‘Legacy AP is dead’: Rho’s Everett Cook

In this episode, we're joined by Everett Cook, the CEO and co-founder of Rho, an all-in-one finance platform for businesses. Rho is changing the game by combining accounts payable, expense management, corporate cards, and commercial banking into a single comprehensive platform designed to empower CFOs and finance teams to achieve more in their day.

During our conversation, we dive deep into Rho’s journey, from its inception in 2020 to its remarkable evolution, and how it is redefining the value proposition for businesses of all sizes. Everett discusses Rho’s mission to make finance frictionless for organizations, with a keen focus on helping finance teams save time and streamline their workflows.

Everett also unveils one of Rho’s latest offerings, the One-Click AP tool, powered by AI, and explains how it's poised to impact the way companies handle their accounts payable processes.

Intrigued by Rho’s approach to addressing the needs of middle-market companies, Everett delves into the nuances of their customer-centric model and how they're continually shaping their products based on direct customer feedback. He highlights the importance of using AI to automate finance tasks, providing finance teams with more time to add strategic value to their organizations.

We also touch on the competitive landscape, discussing how Rho is differentiating itself in the market, particularly by emphasizing vertical integration and building products from the ground up.

As we explore the evolving financial technology industry, we gain insights into Rho’s strategy to stay competitive in the rapidly changing landscape, how they’re addressing their customers' most pressing challenges, and their vision for the future.

So, let's dive into this engaging conversation with Rho’s Everett Cook.

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The following excerpts were edited for clarity.

Evolution of Rho’s value proposition

Everett Cook, Rho:  Our vision and our mission has not really changed much at all. But what we've been able to accomplish in that time has, so when we started Rho, our mission was to make finance frictionless for organizations. That is still our mission. And we take that journey every single day. But when we launched, we launched with business checking accounts and business banking. That was the first thing that we felt was broken was, not working as well as it could in the corporate finance ecosystem. 

As we scaled with that, we really understood that companies didn't just want a better place to store their money, they wanted a better way to spend and manage that money and make sure that it actually helps them run their business better. They didn't need another bank account or corporate card or anything like that. They needed better operational software for finance teams. And so as we continue to evolve on that journey, we've been able to unlock more and more of that vision and deliver more value to those companies. And as such, we've been able to kind of just onboard bigger and more meaningful companies, as well as small ones.

Target customers

We think about our companies today more in terms of headcount: 100 to a couple hundred people in headcount. We have teams that focus on smaller companies and teams that focus on bigger ones, but that's really our sweet spot. That's where we think we can deliver the most value, because those organizations have finance teams that are perpetually stretched too thin. They're doing too much: there may be a CFO and a controller, or maybe a five person finance team, for an organization of a couple hundred people. 

They recognise that any sort of improvement in their workflow improvement in their day in terms of efficiency goes a really long way. And so we're able to deliver that with Rho by combining all these separate solutions. They probably already have products like accounts payable, they may use products like Bill.com and Expensify, or they may use a product like Concur business banking, a product like Chase or a corporate card from American Express – into one platform that reconciles almost instantaneously, allowing them to get more hours in their day where they can actually focus on delivering value to their employees, to their shareholders, to the company.

Over the past years, we've spoken to countless hundreds of CFOs and finance teams, and have really understood their needs, and we tried to build a highly customer centric organization. We're constantly talking to our customers, we're building based on their feedback, and then we're iterating on top of that. 

New AP tool

We're really excited about One-Click AP, the first AI-powered product that we've launched, at least customer facing. We've been using AI behind the scenes for a number of years. The product basically reduces one of the most painful, slowest, most-clicks workflows into a really fast, efficient, and powerful experience for finance teams that takes the mundane activity of entry, grabbing bills, coding them, figuring out payment instructions, managing approvals, and ultimately paying. If you count all the steps, it takes a very long time to have an AI-enabled experience that allows companies to basically do that in one click.

The invoice goes into your OCR system, scans or there's an inbox. And that's great, but it's also something that a lot of the market does. But what makes it really different is that we're using AI to basically infer what to do with that invoice, helping finance teams and accounting teams to process really quickly, efficiently, and carefully. That's the other thing: even though it's one click, there's a lot of safety and controls built into the product. That way they can catch errors or redundancies – stuff like that. So overall, we're super excited about that. We believe legacy AP is dead. We believe companies that are using point solutions for AP shouldt switch to an all in one solution. We believe ours is the best.

