The future of enterprise billing ⎜ Octane ⎜ EP 171

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This is a podcast episode titled, The future of enterprise billing ⎜ Octane ⎜ EP 171. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Akash Khanolkar of Octane one-on-one about the future of enterprise billing.</p><p>---</p><p>Crossover Commerce is presented by PingPong Payments. PingPong transfers more than 150 million dollars a day for eCommerce sellers just like you. Helping over 1 million customers now, PingPong has processed over 90 BILLION dollars in cross-border payments. Save with a PingPong account <a href="https://usa.pingpongx.com/us/index?inviteCode=ccpodcast" rel="noopener noreferrer" target="_blank">today</a>! </p><p>---</p><p><strong>Stay connected with Crossover Commerce and PingPong Payments:</strong></p><p>✅ Crossover Commerce @ <a href="https://www.facebook.com/CrossoverCommerce" rel="noopener noreferrer" target="_blank">https://www.facebook.com/CrossoverCommerce</a></p><p>✅ YouTube @ <a href="https://www.youtube.com/c/PingPongPayments" rel="noopener noreferrer" target="_blank">https://www.youtube.com/c/PingPongPayments</a></p><p>✅ LinkedIn @ <a href="https://www.linkedin.com/company/pingpongglobal/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/pingpongglobal/</a></p><p>---</p><p>You can watch or listen to all episodes of Crossover Commerce at: <a href="https://usa.pingpongx.com/podcast" rel="noopener noreferrer" target="_blank">https://usa.pingpongx.com/podcast</a></p>

Ryan Cramer: What's up, everyone? Welcome to my corner of the internet. I'm your host, Ryan Cramer and this is Crossover Commerce, presented by PingPong payments, the leading global payments provider helping sellers keep more of their hard- earned money. Hey, everyone. Welcome again to another episode of Crossover Commerce. You made it. This is episode 171 of my corner of the internet, what I like to call Crossover Commerce. This is presented by PingPong payments. PingPong payments is a cross- border payment solution. If you haven't heard of us, we are not a table tennis company. We help people save money by helping them with their fees, in terms of paying out suppliers, manufacturers, distributors, if you have employees internationally, or you actually just want to pay in a VA, whatever that might be on a business level, that's going to be helpful with PingPong payments. If you're in the e- com business, or if you're just e business in general, we can help you out. Go ahead and sign up for a free account today. By doing so with five clicks, you can actually save$ 500 With ping pong payments when you're approved with an account. Sending money internationally has never been easier. Go ahead and check out ping pong payments for free today. That being said, again, welcome everyone to Crossover Commerce. This is my end of the week, taking off tomorrow, if you've been with us throughout the week or with the podcasts, if you will. I'm going to take off tomorrow just to have a little bit of a break with family to go see some family, or just in general just to take a day off or two, I think that's important. Before we get into the busy part of the year, right? Q4 is super busy, we're in the midst of that, but taking a mental day or two never hurt anyone. Just always refresh yourself. But that being said, we're running out this week on a really exciting topic. As people come to evolve, there's actually some really cool news in the payment space always, right, there's always how can people accept more money? Earlier this year, Amazon became to adopt a firm which is obviously a company that you can actually schedule out and make payments over a course of a series of months. That was accepted instead of all upfront. There's always this evolving processes in commerce on how to make payments happen, where business happens, right? That's where Fintech is very, very important. That being said PingPong payments is a Fintech company. But as PingPong looks to the future and helps evolve payments, so are other different companies, and that can be anything from a B2C level to enterprise level to SaaS level to cloud level. So what we're going to be talking about today, as we alluded to in the beginning in the intro, the future of enterprise billing. What does that mean? What does it look like? How are payments going to effectively impact the world as we see it today? People ask me all the time, " Is it crypto? Is it Ethereum? Is it all these different up and coming currencies? Or is it more of just how currency is accepted?" Right? Because in terms of currency or value, it's in the eye of the beholder, what is of value to different kinds of companies, whether it's that localized currency, is it more cryptocurrency, is it some sort of other value or trade that you're making happen? So we're going to talk about the future. It's always fun to look to where we've been and where we're going, especially here at the end of 2021. That being said, I wanted to bring on a very special guest today, his name is Akash Khanolkar of Octane to talk about the future of enterprise billing. He's the co founder of Octane, a drop in metered billing system that gives business' flexibility to bill how they want. And of course, to go into more detail, want to inaudible how, go ahead and bring on our special guest today of Crossover Commerce, Akash. Akash, welcome to Crossover Commerce. Let's bring you in there. There you go.

