KAREN WEBSTER: Hi, I’m Karen Webster, here for PYMNTS.com to talk about small business payments. I’m here today with René Lacerte, the CEO and founder of Bill.com. Hi René, thanks for joining me today.
RENÉ LACERTE: Thanks Karen for having. Looking forward to the conversation.
WEBSTER: So let’s put a little context around small business payments for a minute before we get into a few questions that we’ve prepared for you. So small business payments is a real area of opportunity. Many have defined it as a multi-trillion dollar market where the value of all the invoices today are really dominated by paper products. Bill.com is looking to really change the way that small businesses pay and are paid, and you’re doing it in a variety of ways that I think bring a lot of new and interesting innovation to the space. So let’s talk a little bit about what it is that you’re doing, and specifically about some of the announcements that you made recently at the PayPal Developer Conference.
LACERTE: Great. Well, the first point that you said is really true. The small business payment market is valued anywhere around $23 trillion is what we currently see in the market, compared to the consumer bill payment that’s still left to go online is only a trillion. So it’s a 23x opportunity compared to the consumer market, so that’s why we’ve been focused on it, it’s why I’ve been focused on it for the last five years as we’ve been starting the company and building the company. What we announced recently with PayPal was the opportunity to create instant bill payment for business. We have this relationship with PayPal where if a customer of theirs and a customer of ours is using us to pay the bills instantaneously, their customers and vendors can receive the payments electronically real-time. We’ve also announced that we’re going to be embedded into the PayPal platform. So if you’re a PayPal small business user, you’ll be able to get all the benefits of Bill.com straight within PayPal. Those benefits include document management and collaboration.
WEBSTER: So René, there’s a lot of competition in this space, obviously because it is a multi-trillion dollar opportunity. Tell us a little bit about how your approach is differentiated and what makes you guys particularly well-positioned to dominate in this space.
LACERTE: Yeah, from my experience, I’m a fourth-generation entrepreneur. My grandfather had seven businesses, my dad had five businesses, and as I started PayCycle, which is America’s number one online payroll company. I was managing all these bills. I was trying to do what my grandfather and dad had taught me, which was to stretch out cash. Cash is gain, stretch out the payables, pull in the receivables. I found that all the consumer products that I had used before at Intuit, where I was a product manager or just as myself, didn’t fit the bill.
The reason it didn’t fit is because — to your point — what’s unique about us is businesses have a lot more documents. Our research shows that the average business has 70 documents, 70 bills a month that they’re trying to manage and pay, compared to a consumer which is going to be less than 10. So if you think about just the sheer size of that, there’s no way that a small business owner can keep in their mind all the different facts that are on that piece of paper when that bill comes in. So they need some way to manage the document, so we do complete document management around the bills. We also then allow for collaboration. When you’re managing 70 bills, you just can’t holler down the hall and say, “Hey honey, what was that invoice for?” You have to be able to have some collaboration with your teammates. Your accountant, maybe your office manager, maybe a vice president. All that collaboration is important, and guess what, they also need to see the document when they’re trying to help you figure out whether to pay.
Then finally, the last thing is — this goes to our overall philosophy — that the bill payment is a process. It’s not a transaction. So if you’re going to stretch out the cash and do everything that I was taught at the dinner table, you’re going to use accrual-based accounting. Accrual-based accounting means that you’re going to sit on it in payables. You’re not going to pay it for 60 days because you can, and then you’re going to pay it later. If you use online banking today, you can only download those transactions after you’ve paid it. In fact, usually it’s three days after you’ve written the check that you can actually see the transaction in your QuickBooks file. So we think that it’s really important to be able to synchronize all that information, the document, the collaboration and all the invoice information with the accounting package real-time.
So we do all that, we do synchronization with QuickBooks, QuickBooks Online, Intact, Peachtree we just announced, soon there will be others, and so you get a much different experience for our customers when they can have all that information at their fingertips, from their iPhone, from their iPad, from any Android phone. They can view or manage all their bills, see all their customer documents, see all the collaboration, and have it all sync with their accounting package.
WEBSTER: Well it certainly sounds like such an obvious thing to do and a tremendous amount of benefit, but as I think we both know, in the payments space, there is always the chicken and egg problem of getting multiple sides engaged in order to have the real value translated. So what is your chicken-and-egg problem, and how are you addressing that?
LACERTE: Usually when I have a chicken-and-egg problem, I like to make an omelet with both. I think the way we address it is, we make it really easy for businesses to use us whichever way they want to use us. Right? So if they’re using us just for the document management or just the payment piece, we make it very easy to get that going. We also make it very easy to invite your vendors to be electronically paid. So I think that’s part of the chicken and the egg is that, how do you get business to know about us and what are they doing and how do they get paid electronically.
