Recognition and Incentive Payouts with Nick Baum of Tremendous | Soar Payments LLC
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Recognition and Incentive Payouts with Nick Baum of Tremendous

Gift cards have a great sentiment, but aren’t always the best way to send funds and often go unused. In this episode, we were joined by Nick Baum, CEO and Co-Founder of Tremendous – a payouts platform enabling businesses to send money, pre-paid cards, and gift cards to people all around the world – to talk about simplifying the process and gifting people in a way that works best for them.

Payments & Fintech Insights In This Episode

  • The downside to utilizing traditional gift cards.
  • The importance of product flexibility to simplify a complicated payout process.
  • The role of gifting for employee recognition and marketing incentives.
  • The complexities associated with tracking and managing non-payroll-related payouts.
  • The decision-making process between proving viability versus creating scalability in building a company.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone. Welcome to “PayPod.” I’m your host Heather Bodie, and today we are going to be talking about payouts. Joining me is Nick Baum, CEO, and Co-founder of Tremendous. A payouts platform, enabling businesses to send money, prepaid cards, and gift cards to people all around the world. Nick, welcome to the show.

Nick: Thank you. A pleasure to be here.

Heather: Absolutely. To get us started and so I kick off every episode, we wanna know about you. Tell us about yourself and what led you into the fintech industry until today.

Nick: I’m originally from the Bay Area. I grew up in Berkeley, California, and decided to go as far as I possibly could while still staying in the continental U.S. for college. So, I ended up at Dartmouth College in New Hampshire.

Heather: Yes, I think I saw dashboard confessional at Dartmouth College in 2005. How weird is that?

Nick: Oh, wow. I was there then. I hope I wasn’t featured on that. So, I met my co-founder, Kapil, at Dartmouth during freshman orientation. So, we’ve known each other for over 18 years now.

Heather: Wow.

Nick: And we didn’t know it then, but we’d be starting a business together, something like seven years later. I studied math, computer science, a very quantitative background at a liberal arts school. Worked in finance for three years in Boston building algorithmic trading models. Decided that wasn’t quite the right course for me, went back out to the west coast, where I met up with Kapil and we started what would be Tremendous, many years later. The business was GiftRocket, a peer-to-peer gifting platform. And we launched it in 2010 and we went through Y Combinator. And that’s a long story about how we actually ended up becoming Tremendous.

Heather: So, let’s start with GiftRocket. What was the drive to build that product?

Nick: We thought that gift cards captured a great sentiment, but ultimately, weren’t the best product for consumers. They trapped money at a specific location. And so, especially for small businesses, where you think of a person, you think of a place and you wanna say, “I thought of you, I think you’d really enjoy going here.” But ultimately, sometimes the money gets trapped there and doesn’t get spent.

So, we wanted to create a product that was more flexible and actually supported every single business in the United States, even if they didn’t have their own gift card. So, we built GiftRocket, which enabled people to send these gifts online with the suggestion of where the recipient could go, but ultimately, could be redeemed as cash if the recipient wanted. So that’s where we started. And we did something startups aren’t supposed to do. We were profitable very, very quickly.

Heather: Shame, shame.

Nick: I know, I know. We really messed up. We really messed up. And we didn’t know how to scale it up further though. So, we were in this weird no man’s land, where we weren’t just gonna pivot to something entirely new and shut it down, it was a good business. But we had these investors, we had raised half a million dollars, part of that being from Y Combinator, part of that being from other angels.

And it didn’t seem right for them to be involved in this business that wasn’t really scaling the way that you would want a venture-back business to be. And so we ended up buying out our investors. We doubled their money, put GiftRocket into what we called maintenance mode, where we had one person in operations running it for, basically on their own, pretty amazingly for five to six, seven years while the founders did other things.

So, I ended up coming back to GiftRocket because I noticed this opportunity on the business side. We had Nike sending survey incentives through GiftRocket, which made no sense whatsoever. GiftRocket’s a consumer platform. And there were no tools to really track and manage that process of sending tens, hundreds, or thousands of payouts to individuals. We also had SoulCycle using GiftRocket for employee recognition.

And I wish I could say there was some genius moment where we invented Tremendous, but really we just followed the scent. Other signs were there that if these real companies with clear business needs were gonna use GiftRocket, something that was intended to send 50, a 100 bucks to your friends for their birthdays and weddings, then, “Hey, there’s a real market need here.” So, that’s how Tremendous got started.

Heather: Talk to me about how it works. What does Tremendous do to simplify what seems like should be a fairly straightforward process? Can you give us a sort of window into what complicates sending money like this and what Tremendous does to solve that?

