocal for many years but, this round of funding elevated their recognition.
Chen explained that when the pandemic hit, back in March, they paused their hiring and didn’t lay off anyone, they paused to see where the world was going. He said that from a business perspective, they were at a minimum not hurt, they saw some accelerated traction and went back to hiring. He said they have aggressive hiring plans and it’s not only the number of people that they need because they’re growing so fast, but also how do you cope with it during Covid? How do you interview? How do you on board? Chen said that all of these things are great challenges and for now he understands the business and the market. He said they have the go to market, they’re doing well on all of that and the risk there is moderate and the skill that they need to build and strengthen is around hiring, interviewing, onboarding. He said that under Covid, they’ve done a lot of it already and they’re getting better and it’s a real area of focus for the whole company.
In terms of where people need to be located currently, affecting approaches to hiring, Chen said there’s data and research to support that. He explained that when you are in a growth stage, still creating and building and there are a lot of unknowns, if you value the group work, then you need to be in one room. He said that Zoom doesn’t solve for that, it’s very efficient but in some ways, especially around the creative part, it’s not very effective. Chen said they’re hiring so many developers and building so many new initiatives that still need that collaboration and brainstorming. At the same time, he said there are roles in Tipalti that are more structured and require less of that collaboration, they just require good onboarding, training and good resources. He said that for the core roles that require collaboration at the major functions in the company, the long-term vision for them is still an in-office company, but they’re flexible where they can be.
Chen explained that some of their customers actually caught significant tailwinds through Covid, for example streaming, gaming and e-commerce companies are doing better because people are at home. So, he said that many of their larger customers are those and they’ve seen them grow incredibly. However, he said that many of their customers are in the physical domain, and they’ve been like most of the rest of the economy but in the grand scheme of things, Tipalti are actually benefiting just a little bit more from those who caught tailwinds. Chen explained that from a partner perspective, they haven’t seen any significant impact, he said real estate is tricky and in March they were looking for a new place in Israel, San Mateo, Vancouver and London all at the same time. However, he said they were lucky that it caught them just before they signed any agreement, so that is all on hold. He said all their partners performed very well and they didn’t have any hiccups on those fronts.
Chen said that throughout the pandemic, new innovation didn’t necessarily emerge, but the acceleration of the creation of categories like theirs did and in other areas as well. He said for CFO’s, through Covid the pace of this category moving from early adopters to late adopters to early majority and so on, is accelerating and will make all those companies who adopt these technologies more efficient. He added that it will really shift the focus of those CFOs and the VPs of finance to more value adding, being able to add more value in strategic areas of their business which is exciting for them as a business and for him when he looks at the growth in the economy and efficiencies are really critical to economic development.
Raising Awareness and Differentiating the Company
Chen said for them, the category they operate in is really a blue ocean, there are roughly between 600,000 and a million companies in their domain, in their target market and between all of the players together, they are serving three percent, four percent. He explained that it’s not so much that it’s crowded, it’s more about getting the word out and getting more people, he said he’s happy with the success of his competitors to a modest degree. Chen said he wants to be more successful, but it’s actually more about building the category and getting the word out and the way they do that again in under Covid, their value proposition is in line with the pains that they have. He explained that really early in March or April they realigned their messaging to be very Covid aligned about efficiencies, working from home, automation, and better financial controls. He said they have seen with the response from their customers their target audiences’ current pains, and they need to be very empathetic – they need to make changes because they are under stress and showcase how Tipalti can help them make the decision to be empathetic to get the word out.
Chen explained that they are going from roughly 400 employees to around 800 and they feel that this is a step function, things that they need to change. He said they took a consultant to help them work through that and she interviewed the executive team and middle management and despite part of the team being in Israel, part of the team being in the US, they share the same culture. Chen said they understand the vision and the strategy in the same way and it’s about walking the talk, he’s not a big talker, he likes to have robust results and robust actions behind the talk. So, he said the key for them is hiring the right people, correcting where you need to correct and in making sure that and that they elevate and celebrate those who practice and are examples of those values that you want to strengthen.
Chen said that internal communications has been a challenge and before Covid he used to travel two weeks every month, two weeks in Israel and two weeks in California. He explained that he would meet everyone in some way or fashion until they were at 130 and he interviewed everyone they hired, which wasn’t that long ago. However, he said now he hasn’t met more than half of the company, so that’s a challenge but he said he looks forward to changing that hopefully soon. He explained that when Covid hit, the stress was through the roof, they didn’t know what the impact on the company would be, if they were going to suffer like the rest of the economy, however in hindsight, they aren’t. He said the stress among employees was high, so he increased the pace of communication significantly and people really appreciated it. Chen explained that he’s transparent, they share a lot of data and allow employees to ask questions anonymously and he tries to answer everything. He explained when you have that transparency and ability to ask and get answers to tough questions, that really helped during the pandemic, and that helps to build the culture again. He said they have a very clear cadence of celebrating those who are representative of the culture and if everyone hears from him it reduces the level of anxiety around. Chen said that once he’s fully vaccinated, he plans to go back to travelling, he said he believes in the human touch, meeting people face to face, he wants to be there with his team. He said things happen in those meetings, you can be as prescribed and as thoughtful about your approach as you want, but the chit chat, the brainstorm, something that happens when people meet and sparks fly and not only for him, obviously, but for the rest of the team.
Chen said that in regard to being an external spokesperson it’s not natural to him, it’s something he’s grown to do a little better year by year and he’s not an expert but he is comfortable in the role. He explained that for him, it’s a lot about hiring, being the face for the company, for candidates, which adds value to the process. Chen said he took guides, had instructors help him with public speaking and probably every five years he’ll take someone to coach him and help him improve and he said he’ll need to continue with that for the rest of his life.
Chen explained that it was one of those early coaching exercises that really exposed his biggest challenge, and his biggest challenge was himself and it still is. He said he is prone to understatement and his latest coach said Chen was authentic and passionate about what he does, and these are the things that capture the audience. However, before that, early in his career, he didn’t feel that he had the right to make strong statements, so the biggest challenges were around himself and his shortcomings that are sometimes also advantages.
Chen said be yourself, it’s about trust, it’s about people trusting him being authentic, saying it as it is, he always tries to do his best, he’s not ashamed in his failures, they are there, he’s not I’m not overly excited about his successes, they are there. He said just be honest, authentic people will relate to that to.
Chen said that Elon Musk inspires him because there are no limits to his imagination. He really admires, not only thinking big, but acting big. Chen also said he really looks up to Bill Gates, what he’s doing post Microsoft and just being a smart, thoughtful leader.
Plans for the Future
Chen said the market is sparsely populated, to say the least with four percent penetration, so high growth is here to stay for many years to come, from a commercial revenue perspective. Chen said they’re in the third chapter of the company, the first chapter was around those Twitches and Twitters and GoDaddys. Chen explained that probably four, five, six years ago, they started with traditional accounts payable, invoice processing, matching and so forth and the current chapter, they’re hiring aggressively. He added that for the engineering and product part, in the next two years, they will invest in the product more than they did in the previous 10 years combined, those investments will take them to that next level of continuing to expand their solution footprint to help CFOs and finance more, automate more and really accomplish that vision of integrating the workflows with financial operations and making enterprise grade financial products accessible to mid-market companies. He believes in a few years’ time they will completely revolutionise the office of the CFO for mid-market companies. Chen finished by saying a piece of advice he would give his younger self in regard to communications is be yourself and people will trust you, practice and talk more, be more communicative.