Pełna transkrypcja odcinka The Binance Hack, and Why Fintech Is Missing the Physical Economy

at overall security, um Binance, the biggest crypto exchange in the world. 00:06:36.959 --> 00:06:41.759 Um and and they were they were duped, they were hacked. 00:06:41.759 --> 00:06:45.279 And um, you know, if it can happen to them, it can happen to anybody, right? 00:06:45.279 --> 00:06:56.079 Uh I think we've seen a lot of experts come out and say, you know, things have to change as far as an uptick in in security and and precautions that that are taken. 00:06:56.079 --> 00:06:57.839 What are you hearing? 00:06:58.560 --> 00:07:02.399 I mean, I think so I think a few things about that. 00:07:02.399 --> 00:07:10.879 I think that, you know, we are seeing hacks and fraud happen widespread across the fintech industry in general. 00:07:10.879 --> 00:07:17.120 I mean, we had Revolut last month, um, and they were duped by a real government email. 00:07:17.120 --> 00:07:28.000 And so I think that as AI advances, um, anything like digitally, it's it's really hard to like make sure that these types of things aren't happening. 00:07:28.000 --> 00:07:41.199 And I think as like I said, as AI strengthens bad actors, I I I think that the industry as a whole really needs to step back, not just crypto, um, and try to figure out where we go from here. 00:07:41.199 --> 00:07:47.040 Um, I think that you know, obviously more security is needed, but it's a question of what will that look like. 00:07:47.360 --> 00:08:03.920 Now, one thing um that did happen uh that was a a positive is is the sort of coming together of sometimes competitors, but also, you know, just sort of folks that that haven't worked so closely in the past. 00:08:03.920 --> 00:08:13.360 When when all this went down, you'd have you had the circles of the world and the tethers of the world um instant kind of almost instantly stepping in and freezing assets. 00:08:13.360 --> 00:08:22.399 Do you think uh we could see a similar sort of coming together in the industry to to harden itself against um this sort of thing? 00:08:22.399 --> 00:08:35.679 Obviously, as you said, AI is making um more sophisticated hacks more readily available to not just the uh the state actors. 00:08:35.679 --> 00:08:39.440 Obviously, um we're talking about North Korea here uh early on. 00:08:39.440 --> 00:08:58.240 A lot of the security firms like your chain on chain analysis and and TRM sort of pointed to North Korea as the most likely um culpable force here, and then I think you had the FBI over the weekend sort of confirm saying, you know, it was them. 00:08:58.240 --> 00:09:04.480 Um but AI is making it easier for any old soul to pull this off. 00:09:04.480 --> 00:09:07.200 Um so what what do you think? 00:09:07.200 --> 00:09:18.480 Is there going to be sort of a come to Jesus moment for the industry where they all get together and say, we have to maybe work together on this to make it harder? 00:09:18.879 --> 00:09:22.320 I mean, I think this is a really common theme in fintech. 00:09:22.320 --> 00:09:30.399 And we see

with the Jenna Commerce, we're seeing this like fragmentation, people not coming together, making deals, trying to build their own things. 00:09:30.399 --> 00:09:38.080 But I think the only way to solve it from the people that I've spoken to, prod experts for other hacks, too. 00:09:38.080 --> 00:09:44.960 It's like I think that the crypto industry really needs to come together, and I think that's why we saw what we saw last week. 00:09:44.960 --> 00:10:05.600 Um, you know, I think that right now the crypto industry is in a very vulnerable state of trying to prove itself, and so in order for them to get ahead of this fraud and to try to really harden their systems, I think that a group way of going about this is the only way to go about this at this point. 00:10:05.919 --> 00:10:08.879 Well, Amethyst, thank you very much uh for joining us. 00:10:08.879 --> 00:10:10.080 We appreciate it. 00:10:10.080 --> 00:10:12.000 And uh back to you, Sasha. 00:10:17.200 --> 00:10:18.559 Thanks, Larry. 00:10:18.559 --> 00:10:22.720 Our guest this week takes us into a very different part of FinTech. 00:10:22.720 --> 00:10:34.960 Daniel Simon is the founder and CEO of Coast, an expense management and payments platform built specifically for businesses operating in what Daniel calls the physical and field economy. 00:10:34.960 --> 00:10:41.600 Think plumbing businesses, landscapers, construction companies, emergency transport and fleets. 00:10:41.600 --> 00:10:53.360 Companies where employees actually need a corporate card while they're out doing the work, but where controlling exactly what the card can be used for becomes incredibly important. 00:10:53.360 --> 00:10:57.200 And it's a much bigger market than you might expect. 00:10:57.200 --> 00:11:07.759 Daniel estimates that around 120 billion a year flows through specialized commercial fuel cards in the US alone. 