Paying providers accurately, on time, in compliance, and through their preferred method is all part of treating sharing and gig economy providers fairly. And that’s exactly what Tipalti does for sharing economy platforms when it comes to paying providers — like home sharing hosts, ridesharing drivers, and task rabbits. Tipalti is a Hebrew word that means,“I took care of it.” It turns out that paying providers is trickier than you’d expect because there are different currencies, payment methods, regulations, taxes, and other complexities depending on where the service is rendered or good is sold. This challenge is also a big opportunity. Shareable caught up with Tipalti’s CEO Chen Amit about how they’re meeting the challenge, their rapid development as a company, their role in the sharing economy, and what’s next for them.
Courtney Pankrat: I see that Tipalti made Inc.’s 5,000 fastest growing companies list last year by growing 50%. Congratulations! To what do you credit your rapid development?
Chen Amit: When we started Tipalti, the truth is we weren’t sure how big a business it could be. Our scope was fairly narrow. We were primarily focused on the ad tech sector. Once we added our first crowd / sharing marketplace as a customer, it coincided with the overall growth of the entire “Uber for x” space. More businesses were beginning to adopt multi-sided, sharing economy models and needed a way to pay their partners. In addition to fortifying our platform to also support more traditional, invoice-based payables processes, we knew it was time to leverage what we learned from our core verticals to the entire global payables operation for every company. Focus and growing in areas we knew we could succeed in have been the mainstays to our approach and it’s paid off.
What led you to start Tipalti?
I am an entrepreneur and always have been. After I sold another company, I took some time off and after a few months got the itch to go back into creating something. I reached out to a friend (Oren Zeev – one of the best investors in the world) and asked him that if he comes across something interesting, he should let me know. One of Oren’s portfolio companies was having challenges around payments, and Oren introduced me to that company and to the challenge.
I knew nothing about payments or about those business processes, but the challenge was intriguing, and I decided to try and find a solution. The rest is Tipalti as we know it.
Payments seem like a growing market that would attract competition. Who are your main competitors?
Our main competition is against the status quo of manual effort. Businesses assume that they need to hire people to pay their thousands of partners. A technology solution seemed a luxury, especially if they were just starting out. But when there is a competitive situation, we’re usually in the running because of how much of the partner experience we take over including onboarding, tax compliance, obviously payments, early payments, and reconciliation. Individually, these are not hardships, but when taken as a whole, it’s work no one wants to do.
How would you describe your customer base?
It’s a big mix. I’m not even sure these companies consider themselves “sharing economy” or just online marketplace business models. We have several customers involved in property sharing, business services (marketing on-demand, design on-demand, video or photography on-demand, translation), personal services (same-day delivery, vacationing, travel and tourism), and online resell markets. The one thing they have in common is they’re looking for a seamless partner experience that makes payment complexities a non-issue.
Tell us about a customer you partnered with. What were their operations like before Tipalti, how were they different after Tipalti, and what were the benefits of the change to your partner?
We work with a company called Swing Education who provide on-demand substitute teachers to schools. Their challenge was growth — going from 500 substitute teachers to 3,500. Early on, it was the CEO writing checks every week to each teacher. That’s unsustainable. Your senior leadership is spending their time on something that doesn’t move the business forward. And when their new Head of Finance Melanie Reeves joined, she didn’t want to be burdened by that either. She was excited to be working on more innovative parts of the operation and strategic areas of finance. Through Tipalti, fully integrated with their website and processes, they’ve been able to make single approval and payment runs weekly to 2,000 teachers. They estimate it takes just 5 minutes to complete the process. But beyond time back and a more interesting job to come to work to, the ability to scale was everything. Being able to handle seven times the number of teachers means you can sustain yourself. Your end customer isn’t going to have to worry: “Do they have a provider in our area with our needs?” Imagine you’re the principal and can’t find a substitute, because no one is available. That’s a class that then has to be split into other classes disrupting the entire school day and putting the load on your other teachers. And, it’s all because you didn’t have the platform to handle a larger population.
How does Tipalti accommodate different business models in your diverse mix of customers?
At the end of the day, our core competency is in ensuring the payment to a party lands as expected. Virtually the rest of the experience: communicating with partners, enabling a high level of self-service, enhancing compliance and controls, and simplifying accounting processes require the same amount of attention to detail. If anything, what we’ve been enabling in the sharing economy has also informed the traditional business models that in the past were stuck without an automated digital communication path with their vendors and suppliers.
Why is Tipalti focused on the sharing economy?
Even traditional businesses will not be able to ignore the popularity of crowd-sourced, on-demand services. In the right hands, a sharing economy model is good for everyone, even in the emerging world. We also get a thrill when one of our customers, who we were working with early on, sometimes pre-launch, becomes a recognizable brand.
Why are sharing economy companies attracted to Tipalti?
Sharing economy businesses generally run lean. It’s practically in their nature to optimize and automate every step. It’s also the best way for them to scale and grow. As such, it should go against their DNA to hire someone to do the job of paying hundreds or thousands of partners every month or every week — especially cross-border, international partners — when an automated solution is just there, ready to be deployed. Older sharing economy companies may be stuck with legacy custom bank integrations they’ve built themselves, but those who haven’t should be considering a proven system before trying to build one.
What are the biggest challenges you’re currently facing?
For as well known as we are in certain segments, Tipalti is still unknown. Backend finance and accounting platforms generally aren’t very sexy to talk about. It’s not a major challenge, because everyone agrees it’s necessary and relieves a major pain.
What are Tipalti’s plans for 2019 and beyond?
We’ll continue to add functionality and staff across the board. We’re also making strategic internal choices around our partners and ecosystems. As we’ve grown, we’re getting more attention, including from larger organizations, so there will be more requirements for platform integrations, deeper client enablement programs, and, of course, an unending list of “nice to have” feature requests.
Anything else you’d like to add in closing?
I’m excited that we are part of, and can help sharing economy companies that expand into working with partners in emerging countries. It’s a vital way to elevate people’s stature around the globe. A designer in Vietnam, a developer in Estonia, a photographer in Brazil; they’re the diverse voices and extended human capital that can lift up local economies, while also benefiting the greater economies of the world.
Tipalti is a Shareable sponsor. This interview has been edited for length and clarity.