Akash Khanolkar: Ryan, thanks for having me. How you doing?

Ryan Cramer: Man, I'm doing well. You're in Brooklyn. It's nice to talk on East Coast time for him because people are not just waking up. They're not going to bed or anything like that. It's just nice to be in the same time zone with somebody virtually.

Akash Khanolkar: Oh, yeah. Absolutely.

Ryan Cramer: Thank you for doing that and making that a priority for me today.

Akash Khanolkar: Yeah, no, I'm glad to be here. Excited to talk about the future of billing for sure.

Ryan Cramer: Yeah, so that's where I started, right? I had this, for the introduction, to figure out what we wanted to do. It's such a broad spectrum, right? Billing is such a antiquated term. It can be anything from invoicing, it could be anything from how you accept a credit card, can you make your payment terms longer, shorter? Can you accept cash? Or how does money transfer from one entity to another? Across the board, that phrase gives me pause, how you said the future of enterprise billing. So before we get started, what's your background? And we can go ahead and get kicked off on that topic.

Akash Khanolkar: Yeah, no happy to. I came from software backgrounds, I've worked in the Fintech space for a while, I was over at a big bank on their cloud team. So I primarily have a cloud infrastructure background. And as we see the explosion of cloud businesses being created, and just the automation of cloud infrastructure, I played a significant role in working with different companies to realize those shifts in technology. And before I started Octane, I was running a cloud consulting business, and pretty much the premise of what I did was helping different companies set up their cloud infrastructure. If it meant SaaS businesses, if it meant a fast growing mobile app, startups, anything and everything, I was helping companies build cloud infrastructure. What brought me to Octane, and I'm happy to also share what we do and how the evolutions that we're seeing primarily in the enterprise software space is working... With working with so many different businesses, we saw a new shift in the way that enterprises were charging customers, acquiring customers, and that was a shift towards consumption- based billing. I mean, we think about our electricity, and it is, in fact, we think about metered billing, right? Think about how-

Ryan Cramer: Like your cell phone or anything, like using data.

Akash Khanolkar: Exactly, and really paying for what you use. I mean, when we get an Uber, for example, what gets calculated for your bill, at the end of the day, is when you hop into that Uber, the number of miles, time, the surge, there's a lot of factors that play into how Uber ends up charging you at the end of your ride. And that's another completely different use case for, as we say, metered billing. Then what we see a big explosion happening in the enterprise software space is a lot of... We see SaaS cloud businesses. Now, rather than, traditionally, they wanted to charge on annual subscriptions. I mean, that was a pretty standard thing in the enterprise software world, you'll hit a contact us button on their website, you call a sales rep, and they tell you it costs$10,000, $100, 000 a year for their software, and you either buy it or... And if you buy it, and you hated it, it doesn't matter, you've paid$10, 000, $100,000. The big shift we're seeing is now there's a move towards more flexible billing where you can charge on usage, going back to the Uber, you aren't paying$ 5, 000 a year to use Uber whenever, you're paying for that ride. And that's the transformation we're now seeing in the enterprise software world.

Ryan Cramer: Interesting. So with that being said, is there... That's an interesting shift, like you said, it's not just a flat, monthly subscription, or... For example, it's more of a Netflix- based approach in the old ways of, " Hey, every month, I'm going to get charged this amount or at a scale of use at$ 50, 000," or whatever that looks like. That's what you're going to get charged at with usage. And that's how PingPong actually operates too, when you transfer money, it's when that transfer happens, it's when the act of that service is enacted, right? It's not just a holding fee, or just like a base pay or anything like that. So when that shift comes about, what was that driver? Was it the consumer? Was it more of the enterprise itself driving that way, just because of... Is that easier way to bill people? Or is it more cost effective? What are all those things that came into play, how that shifted from one to another?