00:11:07.759 --> 00:11:14.480 Yet much of the technology serving those businesses has barely changed in decades. 00:11:14.480 --> 00:11:36.480 We talked about why FinTech has overlooked these industries, how Coast uses things like vehicle location and fuel data to stop fraud in real time, and why Daniel's team spends less time at fintech conferences and more time at events like World of Concrete and Pestworld. 00:11:36.480 --> 00:11:48.320 We also get into what Daniel learned from building and selling his first company, Bread, and why he thinks vertical specialization can become a real competitive advantage. 00:11:48.320 --> 00:11:50.960 Here's my conversation with Daniel Simon. 00:11:50.960 --> 00:12:01.200 I am very excited to have our guest today, Daniel Simon, CEO and founder of Coast. 00:12:01.200 --> 00:12:02.799 Hey Daniel, how are you? 00:12:03.120 --> 00:12:04.080 Hi, I'm great, Sasha. 00:12:04.080 --> 00:12:05.120 Always great to see you. 00:12:05.440 --> 00:12:06.320 Yeah, you too. 00:12:06.320 --> 00:12:08.960 So we've known each other now for nearly a decade. 00:12:08.960 --> 00:12:12.639 I

remember when I first moved to New York. 00:12:12.639 --> 00:12:19.440 Um was working at Quovo, and you were still the founder of the thriving company, Bread. 00:12:19.440 --> 00:12:23.279 Um, so huge success story and congrats on that. 00:12:23.279 --> 00:12:28.399 Um, and excited to hear today about your next company, Coast. 00:12:29.120 --> 00:12:32.240 Uh yeah, it's it's like I said, it's always great to see you. 00:12:32.240 --> 00:12:39.200 And yeah, I feel like you know, we've both gone through journeys in OG New York FinTech uh over the course of a decade plus. 00:12:39.200 --> 00:12:43.120 So um uh yeah, plenty to talk about when it comes to Coast. 00:12:43.519 --> 00:12:49.200 Can you start by telling the listeners a little bit about Coast and why you founded it? 00:12:49.919 --> 00:13:11.440 So to give the picture of what Coast is in a pretty short summary, Coast is expense management software, so you know, making sure that your folks are paying for the right things, that you've got control and security, and that you go through your approval and review processes um uh as you run your business. 00:13:11.440 --> 00:13:27.600 Uh and uh payment solutions attached to it, including sort of bill pay and AP, but most relevantly a charge card, a business credit card, but very specifically focused on the needs of companies that um you might think of as being in the field economy or physical economy. 00:13:27.600 --> 00:13:43.120 So if you run a plumbing business or an HVAC or construction or landscaping business and the list goes on and on, and you need to give the technician who works for you the company credit card when they take the van out to go do their job so they can buy gas or whatever else it is that they need when they're in the field. 00:13:43.120 --> 00:13:47.679 You need to really specialize like control, security, visibility, reporting. 00:13:47.679 --> 00:13:50.000 You want to make sure that they're buying the right grade of gas. 00:13:50.000 --> 00:13:58.720 They're not going into the convenience store to buy cigarettes and chips with the company credit card or using it to fill up their family car's gas tank or sell gas to the guy behind them in the line at the gas station. 00:13:58.720 --> 00:14:00.240 You need to specialize software. 00:14:00.240 --> 00:14:02.799 There are a couple of companies in the US that do this. 00:14:02.799 --> 00:14:04.399 They're really big and profitable. 00:14:04.399 --> 00:14:06.639 They've been around for a really, really long time. 00:14:06.639 --> 00:14:13.440 And I would say that they haven't really given the market a ton of innovation over the course of the last decade or more. 00:14:13.440 --> 00:14:18.799 And we saw an opportunity to do uh something better, which is what we uh think that we've done. 00:14:18.799 --> 00:14:22.080 Um and so we started with uh card for fuel. 00:14:22.080 --> 00:14:28.080 We expanded it to capture all field expenses, but with really precise control and visibility. 00:14:28.080 --> 00:14:53.120 But then because of customer demand, because of the platform that we created for expense management, they asked us to actually work for the rest of their expenses as a field services or construction or specialty transportation business to be able to manage purchasing inventory from supply houses online or uh paying invoices for their vendors uh in order to uh be able to do uh their construction jobs uh and the like. 00:14:53.120 --> 00:15:26.799 Um, and so we've built out that platform and we're only getting started to be a financial services platform for um this kind of customer, whether they be in, like I said, uh residential and commercial services, your pool guys, your landscapers, your plumbers, your electricians, whether it be for the large construction segment, specialty transportation like WIMO, non-emergency medical transport, ambulance, oil and gas and utility, uh all the kind of vehicles that park in the same lot at the end of every day, because those are the folks that really need these kinds of software solutions for uh for control. 