Nick: Sure. You would think that in 2022, every company could very, very easily just send 50 bucks to an individual, whether they’re an employee or not an employee. So, it gets especially complicated when companies are paying not employees that might be international, might be domestic, might be banked, might be unbanked, have different payment preferences. You can’t just go to payroll, put in someone’s email address, and say, “Give them 50 bucks.”

And that doesn’t exist. That’s not what payroll was built for. There are other solutions, there’s PayPal, there are Amazon gift cards, there are Visa cards, but no one solution is gonna cover all of your recipients if you’re an organization that’s sending thousands upon thousands of payouts for purposes that range from employee recognition to marketing incentives to research compensation, people taking surveys online.

It’s a very complicated process to track and manage all of that. Because, ultimately, you don’t know what the recipient prefers. So, you need to offer a broad catalog. And then beyond that, there might be tax implications. How do you collect W-9 information? How do you resend these if a recipient wasn’t able to find it in their email? How do you coordinate with your finance team so that they can track and manage all of this?

So, there are a ton of gotchas in this process that every company discovers if they try to do it on their own and really they need some solution. They need Tremendous to make that a super simple process where they can just say, “Here’s an email address, here’s the amount of money, pay this person, whether in the U.S. or they’re in Sweden, wherever they are. We’ll make that super simple. Do currency conversions, language translations, provide an appropriate catalog.” It just becomes really dead simple for a company to actually just pay someone 50 bucks, something that should be very, very simple.

Heather: So, it does sound simple and it sounds like you’re making it simple for other people. But, as you said, that there’s lots of gotchas in the process. What has it been like, you had mentioned with GiftRocket, you’d had this smaller team and even had that opportunity where you could let it run on an incredibly small team while the founders went out and did something else. What has it been like building a larger team at Tremendous and is the team growing at the moment?

Nick: It’s very different in a very positive way, very different experiences. So, we are what we call VC-free. We have not raised money since 2011, which we paid back to our investors, doubled their money. So, yes, managing a team that’s just founders and one person in operations is very different than the experience that we’re having right now.

We’re a team of 50 people. And we’ve been doubling headcount about year over year, and it makes sense. We’re working with over 5,000 organizations that have been using Tremendous. So, we need a larger staff across engineering, across sales, across success, and across marketing to support the wide user base that we have and the goals that we have as a team. So, we have a remote team too. We’re actually remote before the pandemic, and it’s funny. It was so tough recruiting anyone. Everyone wanted that social experience of being in the office, and I could never get it.

Of course, you wanna know your coworkers and colleagues and that social experience is great. But the trade-off between having to go into an office every day commuting, it never quite made sense for me. I was never able to crack that calculus. And it took a worldwide pandemic. But now we’re able to recruit much, much better for remote roles.

Heather: Yeah, it’s really fascinating. I agree with you that people were craving that social, that in-person experience pre-pandemic to some extent. But I’ve also always been so fascinated about the business model because I know a lot of especially with really popular and booming tech startups, we’re also seeing this almost cartoonish benefit structure around it as well, right?

The building is massive. All the amenities inside of it are top-notch. There’s gifts on the desk on a regular basis. There’s all of these spends that make it, I would imagine, a pretty long runway till you hit that point where you’re in the black. And it sounds like, with GiftRocket, you were profitable almost immediately. And I imagine not having a physical location and having an all-remote team really does help the numbers make a little bit more sense earlier on in the process.

Nick: It certainly does. I think our office expenditures for GiftRocket were a big slab of wood that we got at IKEA and a few metal poles that we attached and made a table. The expenses weren’t high. And for Tremendous, you know, of course, we’ve got an office stipend for people to give themselves a comfortable and productive working space, but we’re spending what we would be spending on an office on offsites. We wanna get people together.

And we do two week-long trips per year. We’ve got one coming up in Mexico City in September, and it’s impossible to replicate the bonds that you form in person, and we acknowledge that. So, we’ve made it really, really key piece of our culture to actually get together a few times per year. And these are lighter weeks. These are not heavy work weeks. We’re encouraging the entire team to really spend time to get to know each other. But, correct, we’re definitely saving money on the office space, but we certainly wanna build culture in other ways.

Heather: Let’s talk about integrations a little bit. Right now or today, at least from my perspective, it feels like whatever your issue, there is a platform to solve that, and all of a sudden you turn around and your tech stack has 15, 18, 25, 30 different platforms that you’re engaging with on a daily basis to conduct business.

What does the customer journey look like when a company comes to you and says, “Yes, we want to engage with Tremendous to be able to use this payouts platform for all these different ways?” Are you creating sort of a bespoke product for them to offer exactly what they want? Or is it across-the-board bespoke in the sense that the individual whose cash or money is being sent to you gets to choose their own adventure, so to speak?

