Speaker Q&A: How to Compete Without Losing Your Mind and Runway when Cash is Expensive?

May I have your attention please welcome TechCrunch senior climate writer Tim Deschant Ruth Fox blader partner at Anthemus and tejio kote founder and CEO Airbase All right thank you for joining us Everyone we've got a great q a session Here Um if you need to submit questions on Slido we should have a QR code up there If you haven't seen it already should be Popping up on occasion so we're going to Be discussing today how to compete Without losing your mind or or your uh Bank account And one of the things I want to get to Right away is this idea about competing Against large incumbents Um and I guess one of the questions is When do you know when to compete and When to partner So when you're talking to Um about a large incumbent in our space I guess that would be folks like MX and And others uh we just made it a core Part of our strategy uh to partner right So MX is actually a small investor in Airbase we are working with them in a Variety of initiatives some of which you Know hopefully we'll be able to talk About more over time but that's kind of One way to think about uh you know not Even being in the headlights or Crossroads with large incumbents is to

Figure out an opportunity to just Partner sure and that's what we have Done right yeah was there a moment Um you say when you kind of knew it was Better to partner No look of course that has to be baked Into your strategy from day one uh you Know as kind of context for those of you Who may not be familiar with air base Where uh spend management uh platform Focused on mid-market businesses and What that means is uh you know Businesses spend money and you typically Use lots of different systems to do that Uh air base brings together all the Non-payroll spending that happens in a Business into one platform uh you know AP bill payments corporate cards expense Reimbursements instead of having many Different systems for all of that you Kind of consolidate in in one place That's what we do and in our case we've Always looked at the opportunity ahead Of us not through a fintech lens because We are a B2B SAS and a fintech business We kind of provide Rich workflow support In our platform but we also move a lot Of money and and we have embedded Payments in the platform uh and but we Have always strategically thought of Ourselves as a SAS company first and a Fintech company second right so it's Really answering that question what is Core to what you do what is the idea

Identity for your business how do you Want your customers to perceive you what Is the value that you are providing to Your customers and and if it's really Core to what you do yeah you either Compete and you don't have an option Around that but if it's not then you Find the opportunities to partner with Uh with uh you know big companies small Company incumbent or not doesn't really Matter yeah yeah Ruth what do you say to Founders who are trying to take on an Incumbent So I think that if you're building a Real Challenger brand don't forget the Brand I think that a lot of Founders Come from the perspective of really Having a superior technology and a Superior user experience and both of Those things are incredibly important Typically someone who is focused on the Brand isn't a first hire at an early Stage company and while you don't need To necessarily make a hire I think it's Incredibly important to remember that Particularly in the space that I invest In which is financial services space uh The this is this is really um a sector Which relies on trust and brand is Incredibly important and so yeah just Remember that as you're challenging your Brand is incredibly important yeah Hey Joe I think this one is directed to you What do you think about divi's

Partnership with Amex small business Cards business Yeah so it's uh you know early stages MX Is a big company and they tend to Partner with lots of uh providers right And uh we are at a different stage of Partnership with them we're in the Process of rolling out specific Offerings we are not exclusive to Any Given company we don't expect any of our Partners to be exclusive uh you know to Us and that's just not how it works but Ultimately the approach we take is is There a good joint compelling story to Be told right because you want to have Those conversations up front with any Partner what's in it for you what's in It for me right what is your strategic Rationale for doing this what is our Strategic rationale for doing this what Do you hope to take away what do we hope To take away you gotta have those Conversations as early as possible in Kind of the partnership discussion and We've done those things with uh you know MX and we have kind of jointly making The Investments because we have specific Plans in terms of the kind of customer We want to Target the kind of value that We want to deliver to existing MX Customers all that kind of stuff early Days we don't have a huge amount to kind Of talk about that in public just yet But hopefully there's a lot more that we

Will be talking about at the right time Right yeah great Bruce I've got another Question here from the audience um Should you approach an investor with the Idea or MVP or should you try to get the Product ready to go before seeking any Funding That really depends on the stage that The investor focuses on I think it's Really important to do a bit of research About you know where this what let's say What the investor majors in sometimes Investors will make exceptions for Projects that they feel particularly Passionately about but typically Investors who work in normal Venture Capital funds have a mandate for that Fund and they're not going to depart From that mandate I would say at the Earliest stages business angels are Really great investors not only do they Provide Capital but they also can be Really fantastic at making connections And so you know if if you have the Opportunity to access some of that angel Capital initially that can be really Helpful to build a couple of proof Points but typically most investors will Communicate about you know where they Expect the business to be when they look At it you know and why what their Criteria are for investing in companies How they Define what stage it is it's a Little bit complex now because there has