00:15:26.799 --> 00:15:28.720 So that's what we are in a nutshell. 00:15:28.720 --> 00:15:31.600 Um I'm happy to go into any further detail on that. 00:15:32.399 --> 00:15:38.799 The examples that you just gave are really interesting, especially the emergency services um component. 00:15:38.799 --> 00:15:50.639 I was reading a book that actually my last guest, um Adam Nash, who's the former CEO of Wealthfront and now the CEO of DAFI had recommended. 00:15:50.639 --> 00:16:02.639 And within that, it talks about, you know, like we have these big, flashy tech companies that have all of the buzz and like a lot of the millions and billions of dollars. 00:16:02.639 --> 00:16:12.960 And then there's like all of these other very profitable companies in Middle America that maybe don't get as much noise but are doing extremely well. 00:16:12.960 --> 00:16:33.600 And one of the examples was this um company that sold to emergency services and how that was such a different go-to-market approach because they all seem to use the ones that their buddies use, considering like a fire department or an ambulance driver isn't like competing with the next one. 00:16:33.600 --> 00:16:37.360 Like they they're just all like existing and wanting to be there to help people. 00:16:37.360 --> 00:16:45.759 So, have you found that in the go-to-market it's been different from the standard like tech acquisition? 00:16:45.759 --> 00:16:51.200 And because you are selling to these, like, I guess, dusty industries in some ways. 00:16:52.000 --> 00:16:53.200 Yeah, absolutely. 00:16:53.200 --> 00:16:57.440 I I that that that's actually um like a really sharp question. 00:16:57.440 --> 00:17:02.639 Uh uh, what I would say is like first, it's it's worth understanding how big these markets are. 00:17:02.639 --> 00:17:14.079 Like, like the the legacy industry that we uh started out trying to disrupt, uh

that we are disrupting uh pretty significantly, um uh of like traditional fuel cars. 00:17:14.079 --> 00:17:24.720 In the US, in a given year, you got something like $120 billion being transacted on these specialized fleet fuel commercial credit cards, which is like a staggering number. 00:17:24.720 --> 00:17:28.960 It's like more than 10% of US total B2B commercial card spend. 00:17:28.960 --> 00:17:30.880 Um by the way, that's just on the fuel. 00:17:30.880 --> 00:17:39.920 And our customers spend between three and five percent of their revenue on gas, but they're spending between 15 and 30% of their revenue on stuff that they already put on credit cards in general today. 00:17:39.920 --> 00:17:44.480 So, like, you know, like 5x plus kind of upsize that we're doing for any one given customer. 00:17:44.480 --> 00:17:50.000 Um, you know, it's an absolutely staggering uh size of market. 00:17:50.000 --> 00:17:54.000 And like folks in tech don't always really think about these parts of the economy. 00:17:54.000 --> 00:18:02.559 Like um, you know, there's this like Silicon Valley, Y Combinator, Credo of, you know, build a product that solves a problem that you have that you would want to use. 00:18:02.559 --> 00:18:05.599 And I always feel that that's how you get dating apps for software engineers. 00:18:05.599 --> 00:18:20.000 It's like, you know, like, yeah, that's like a part of the market, but there's also America and building a product for uh a large market that um uh you know you don't naturally empathize with uh when you wake up in the morning is a really big challenge, but an enormous opportunity. 00:18:20.000 --> 00:18:27.359 And so uh these markets that we're selling into are also, and I think this goes to your point, hyper fragmented, right? 00:18:27.359 --> 00:18:30.480 Like we know we sell to companies of all sizes. 00:18:30.480 --> 00:18:37.839 We don't do micro businesses, a guy in his plumbing, like a brother-in-law doing a plumbing business, like the proverbial chuck in a truck, as they call it in our industry. 00:18:37.839 --> 00:18:49.039 We but we sell from small businesses with you know, like a plumbing company with plumbing trucks all the way up to you know, home services solutions that have thousands of vehicles in their fleets, and like all of those, we have a product uh uh that works for them. 00:18:49.039 --> 00:18:54.400 But even with companies that large, like this is a hyper, hyper fragmented market. 00:18:54.400 --> 00:18:59.200 And so in uh to get in front of them, you know, what is the playbook? 00:18:59.200 --> 00:19:05.839 Uh in some ways, it's actually not that different from selling into like your tech buyer. 00:19:05.839 --> 00:19:10.400 You have your marketing across both the demand gen and brand. 