Akash Khanolkar: Yeah, what's lovely about usage- based billing is it's a really nice handshake that happens between the end customer and the vendor. So when you think about a usage- based billing model, and there's massive other trends, which I'm happy to talk to you about that are connected to this one right here, but in a usage- based billing model, an end customer can start trying out your products. So the idea of like, " I'm going to try this new, fun or interesting software, and I'm excited to try it. So let me just start using it." And in a usage- based billing model, like I said, the vendors are going to start tracking that usage. And as you use more of it, they're going to charge you for it. So let's talk about in the cloud infrastructure world, we have this concept of virtual machines. So if I spin up 10 virtual machines in this cloud... Let's talk like Amazon Web Services, a company everyone's familiar with. I spin up 10 virtual machines on Amazon Web Services, and I spin that up for four hours just to experiment, just to try it out, I get charged... Amazon calculates at the end of the those four hours the bill for, " Okay, this is how much it costs." Now it's great for me as the end customer because I didn't pay$ 10,000 just to crosstalk

Ryan Cramer: Right. Little sample.

Akash Khanolkar: But it's also great for Amazon Web Services because like, " Okay, this small user has used this small amount." Now what happens if I'm like, " Okay, I'm serious about Amazon Web Service. I want to add more usage to... I want to make this real, convert my production workloads over there." So now I spin up 100 virtual machines, because I need to support my system, for example. And the price ends up being connected to that value that I'm getting. So now I'm charged, what, 25X what I was when I was just experimenting with it, but now I'm getting legitimate value as an end customer. And AWS doesn't really need to negotiate anything, it's like, " Okay, you're using 25X, because we're giving you that value." So it works really well for both the vendor and the end customer. Going back to your immediate question, who started this agenda? I think it really is a two- sided approach. I mean, it just makes sense.

Ryan Cramer: With that being said, is this more of an ease of model use, too? Is this something where, if I'm an e- commerce business, or if I'm a e- business in general, and I want to bill people, I hear lots of pros in that regards of like, you're going to be able to test it out at that scale of what you needed to, there's no contracts involved. I think the phrasing and inaudible there's no contracts, it's just test it, if you like it you can continue on. If you want to continue on, obviously, you just pay either that usage fee or whatever those fees incur with that regards. I think that's more... Is that more of a, like you said, that handshake, if you will, of there's no pressure on you to jump in all upfront, it's a, if you like it, it fits your needs, you're going to love it no matter what. Is it just because of that trust in the consumer to know what they need, instead of you trying to push, like you said, a$50, 000 agreement all upfront, and if they don't like it, then you're just going to have bad customer service, you're going to have that hesitancy to even give it a try? It's not going to push people over that edge. That's what I'm hearing from you. Is that also true?

Akash Khanolkar: Yeah. No, that is also true, and what you've done is you're actually touching on a really big trend that's now happening across the software as a service industry, which is this trend called product- led growth. Have you ever heard of this?

Ryan Cramer: I've heard of it, but for the listener out there maybe trying to understand more crosstalk

Akash Khanolkar: Yeah. There's this new trend happening in the software as a service space, it's called product- led growth. How this works is essentially building a revenue channel, squarely based on the actual value of the product. Build an amazing product that people onboard onto and start to use and consume more and more of as a method of increasing your revenue. So yeah, like going back to the AWS example, just the more you use AWS, you use their compute, then you use their storage service, then you use their machine learning service, you start to consume more and more of that business, hence, your bill gets bigger, and that's the way you're growing your business. As opposed to, we think about traditionally, it's okay, I'm selling you my software for$ 10,000 or $100, 000 this year... Let's just say$ 100,000. Then okay, the end of the 12 months is up, let's renegotiate. Okay, $150, 000. And the year after that, okay, let's renegotiate. Oh, you need less of it? Okay, $50, 000. So it's like... Sorry, I think you're on mute.

Ryan Cramer: I did it on purpose. Yeah, I'm sorry. When I take a drink, I don't want to hear people. Having coffee in their ears. But yeah, so it's more like a... I agree with that, because I think it's for personal companies that I've been a part of in the past, it's always a hey, this is the contract we're going to do. They either give you that usage amount upfront and say, " Hey, you based upon what you're theoretically going to use, this is what the contract is." But in that theoretical world, you don't actually know if that's all you're going to use, right? It's in theory, if you're using bare minimum, hey, this is what we're doing at that juncture. But then that's the pricing you're negotiating, and then there's all these kickers, like those overage charges or anything like when you go to like an AT&T or like a... I go to cell phone, I know you go inaudible your cell phone. Cell phone users companies, if you make an international call or something, it's not quote, part of your monthly planning. You go over that theoretical amount, you're going to either get an upcharge or surcharge fee, because it wasn't expected, and they're going to pay that premium to either onboard you or put that onto your account. Or they're just going to make you continue to go up and up and up, but that, again, comes with costs and things like that. And that's so hard to fathom as a new business owner, right? Because you don't actually know the scale of which, the bandwidth of which you that company, or you the personal person that's using this are going to use it, so that's very difficult to use. But at the ease of as much as I need it, that's what I'm going to pay for. I think that's so simplistic and that thought process.