Our customers, for example, they can just stick in the e-mail address for their vendor. The vendor gets an e-mail saying how would you like to be paid, and they can put in their bank account. They can put in their PayPal notification e-mail, and they’re set up. Now, they can review invoices, they can see the payments when they’re made, they can see the dates when they’re made. That helps the chicken and egg is when you have a very simple process for the person receiving the funds to be able to get those funds without doing a lot of work. That’s our approach, is to really simplify both sides of the chicken and the egg.
WEBSTER: So you mentioned earlier that you’re part of the PayPal business platform, and that’s a pretty significant achievement because there aren’t very many firms that are part of that beta pilot. Why were you chosen, and what’s the significance of that?
LACERTE: I think the primary reason we were chosen is PayPal looked out in the landscape, and they wanted to find folks that were helping move payments forward. Obviously they move a lot of money, and we move a lot of money as well, and so we have tens of thousands of customers that are using us that enable our folks to do things that you can’t do anyplace else. One of the things that our customers come back and tell us consistently is that we let them chase their dreams, not the paper. Our net promoter score, the satisfaction that our customers have is somewhere in the neighborhood of 55 to 60. And what the customers tell us is that we save so much time, that they can go from three people working on payables to 1, or they can save 75 percent of the time. Lots of small businesses, it’s the owner who’s doing the stuff at night. We do everything from the data entry all the way to the payment and the check printing, obviously. All that stuff happens, and it saves time.
So what PayPal wanted was an app that could take the entire app process for the business and put it into the cloud so that they could then integrate with the PayPal system that they have. So I think the reason they chose us was the success that we’ve had to date, the fact that customers are saving time, that they value our application and just the breadth of the platform that we’ve built that goes from document management all the way to payments.
WEBSTER: How have you seen your business environment play out given the economic environment that we’re in and the importance of cash flow to small business?
LACERTE: We’re a relatively young company. We launched the product maybe three and a half years ago, and so mostly when we launched, we were going through the 2008 downturn, whatever you want to call it. The worst recession in a generation is what the phrase is these days, right? And so for us, all we know is that we’re growing 10-20 percent a month. What we’ve seen from our customers is that they do care a lot about seeing the entire cash flow view and the ability to see both their payables and their receivables, have it all on one calendar, they’re asking us for more features around that, and that tells me that they do care about it. What we also see is that people are stretching out their bills a little bit, right, you would expect that in this market, and they need tools that allow them to make the decision, what’s my contract say, how late can I go on this without having the service interrupted. So those are all things the customers are telling us, and we think that’s contributing to the growth rate. I do think in general, everybody’s had a reset on saving, right, we talked about that in the economy. It’s also a reset on how you manage your cash. I think this has been good for our business.
WEBSTER: That’s great. You mentioned that your tagline is chase your dreams, not paper, do I have that right?
LACERTE: You do, yup.
WEBSTER: So in closing, what is the one thing that you want people to know about the Bill.com suite of services that you could put in sort of an elevator pitch sound byte?
LACERTE: I think the one thing is, if you’re used to doing a check run at your desk and being tied to your desk with all this paper, give it up and go chase your dreams, stick with Bill.com, try it out, it’s really easy, and you can get rid of all that paper and you won’t be tied to your desk. So go watch your kids play soccer and enjoy life.
WEBSTER: That certainly is a very persuasive sales pitch. Rene, thank you very much for your time this afternoon.
Executive Bio
René Lacerte, CEO and Founder of Bill.com
René founded Bill.com in April 2006, bringing with him more than 18 years experience in the finance, software and payments industries. Built from a legacy of four generations of entrepreneurs, René developed the concept for Bill.com based on personal experience growing new businesses. He realized the tremendous need to simplify and automate the way businesses manage bills, invoices, payments, contracts and other important financial documents; and the challenge of not having control and intelligence into daily spending and cash flow. Bill.com solves these issues and also puts all valuable financial documents in one place for secure access anywhere/anytime.
Prior to Bill.com, René co-founded America’s #1 online payroll service PayCycle, which employed over 100 people and served over 85,000 customers prior to being acquired by Intuit in July 2009. PayCycle has received multiple 5-star awards from PC Magazine and numerous accountant trade publications. Both at PayCycle and Intuit, René led the development of industry leading customer service organizations that provide an unparalleled customer experience.
René spent five years at Intuit, creating and managing the company’s bill presentment team and growing its bill payment and credit card businesses 30% in one year. As the Group Product Manager for Intuit´s Employer Services Group, he was responsible for developing the strategy and then launching Intuit’s connected payroll product in less than one year.
René received a Masters of Science degree in Industrial Engineering and Bachelors of Arts in Quantitative Economics from Stanford University.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More