00:19:10.400 --> 00:19:20.000 You've got your sort of sales uh organizations, the inside sales, the field sales, uh, the the outbound um uh through a lot of the same kinds of tools and channels. 00:19:20.000 --> 00:19:45.119 The interesting thing though is like getting to understand these customers and their problems and how payments and credit fit into their problems is um a really fun uh kind of challenge because they're not always thinking about what's possible in the same way that like a uh sort of tech startup venture back company is thinking about what's possible and has awareness of everything that there is in the market. 00:19:45.119 --> 00:19:50.079 There's an enormous amount of product education that goes into uh talking to these folks. 00:19:50.079 --> 00:19:58.559 But because we're doing something that's so differentiated that so unique in the market, uh once you acquire them, the customers stay forever. 00:19:58.559 --> 00:20:03.519 Like it's just something that we've observed because of the kind of differentiation of our offering. 00:20:03.519 --> 00:20:10.160 Um it's also very much, uh, I think perhaps more so than in other industries about the partnerships that you have. 00:20:10.160 --> 00:20:25.359 There are a lot of companies that touch the lives of these customers, whether it's telematics vendors or fleet management software or field services management software, where there's like a hundred of these kinds of companies, even retailers in the parts and maintenance category or the car manufacturers, the OEMs. 00:20:25.359 --> 00:20:33.680 Like a lot of these folks, many, many of them, are selling Coast Cards with their logo stamped on them because these are important parts of our customers' lives. 00:20:33.680 --> 00:20:38.160 They need a best in the class payment solution for this kind of customer, and that's where we come in. 00:20:38.160 --> 00:20:43.440 Uh, and that's been uh again a real eye-opener for us as we've evolved our go-to-market strategy. 00:20:43.440 --> 00:20:55.200 But uh, yeah, it's it's it's a little bit of all of the above, and it's really is like the characteristic of selling to a hyper-fragmented market where fintech has kind of left them behind, generally speaking, is it's been pretty unique. 00:20:55.440 --> 00:20:57.119 Yeah, I'm really into it. 00:20:57.119 --> 00:21:05.039 Like I think like this selling to non-tech industries is like where real disruption happens and where a lot of money can be made. 00:21:05.039 --> 00:21:08.240 So I think it's great that you're focused on that. 00:21:08.240 --> 00:21:11.359 Um, I totally hear you on the fragmentation piece. 00:21:11.359 --> 00:21:32.720 A few years ago, I was in the you know, bridge to the airplane to join to board the Money 2020 flight, and I saw Lindsay Fitzgerald, who's on your cap table from Vessi Ventures, and she saw one of your account executives, and he was saying, I think I'm the only person not going to Money 2020, I'm going to the limousine conference in Vegas instead. 00:21:32.720 --> 00:21:34.799 So very specific. 00:21:35.519 --> 00:21:45.359 Yeah, listen, I mean, like, you know, I go to Money 2020 and I'm like, how 12,000 registered

attendees, and not not to mention the folks who come without a pass. 00:21:45.359 --> 00:21:47.920 How are there this many people who work in FinTech? 00:21:47.920 --> 00:21:48.480 It's huge. 00:21:48.480 --> 00:21:50.480 And by the way, how do I know every one of them? 00:21:50.480 --> 00:21:55.359 And then like our team, to your point, goes to other conferences. 00:21:55.359 --> 00:21:59.680 So one of the conferences that they go to uh is in Las Vegas as well. 00:21:59.680 --> 00:22:01.759 It's a conference of the paving industry. 00:22:01.759 --> 00:22:03.440 And so these are a lot of our customers. 00:22:03.440 --> 00:22:05.599 And then it's called World of Concrete. 00:22:05.599 --> 00:22:11.359 And like the number of registered attendees at World of Concrete is more than 100,000. 00:22:11.359 --> 00:22:22.799 And it's just like a reminder of like what a tiny corner of the universe that we in tech and you know fintech in particular occupy versus like the real world and all the businesses that operate in it. 00:22:22.799 --> 00:22:26.559 So yeah, it's really eye-opening working in these kinds of customer markets. 00:22:26.880 --> 00:22:27.839 Wow, who would have thought? 00:22:27.839 --> 00:22:29.359 World of Concrete, it's huge. 00:22:29.599 --> 00:22:30.880 Oh yeah, it's huge. 00:22:32.559 --> 00:22:32.880 Great. 00:22:32.880 --> 00:22:36.079 So you are doing co-branded credit cards with some of these providers? 00:22:36.079 --> 00:22:38.480 Like they'll have the their logo on the card. 00:22:38.799 --> 00:22:45.200 Yeah, the the uh so far, what is what it's manifested as is their logo on the card. 00:22:45.200 --> 00:23:00.559 But we um have found that because partners are so important to us, because our customers run their business lives uh on some of these partners, um uh, you know, the idea of embedded payments uh and the way that we integrate. 