Akash Khanolkar: Yeah, and I mean, you can slice and dice this thing however you want. Like you said, you could do month to month subscriptions with overdue, you could do just pure pay- as- you- go usage. We've seen companies do, okay, the large enterprise many times want to do annual commitments when they buy other enterprise software. And that's fine, too, as long as you can actually package that annual commitment deal into some usage, so it's really... Yeah, it really can fit in a lot of different places.

Ryan Cramer: Okay, so taking that model and moving forward, who's benefiting from this? Is it the consumer? Is it the company? Who's benefiting with this shift in how things are structured this way?

Akash Khanolkar: I think if it's a really well... In a perfect world, both the customer and the vendor are both benefiting almost at an equal... Equally across all the dimensions. If you think about the world today, there's likely, in many, many dip scenarios, very, very big disconnects in the customer value to how much they're spending. On one side of the spectrum, a customer isn't spending nearly enough money for the products, but they're getting tremendous value. And then there's another side of the... Which is, I mean, great for the customer, the customer is never going to leave, but the vendor is leaving a lot of money on the table. And then there's another side of the spectrum, which is the customer isn't using the software at all, but getting charged a lot of money by the vendor. And that's like what we think, like, " Okay, you do$ 100, 000 annual commit, and you only use barely any of it." It's like doing an annual gym membership and never showing up.

Ryan Cramer: Exactly.

Akash Khanolkar: It's going to leave a sour taste in the customer's mouth, and they are eventually going to leave. So these are the two sides of the spectrum. In a perfect world, as the customer uses more of the software, they pay for that value. And if the vendor priced appropriately... I mean, obviously this comes back to actually how do you price your software effectively to actually make sure that there is that line that happens, right? It's proportional customer value to spend. Assuming the vendor prices this properly at all stages of you using this product, there's a pretty equal handshake of customer value to spend.

Ryan Cramer: An an ERP, or someone who's on the enterprise side of things, is that as a company, on the company side of things, instead of... That's offering the service. Is that harder to predict how much you're going to make on a month to month revenue wise? In theory, because obviously, if there's just not that consistency, you don't know what that base level is. Is that the difficult nature, that's the con, if you will, of this sort of model?

Akash Khanolkar: Yeah. Yeah, so that is certainly... I mean, usage- based billing, it can be highly variable. It can fluctuate and even from an... Both the consumer and an enterprise, they might not love that, because every month, it's going to be non obvious what your bill is. But there's a lot of great tooling coming out and I mean, getoctane. io, what we do is helping businesses facilitate these types of problems, but bringing more certainty into the variability of your usage- based billing is a way to actually solve this problem, correct?

Ryan Cramer: crosstalk

Akash Khanolkar: If you want to at least project into the future, okay, I understand what my spend will look like out into the year, I can understand on a month-to- month basis, this is what expected spend is, then the customer is going to be less frustrated. If me as a customer, if I know at the end of the month what my bill is going to look like, or I have a pretty good understanding, and the vendor helps me understand that, I'm not going to be as frustrated. And then similarly for the vendor, if the vendor knows how much this customer is going to end up spending, based on however they want to actually do those projections, then-

Ryan Cramer: It's more like a velocity problem, right? You can say, like for example, I would get a bill, or I get an email notification for a certain service that I'm using in terms of utility, right? They're saying, " Hey, you're halfway there through the month. This is at the velocity of what you're using X, Y, Z. This is what you're currently at, this is where you're projected to be at the end of the day." So if my wife sees it, and she's like, " That's not happening, let's do half a bill." We're going to throttle down whatever that utility is, right? And so you're going to reign back, almost have that complete control over the matter. Or if that's just helping you predictably go forward. Is that more what Octane is doing? That predictive analysis of, based upon rate and velocity of which you're using service X, Y, Z?

