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Disruption in Spend Management with Oded Zehavi of Mesh Payments

With nearly 30 years of experience working in payments and Fintech, Oded Zehavi, CEO and CoFounder of Mesh Payments joins us in this episode to talk about the way the pandemic inspired exciting ways to create disruption in spend management. Through Mesh’s innovative platform companies have total control and visibility into every dollar spent.

Payments & Fintech Insights In This Episode

  • How corporate spend management has changed since the pandemic began.
  • The ways a new approach to spend management can positively impact the bottom line and also improve the employee experience.
  • How the themes of complacency and inertia prevent companies from adapting and growing.
  • The use of data extraction and process automation to create transparency and to save time and money.
  • Addressing change management with the adoption of new platforms.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone, welcome to another episode of PayPod. I’m your host Heather Bodie. And today, we are going to be discussing disruption in spend management. Joining me to help explore this topic is Oded Zehavi, the CEO and co-founder of Mesh Payments. Oded, welcome to the show.

Oded: Hi Heather. Thank you. Happy to be here.

Heather: So to get us started, tell us a little bit about yourself. How did you find your way into fintech? And more specifically, how did you find your way into the spend management side of things.

Oded: So I’ve been in the payment space for almost 30 years now, I in some ways, position myself as a payment plumber. I’ve been working with payment networks for so long, and helping innovate and disrupt payment use cases, mostly around B2B. And I will say one of the milestones of my career was that PayPal selected me to start and manage Middle East and Africa for them, which was one of the first territories that really defined the playbook for PayPal going international. And that was really exciting. And we’ve launched few countries in this region, and we’ve launched few countries in Africa with all the challenges it brings. And for me, payment was always a passion. When COVID started, we had…I founded Mesh four years ago, around a year now before COVID. And we were planning to do something a little bit different. And when COVID started, we found ourselves without customers…with a product that doesn’t fit the new norm that COVID brings. And we decided to take the amazing team I have and the technology we built and look for much bigger problems. And COVID really amplified the need to have sophisticated spend management solutions as companies had become distributed and remote. And the rest is history.

Heather: Wow. Okay, so let’s talk a little bit about Mesh Payments, specifically. I am very excited to talk about any sort of disruption model, but let’s discuss specifically how you’re allowing corporations to move away from using corporate cards, tell us how it works and why it’s so important.

Oded: So, finance teams really don’t like corporate cards. For them corporate cards represent lack of control, lack of visibility, people are going around the world and trying to…can buy things and charge the company, which is maybe one of the worst nightmares of the corporate finance team. And right away before COVID, a lot of the spend management aspects were around travel, what we call T&E, travel and entertainment. And one of the interesting things that when COVID started, that subject has been eliminated overnight. So now corporate teams have found themselves looking for a solution that can help them adopt or pay for the new thing that the company needed in a post-COVID or in a COVID situation. And a lot of the focus have gone to how do you buy SaaS services? How do you pay for a gift for employee that just got quarantined? A lot of use cases that have not been around pre-COVID. And we came with the notion that it’s not about the card as such, it’s about the payments, the finance team really wants to enable employees to pay in a controlled way while having real-time visibility to any payment that has been going out of the company’s budget.

So we started building technology that sits around the card network, and the card networks have been around for so many years and provide the ubiquity that is needed for paying in scale. But from the other end, cards has a form factor and have been designed mostly for B2C, for consumers who are going into shops or malls or eCommerce sites and spend. So the combination of the cards that provide the engine and the software and the technology we are bringing into the table, that’s why corporate finance teams really like the way we allow them to now have full empowerment while have great control and visibility. And that’s an amazing step for them.

Heather: It is. And it seems like an obvious solution. It always surprises me, even whether you’re talking about tiny, tiny businesses, nonprofits or large corporations. They all seem to struggle with the same problems and it often is around aggregating all the different ways that spend happens, whether it is with individual employees, or it’s just the dollars, the cents and dollars sometimes get lost along the way depending on how many systems are in play. And so this feels like a very aggregated singular solution and obvious that someone would adopt it, especially in these uncertain times when CFOs are shifting their focus away from maybe a revenue increase and more toward reduce spend.

So I know companies simultaneously can be reluctant to bring on yet another software management platform, what has been your biggest challenge, or we should say the challenges for the businesses in transitioning into your platform.

Oded: First of all, echoing your comment about the fact that in the last two years, with the amazing growth, especially around technology companies, a lot of the focus of the finance team was about fueling the revenue growth. Not that they don’t care about spend, not that they don’t invest a lot of time and effort around having payments with platform around. But it’s, in the end of the day, what really matters for them was growth and revenue. And if we made a mistake on the cost side, we can raise more money. These have been changed dramatically in the last few months. And now we’ve seen the acceleration of finance teams that are really giving high priority to the need that is driven by their boards, by their management, even sometimes by other teams to have better visibility and control on the way that they spend.