Value proposition and competitiveness start with customers

First of all, we are always just customer centric – we're building what our customers are expressing is causing them the most pain in their daily workflows. We may have overlapping customers, that organizations may be hearing similar things. I think next generation software products that are really powered by finance are the future, and I believe every organization will ultimately end up adopting one of these products. We don't really view it as competition – if you add all of us up, I think it's 1% of the market or something like that.

In terms of differentiation, we predominantly focused on serving middle market companies. And I think that that's probably your differentiation in terms of which customers we are actually talking to that's informing our product, as opposed to tech companies or large enterprises. But overall, we are customer obsessed, and we try to execute extremely well.

Building new products

We really believe a lot in building products. We pick our battles very carefully and what we're going to build. We try to focus around the things that drive the most leverage to the CFO, to finance teams’ workflow. What are the things that are taking the most hours of their day that can be automated, and that's how we think about the hierarchy of what it is we build. In terms of partnering or integrating, we haven't really done substantially any integrations like that. We do leverage partners – Plaid to connect to banks and things like that. They're common infrastructure, but in terms of our core product propositions, we believe it's really tough to differentiate if you are simply just taking someone else's products and integrating them. So we really believe in building from the ground up, owning the experience, because then we can own it all the way down. 

For instance, in our bill pay product, one of the reasons why it's so powerful is because it's built on top of the Rho checking account. That means when you click pay on the Rho one-click AP product, that vendor gets paid immediately or that wire goes out today, if we're integrating someone else's product. We've end up moving from point A to point B to point C – it could take up to five days. And that's what we see: it's a huge pain point that customers have. So by building all the way down, basically to the metal, we're able to deliver a much more robust, more scalable, and better experience for our customers. We built our own bank for that reason – that's another thing that powers all the innovation, all the speed, that we're able to deliver our product because the core foundational infrastructure is ours – its proprietary IP. That's been part of our secret.

The macro impact on businesses

It's been a really fascinating macroeconomic environment. I was a former macro trader, so this is something I always cared about and thought a lot about. I think it's very mixed. Some companies have more demand than they can keep up with and some are really struggling. I think everybody is being more thoughtful about the way that they're spending money and everybody cares about saving money, I think those are universal things across the country. And we certainly see that with our customers – we think one of the reasons why so many companies are coming to us today to automate their AP solution, as well as their finance stack, is because finance teams are under pressure to save money for their organization. And so they can, and the best way they can do that, the easiest way they can do that is by saving money on their own spending. That's one place where we see a lot of benefit to Rho, as well as just driving more visibility about spending across the organization. 

We think that is on the up and up in terms in terms of demand. I think in terms of solving the problem, that's where we're really excited about what we can do with AI. We launched one click AP, basically using AI to infer what to do with an invoice, not just scanning it as, like in an OCR solution. Our expectation is to continue to build AI into all of our products. That way, we can not just make it easier for companies to do the task, but really assist them in actually doing it. That way operational finance functions of the finance team can be almost fully automated, and all that time can go back to actually adding value to the organization. We're not trying to take people's jobs, but we want them to use their time super productively, so that they can actually make an even bigger impact as CFOs and finance teams.

The opportunity left by SVB

What happened with SVB was very sad and a loss for the entire ecosystem. I think in terms of competition, we are still a minnow in the overall pond, if you think about in terms of the sort of organizations like us, versus broader banking infrastructure. We were able to partner with great banks to manage the asset liability side and the back end. We partner with Webster Bank and banking services are powered by Webster Bank on our platform. 

We believe that the story hasn't really changed very much: an increasing percentage of financial services will be basically driven by software, and companies that are really good at shipping software built for finance teams are who is going to in that watershed,

Winning business

We think we're mostly winning business from legacy AP providers actually. Some of that is coming over in the form of a payment plan and stuff like that – we always think about ourselves as a software company. But our monetization model is people don't pay for SaaS, they pay us with transactional volume and that can be hard volume, or that could be flow. We think that's win-win, by the way. Finance teams are tired of spending six digits on SaaS products that are supposed to help them save money.

We always felt like it was silly to spend $20,000 to $30,000 on a product that's supposed to save you money, and then use someone else's card to do that. So, by combining them, it's really powerful. But we really view ourselves as software first. That's the big distinction.

Rho and 2024

We're really excited to continue to put our products into market and help transform hundreds of thousands of organizations across this country, small to large enterprises. Our largest customer today is actually a company doing almost $2 billion in revenue. So we're incredibly excited to be able to power organizations and finance teams. We have a number of really exciting releases coming out over the next couple of weeks, too. They're really cool. I’m really excited to get those out there. We've been pretty heads down over the past 12 to 18 months focused on really building amazing products. That's probably why you haven't heard from us as much. But right now, it's shipping time.