‘Let’s evaluate what a company spends and we’ll help it spend less’: Ramp’s Eric Glyman

I'm Eric Glyman and I'm the co-founder and CEO of Ramp. Ramp is the first corporate card designed to actually help businesses spend less. Companies can sign up in under five minutes at ramp.com and get a card that automates your accounting. We offer 1.5% cash back through our software that identifies ways that companies are overspending like duplicate software, when you're being charged more than other companies. We also save the average company an additional $100,000 per year on top of it.

Do you think that that perspective of siding on the spend management side, of reducing spend and not tacitly increasing spend, do you think that differentiates you from some of the other players in the market?

I believe so. It sounds like a simple, obvious thing. Some of the largest companies in the space historically had really brilliant people thinking about how can I design points and rewards programs to incentivize people to spend more money and earn more points. And that might make sense for a consumer context. But most business owners I know want to be more profitable and spend less.

We're happy to say that we're the fastest growing corporate card in America over the course of 2020. Revenues grew by over 6,000%. And we haven't slowed down. And so we think that there's real demand for a different way to approach business spending.

But you're still monetizing interchange fee, right?

That's right. The way that we think about it is, as a new company and a disruptor in the space, when we started, we had no revenue at all. We focused on evaluating what a company is spending and said, we're going to help you spend less. That's a big part of what earns us the right to earn revenue in the first place. And so we really do have a true incentive to show companies ways to spend less, because you know, that gives us a piece of the pie to begin with.

You're fresh off of a big fundraising round. Can you give us the details of that? I know Stripe participated.

Just about a month ago, we announced $115 million in new funding, led by D1 Capital, as well as Stripe, and a few others, Goldman Sachs, Founders Fund, Coatue, Thrive, Redpoint, and a number of others. We were able to raise it at a $1.6 billion valuation on the business. We're certainly excited about it -- mostly to to be the fastest growing startup in valuation terms in New York City's history.

What's the investment thesis in Ramp for these firms?

For many investors, just the size of this market is fascinating. There's about $1.3 trillion per year spent in the US on corporate and small business cards. Historically, that's been dominated by just a few traditional players. Amex folks estimate that they have something like 40% - 45% of the market. Chase and my old employer, Capital One, are significant, and it falls off from there. And I think that there's a lot of excitement given that this market has historically been quite profitable. It's suddenly starting to see new players with very different and innovative approaches.

I think beyond that, many folks see this is not just a great way to deliver a product, but actually as an entry point into the CFO suite. Two thirds of our company's headcount are engineers, folks in product design, data science. And typically, competitive companies are fairly sales and marketing lead. And there's even a thesis that if Ramp can grow at this rate and start having cards and accounting software deployed, maybe offer other forms of B2B payments -- this could be a very interesting way to build a true software business that connects deeply to companies and helps them improve their efficiency. Could that be a business like Shopify? Could that you be a truly large scale software business? I think it is.

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What about competitors that take an industry-centric approach to spend management?

It's a really great question. It's interesting == I actually think that some of our competitors who are a little bit more marketing and sales driven verticalized much faster. And I think that it's a great sales pitch. But in reality, businesses, in terms of credit card spend, are a lot more similar than they are different. I think it gives you some advantage in affinity and selling through -- you can market certain points and rewards programs that way.

We were very surprised: today, one of our largest customers is a farm. They sell potatoes, and they make potatoes in 20 states, sell them around the world. That was definitely not the kind of customer that we were expecting to come in. What I'd say is that all businesses really struggle. The complexity comes in all the challenges that happen: are you giving out cards for travel and entertainment? Is it for procurement and purchasing? How do you handle receipts? Today, they're split over different systems that the IRS requires you hold on to receipts for anything above $75. Great, you've done that. How do you audit, spend and make sure things don't get out of control? How do you get things into your books and records and improve performance?

I think that the vertical perspective helps you sell to it to a customer. But we think that the horizontal approach of really solving how do you solve it end to end? is the way to go. It leads to outcomes like saving the average company about five days per month on their monthly closing experience. People say, I didn't expect how useful it would be.

Who is your marginal client? Who are you displacing on the card side?

I think this is reflective of where the market historically has been. The most common is American Express -- typically about a third of the time, a customer has an Amex in place that's getting moved. And we see others too. There's Chase and Capital One. There's also some of the new age folks like Brex or Divvy or something like that, where as companies scale, they're looking for a more robust tool.

I think the other unintuitive things that we displace is actually Concur or Expensify. Since Ramp launched reimbursements functionality, back in December, already 90% of our customers have actually gotten rid of their Concur or Expensify. So it's not just a card, but often it's some of the middle expense software, as well, that's getting replaced.

Can you talk about that relationship between reimbursement and displacing some of the the expense software?

A customer experience we heard really often, when you talk to a finance team, and if you really dig in one of the worst parts of the job, it's the end of the month and no one has done their expense reports. They haven't turned in receipts. And for about a week it turns into chasing people down and asking people to get stuff and it's important because you really need this data to close the books properly and not have to reopen the books.

When we started to dig into why, a lot of it came from a faulty integration between card issuers and expense management platforms. Put differently, if you have an Amex card and you have an Expensify or a Concur, your transactions are auto synced once a day, usually around three, four in the morning between Amex and Expensify.

The problem is, if you're at, let's say, a dinner with a client, and you want to upload a receipt right then and there, you open up your Expensify or Concur app, and the transaction isn't there. So you can either manually enter all the data, later delete, and the other transaction gets synced. Or you can say, you know what, I'll put the receipt in my wallet and wait till the end of the month. And so it creates all these really bad habits. The difference with Ramp is because we're actually in the authorization layer and Ramp approves or denies the charge at the point of sale, we can text the cardholder the second transaction occurs to auto forward and match the receipt.

