Commerce Conversations

• Micro-fulfillment is a dynamic space that involves automated facilities, usually smaller than 10,000 square feet, for efficient order fulfillment.
• The landscape of micro-fulfillment solutions includes various goods-to-person systems that aim to optimize storage density and throughput.
• Instock is a micro-fulfillment solution that uses robots driving on the floor, ceiling, and vertical walls to maximize space utilization.
• The system is designed to be highly flexible, fitting into existing real estate, and allowing customers to try it out as a service.
• Instock's approach focuses on software complexity, simplifying the hardware, and enabling easier installations.
• The system's flexibility and lower cost compared to traditional solutions make it more accessible for retailers to deploy in various locations.
• The robots in the Instock system can operate both inside and outside the grid, enabling innovative applications and easy integration with other automation technologies.
• The unique magnetic suspension system allows the robots to move smoothly on various surfaces without the risk of falling.
• Instock is expected to be available for customers within the next six to nine months.

• What is Karat?

We’re building a better financial system for creators. So if you’re a YouTuber, an Instagram influencer, a TikTok or Twitch streamer, you are a business, albeit a new and different type of one that makes a living from content. Many of these new types of businesses really struggle to figure out their finances around getting access to credit, help with their taxes, setting up business bank accounts. And so that’s what we help them do.

• Eric recently started kicking awareness into overdrive with by leading content. What was that like?

Our content strategy was really motivated by two things. The first is tremendous business value. The second is that personal connection you alluded to from a business perspective as more and more people learn how to make content. That’s how they’re learning to receive information and learn about new things too. The way to win distribution and marketing today isn’t necessarily through running ads, it’s by creating genuinely compelling pieces of content that people will go and watch. We believe in this thesis because our entire client and business segment we work with does this to grow reach and revenue for their products and services. So we said well, why shouldn’t we do this for ourselves?

 I find it really hard. As I mentioned growing up I was so focused on ensuring that I did a good job in terms of landing in a financially stable and safe occupation that anything like putting myself on camera felt narcissistic. It felt like navel-gazing, like, why would anybody wanna listen to me? Why should I do it? And part of what eventually got me to try was, as I mentioned, seeing all my friends, seeing everybody finding it so casual and simple to make content nowadays. It’s the same reason Karat exists. Other people are figuring out this ease and simplicity, and it motivated me to try doing it for our company, too.

• Talk to us about the Karat user?

Our target client is someone who’s made a living from their content. Whether it’s shared via subscriptions, shared with users on Patreon, Twitch, or from ad revenue being shared with them as on YouTube or even sponsorships they’re doing themselves, which you see a lot of with Instagram influencers. Like any other businessperson, they’re focused number one above everything else on what’s going to help me grow my business faster. For them, that’s things that either help them make more content, more money, or build their following base, while reducing the time they need to spend on everything else. That is not one of those three things. Our very first product was a business charge card that provided them with limits that actually made sense, because we underwrote them based off their financials and social stats instead of their credit history.

• What's exciting that's up and coming for Karat?

The focus for us has been on building that card in every creator and YouTuber’s wallet that they pull out and say hey, that’s a Karat card. Because our vision is once you have the card, we’ll be able to cross-sell you into other financial products and services that you also need, but might not have considered because you didn’t have the time to assess properly and didn’t know who to trust.

Eric: We’ve been around for about four years. Even in the first year we launched the card we were seeing 50, 60, 70% growth month-over-month. And it was primarily organic, because this population didn’t really know much about how to figure out their finances. That’s why when they found a source that they actually trusted and heard of, they leapt on it. There was almost this pent-up demand that just didn’t know where to go that all suddenly just swept into us. Similarly, we launched our bookkeeping and tax service about a year ago. Initially we didn’t know what to expect. As I mentioned before, this space is really based on trust, and we had explored bookkeeping taxes as one of our very first products to start with, but there wasn’t much interest because no one knew exactly what we were doing. But when we relaunched it after having built up that trust and credibility, we again saw double-digit growth every month and quickly exceeded even our capacity to serve.

• Can and should big FIs pile on to the content and community strategy?

I think there’s two points here. The first is at this current moment, there’s more focus on ensuring the core banking infrastructure in America, and frankly the world, is stable before saying we’re gonna go and build the coolest new “Dogecoin for Uber drivers named Kevin” app. We saw a little bit more of that a couple of years ago. Now I think it’s more like, if you hold my money, will it still be there? So that’s a pretty big shift. The second, if you think about some of these recent collapses in the first place, they were driven by bank runs. They were driven by animal spirits. It is in the actual business model of a bank to obviously have a money multiplier, to have a reserve ratio such that if you think about it, any bank is potentially at risk of a bank run. It just occurs if people are scared. And I’m not saying just go and build good community and everyone’s gonna be super happy and hopeful, because let’s be honest: SVB actually did a fantastic job building community and it still didn’t work out right. But it doesn’t hurt in times where peoples’ fear, uncertainty, and doubt can manifest into wiping out billions of dollars of shareholder value. I think you do have to consider well, what can I do to help to reinforce trust, awareness that I exist, and that I’m doing the best I can? I think that’s a big part of where content and community can be helpful.