Been quite a bit of valuation inflation And so you know it's like oh is that a Seed round or was that a you know series D Um sometimes it can be hard to tell but Typically it's very important to just Understand the investors the individual Investors mandate yeah another quick one Ruth um a question about focusing on the Brand Um someone's wanting to know if for an Early stage startup are there four or Five things you might focus on to create A brand Um hmm probably better to ask someone Who is you know there's so many amazing Branding experts I would say the Company's values need to shine through Uh and and really the brand is about you Know much more than the logo and you Know it's and the look and feel it's Really like the language and helping a Customer feel at home I would say some Of the obvious mistakes that I see my Companies make would be you know Creating a website where the customer Group that you're targeting isn't Represented it's like people should go To you know your kind of digital Properties and and understand that they Belong there and you know that's kind of A language thing that's uh sort of what Are the what are the stock images that You're using really thinking through

Um is the ethos and the utility of the Community being of of the company being Communicated everywhere possible yeah Pedro I've got another one here from the Audiences do you think any business card Or spend management will be ever be able To challenge amex's corporate card or Small business card portfolios So Let me step back a bit in terms of Thesis for us as a whole like I said the Fundamental problem we are trying to Solve is to say there are too many silos You know even small businesses for sure Even in mid-market businesses in terms Of where money is spent if you look at Every Persona in the business that Somehow is involved with how money is Spent Finance and Accounting teams Absolutely but then uh you know every Employee at some shape or form is Spending money right they're claiming Reimbursements and you're placing a Request to go buy some software and any Number of use cases and ultimately you Know our goal is to bring all of those Non-paid payroll spending workflows and Money movement into a single platform And you know it is a good question to Ask hey there have been this incumbents For for a while uh and and what about Them what are they going to do about it And and the opportunity for startups Like us is when there are shifts in in

What's possible in the market and one of The interesting things that has happened In the last five years is access to Financial infrastructure has become much Easier right companies like us can issue Cards companies like us can more easily Hold and move money through banks and You know that kind of infrastructure Level has matured quite a bit which has Made possible startups like Air Base but Having said that I would argue it's also Being commoditized right so those same Primitives Every company has access to so if all You're doing is issuing cards and saying I'm going to compete on the basis of Giving you more cash back I'm going to Compete on the basis of giving you a Slightly larger line of credit I don't Know if in the long term that's enough Of an advantage right so our Focus has Always been to say focus on slightly Larger companies mid-market early Enterprise 100 to a few thousand Employees they care a lot more about Workflows they care about how the glue Comes together in terms of connecting The workflows from an employee's Perspective approvers Finance and Accounting people all that kind of stuff And so workflows matter and and we Charge for you know think of it like Project management software like Spending money is in many ways a

Collaboration problem right and so how Do you think of it more from that Perspective and and also when it becomes A software problem there are workflows Associated with corporate cards too Right like that's kind of a sub thesis For us is that the corporate card of the Future is going to be a software product It's going to be a software workflow Product it's not going to be a piece of Plastic that you put in an envelope open You mail RTR employees and and the Bigger question to ask is are some of The incumbents the traditional corporate Card providers like the banks and all of Them are they in a position to become Software companies and software workflow Companies as the shift in expectation Happens among customers and and is there Where you can add value so that's kind Of the unique angle that we bring to the Table and and you know I'd like to thank Some of the Partnerships we have that We've announced already uh you know the People uh in those larger companies see And are asking themselves the same Questions right and and uh you know That's how we've approached it so you'd Say in that along those lines that You're seeing yourself more as Complementary to what Amex is offering Where you're maybe filling in some of The gaps that they might not be seeing In these mid-market businesses in the