Remember, one fundamental challenge when it comes to finance teams, the biggest challenge or a solution like ours is complacency and inertia. Inertia meaning finance teams have been operating the same way they were operating for so many years, 10, 20, 30 years. And for them to change is not something that they take lightly. And I think the fact that the latest software product has been able to show them that it’s not a huge project that they can onboard themselves very quickly, that they can get value almost immediately, and that they can solve huge real pains for them. That was one of the reason why this space as a whole have been growing and making much more noise, which relates to the second thing, which is complacency.

Historically, people were not really aware that there is an alternative to an Amex card, or there is an alternative to go to their Chase Manhattan banker and ask him for more corporate cards. And in the last few years, few companies that have come around created a lot of positive noise, raised relatively a lot of money that have been used for market education. Today, in specific segments, it’s a finance team, more or less, one of the first thing they will do when they start a company or while they grow, they will look for a spend management solution. I can tell you one of the things that we’re most proud of is that we’ve seen CFOs that go from one company to the other, and one of the first actions they will do when they start a new role is to bring us on board, and let them have it. That’s maybe the strongest sign of success for my team.

Heather: Absolutely it is. That’s so exciting. So you mentioned onboarding, can you give us a little bit more of a window into what that customer journey looks like? If my company decided today to move forward with Mesh Payments? What could I expect? What could my finance team expect?

Oded: So, one of the important things that are different from when you deploy a new accounting system, or when you deploy a new FP&A system is that in the newest technologies, they’ve all been built from the ground up to the notion that you don’t need to solve all your problems at once in order to get value. You can start small, you can start solving pain by pain, and expand as you grow. So in most cases, what we’ll do, we’ll stick with the finance team, we will try to identify what is their biggest pain. Some of them have lost control of the SaaS subscription payments. Some of them don’t like the employees that leaves, and now you know, a lot of companies will reduce their costs, they cannot stop the recurring payments from happening and they need an infrastructure to enable that. Some of them have people who are traveling, and travel has come back, and they need to provide them a way to spend while they’re traveling without the hassle of the reports and all the receipt collection and things that they really, really hate. So we try to identify what is their biggest thing, prioritize that, and start solving them one by one.

Of course, one of the advantages of the technology we’ll bring is the fact that we’ve built integrations to the standard SaaS services like the NetSuites of the world or the Google Workspace of the world, that enable us in a relatively short timeframe to extract data that will make their life easier. And last, and maybe most important to automate their processes. A lot of what we do is to take processes that have been manual by nature, and you will be amazed how many processes are still manual by nature, even where the technology exists. And we provide them full automation that in the end of the day, of course, will save them time and money, but take a finance team from a fully manual stage to automating more and more processes. That’s really one of the things that will excite us.

Heather: Out of curiosity, so my partner works for a pretty large organization. And he finds that at the end of the month, he’s doing kind of what you were mentioning as one of the main pain points, the receipts are laid out everywhere. He’s been typing them in one at a time. When you’re talking about getting the finance team on board or any sort of change management within a company, what does it look like on the individual employee side of things? Is it an app based setup? Like are they actually submitting everything through their phone or desktop, laptop?

Oded: Yes, so we believe that the interaction with the employee, which is very important, remember, our target customers are the finance teams. But at the end of the day, what really will make us successful is the satisfaction of the employees, which is not always the same, there is always sometimes the conflicts between the ambitions of the finance team and the satisfaction of the employees. And we have tried to build a solution that will be able to balance between the two of them, and also enable the finance team to move the needle between more control, less control, more easiness, and sometimes some hassles that are required to make things more controlled.

But to your point, we believe that the best way to interact with the employee is the wherever he likes, meaning we provide multiple channels, it’s an app, it’s a Slack channel, it’s email, it’s a unified inbox that the employee can just throw the receipts and we will with all the technology we have, we’ll scan it, and we’ll match it automatically to the relevant transactions. So we’re not trying to push the employee to a specific channel. We usually go and say, to each one of the employees, this is the…it’s like à la carte, these are the channels we operate in, choose whatever you prefer best.

Heather: Pick one, choose your adventure.

Oded: And you can, by the way, use more than one of them. But in the end, all of that will be consolidated into an interface, which is very user friendly. And we really focus a lot on creating user experiences that are modern. A lot of the competitive technologies are sort of built 15 years ago, that are based on very old user experience, very old technology, the fact that employees like a user experience of a finance software, that’s a breakthrough.