Nick: So, the recipient can choose their own adventure, and our clients can choose the type of options that are available to their recipients. So, for example, we might work with a health and wellness program that wants to offer Amazon, Visa cards, bank transfers, but maybe they’re gonna hold off on the Applebees and Buffalo Wild Wings as options to the recipients.

So, they’ll keep that out of the catalog. So, they can actually customize that experience for recipients as they want, they can put their logo, colors, branding, all of that nice stuff. There is some bespoke work that we’ve done technically for some larger clients. For example, Google is a client of ours and we’ve done some work on the accessibility front for them. And some of our larger programs, yes, we’ll do some level of customization to support their workflows.

But for the vast majority, our clients are able to use the platform as it exists through integrations that we’ve built too. If they wanna connect it to other software, we have connections to survey platforms, like Qualtrics, Decipher, formerly known as SurveyMonkey, which is now Momentive, I believe. And they can control that process, the experience, virtually all by themselves out of the box with Tremendous.

Heather: So, what’s next? I mean, it sounds like you’re in a really great spot, but I know that with any passion project of any kind, it’s never quite done, right? That dream keeps growing and growing. What’s on the horizon for Tremendous?

Nick: So, we have great product market fit, like I mentioned, working with great companies, Google, Spotify, Pinterest, Atlassian. And we’re in a place where we just wanna make sure that companies that have a need for this product are able to use it. So, our focus on the next 12 months is really around go-to-market, getting the Tremendous name out there, and helping identify use cases across the board.

Because companies have so many different needs for this product. We’ve been very low profile for the past 12 years. For many of those years, the founders weren’t even working at the company. So, now is the time for us to really put our name out there and to enable companies to simplify this very complicated process internally across many different departments.

Heather: I wanna circle back to the experience or the process of deciding to take the leap and start your own company. What was that experience like and what surprised you most about the realities of it?

Nick: It really became an analysis of, “What does my life look like if I continue in finance or if I continue working in the corporate world?” And that wasn’t right for me. There was something that really called to me about building product and experience. At the time, I didn’t really appreciate all of the different elements of creating a business, you know, marketing, sales. I didn’t have an appreciation for that when it started.

But it was so clear to me that I wanted to build a product. I wanted to be able to choose who I work with. And the opportunity to work with one of my best friends, who was extraordinarily talented, was just so enticing opportunity for me that it became almost a no-brainer when I looked at, “Do I want to continue working in finance or do I want to build something, see real tangible impact from the product that I’m building, and really own figure out who I’m working with?”

That to me became so, so clear when I put it in those terms that Kapil and I didn’t know that we were gonna start a company dealing with gift cards. That was not obvious to us at the outset, not for one second. And if you had told me a year prior to starting GiftRocket that I’d be working in the payments and gift card space, I would’ve thought you’re crazy. It would’ve made no sense. But for me, it was really analyzing these two different paths more broadly, where entrepreneurship with a really talented and great friend seemed like a no-brainer to go down.

Heather: And were you right once you got there? Do you feel like, “This was exactly what I’d anticipated?”

Nick: It definitely wasn’t exactly what I anticipated. And have you talked to anyone who’s done entrepreneurship as a breeze?

Heather: No, that’s why I’m asking. I mean, at the top of our conversation, you were saying that GiftRocket was profitable so quickly. And honestly, you’re the first, one of the first entrepreneurs that I’ve spoken to that has a narrative that is quite that positive that soon. I spoke to someone just a few weeks ago who said entrepreneurship is like signing up to be hit in the face over and over again. You know, so that it really does take a resilience that you can’t anticipate. So, no, I haven’t talked to anybody who said it was a breeze, that’s for sure.

Nick: I know. I wish I could be your first guest that does. And that won’t be the case, unfortunately. I skipped a few steps there along the way to profitability. There was what Paul Graham at Y Combinator likes to call, “the trough of sorrow.” We launched GiftRocket on “TechCrunch.” And it was incredibly exciting that first day to be getting so many visitors. I actually remember we woke up in the morning and the “TechCrunch” article had launched. And we knew that because we had installed software on our website where we got a ding every time there was a new visitor.

So, basically, it was this alarm clock. We had turned the speakers up on the computers really high and we got, you know, a ton of dings and we all came rushing out to see the traffic that we had. And the first day we got a ton of inbound emails, interest from other entrepreneurs, businesses, investors. And then over the weeks, those dings just started to become less frequent, and it was awfully quiet.

After a month or two, we were selling one to two gifts per day. And that’s not enough to keep the lights on. It took a course of maybe 9 to 12 months for us to figure out a real working user acquisition channel. And at that point, I’m not gonna say it was a breeze, but there were a lot of challenges. Every decision seemed like the most important decision in the world before we were profitable.

