Sramana: In your industry there must be issues around the APIs of various payment infrastructures and data systems. Some are easier to tie into now; for example, you can tie into PayPal via an API and run your algorithms on that data. Is that becoming the standard?
Marc Gorlin: It is tremendously helpful to have payment processors with APIs. Some of the processors still require scrapping and use manual processes with no APIs. However, a business in our industry needs to be able to support all of them.
Sramana: At 1M/1M we have an online SaaS business, and Chargify processes the orders. There is a merchant system that takes the payments and processes them. We also take wire transfers and PayPal. We work with corporate partners who will do bulk wire transfers. The only place where there is a single location of all that data is at our bank. I don’t think our bank has an API to interface with a system like yours. Are banks going to start pushing for an API?
Marc Gorlin: I think that is coming.
Sramana: I want to underscore that point because there are gaps in the ecosystem to help money flow faster and easier. For automation to work, those interfaces need to work.
Marc Gorlin: You are absolutely correct. I think you will see some of the leading banks take first steps in this direction, and others will follow along.
Sramana: Do you see any of the banks taking that lead?
Marc Gorlin: We have had a lot of active discussions with banks. That does not mean we are implementing a product on the bank side. I think this is similar to where Amazon was in terms of finding out if this is really a market. I think banks are going to realize that it is a market. They can’t ignore all the small businesses out there, but they need an automated approach to address that market. That conversation is going on at some banks right now.
Sramana: You are working with 65,000 small businesses, and you have cracked a lot of payment APIs. Where do you go from here?
Marc Gorlin: We will be live in the U.K. by the end of the year. That will be our first international product. We will be looking at doing underwriting for offline businesses using alternate data sources as well. We will look at shipping information and accounting software to develop new underwriting models. We are looking at greater amounts of data all together.
There is something called a net promoter score that is an indicator of how likely your customers are to recommend you to others. An average in financial services is 10% to 20%. Amex has one of the best at 41%. Apple is at 74%, and Kabbage is at 75%. We are crazy about taking care of our customers.
Sramana: This part of the ecosystem is dramatically underserved. That is why we work with this part of the ecosystem as well.
Marc Gorlin: That is why the UPS partnership is important. They have put money into Kabbage, they have invested in our debt, and they allow us to look at the data because they are trying to get money out to small businesses. They know it will help the entire ecosystem. They understand there is value in helping those businesses grow. They want to be on the forefront of how SMBs get funding today.
Sramana: It has been a pleasure speaking with you. I look forward to watching your continued success.