Sense that if you believe that thesis That the corporate card of the future is A software workflow product right Because a huge pain point for companies That spend money on cards and if you've Been in that position especially if You're in the Finance and Accounting Side of the house in businesses you Realize that you know it's easy for Employees to share cards and and you Know numbers and slack card numbers and Slack and and shared cards and one Password and they're always surprises at The end of the month when you get a Statement who the hell spent this you Know who has access to that card and no Control no visibility you can go from That world to a very good software Driven workflow hey make it a very Simple request process I'm going to Place a request as an employee and the Right people are going to approve it and Once all the approvals are done you can Create a specific say virtual card with All the right limits placed on it you Only get access to that card number and Not a card with a much bigger limit on It and then as transactions are Happening on those cards you can Automate away how it's all categorized And synced into the general ledger to Help with the monthly close process That's a workflow right that's a Software product and and and the

Instrument of the card and the 16 digits That you ultimately go to a Merchant's Website and put in uh you know that's Like a very small detail of the larger Workflow around spend that has to happen In the business and so that's the Approach that we've always taken and While we issue our own cards Strategically we don't think that that Is super important in terms of the Larger problem that we saw when I've Never wanted to compete in in the Corporate card wars right and and as the Financial infrastructure issuing Infrastructure has been commoditized uh My belief has always been that you got To go to the next level and compete the Software layer and that's why we're more Than happy to partner with any other Card issuer as long as our strategy is Aligned and we're not directly competing And that's what some of the Partnerships We have are all about yeah so related to Partnerships there's another question From the audience Um What have you thought about partnering With people outside you know companies Outside of corporate card issuers um you Know Accounting firms for example oh yeah Absolutely we have an entire VP level Person who's a key part of our Go-to-market team and and we have

Business development uh and uh we have Efforts around building channel uh and Partnerships in a variety of areas right So obviously some of these banking Partnerships are one of them uh netsuite And intact a really good strong partners Of ours because we integrate deeply with Those General ledgers and pretty much Every customer who signs up with us you Know not pretty much every one of them They have a general ledger a core part Of our value proposition is that we Integrate with those General ledgers and So not not just netsuite and intact but The ecosystem of players who operate in Their ecosystems their large established Companies so they can be Channel Partners for us accounting firms as long As they serve a specific size of Customer can be a good fit for us so we Absolutely long term think about Channel And Partnerships and the role that that Can play in general rating pipeline for Us you know as we kind of pursue our Growth goals yeah Ruth along those lines When you're thinking about this um for You know your portfolio companies um and You know maybe they come to you and you Say they say we're looking to expand you Know we're looking to develop new lines Of business uh work with new companies Other Partnerships what kind of advice Do you give them Um I think that what we really try to do

Is assess if the potential partnership Is a distraction Or if it's going to help us to achieve Our core goals excuse me yeah it's okay And so you know we have a limited amount Of capital we have a limited amount of Intellectual resource and ultimately we Understand what our short and long-term Goals are and if these Partnerships can Help us to achieve them then we say go For it So are there you know in a case like This Um you know if we're thinking there's Accounting firms there's corporate cards Are there other places that you might Direct a startup ahead Um so I will not direct my startups to Do anything got you um they know the Market much better than I do if they Need my help we're in trouble Um just kidding What so you know there could be all Manner of interesting Um partnership opportunities where we Really look to do Good work in the fintech space is we Think about underwriting Advantage we Think about product advantage and we Think about distribution Advantage Anyone who can help us in any one of Those ways you know is a potential Candidate I would say at the earliest Stages

Um You know integration of new partners can Cost more than it yields and it's very Often difficult to assess both that cost Side and what what will be yielded so Any de-risking that we can do around Either of those sides of the equation is Is something that we'll we'll look to do We'll think very critically about yeah Phaedra how do you how do you go about That process when you're considering the MX partnership uh look not just the AmEx Partnership but the any kind of Pessimistic way right because uh you Know it takes a really long time for you To start seeing results typically right 24 months and the way we think about That is uh in the Investments at which We are growing if you want to add a Certain amount of pipeline that is Double uh it may take that long but you Got to invest in that now and the Hardest thing to do and to be Disciplined about is uh to kind of set Aside that money when you're not seeing Returns today and and it's lowering your Efficiency from a go to market Perspective overall uh you got to have Faith as some level right that may come From experience that may come from Examples of other similar companies that Have built those channels after uh you Know investing over a period of time but You've got to have that Faith at some

Level and and uh at earlier stage Companies it really tends to be a board Level uh decision down where is this Something we want to invest in because Chances are you're not going to see Results uh you know for a good while and You have to be okay with that right yeah Well I think we're just about out of Time so I want to thank the audience for Excellent questions and uh thank you Thank you and Ruth appreciate it thank You very much