We would debate the colors on the website, what buttons looked like. It was, in retrospect, I don’t know if insanity is the right word, but it wasn’t particularly healthy. But once we started to have success and we saw the road towards having a good business, we started to be able to put things in perspective. And that’s when… No, it didn’t become a breeze, but certainly, became a lot, lot easier.

Heather: I think there’s something really beautiful about what you just said in those where every decision feels like the ultimate decision and you’re debating for three hours over the type of blue on the button on the third page of the site. I think it can look like you were spinning your wheels when you look back on it. But I think there’s something really important about that stage in a business too, where you don’t quite have the solution locked in yet, right?

You don’t quite have the…you know there is another side to this coin but you haven’t totally seen the path there. So, you spend your time dedicated to the details that are there right in front of you until that door unlocks. Because the other option is, what, just to close up shop and walk away? So, I think there’s something really cool about those obsessive button-color decision moments in the trajectory of a new business.

Nick: I completely agree. And it just demonstrate, you want people who care and you want people who care about the details. And at the outset, you don’t know which decisions are gonna be the important ones. Sure, you should have some ideas. You probably should know that the button color isn’t gonna be the most important decision but you have to sweat the small stuff. You really do. You have to care.

Heather: Yeah.

Nick: And if you don’t pay attention to the details, you’re probably gonna miss the big picture too. And we did all sorts of different things. I remember Kapil was going out and pitching businesses directly. This was one of the worst ideas we had. Debating button color seems better than this, where Kapil was going door to door to businesses trying to get them to start using GiftRocket and putting it on their website.

I don’t know what we thought the scalable solution was here. I don’t know if we were gonna clone Kapil and just have them go to every single business in the United States. But you try things. And some things work, some things don’t. Hopefully, figure it out quickly. And I can say, button color probably does not matter for virtually any business.

Heather: I also spoke to someone recently around scalability. I feel like you’ll appreciate this because it lines up to what you were just saying about, “What were we gonna do, clone Kapil and send them out all around the world?” I spoke to someone recently who said, “No, you’re not. And in those early days, you cannot make every decision modeled around scalability. You just have to get the work done.” And sometimes that means sending Kapil door to door. And so I think it’s cool.

Nick: I don’t disagree. I think that’s fair for that particular decision. And how one was never gonna be scalable, that was never going to work. But I certainly agree with that sentiment. We still, today with Tremendous, do on scalable things. I think a lot of our work is done in a way where we just need to prove out viability and you do things that you wouldn’t do at scale. That’s a lot of what a startup is. You figure things out and then you turn it into some sort of process that you can actually scale with.

Heather: I love it. Nick, this has been so much fun. I want to close out our show as I like to do each episode asking you, and this is a little bit of a stumper, but I believe in you. What’s the best business advice you’ve ever received, and from whom?

Nick: Oh, man. That is a bit of a stumper.

Heather: I know.

Nick: I appreciate the faith. I hope it’s not misplaced. There was just so much good business advice for early-stage stuff from Y Combinator and a lot of it was just around, “Yeah, I would just stick to listen to your users.” For Tremendous, so much of the insights we had were from founders doing sales.

Heather: Oh, yes.

Nick: Again, it’s the unscalable stuff, but you need that direct line of sight to what your customers want. You need to be able to shape your product and your services to the needs of the marketplace. So, ultimately, what matters is, get out there and then talk to people, get feedback, fail quickly. So, I don’t think there’s just one source that came from, I think that you can find that advice from across the internet now, but that’s really what’s most important I think in early-stage entrepreneurship is being able to have really substantive conversations with your customers.

Heather: That does it. Nick, thank you so much for joining us today. If folks wanna get in touch with you or if they wanna learn more about Tremendous, where can they find you?

Nick: Well, more about Tremendous, you can go to tremendous.com. For me, feel free to email me at nick@tremendous.com or look me up on LinkedIn.

Heather: Great. Thanks again for joining us.

Nick: A pleasure. Thank you.

Heather: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s S-O-A-R-P-A-Y.com/podcast.

Industry Spotlight

Tremendous

Tremendous is a payouts platform, enabling businesses to send money, prepaid cards, and gift cards to people around the world. Used by researchers at Google and MIT, marketers at Casper and Lyft, and institutions like United Way and the Federal Reserve Bank, Tremendous has orchestrated nearly 10 million payouts. Over 4,000 organizations agree: a Tremendous payout is almost as delightful to send as to receive. We’re 45 people, fully remote, highly profitable, and self-funded (yes, crazy, we know). Even if you like your job, you’ll probably be happier at Tremendous. Come work with us!