Ramp
Fintech Finds: Ramp
Company Snapshot
Founded: 2019
Employees: 220
Funding: $610M
Valuation: $3.9B
Locations: New York
Company Overview
Ramp is a finance automation company designed to help customers spend less through corporate card savings, spend management, and much more.
So why should you care?
Ramp’s goal is to help customers build better businesses through financial automation and savings. This is antithetical to corporate card behemoths like American Express, and high flying startups like Brex who have historically acquired customers through attractive spending bonuses like 7x on ridesharing, 3x on dining, and 2x on recurring software purchase - all incentivizing customers to spend more money. Instead, Ramp is creating a product that the CFO-suite loves, building a 5-in-1 platform to automate savings.
With savings as a moat, Ramp has made it challenging for the corporate card competitors to compete without upending their value proposition to their customers.
The best part? It’s working. Here are some stats originally published by TechCrunch from August 2021:
Number of cardholders on its platform increased by 5x with more than [3,000] businesses using Ramp
Transaction volume [and revenue] for corporate cards tripled since April 2021
Ramp helps companies close their books 5x faster, and saves finance teams an average of 5.4 days per month
Market Opportunity
Accenture estimates that overall spending on business credit cards in the U.S. will grow at ~12% CAGR, climbing to $1.1 trillion in 2024 from $625 billion in 2019. Any market that starts with a T is going to be competitive with a lot of players vying for a piece of the pie. Incumbent corporate card providers like Amex and Chase are thwarting off challengers like Ramp, Brex, and TripActions, all while (legacy) expense management solutions like SAP Concur, BIll.com, and Expensify lurk in the background.
Ramp is building a financial automation platform with corporate cards as a wedge into more lucrative software sales. The company’s 5-in-1 expense management platform is likely an early iteration of what they hope will become the operating system for the CFO-suite. Remember, the dynamics of the market and each solution provider's value proposition can dictate winners and losers of the market - Ramp is the only vendor helping companies save money.
Why I like the company
Ramp is a tale of talent + unique product = market opportunity. The company is led by seasoned founders, Eric Glyman and Karim Atiyeh who previously sold their consumer credit card savings startup, Paribus to Capital One. Applying similar principles to corporate savings, they have compiled an “absurdly talented team”. Here’s Packy McCormick’s breakdown of the team from April 2021:
“The team today, at 85 employees, is absurdly talented. One-third of the team are former founders, and at least five people on the team graduated with perfect GPAs from MIT, Stanford, Harvard, and other top schools. The team also includes a few dropouts. Overall, the team skews heavily towards engineering and design. That, plus conversation with angels and customers, has allowed them to ship at an unbelievable cadence.”
The talented team is building a consensus defying product that is gaining a lot of traction (3,000 customers to be exact). Ramp’s wedge into becoming a financial automation platform is not just attractive, but really smart (duh), especially in a market where vendors are all drinking the same Kool-Aid. With enterprise software and automation specifically having high such switching costs and long sales cycles (think about how hard it is to sell ~digital transformation~ into the enterprise), Ramp is paving its own way toward becoming the operating system of the CFO-suite through an offline-to-online product wedge, corporate cards.
Ramp’s Hiring Corner
Other companies like Ramp to check out:
Software Spotlight: Retool
Company Snapshot:
Founded: 2017
Employees: 150
Funding: $96M
Valuation: $1.8B
Locations: San Francisco, New York
Company Overview
Retool is a fast way of building custom internal business applications for a variety of audiences. The company's platform lets engineers quickly build internal applications in a drag and drop interface, which is faster than writing code from scratch. As a result, businesses can build the internal software they need, without being constrained on engineering resources.
So why should you care?
Software might be eating the world, but companies still need to build internal tools to facilitate their day to day operations. If wielded by the right samurai, Microsoft Excel and other out-of-the-box software tools can create powerful business applications. However, these tools only take companies so far. Still, at every company, teams of engineers build internal applications just to make the business run properly. Whether that be creating a dashboard for customer experience teams to track orders and shipments, or display real-time user and revenue data for finance, these projects take time, money, and resources away from engineering teams.
The good news is, Retool’s value proposition works, just ask Coinbase, NBC, Peloton, Doordash, and Volvo, all Retool customers.
Market Opportunity
Recently, it feels like Buzzwords have been all the rage. Things like NFTs, DAOs, the Metaverse (we’ll get to those later), and much more have become commonplace. However, two trends to keep an eye on are No Code and Low Code software. No Code software refers to drag and drop tools that allow non-technical users to create applications. Unlike No Code software, Low Code platforms still require coding skills but accelerates software development by letting developers work with pre-written code components. Retool falls under Low Code as its developer focused.
From a top down perspective, Gartner forecasts that low-code application platforms will account for 65% of all app development by 2024. Another study reports that 85% of Fortune 500 engineering leads think that low-code will be commonplace within their organizations as soon as 2021. If the current trend holds, the market for low-code and no-code could climb from between $13.3 billion and $17.7 billion in 2021 to between $58.8 billion and $125.4 billion in 2027.
Why I like the company
The structural dynamics of a market and its relationship to its end users create the winners of a market. Some markets expand the total addressable market by increasing the number of users (e.g., Robinhood offering commission free trades) while others penetrate existing markets (e.g., Casper providing a better mattress to sleep on). Retool is doing both through it’s developer focused low-code platform. Whether it be “from scratch” or through automation tools like Retool, I believe the most powerful applications will continue to be built by the developer community.
Similarly, B2B software is the most lucrative form of technology (think high gross margins, large average contract values, sticky products, high switching costs, etc.). From a go-to-market perspective, Retool’s strategy is strong - targeting customers of all sizes from enterprise to SMBs, allowing them to build industry specific tooling. Piggybacking on the product-led growth strategies of other SaaS companies like Datadog, Twilio, and more, I think we will see positive feedback loops that allow for virality throughout a customer organization (e.g., when one engineer tells another engineer to use Retool because it’s so great). Additionally, there could be a Channel Partner play here where large consulting firms and global systems integrators sell Retool and managed services on behalf of the company. If the company wanted to build a comprehensive no/low code platform and make the foray into the citizen developer community, it would likely be easier to acquire a B2C no-code platform than vice versa (even though they’re unlikely to do that).Lastly, and most obviously, building internal tools is still a big problem. Companies pay engineers a lot of money (just ask Apple and their $180,000 sign on bonus’) to make customer facing products. The realized efficiency gains from shortening time to value for internal tools will allow companies to ship customer facing code easier.
P.S. It sounds like Retool CEO, David Hsu is building an awesome organization for employees. Check this out: Raising less money at lower valuations. Oh, and they are cash flow positive with revenue in “mid eight figures”.
Retool’s Hiring Corner
Other companies like Retool to check out:
Airtable, Bubble, Unqork, Webflow, KgBase, Parabola, Zapier, Mendix
VC Jobs
Point72 Ventures - Associate, Growth Investments
Renegade Partners - Associate
Costanoa Ventures - Associate
Chicago Ventures - Analyst
Interplay Ventures - Associate
Two Sigma Ventures - Associate
What I cooked in the kitchen this week
Half Baked Harvest’s Creamy French Onion and Mushroom Soup no pics :(