Heather: Inevitably, then, after a company adopts a new product, there’s bound to be these moments along the way as they’re bringing their employees into the fold and making sure that they’re actually using the system that’s put in place where they’re going to need support. How does Mesh Payments approach providing quality customer support beyond that initial setup?

Oded: So we have different level of support interaction. Of course, the fundamental interactions with the employees is through our customer support, we have 24 by 7 support through chat and email. And you can even call. One of the interesting things we do, we are trying to identify the level of urgency that the employee have when he approach our customer support. And I will give you example. We know a lot of what we do is try to identify context of the payment. So it’s very different the employees now checking into a hotel, and he needs to pay and something goes wrong, because the merchant terminal doesn’t work or he doesn’t have enough balance on his card, and so on and so forth. Or when somebody is trying to buy an R&D support line. So a lot of the background technologies around identifying the urgency of the needs of the employee, and try to approach him in a way that will solve the most urgent problems very quickly. And in some cases, take the other employees into more soft channels and allow us to give them more knowledge or data which doesn’t require them to call or to interact with us in real time.

But in the end of the day, some firms like ours are being measured first and foremost by the satisfaction of the customer and what will differentiate. And we’ve seen that around the world, especially with companies that now have huge expectations from their service providers. And remember that one of the advantages that we have in our space is that our comparables are the banks. So usually the guy will come to us after being serviced by a bank, which is not always, and in most cases, doesn’t provide the most advanced and world class customer service to an environment where we really focus on making sure that each one of them is happy. This is something that’s very hard to win, but it’s even more hard to keep.

Heather: Let’s switch over and talk about security a little bit, and privacy. I can imagine when you’re aggregating spend management across an entire company, there’s potential increased risk exposure, having so much data on a singular platform. What is Mesh Payments approach when it comes to data security?

Oded: So, as a financial service provider, security and risk management is one of the basis of the way we operate. And it’s not only in the way we aggregate the data, which is obvious. And we have so much data that is driven by so many companies that are using us for so many different use cases, which by the way, will enable us over time to provide much more sophisticated insights to companies, by the way without infringing their privacy. But more important for us, we have invested a lot of efforts, going back to some of my comments about the finance team really wants to make sure that they give this payment instrument which is called cards, in the hands of an employee that is not a corporate management, and he needs to pay and they don’t want to be charged in vain, even if they are protected, by definition by the network guidelines.

So one of the nicest thing we’ve announced almost two months ago in partnership with Visa is the first numberless corporate card, which means that now in the hand of the employee, there is a plastic Visa card that if somebody will steal it, he will not be able to use it, will not be able to take it online and try to buy personal stuff for himself. And more than that, even if the card number that is linked to that, and we are in the background allowing the employees to connect any of their virtual cards, which virtual cards by the definition are perceived more secure, more control, can be activated and deactivated much more easily, even if for some reason the virtual card is connected to the plastic will be abused.

You don’t need to send a new plastic, which is a very problematic use case, you are traveling abroad and somebody steals your number. And now the corporate finance teams need to send you a new card, which is a huge hassle. They only need in one click, switch that account number and everything works immediately. So these types of solutions, which are the future of the corporate spend space, these will be the reasons why when probably we’ll talk again, in a year or two years from now, the number of companies that will not have some kind of advanced spend management solution will be [inaudible 00:18:10]. Remember that today 98% of the market still captured by the legacy banks, all the legacy corporate cards vendors. So we are really in early days of adoption of this highly advanced and highly secure solutions, but it’s growing fast.

Heather: Yeah, it seems inevitable that it is going to absolutely capture a very large market share at a very, very short amount of time. So what’s next for Mesh Payments, any exciting offerings, or projects, or partnerships, anything you can give us the inside scoop on.

Oded: So for us one of the next big things is really partnering with retailers in our space, in a way that will bring value to our joint clients. So we have announced two weeks ago a partnership with a company called Papaya Global, which is the leading provider of Global Payroll. And together we can offer global companies payroll, and non-payroll solutions that can allow employees whenever they are…while they’re traveling, a unified experience [inaudible 00:19:18], throughout that partnership. But this is only one of many that we are going to announce in the next few months. And we really believe that there will be more and more consolidation, more and more synergy between the different aspects of payments and corporate finance, and we want to be anywhere that will bring value to the growing number of clients we have.

The second thing, we are on the race to bring more and more new patients into our space. We are going to announce a lot of new solutions that helps the clients handle the specific use cases that are coming into play. As I mentioned, for me, spend management is not something monolith, which means that there is a different challenges, how you manage your travel spend to how you manage your SaaS subscription payments spend, to even how you manage your cloud payment spend. And we are building solutions that can provide insights and growing automation to each one of these contextual experiences. And the future of corporate spend in my mind, is about having a solution for each one of these specific use cases. That’s where we’re heading.