Akash Khanolkar: Yeah. I mean, we have a lot of advanced stuff under the hood there beyond that, but-

Ryan Cramer: If I was the dummy, like for the dummies out there like myself. That's the example I'm going to use.

Akash Khanolkar: But yeah, more or less what we want to help here with is the reporting, so obviously, if you're using any utility, getting good reporting on how you're using it, even on a day by day basis, you're going to be a happier customer, versus if you wait till 30 days, end of the month, and you get your bill and you're in shock. So yeah, going back to it, to solve that variability problem, just good reporting and understanding what your spend might look like into the end of the month is what you want.

Ryan Cramer: Gotcha. I'm curious too, Akash. Who in this industry is doing a fantastic job with this? Well, we can call inaudible a company or name, or if there's a sector of this business industry that is doing a really good job at this, the future and like being with the customers and the needs in this regards. And who's not doing such a great job? Like they could actually use a lot of help and catch up in that regard.

Akash Khanolkar: Yeah. I mean, there's a lot of pretty significant IPOs that have happened recently, of companies that are doing a remarkable job, and they say part of that success was because of their shift to the usage- based billing model. A specific example of a company that's doing a really good job is, and maybe you've heard of it, Snowflake.

Ryan Cramer: Yeah.

Akash Khanolkar: Snowflake crosstalk

Ryan Cramer: They do the... Yeah, go ahead. For people who don't know who Snowflake is, why don't you crosstalk

Akash Khanolkar: Yeah, they're a BI database tool, and... Yeah, they're pretty much a data warehouse tool, and they... Yeah, they've done a fantastic job of pushing for the usage- based billing model, and a big part of it is because what they're seeing... I mean, and you look at when they IPO'd, and they've just been doing really well, and their growth has been tremendous, it's because well, they've done a usage- based billing model and month over month, the growth on their customers has... The spend, the customer spend has been increasing, and it's because they love the product, so they use more of the product. But yeah, I mean, that's really it.

Ryan Cramer: What about maybe like that... If you, as a consultant, or if you had to come in and really clean up a company and you said, " You can certainly create lift." And again, maybe this is the selling functionality of Octane, but if you as a consultant came in, and you could shake up any sort of company, service, software, whatever it might be, because you know for a fact that they would just incrementally grow if they switched up their billing system, is there one in mind, or can you see they're almost at a rate... I won't call it archaic, but they're behind in the times. Is this where a lot of people can create that instantaneous lift, like you said? The growth for snowflake is just phenomenal. Why wouldn't more people or businesses looked at that and adopt it even quicker, sooner? Is it just because of the nature of which they're, in which their service is, or their products, or whatever that might be?

Akash Khanolkar: Yeah. I mean, I think it's a you-

Ryan Cramer: Is this a one size fits all fix, or is this something that you're going to have to get even more customized, more in the weeds of it to understand how you can effectively help them manage their customer? Because now everyone's crazy equally in terms of customer. A customer for a subscription- based model might be perfect for, like I said, the Netflix, but a usage- based model for Uber makes more sense. You're not just paying a flat fee of every time I get in a car it's 35 bucks. No one would do that if it's just a couple blocks away, so it makes sense for different services, right? It's not just a one size fits all.

Akash Khanolkar: Yeah, I'm not here to say that every single company should now move to a usage- based billing model. I think you identified some good examples. I think, Netflix, I think people are fairly happy with being able to take Netflix on unlimited... Yeah, if we were paying pay as you go on Netflix, we'd probably all have pretty significant crosstalk

Ryan Cramer: Oh, I'd be screwed.

Akash Khanolkar: It's not a one size fits all. I think we're, primarily at Octane, we're primarily focused in the B2B SaaS space, and it's fairly consistent. I mean, out of 10 companies we talk to, most of them will say, " Yes, we do need to offer usage- based billing to our customers. We don't currently, or we have it, and it's fairly rough draft and doesn't work super well." So we see, at least in the enterprise software, the B2B SaaS space, which is a smaller subsection of everything else, but it is commonly needed, and the big reason for it is because I think the shift that's happening now is not more like you only offer pay as you go, or usage- based billing, and that's all you do. I think the shift that's happening is you need to just have a more expanded set of offerings, so you just need to be able to build more flexibly. And the reason that's happening, that trend is happening, is because competitions becoming a lot greater. There's a lot more software companies competing along the same dimensions, so to win in that market, you need to have the most flexible billing offering. And if we think about it, even in a... It'd be really... I don't know the truth of this, but I think it's worth it to talk about, specifically a gym. I know it's pretty classic, the annual membership, but if you had a gym that could come to you and say, " Look, our pricing is transparent. Everyone knows what our pricing is, we're not going one by one and saying different prices. You have a couple of options. You could buy for the year, and you'll get a discount, you could buy by the month, it'll be slightly more, but you're going by the month. Or you can pay by usage, which is obviously even more than that, which means you pay by the hour." As you can imagine... And again, I haven't proven this out, I don't know if any gyms are doing this theory, but crosstalk

Ryan Cramer: I like the theory behind that.