00:23:00.559 --> 00:23:05.599 So, for instance, uh a couple that you know have been um publicly announced. 00:23:05.599 --> 00:23:16.160 Um we work with uh fleet management software business called Fleetio, uh, which is a fantastic business uh uh growing fast. 00:23:16.160 --> 00:23:20.880 Um they provide fleet management software for uh a lot of these customers. 00:23:20.880 --> 00:23:41.680 For them, having the ability to have Coast as part of their experience to be able to manage this payments aspect of your fleet operations within the same place that you're managing your fleet broadly to understand total cost of ownership and like all of the things that have to do with the maintenance and operation of your fleet, it's an absolute no-brainer. 00:23:41.680 --> 00:23:44.960 So the selling that with coast cars with their logo stamped on them. 00:23:44.960 --> 00:24:06.160 Um, another example, which doesn't have the logo uh stamped on right now, but um uh telematics vendors like Samsara is something that they announced recently that they uh using Coast APIs built the experience to manage your Coast program directly within the Samsara experience because the products actually work uh in ways that are complementary and amplify the power of one another. 00:24:06.160 --> 00:24:18.319 So Coast can do things working with Samsara, like for instance, why are you trying to make a purchase at a merchant location when I know that the real-time GPS location of the vehicle that you're supposed to be driving is far away from that merchant? 00:24:18.319 --> 00:24:19.680 I can decline that in real time. 00:24:19.680 --> 00:24:25.359 Like, why did you make a purchase of a certain number of gallons of gas, but I didn't see your fuel gauge go up by that corresponding percentage? 00:24:25.359 --> 00:24:26.319 Where's the missing fuel? 00:24:26.319 --> 00:24:27.839 Did you put it in your family card? 00:24:27.839 --> 00:24:31.519 Or were you selling gas to other people at the gas station using the company card? 00:24:31.519 --> 00:24:48.319 Um, all of that, like these products, because they're made more powerful, because they integrate so naturally with Coast and with a payment solution, because they understand the stickiness of payments as part of their overall offerings, have been eager to make Coast available through their channel to their customers. 00:24:48.319 --> 00:24:50.720 And that's been really fruitful for us and for them. 00:24:51.200 --> 00:24:58.000 And the controls is such a big part because I worked in corporate cards at City and I worked at Rev as well. 00:24:58.000 --> 00:25:03.920 And this like internal employee fraud is actually a huge problem. 00:25:03.920 --> 00:25:14.559 Um, so much so that one of the companies I invested in when I was a VC is kind of similar to Coast in ways, but in Brazil, it's called Portal 3. 00:25:14.559 --> 00:25:18.240 And the large enterprise customers love using them. 00:25:18.240 --> 00:25:19.680 They don't even extend credit. 00:25:19.680 --> 00:25:32.480 But the fact that they can have the controls of like this person purchased gas for their vehicle, but put it in like then they're not using it for a work trip is like so powerful for employers. 00:25:32.880 --> 00:25:39.519 Yeah, and in many ways, it is the value proposition for which this industry category of fleet payments exists. 00:25:39.519 --> 00:25:44.319 Um it's a low trust use case. 00:25:44.319 --> 00:25:59.119 When you're giving the plumber who works for you the company credit card, it's not the same as giving your director of sales uh a corporate card that they can use when they're going to a conference, uh money 2020, to pay for travel and meals and entertainment. 00:25:59.119 --> 00:26:04.079 Um the the the blue-collar mobile workforce is a different kind of use case. 00:26:04.079 --> 00:26:26.160 The thing that unites all of our customers is that the majority of their personnel are out there in the field in the real world, like doing stuff, which gives them a very particular kind of need that if you were running a company with thousands of

people in sort of maybe customer service operations or um you know in a manufacturing business, like you don't have the same need because you don't give most of those people the company credit card. 00:26:26.160 --> 00:26:30.000 But your people in the field, they need a company credit card because they need to buy gas. 00:26:30.000 --> 00:26:32.319 They need to buy all their stuff when they're uh out there in the field. 00:26:32.319 --> 00:26:50.160 And what happens in these industries is that by the time you get to like 10 guys, let's say, they're usually guys, um, like you have like your first incidence of fuel theft or fraud or abuse, and then you discover that there's this product category that gives you greater control and visibility and reporting on your spend. 