Heather: And it’s unbelievably exciting. Congratulations. It is really, really cool to hear about all of those different things you have going on. And in such a short timeline, I feel like for being only four years old, and already be on the precipice of those big changes is really great. So, congratulations.

All right, we have a segment we like to end every show on five questions. Rapid fire. Oded, are you ready?

Oded: Shoot.

Heather: Okay. Make a prediction about immediate changes in spend management, what are we going to see happen in the next 12 to 24 months.

Oded: So in the next 12 to 24 months, you are going to see the beginning of the consolidation. A lot of the smaller players are going to be eaten by the most successful players. And second, I’m predicting that in the next 12 to 24 months, banks will start taking actions that relates to spend management. Today, they are all sitting on the fence looking on all the new players succeeding, I think it won’t stay that way for long. And it’s really going to be interesting to see how they will react.

Heather: What’s one cool piece of payment or finance related technology that you’ve come across that impresses you?

Oded: For me, I’m virtual card game. I’ve launched my first virtual card startup, two founder in one, trying to help consumer to better spend on eCommerce site that even before eCommerce was the way it is today. I think the importance of virtual card as the major technology that fuels a lot of the payment use cases is still…there is so much future to that. And I’m so happy that my team is one of the most experienced teams when it comes to high capacity issuing and how…and they’re really will work hard to the biggest granular level that’s available and really leverage the data that is collected through payment. This is really amazing for me, and I think it’s still early days for all of us.

Heather: In the next five years, most people you were mentioning sort of a virtual wallet, they’re going to make a purchase with Bitcoin, Apple Pay, something along those lines. Which one and why.

Oded: I’m a huge fan of the mobile wallets. Even though I can talk a lot about why the mobile wallets as they are today are not built for corporate spend, they are mostly focused on consumers. There are so many limitations that prevents corporate to use the mobile wallets as they are today in a much more substantial way. I think that’s going to change the mobile wallet providers, mainly Google and Apple are going to acknowledge the potential of the corporate spend as a revenue generation for them and the ability for them to be much more meaningful for corporates by the data they collect from the mobile and the payment itself. And that’s going to be one of the most exciting progress in our space.

Heather: What’s a piece of advice you have for someone who’s considering payments or fintech as an industry they’d like to develop a career in.

Oded: So in opposite I produced a team that is the best way to go after a solution is not to understand anything before you try to solve it. And that means that you won’t be able to limit your thought process into things that…or try to avoid obstacles. I’m a huge believer that payment is such a complex and fragmented subject. And if you want to go after a payment problem, you need to understand the bits and the bytes of the ecosystem, and the challenges before you start solving that problem. I’ve seen so many entrepreneurs that have had amazing ideas, but couldn’t survive in the way that the ecosystem is built. So if you want to grow, if you want to do something exciting in payments, spend some time to understand the landscape. And only then go for it.

Heather: What’s the best piece of business advice and maybe there’s some overlap with what you just said, that you’ve ever received, and from whom.

Oded: So I’m a huge fan of Only Paranoid Survive, and it’s a great book, and I really behave based on that model. I think today that the thing that should be said that you know today, cash flow runway is the king. So if you want to start something, or if you want to do some new initiatives, you need to make sure you can raise enough funds upfront in order to succeed. By the way, this is even more true in payments where the difference between a fintech company and just another software company, that you have all these regulatory challenges and all these legal costs that are from day one, and if you cannot afford having the right support on these subjects, the chance that you will be able to build something and for sure scale is very limited. So make sure you have enough funding and enough firepower to support the initiative. And only then can you…

Heather: That does it. Thank you Oded so much for joining us today. If folks want to get in touch with you, or they want to learn more about Mesh Payments, where can they find you?

Oded: So it’s www.meshpayments.com. And of course it’s oded@meshpayments.com, but LinkedIn is usually the easiest way to reach me. I don’t think I’ve printed business cards for almost two years now, so LinkedIn or Twitter that’s my favorite channels.

Heather: I haven’t had business cards for over five years. And I went to an event recently and someone kept…like, more people asked me for a business card in a half an hour than have asked me for a business card in 10 years. I was like, “I don’t have them, what do we do?”

Oded: Twitter is the way, tweet me and we’ll talk, yeah.

Heather: Perfect. Twitter is the way. Oded, thanks again so much for joining me today. I really enjoyed talking to you.

Oded: Thank you for having me. Have a great day.

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Mesh Payments

Mesh transforms the way finance teams operate with a centralized and automated spend platform. Mesh empowers finance managers with a whole new level of visibility over their entire business spend so they are equipped with all the insights they need to optimize and control their corporate payments.