• Who do you think is killing it in terms of community and content in FinTech?

So yes, number one I actually do think Mercury’s done a really good job. Number two, I’m actually gonna pick a slightly older example than most recent-crop FinTechs. Look at Square and CashApp. When CashApp launched, Venmo had already been around for a long time. Payment apps really die and thrive based on their ability to build network effects. So in a way it’s actually very challenging and tricky to say “oh yeah, here’s a company that has already built this really cool digital peer-to-peer payments app, and they have tremendous network effects, and from a product perspective there’s a couple of things we can do differently, but yeah, let’s go in and fight them.” 

Episode Highlights: 

• How did the idea for CNote originate? 

At the intersection of social responsibility and financial services, CNote was born out of the need to align large institutional investors' values with their cash and fixed income portfolios. Cat, the founder, observed a growing interest among major clients to invest in socially responsible or ESG (Environmental, Social, and Governance) assets. Recognizing the lack of options in the cash and fixed income space, Cat saw an opportunity to create a scalable solution that would enable investors to allocate their funds in alignment with their values, while addressing the wealth gap in underserved communities.

• What motivated Cat to transition from a large financial services firm to launching CNote? 

Cat's personal motivation stemmed from witnessing the widening wealth gap in the United States, juxtaposed with the increasing interest in values-aligned investments. Fueled by a desire to make a meaningful impact and promote financial inclusion and diversity, Cat left her position as a managing director to start CNote. The goal was to create a tech platform that could facilitate the movement of cash and fixed income from corporations and foundations into community finance, ultimately serving the larger good.

• What was Cat's founder journey like, transitioning from a large institution to starting a business? 

Cat had a natural inclination toward problem-solving and entrepreneurship throughout her career. Even while working in a large corporation, she consistently gravitated towards creating new opportunities and solving market challenges. The decision to start CNote allowed Cat to combine her passions for finance, technology, and driving economic justice. Building a mission-driven startup was both exciting and challenging, as it required balancing financial stability and profitability with a commitment to a larger societal issue.

• How does being a mission-driven startup differ from a typical startup? 

Being a mission-driven startup brings a unique level of excitement and difficulty. The privilege of working on a problem that deeply matters on a societal level is a motivating factor for the team at CNote. Their commitment to the mission attracts talented individuals who share the same passion. However, balancing financial stability with the pursuit of a mission is a constant challenge. Cat emphasizes the importance of establishing a solid business model and a growth plan to sustain a mission-driven company.

• How does CNote approach team diversity and why is it important? 

CNote values and prioritizes team diversity. With an exceptionally diverse team, CNote benefits from attracting talent through networks that are already diverse. Intentional efforts are made to ensure diversity in the hiring process. While it requires additional work, the commitment to diversity is reflected in the team's low turnover rate and the high number of applicants for every job posting.

• How does CNote operate within the corporate treasury space, and how has recent events like the SVB crisis influenced the mindset of enterprises regarding cash management? 

CNote's focus lies within the corporate treasury space, working with corporate treasurers and CFOs to optimize their cash management. The recent SVB (Silicon Valley Bank) crisis and other similar events have shifted the mindset of enterprises. The conversation has moved from seeking yield opportunities to emphasizing capital preservation and risk mitigation. CNote's solution, which prioritizes capital preservation and offers complete transparency to banking partners, proved valuable during these events. The crisis prompted a heightened interest in CNote's approach, particularly in managing cash and providing exposure control and transparency.

• Will CNote expand its solution to cater to mid-market and small business customers in the future? 

While currently focused on serving enterprises, CNote recognizes the vast opportunities within cash management for mid-market and small business customers. The scalability of their solution allows them to move towards these markets. CNote acknowledges the demand and plans to broaden its reach beyond enterprise clients to support a wider range.

About the Guest:

• Catherine Berman on Linkedin
• CNote website

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

What does WEX do?

From 30,000 feet, what we're all about is simplifying the business of running a business. In this context, that means our three different product sets: benefits, corporate payments, and fleet payments.

What’s happening in payments?