00:26:50.160 --> 00:26:56.640 It's just that the incumbents, in my opinion, have done this in a way that has kind of been stuck in like a technology of 20 years ago. 00:26:56.640 --> 00:26:58.799 And like I said, we found an opportunity to improve it. 00:26:58.799 --> 00:27:02.799 The incumbent technologies were all built before everybody had a mobile phone in their pocket, right? 00:27:02.799 --> 00:27:03.519 What can you do with that? 00:27:03.519 --> 00:27:06.240 And that's why we've completely uh reinvented the space. 00:27:06.240 --> 00:27:14.640 But so when people like sometimes think of cards, to your point, in the horizontal sense, they're thinking about, you know, what are my rebates? 00:27:14.640 --> 00:27:16.000 What are my cash back? 00:27:16.000 --> 00:27:23.440 Whereas for our customers, we have great rebates, but like the the value proposition for them, uh but but there are there are other folks out there who have bigger rebates. 00:27:23.440 --> 00:27:36.319 The value proposition for them is that the money that they save and the time and the operational complexity that they save from control is way, way bigger and more powerful for the bottom line of their business uh than a rebate ever would be. 00:27:36.319 --> 00:27:43.200 And that is like the value proposition that we offer to our customers and is the thing that resonates with them, particularly operating in these kinds of industries. 00:27:43.519 --> 00:27:44.960 Switching gears just a little bit. 00:27:44.960 --> 00:27:50.240 So, you know, Bread was an extremely successful consumer lending company. 00:27:50.240 --> 00:27:53.519 What made you switch this time to business? 00:27:54.000 --> 00:28:00.079 Yeah, so so Bread was a sort of a consumer um payments and credit business. 00:28:00.079 --> 00:28:03.200 Um, you know, these days the kids call it buy now, pay later. 00:28:03.200 --> 00:28:05.920 Um uh and that was a venture capital back business. 00:28:05.920 --> 00:28:11.680 And like you mentioned, we um like the company sold in uh 2020 for a great outcome. 00:28:11.680 --> 00:28:14.960 Um I knew I was gonna do something new in fintech. 00:28:14.960 --> 00:28:20.960 Uh and for a while in 2020, like I didn't have

like the thing that was exciting to me. 00:28:20.960 --> 00:28:28.480 Um but that that time, like after leaving the first company, uh, it was COVID. 00:28:28.480 --> 00:28:43.119 And uh everyone was sitting at home, and uh the folks that we used to call back then like essential workers, like you know, like the folks who are in these kinds of physical economy industries that we serve, like they're much more visible. 00:28:43.119 --> 00:28:48.640 Like, and it's just like a difficult not to notice them because they're the ones that were the ones that were out there when like nobody else was. 00:28:48.640 --> 00:28:55.440 And so I started digging into um sort of is there like a kind of a like a fintech for these businesses? 00:28:55.440 --> 00:28:59.759 Is there like any kind of uh technologists serving their financial lives? 00:28:59.759 --> 00:29:11.839 And what I found was that there's actually an enormous ecosystem of payments companies specifically designed for these kinds of companies' use cases, but as I said earlier, very much stuck in the past. 00:29:11.839 --> 00:29:36.480 And fintech, you see all of these innovations, like the consumer business that we built at my last company, as well as uh in certain categories of commercial applications, like you see all these great expense management uh and like credit card software companies that have been started, but they've been for other venture-backed startups or big corporates in Fortune 500, or you know, cross-cutting horizontally for doctors and lawyers' offices. 00:29:36.480 --> 00:29:48.079 Uh but there hadn't really been these fintech businesses that were focused on these enormous parts of the economy that are growing super fast, by the way, uh, these physical economy industries. 00:29:48.079 --> 00:29:51.759 Um they had kind of been left behind uh by fintech. 00:29:51.759 --> 00:29:57.039 And as I understood the market deeper and deeper, I understood the dynamics of it and the specialized needs of it, I became more and more excited. 00:29:57.039 --> 00:30:00.079 And I looked at a lot of stuff in 2020, a lot. 00:30:00.079 --> 00:30:02.480 Nothing got me anywhere nearly as excited as Coast. 00:30:02.480 --> 00:30:16.400 And seeing sort of the needs of these customers, the size of the markets, the characteristics of the incumbent markets and the way that they are perceived by their customers and the state of their technology, uh, I just felt that this opportunity was like really huge. 00:30:16.400 --> 00:30:24.079 And so I'm taking a lot of that experience from credit and payments on the consumer side from the first company, to your point, and I'm applying them in a commercial context of coast. 00:30:24.079 --> 00:30:28.160 And in a lot of ways, like it's the same sort of messiness, right? 