Illustration of the Soverign from Picturesque Representations of the Dress and Manners of the English(1814) by William Alexander.

3 News Stories

#1: The Most Comprehensive Corporate Spend Management Platform 

What happened?

I guess I’m just going to keep writing about this space:

Rippling has launched spend management products that integrate with its existing payroll solution, enabling finance leaders and controllers to view and manage spend across their company on a single platform.

The new Rippling Spend Management products include corporate cards and an expense management system and will soon add bill pay software, according to a Tuesday (Sept. 20) blog post on the company’s website.

“Because Rippling Spend Management is deeply integrated with Rippling Payroll, you can manage and report on all of your spend in one place — not just card transactions, reimbursements and invoices, but payroll too,” the company wrote in the post. “No more logging into different systems or merging data in Excel to figure out your monthly cash burn.”

So what?

At this rate, everyone in fintech is going to be offering a corporate card and expense management platform.

This one feels especially significant, however.

Corporate spend management is, at a basic level, comprised of these buckets: vendors (procurement & accounts payable), employees spend (T&E and non-T&E), and payroll (inclusive of wages, benefits, and equity). Rippling is, to my knowledge, the only player in the corporate expense management space that provides a platform that sits across all three areas. And Rippling isn’t some dinosaur (it was founded in 2016), so dismissing this as innovation theater feels unwise.

Also, this is kinda cool – the guy who built Rippling’s spend management products got the job by posting about the idea on Twitter. Reminder – always shoot your shot! 

#2: A Noble (but challenging) Goal

What happened?

A new lending-as-a-service player has emerged from stealth:

Credit lines are a lucrative product. U.S. consumers alone pay $120 billion in credit card interest and fees every year, according to the Consumer Financial Protection Bureau. Given the revenue opportunity, it’s no surprise that there’s enduring interest from both startups and established companies in delivering credit-based products. But challenges stand in the way, including — but not limited to — complying with local laws and regulations and modeling credit risk.

Enter Noble, a putative solution in the form of a platform that allows businesses to build credit-based products like credit cards and buy now, pay later services with no-code tools. Founded by WeWork veterans, Noble allows clients to connect data sources to create custom credit offerings, providing a rules-based engine to edit and launch credit models.

Noble today emerged from stealth and announced the close of a $15 million Series A round led by Insight Partners with participation from Cross River Digital Ventures, Plug & Play Ventures, Y Combinator, Flexport Fund, TLV Partners, Operator Partners, Verissimo Ventures, Interplay Ventures and the George Kaiser Family Foundation. The new cash brings the company’s total raised to $18 million, which CEO Tomer Biger tells TechCrunch will go toward opening a new office and expanding Noble’s portfolio to support additional use cases.

So what?

This is getting to be a hot area, as TechCrunch notes in its coverage, with Noble joining Alloy and Onbo, both of which offer similar capabilities (along with a host of more established providers).

Based on my cursory examination of the company’s website, Noble appears to have a neat product. And I certainly think that there will be a great and growing market for this type of offering, between fintech companies and the emergence of embedded finance.

My only caution – credit underwriting is one of those things that seems like it should be much easier to build technology for than it actually is. On the surface, it’s just data acquisition, workflows, and business rules. However, in order to offer a credit underwriting system that actually enables the lender using it to build a profitable loan portfolio, you need to build a lot more capabilities, which aren’t all obvious if you haven’t worked in lending for a while (custom attribute development, least-cost routing, reject inference analysis, etc.)

Fintech companies building in this space would be wise to focus early on selling to banks (in addition to other fintech companies and non-bank companies doing embedded lending). Your product managers will thank you.

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(BTW – if you are building in this space [or considering doing so], let me know. I can connect you with some consultants I know who know A TON about this area.) 

#3: Closed-loop Payments-as-a-Service (CLPaaS)

What happened?

Another company emerges from stealth!

Lynk, the company providing merchants an alternative to costly credit card processing fees while powering customer loyalty programs that drive revenue, today announced the general availability of its branded payment solution. The platform enables marketplaces to own their own payment ecosystem without upfront fees, large cash reserves or the cost of hiring an engineering team to build. As part of its launch, Lynk has raised $3 million in seed capital that included participation from Samsung Next, Plug and Play, Tribe Capital, Simplex Trading, N49P and others.

Dozens of fast-growing merchants are already using Lynk’s platform to reduce their credit card processing fees by as much as 90% and fund reward programs with no cost to their bottom line. Lynk is on track to power more than 2 million retail transactions in 2022.

So what?

First, I gotta say – what is with all the stealth? I get the impulse. Honestly, I do. You think you have a clever idea and you don’t want someone to steal it. Newsflash though – there are no new ideas in financial services. Literally none. Lending-as-a-Service? Not a new idea. Closed-loop payments? Not a new idea either. Even if you have some clever twist on one of these old ideas, you can be sure some other smart person is also thinking about it. And that’s fine! What will make or break you isn’t the idea. It’s the execution. I swear, half the reason founders build in stealth is that it sounds cool. If we called it, I don’t know, “building laconically” instead, no one would do it.

OK, rant over.

I do think we are going to see a lot more of this in the next year or two. The value of closed-loop payments for merchants is well established at this point, but realizing that value has mostly required merchants like Starbucks to build it internally. Closed-loop payments-as-a-service (CLPaaS … but pronounced “claps” … you saw it here first) has the potential to democratize (sorry … I’ll put $5 in the fintech buzzword jar) this infrastructure for merchants of all sizes. That’s intriguing.  

2 Content Recommendations

#1: Lessons from Fast’s Implosion (by Francisco Javier Arceo, Chaos Engineering)

I really enjoyed this candid write-up from Francisco on why, from his perspective, Fast failed. In particular, this observation about the danger of conviction really resonated with me:

In my own startup I thought I was placing high conviction bets and later realized I was just ignoring reality. I saw this often at Fast as well. We hired strong leaders with strong opinions, but ultimately strong opinions that do not bend to data are probably doomed.

Some call this behavior being relentless, having strong conviction, or even being a visionary but, in reality, the average case likely doesn’t play out well with this approach and it’s probably more effective to be both balanced and responsive to the feedback you get.

#2: Open Data is the Key to Improving Consumer Outcomes (by Simon Taylor, Fintech Brainfood)

If you are reading this newsletter, I’m assuming you are a regular reader of Simon’s work (if not, please correct this error ASAP). However, I did want to call out this ‘rant’ by Simon because I think it offers a couple of very important perspectives.

First, regardless of what your amateur macroeconomic instincts are telling you about the likelihood of a recession, it seems likely that we are headed into an environment where consumers are going to be more financially stressed than they have been in recent years. Simon rightly points out that now is the time to invest in solutions that are focused on improving consumers’ financial health and resiliency.

Second, I love how Simon focuses on just how much further we have to go to realize the full potential of open finance. We like to pat ourselves on the back in fintech, but the reality is that we still have a ton of work to do to unlock the value of this shift towards open data.

1 Question to Ponder

When will Apple Pay Later actually be available to use?

Context: Apple Pay Later is reportedly facing ‘technical and engineering’ issues

If you have any thoughts on this question, hit me up on Twitter or LinkedIn.

Alex Johnson
Alex Johnson
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