And that subtle difference leads to a massively better experience for users and much higher throughput and uptake of actually turning receipts in on time.

How has the product matured since you started?

It's come a really long way. When we started, it truly was some of the most basic simple cards with some light level of controls, underwriting, stable support and some cash back, which I'd argue is where most of the industry has been. Over time, we started to really layer on more and more advanced functionalities. The value added software came first with spending insights. Because we're getting data from the merchants, we can cluster information about merchants. We can see when there's duplicative software spend. So we'll tell people, hey, it's strange that you're paying for three sets of project management software across your organization. Vendor management, we surface up when the next subscription is going to hit, how the pricing actually compares and surface that. Maybe you can save money from switching from a monthly to an annual subscription.

Today, Ramp card holders can say they want their card to expire next week or only work at one specific merchant. We have Slack integrations, accounting automation, even reimbursements and all that. The way we've been thinking about it is, how can we take everything that is time intensive, or has a lack of control or lack of visibility, and build more features to really streamline the job. How do we help them save more of their time?

We have things in the future that are interesting to us. Most spend, at least by dollar, comes through on ACH, on wire and other forms of payments. We're starting to look more broadly as well how we can continue to not just help on the software side, but if you can touch more forms of payments, and integrate a lot of the automations, in insights on top of that new form of payment, you can continue to deepen your value prop.

Can you talk more about Ramp's insight layer?

There's often a principal-agent problem. The folks that are closing the books and that are tasked with being in charge of the budget aren't always the people who were making the spending decisions. Imagine if you and 30 cousins are asked to share a credit card or 30 different credit cards. At the beginning, maybe you coordinate, figure things out, but you know, flash forward in time, suddenly, you probably have five, six subscriptions to Netflix. Lots of things like that can start to break down and companies kind of look and behave like that, especially as they grow in size.

So it ranges from the very simple, hey, you're paying for all these different Netflix licenses in the company context. It could be everyone has these different LinkedIn subscriptions, everyone is double paying for sets of software -- you actually only need one or you can save by bulk negotiating. We surface things up, like these sets of software. If you switch a card to Ramp, you can get an additional 1.5% cashback.

Next, there can be elements around pricing data that we're seeing and surfacing that up. Eventually we think it will be possible to go and even automatically, whether it's negotiate or just bring intelligent automations. That was my background. Prior to starting Ramp, I'd started a company called Paribus -- it's now known as Capital One Shopping. We helped consumers save automatically on their purchases after they bought things through price drop guarantees, through price protection policies, and all that. I believe there will be similar opportunities, both in what companies are buying in upcoming renewals of software, as well even in travel one day, to go and facilitate that for businesses. And so we're in the very early days of helping companies get more for every dollar.

How sticky are card solutions like yours?

Part of what's driving Ramp's rapid growth is just natural revenue expansion. You know, where people use it, companies grow naturally. We also see companies switching things from bill payments to cards specifically, just for the insights in that value. I think in the consumer world, one of the most popular apps that people are used to is the driving app Waze. I think Waze is a really fascinating app, in that if it was just a map app, it only be so interesting. The real value comes in knowing, wait a minute, there was a crash on this freeway, maybe take the other one, or switch the route -- that'll get you there faster based on real time information.

I believe that the more companies that you have, and if you can start to give these insights and see what great performance looks like, understand what pricing can be, you can actually create more value back into the network. And so I do think over time, that these products historically haven't been built like this. They generally have been let's distribute a card, we're gonna give you a points program or cashback, but really not thinking in this way that modern software companies do. I think that kind of approach is going to come to this industry and should.

How are you reaching your prospects and your customers?

It's very funny. We had very interesting and unusual launch timing -- we launched in February of 2020. And so suddenly, within a month, it was like, wait a minute, you could see adverse selection. It probably wasn't right to go buy a bunch of billboards, do a lot of things that companies traditionally do and so, we actually grew very quietly. What really powered our growth was building a great product. We quickly became the highest rated spend management software online and that generated a lot of word of mouth. So even today, about 40% of Ramp's growth month in month out is related to people talking about it, sharing it, referring or even bringing it to other companies .

The next biggest channel is when we reach out to companies directly -- to finance teams -- and say we'd love to understand your process and how we can streamline things. And then from there, there's a little bit in partnerships with partners, a number of accounting firms. We do a little bit in advertising, but if I'm going to be really candid, I wish we were better at marketing. I think that the strength of the organization is really good on products. But it's a major area of focus for us in the coming year.

Many successful tech firms start with a product focused approach, and then, as they mature and hit that first leg of customer base, they move into marketing and branding and stuff like that. So is that something you think would be the natural evolution of the company?

I do, yeah. I think that most people in the country have never heard of us. I think that's one of the biggest things that we'll need to think about -- how we overcome that and grow, because we do think the product when people use it, it is just so much better. And so it's something really real for us to figure out.

What are your biggest priorities going forward?

The biggest area is still that we think that there's so much more we can do to actually help companies save more money and save more time. So there's a lot of software development going into that side, particularly as we handle some more complex workflows, approval, approval policies, expense policies, deeply embedding all that. We're looking very closely at bringing some of the intelligence to other forms of payments. So not just card but evaluating what it means for bill payments.

I think that last leg that you touched on -- the more broad awareness driven by great marketing. We think that the product speaks for itself, but we have a lot to do to really build that engine out. So should be a really fun year.