00:30:28.160 --> 00:30:34.799 Like fintech is really hard because you've got laws and regulations that weren't designed for the kinds of digital experiences that you're trying to create. 00:30:34.799 --> 00:30:38.000 You've got entrenched incumbents, aging infrastructure. 00:30:38.000 --> 00:30:55.200 And to bring that all together, it's not just about creating great software and engineering, it's about finance, capital market strategy, credit risk, fraud risk, compliance, like uh the operations, servicing, collections, crazy legal and regulatory stuff, uh, and obviously all the go-to-market and RD functions. 00:30:55.200 --> 00:31:03.759 All that has to come together in this like really collaborative and seamless way to make it look to the customer like there's nothing going on, but there's all of this complexity under the hood. 00:31:03.759 --> 00:31:05.839 That's what creates stickiness and lifetime value. 00:31:05.839 --> 00:31:10.240 And it's really hard, and the complexity builds a moat and defensiveness around the business. 00:31:10.240 --> 00:31:25.759 Um and to me, um, that experience that I had in FinTech was generalizable to a commercial category, but with a harder product problem in some senses, because the needs of different businesses are different in a way that the needs of different consumers are less so. 00:31:25.759 --> 00:31:33.039 Um so I just felt that like the experience at the first company put me in really good stead, even going from consumer to commercial. 00:31:33.599 --> 00:31:54.559 And I totally hear you on like the underwriting and different like ways of assessing risk for different business models, because back at Ramp, like I would try really hard to get a client to sign up and then they wouldn't pass underwriting because their cash flow was different to the way that Ramp did their underwriting at that point. 00:31:54.559 --> 00:31:56.000 And so, like, yeah. 00:31:56.160 --> 00:31:59.920 So yeah, and just with apologies for for interrupting, totally. 00:31:59.920 --> 00:32:09.200 And so, what we've gotten really good at at this business is understanding these kinds of customers and how to underwrite these kinds of businesses. 00:32:09.200 --> 00:32:17.359 Um, you know, knock on wood, but like our losses in this business are a number that I'm very, very proud of. 00:32:17.359 --> 00:32:20.720 People are looking for software in this company and they pay us back. 00:32:20.720 --> 00:32:28.160 And the the quality of the customer is very high, even if it's a plumbing company with six trucks, right? 00:32:28.160 --> 00:32:31.119 Like, like that's a customer that we know how to underwrite. 00:32:31.119 --> 00:32:48.640 And a big part of that is because they're looking for the controls and the solution for visibility in their business, and not so much just looking for credit and going to whoever's advertising it uh and and looking to use it as a credit product and a financial product exclusively. 00:32:48.640 --> 00:32:55.680 Uh, so we got to understand this customer really, really well in the context in which they're engaging with us. 00:32:55.680 --> 00:33:04.880 Um uh and so yeah, we've been able to build a really great

book of business from a credit and portfolio perspective um because of our depth of understanding of these verticals. 00:33:05.200 --> 00:33:12.319 Yeah, and it's great that you're going after these like stable, reliable companies that are going to be around for many, many years. 00:33:12.400 --> 00:33:21.519 And yeah, like something like 85%, I think, of our customers have been in business for at least five years, something like 65% have been in business for at least 10 years. 00:33:21.519 --> 00:33:28.079 Like these are these are folks who have like healthy businesses, in many cases, family businesses, by the way. 00:33:28.079 --> 00:33:29.519 Um, and it's really interesting. 00:33:29.519 --> 00:33:41.759 There's a bit of a generational changeover that's happening as a lot of the sort of elders who founded this business decades ago in HVAC, let's say, uh, and they're now at retirement age. 00:33:41.759 --> 00:33:53.200 And so uh either they're passing it on to the kids who had MBAs and like now they're taking over the family business, or if the kids don't want it, they're selling to private equity businesses, rolling up services companies. 00:33:53.200 --> 00:34:05.200 And in both cases, both of those successor managers have a mandate to improve efficiency in these businesses through the best-in-class technology and automation, uh, which is why they come and look for us right now. 00:34:05.200 --> 00:34:07.920 So it's been a really great uh opportunity. 00:34:07.920 --> 00:34:11.760 But yeah, these are fantastic companies that are our customers. 00:34:11.760 --> 00:34:16.320 Um, we don't need to make VC bets on the businesses that we acquire. 00:34:16.719 --> 00:34:17.360 Exactly. 