A few major things… 1) Digitization of payments: even when Jay started his career in 2001, he was focused on the death of the check, and it’s still the last bastion of manual payments today. 2) Consumerization of B2B payments: users are seeking Venmo and PayPal-like experiences in their B2B software experiences, so we’ve seen a shift to become hyper-focused on UI. 3) Long-term convergence between software and payments: thinking through how to take software and turn widgets that really turn it into a service, closer to embedded payments.

What about what’s happening in vertical payments and fleet specifically?

It’s all about how you take the payments, the data, and technology together in a way that’s bespoke for a particular segment and then rinse and repeat. It’s not a particularly complex space, it’s just been around for a long time – about three decades – and there are only a few players purely focused on it.

How to map the huge billion-dollar market in the fleet?

WEX thinks about two buyers on the services side: the fleet manager who is typically mid-market or more advanced fleets or the small business owner who has very limited time, and they need the operations of the fleet to be abstracted away so they can do their most pressing work.

It seems like all of the new VC-backed entrants are making plays to 15 other financial services outside of just fuel cards. What does expansion in this space really look like?

At WEX, the spirit of the offering is simplification, and so there is an absolutely sensible sense in expanding the suite of product offerings. The WEX learning is to focus less on what they CAN do and more on what the customer craves. This has meant investment in the credit extension area more than anything.

Where does EV come into play?

It’s not a transition to EV; it's a transition to a mixed fleet… and there’s still a financial services experience for that source, which is less complex in the money movement sense but may command a SaaS model.

What’s the most exciting trend happening?

For Jay, it’s much less about the business model and much more about empathizing deeply with a top pain point for the finite profiles of customers they engage with. The most exciting focus for him is about a workflow that needs to be solved.

About the Guest:

• Jay Dearborn Linkedin
• More about WEX

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

• Andy and Matt talk about the shift in thinking that Millennials and Gen Z’s catalyze in regards to sustainability and buying preferences
• Like all of the big name innovators in the space like Rent the Runway and ThredUp, Trove started as a peer-to-peer model but the team realized early on that the way resale best played out for clothing was actually more akin to buying a certified pre-owned vehicle – bring control back to the brand.
• The only way to create a really elegant experience is by creating a manager marketplace not a peer-to-peer one
• Thrifting is come into its own in a huge way, and legacy retailers don’t understand that because their traditional leadership may still hold old notions of how thrift is perceived
• The way to make reCommerce successful is by making it invisible and right alongside buying new fashion
• There's a culture contradiction going on too – the rise of Shein and other fast fashion platforms seem like they are in direct violation of the sustainable preferences that we are seeing with younger generations. In Andy’s perspective, premium brands are able to compete on a price basis by integrating reCommerce and as such the middle market and those throwaway retailers will feel the pressure especially as social stigma grows.

About the Guest:

• Andy Ruben
• Company Website

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

• Chris began his career in IT at Nintendo before the company itself had a product.
• As he matured in his career Chris began to refine his expertise across sectors and products to deeply understand how to approach the sales process for different conditions.
• Chris then walks us through the EagleView and Pictometry merger.
•  Chris uses the metaphor of dating before marriage to exemplify how the companies became familiar with one another through their customer and supplier relationship before carrying out a merger.
• Boards are the needed “adult supervision” for strategic business decisions, Chris believes. It was ultimately with the board of Pictometry that was the best audience to push forward the merger.
• While departments like finance or HR needed to be downsized in the merger, they kept the two sales organizations running to expand growth.
• “When I first became a CEO, one of my board members gave me some advice. He said, he said, ‘as a CEO, You're gonna experience two emotions, uh, more often than not, and you're gonna experience euphoria and you're gonna experience terror.’”
• Insurance is a small professional circle which means if you have a bad proof of concept at one carrier, word will certainly travel.
• Chris started a business in 2008 and with such tight capital, he stressed getting to profitability in 3-4 years as a key intention.

About the Guest:

• Chris Barrow Linkedin
• Imagen Capital Partners | EagleView Technologies

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

• Growing up with a physician father and social worker mother, a life of service was drilled into her from an early age for Betsy Cohen
• After absolutely hating philosophy as a major, she changed her focus to law on a whim
• Then after law school she was awarded a prestigious internship with a law firm and performed brilliantly. However upon completion her manager conveyed that the senior leadership of the firm was not yet ready to have a woman as a professional colleague. After that moment she swore never to work for someone again and began her entrepreneurial journey.
• After law school Betsy went to go teach and then became interested as a new bank law passed, enabling new banks to be chartered in the early 70s
• She then became one of the first women to lead a bank as she filed for charter in Pennsylvania
• Betsy called herself an observer, looking for negative space and could start to see that the banking space was simply not going to serve the digital world of the future as the early 2000s approached.
• Betsy wondered how banks could serve financial technology companies, and that birthed the Bancorp – a pioneer in what would become the sponsor bank framework.
• Dan recalls that Betsy was the person who he first heard the term SPAC from, an area where she and her son Daniel developed expertise.
• Unlike the fund model, the SPAC model enables you to deeply understand the company in Betsy’s perspective.
• Today, Betsy is more focused on investing in FInTech and advising founders with her deep experience in bank partnerships.

