‘It’s new branding to what is a very classic industry’: Ramp’s Eric Glyman on B2B BNPL, and how their new offering is different

I spoke with Eric Glyman, co-founder and CEO of Ramp, on how the company gained a footing in the financial services industry, why they built Flex and Bill Pay, and where he sees B2B BNPL going – now that they have made their way into the space.

Being a fairly new company, how has Ramp managed to double its revenue growth and valuation this year – against the current market tide?

Eric Glyman: A lot of it comes from really first asking, like, what are business owners in finance teams looking for? I think as much as companies during good times are looking to be efficient and profitable, it's equally important to make every dollar count – it's much tougher to fundraise. And even though labor markets are tight, inflation is high and all that, being able to really know that no dollar is going to waste counts. So what really differentiates Ramp is our unique focus on helping companies spend less. Being able to cut expenses by three-and-a-half percent per year is much greater, even mathematically and certainly emotionally, than was possible through simple credit card points and cashback programs. Saving money in time can help accelerate interest in adoption among customers.

What’s the biggest revenue driver for Ramp, and how do you keep it viable amidst this macroeconomic climate?

Eric Glyman: The biggest revenue driver is and remains interchange – the fees that come through when folks swipe their credit cards. In terms of keeping that going, it comes back to a product that customers want to use more, and if it makes sense to them to put more of their spending with Ramp. When that happens, effectively, there's more volume that goes through, which drives more revenue to Ramp. So the strategy is the same as it always has been: that it should make sense for businesses to consolidate onto Ramp – because good times or bad businesses still have material requirements. Even the other products – reimbursements, bill payments, automated accounting, and a lot of the software – all contribute to one value back to the customer, but also to an interest in using more and more Ramp products like the card.

In view of Ramp’s new Flex offering for enterprise customers, do you think B2B BNPL is a safe bet given it’s still in its early innings?

Eric Glyman: That's a super good question. I think there are two sides to this. First, fundamentally, we're using the same risk model to support the same customers in new ways – that’s because businesses spend as much as on cards, usually multiples more on bill payments, whether it's paying invoices, suppliers, or maybe folks who don't take cards. Considering an example of TV, let's say that the risk team determines Ramp is able to support and underwrite a customer with a $100,000 limit per month – if that customer can only use 25,000 on the card, she might now be able to access the remaining 70 or 80,000 on Flex. This allows her to use the same limit, not a net new and not just on the card but on bill payments. And so it's not really taking an incremental risk from a business underwriting standpoint, it's using things that we already know, and allowing credit to be used in a new way. It’s about convenience and access versus new risks. I think that the other side of the question you're asking is what about this B2B BNPL industry as a whole. What I'd argue is it's really a simple product, which is, if you want to access and pay an invoice for a fee, that's it – it's very distinct from a different category of BNPL, in which you can hit a button, and there's underwriting – it's a new relationship on a site, which carries a lot more risks. I'm happy to go deeper into each but we think Ramp’s deep relationship with customers and our ongoing continuous underwriting is sensible in some products. We've been blown away by both the interest and the reception already ever since the company's recent launch of Flex.

Why is B2B BNPL more vital today than ever before, and why would businesses opt for this model?

Eric Glyman: I think it comes down to the underwriting that makes this possible in the relationship with folks. With customers, our use is very different than Klarna, where you have a consumer and you don't really fundamentally have access to a balance sheet. When customers sign up for Ramp, there's a depth of underwriting that's shared in both ways – to ensure a bank account, maybe accounting information, invoices, credit history, and all that, which allows us at points in time to underwrite if it is worthwhile if a company can take on credit for an invoice, or it doesn't make sense. When you compare that to the norm, which for most companies is a bank loan, it is a very time-intensive process, in which they're often turning in three statements, or multiple financial statements, income cash lists, debt documents, credit indentures – so there's lots of back and forth. What makes the Flex experience extraordinary now is Ramp is able to do that at all points in time in the background. And so when a customer uploads an invoice, he can simply see, okay, do you want to hit a button and have financing or not, which is so different and powerful compared to what normally is a multi-week effort where it's not a tightly fitted product and not embedded. In our view, it's about embedding the option within, which is only possible now, given the data and the relationships that companies like Ramp have with customers.

What challenges are involved in implementing this business model, and how do you steer clear of risks?

Eric Glyman: Historically, Ramp has had what we believe to be the industry’s best performance in credit as well as combating fraud. It comes down to heavy and continuous investment in both, keeping customers safe as well as being prudent with investments, and I think that starts with talent. There are a number of people who bring an incredible approach, whether it's folks like Srinath Srinivasan, who was the former head of credit risk at Marcus and brought the Apple Card, which, in many ways, was a zero to 1 million customer launch. We both worked for Capital One, which is extraordinary at assessing risks – to now a great team on progress, and looking at protecting unauthorized access, fraudulent transactions, and making sure that our customers are not the subject of attack. Many folks are limited on offering and also do a lot less in terms of employing tools that help detect and combat that, but we invest heavily there.

Do you think B2B BNPL has the potential to be the next big thing in the industry?

Eric Glyman: I think that the potential of helping and supporting customers with the precise amount of access to funding if they need it, is a tried and true model, which is the classic finance industry. To some extent, I think all finance is the ability to access finance now and pay off the financing later. I wouldn't consider what we're doing truly BNPL, but in many ways, it's new branding to what is a very classic industry, delivered in new ways possible through software innovation. I am very bullish on using software. In more convenient forms of finance, Ramp Flex is one product that's always a win and always has a place, if customers can operate their business more nimbly.

What’s on the cards for Ramp?

Eric Glyman: Today we support hundreds and thousands of employees all around the US and globally. Coming out of the pandemic, companies are remote, hybrid, and urban more than before, so support for increasingly complex, large, and multinational-oriented companies is something that we're thinking about a lot. In addition to this, international payments of all types are certainly something you can expect from us, while staying true to the mission of helping companies spend less. We think that there's a lot of price discrimination, and companies are getting charged more than others in most cases. So we continue trying to empower customers with tools to show them where they can monitor their spending, how they can better automate their bookkeeping, and keep more on their bottom line.