00:34:17.360 --> 00:34:19.679 And I'm seeing it in prop tech as well. 00:34:19.679 --> 00:34:38.079 Like it was notoriously difficult to sell into the owners of um real estate companies that were kind of you know used to doing things one way, and now that this succession is happening to the younger generation or to PE, there's a lot of now tech being bought for efficiency. 00:34:38.079 --> 00:34:39.039 Um great. 00:34:39.039 --> 00:34:40.480 So that went really fast. 00:34:40.480 --> 00:34:41.440 We're actually at time. 00:34:41.440 --> 00:34:45.199 So is there anything else you wanted to tell our listeners before we wrap up? 00:34:45.760 --> 00:34:46.239 Oh, yeah. 00:34:46.239 --> 00:34:48.079 Okay, so I'll say a couple of things. 00:34:48.079 --> 00:34:49.440 Uh we're growing. 00:34:49.440 --> 00:34:55.039 Uh the business is growing super fast, and we need the kinds of people that can help us accelerate even faster. 00:34:55.039 --> 00:35:07.840 Um, so uh go to our website, we've got a number of great roles open, uh, pretty much across functions and partnerships and uh product and design and uh and sales. 00:35:07.840 --> 00:35:11.280 Uh we're a company of about 135 people. 00:35:11.280 --> 00:35:15.119 Uh two-thirds of us are here in New York, uh, where I am, and sit with me. 00:35:15.119 --> 00:35:21.519 And then uh the other third is in our fast-growing uh sales and operations office in Utah, where we've built an incredible team. 00:35:21.519 --> 00:35:26.880 Um uh so those are places you want to be, and this is the kind of company you want to work at. 00:35:26.880 --> 00:35:28.159 Uh just give me a call. 00:35:28.159 --> 00:35:40.000 Um and uh the other thing that I kind of wanted to uh mention is just like how much I've enjoyed vertical focus, industry-specific focus. 00:35:40.000 --> 00:35:48.000 Um, there's a lot of great companies out there, like I mentioned, that kind of are adjacent to us or overlap with us. 00:35:48.000 --> 00:35:58.159 But I wake up every morning thinking about how can I solve the problems of you know a 50 truck pool cleaning business? 00:35:58.159 --> 00:36:00.079 And what do they really care about? 00:36:00.079 --> 00:36:01.840 And what's different for them? 00:36:01.840 --> 00:36:12.079 And in construction, they care about job costing and job completion phases and statuses when they think about their expense management and approval and review workflows. 00:36:12.079 --> 00:36:32.880 And I uh translate that into building the 14th telematics integration to be able to block transactions where the GPS is far away, or thinking about how am I going to integrate into the pest control company's software management and building a payments experience that works end-to-end. 00:36:32.880 --> 00:36:38.239 Going that deep and understanding that customer has been really exciting to me. 00:36:38.239 --> 00:36:45.920 Showing up, like we mentioned about different kinds of conferences that we go to, showing up a pest world to talk to exterminators all day long has been incredible. 00:36:45.920 --> 00:36:48.880 But I went to Pest World the year that they had it in Waikiki. 00:36:48.880 --> 00:36:53.280 So like I'll give myself like a not too much credit for showing up on that one. 00:36:53.280 --> 00:37:04.320 Um, but like it creates a product of such depth that, like I said, the customers never leave because they're not coming to us because we're giving them the last basis point of rebate. 00:37:04.320 --> 00:37:06.960 They're coming to us because we're solving problems for their business. 00:37:06.960 --> 00:37:09.360 Uh, and that to me has been really rewarding. 00:37:14.800 --> 00:37:18.000 That was Daniel Simon, founder and CEO of Coast. 00:37:18.000 --> 00:37:27.599 I really liked Daniel's point about how small the fintech world can feel when you compare it with the enormous industries happening outside of it. 00:37:27.599 --> 00:37:37.360 Money 2020 might feel huge when you're there, but then Daniel points out that world of concrete attracts more than 100,000 people. 00:37:37.360 --> 00:37:45.760 It's a pretty good reminder that there are enormous parts of the economy that technology companies rarely spend much time thinking about. 00:37:45.760 --> 00:37:59.039 And Coast's approach is basically to do the opposite: pick those customers, understand their businesses incredibly deeply, and build specifically around the problems they actually have. 00:37:59.039 --> 00:38:04.800 And that's it for this week. 00:38:04.800 --> 00:38:13.920 Thanks again to Daniel and to Larry and the Financial News Network team for helping us make sense of what's happening with Binance. 00:38:13.920 --> 00:38:22.079 We'll be back next week with another story from the news and another conversation with someone building something interesting in FinTech. 00:38:22.079 --> 00:38:28.639 Make sure you subscribe, leave us a review, and share the show with someone you think would enjoy it. 00:38:28.639 --> 00:38:31.440 Thanks for listening, and I'll see you next time.