About the Guest:

• Betsy on Linkedin
• Cohen Circle

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

• Since joining Lazard in 2002, Dima has been investing actively in public equities in financial services with long horizons. 
• So, are we in recession? To Dima we either already are or about to experience one. However the real question is about the magnitude of such a recession.
• Dima started in 2002 when JPM stock went down about 50% and of course, was still an analyst in the Global Financial Crisis, and the common theme for both of those was the very high amount of leverage in the system.
• In the GFC there was tremendous leverage for the consumer, not just in mortgages as well as in the banking sector.
• The difference coming into this downturn is that our financial baseline is different, right now consumer deposits are still multiples higher than at 2019 and commercial balance sheets are similarly positive. Our balance sheet health is stronger.
• Banks have been prevented from getting into high risk areas like leveraged lending or subprime consumers because of the heightened regulation, which is a safety mechanism against higher levels of stress.
• Back on magnitude, what’s the key driver of the spectrum there? Dima comes back to liquidity and in the context of the last few years banks are still flush with positive account balances. Of course, unemployment is a top factor to depression and today that rate is still hovering at record lows. 
• Rate hikes that have been unprecedented are not going to be felt overnight but will be reconciled in the coming quarters.
• Angst in the investor community is more so a pain in a market correction versus true fundamental structural challenges.
• However, the Fed is creating a tightening condition and that is in fact very real for recession.
• A handful of Fintech players are deeply challenged by these conditions, BNPL is a clear example of threats from cyclical markets.
• Businesses with revenue models driven by leveraging regulatory loopholes, like payments for order flow or Durbin-exempt interchange. The risk of these models being turned upside down is far too high. 
• Dima believes the banks will continue to invest in technology because there’s no other choice because 1. They must spend money to modernize and 2. They must spend money in order to retain and gain market share.
• The key ingredient for the IPO boom to return is market stability and that will likely happen when the Fed stabilizes rates and the market finds its new base. 

About the Guest:

• Dima Batsev on Linkedin
• More about Lazard

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

Our Predictions, debated:

1. Buy Now Pay Later (BNPL) implodes.

2. More than a few challenger banks look for exits, or fold.

3. Private equity rolls up public former D2C retail darlings.

4. Crypto winter will persist through 2023, but not forever.

5. Mass merchants face headwinds while luxury booms.

6. Incumbents acquire at least one venture-backed payments company for $1B+.

7. Skyrocketing consumer borrowing in 2022 makes credit servicing and collections a critical category for investment in 2023.

8. Venture funding bottoms out in Q1, before rising in Q2.

9. Scrappy founders return.

10. Retailers invest in the automation of stores and supply chains as labor markets remain tight. 

About the Guest:

• Dan on LinkedIn, Matt on Linkedin, Ys on Linkedin
• Commerce Website

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium

Episode Highlights: 

• Pete grew up in Ohio with 4 other siblings with a serious amount energy, which we later found out was ADD
• Without a diagnosis, Pete knew that his energy and intention meant he wouldn’t be a great employees, but entrepreneurship could be channel to funnel his drive at his own pace.
• Pete dropped out of college with just a quarter to complete and ended up running a chain of gyms. After spending time with some bankers he became aware of ACH that they were using to collect monthly life insurance payment
• I was talking to banks about accessing ACH, and a banker took pity on me by sharing Regulation E. I read it and saw it didn’t explicitly say non-banks could use ACH.
• I used a local bank introduction in Columbus to access ACh, thanks to John McCoy. But it took me a little over a year to actually launch products. But in Columbus, Ohio you can’t hack out of a garage, it’s too cold! So Pete went to work with a single programmer and borrowed a computer from a local real estate company out of his grandmother's basement. 
• Pete capitalized the business after getting 250 VC introductions, getting 200 “nos” and 250 “hell nos.” It was his lawyer that suggested that insurance companies would understand the excitement for the product.
• He eventually raised a 3M round with 4 insurance companies from Ohio.
• The company went public in 1995.
• Pete never wanted to take a company public, he just wanted to win.
• Pete decided to sell the company after seeing the way banks were in way over their head.

About the Guest:

• Peter Kight

Interested in keeping up with the latest in FinTech and Retail Tech? Check out our website to learn more about us and follow our social media to stay up to date.

Follow Commerce Ventures: 

Twitter

LinkedIn

Medium