Akash Khanolkar: But in theory that's really what we're seeing in the enterprise software space. It's like enterprise software company is like, " Look, you can buy my product for the entire year at a significant discount, or you could buy it month to month at a slightly less discount, or pay by the button click."

Ryan Cramer: Right, I was going to say, so for example, you have a Planet Fitness where everyone knows, you have a key card or something that you swipe in to get into the building. Every time you swipe to come in, or you swipe to start a machine, or... You use something like that... Not clock, but every day that you're using, there's that like, " Boom, there's a$ 5 charge or a$ 3, or whatever it is at that rate." And then you get billed that. But if there's a month that you're just so busy, obviously you're not getting billed, and that feels like a win, almost like it's working for you. On the flip side, that's where I keep coming back to. As a company, that's so hard to predict for when if you've subscribed for a membership or whatnot, like you said, it's up to consumer to choose, and that's important. As a business, it's hard to dictate, I hope they come in a couple more times this month, so we can get to that minimum threshold of that consumer cost. But that's really hard to predict. It feels like almost like too many options, if potentially... A lot of things are coming around. That's why I sound like I'm babbling or mumbling, but is it almost... Could that be a negative, like you can almost lose money if you don't predictively offer the right solutions for customers, or is it probably going to be if, in the case of like an Octane, you can actually create and get more customers in that regards and incentivize people that way of hey, because you have options, now you don't have to worry about being overcharged or undercharged, you're just a customer? That's it.

Akash Khanolkar: Yeah, it's a good question. I think the answer is, well, it's competition, ultimately. If you're selling to the entire internet, and you have another four different companies also selling to the entire internet, it doesn't matter... And they offer usage- based billing model and you don't, you're going to lose to them. I mean, that's what you really need to debate in that scenario.

Ryan Cramer: Almost choice has become the number one component of, if I don't have a choice, that instantly becomes either a negative or positive, depending on who you are. It's a negative if you are another business owner or consumer that there is an option out there where I can choose that kind of level, but then as a business owner, if other people are offering it, and I don't offer that, you're saying you can lose out on just actual competition. So that's become almost the number one, quote unquote, need or necessity or want from a consumable standpoint, is what your thoughts are.

Akash Khanolkar: Yeah, exactly.

Ryan Cramer: Cool. We had a question come in, I'm going to decipher this too, inaudible. I won't throw it out there, because I'm going to decipher it. What would you say if you were a franchisee? For example, if I'm a franchisee... And again, I don't know the details of... I'm not a franchise owner, but it's a flat rate, you're paying per year to use the brand, the logo, the services. What would that be entailed? Does that usage- based model apply to that, do you think of, hey, this company, or this locale is crushing it, therefore, we should make more money theoretically, from our billing system. And if it's another franchise location, that may not be doing so much, maybe it scales in that direction of... Again, it's based upon annual revenue sales, whatnot, that walk through the door instead of a flat franchise fee.

Akash Khanolkar: Yeah, I mean, we have customers that do the usage basis, like revenue percentage, and that's... I mean, that's very common. That's very common, and we see that... I mean, we also see that in the payment space, right? I mean, in terms of how you bill end customers. So you're saying, " Okay, we're getting paid out based on the percentage of revenue you bring in." No matter what, or let's say yeah, you're a franchise owner, you're Burger King, you say, " Okay, so for every Burger King, we take a certain percentage cut of this, whatever the revenue that this restaurant makes." So yeah, I mean, that's-

Ryan Cramer: Almost like a commission, of sorts.

Akash Khanolkar: Yeah. I mean, yeah, exactly. It's essentially a commission. Versus, okay, flat fees, right? I mean, you open up that Burger King, and, well, if the flat fee is just too significant, I can't even open up the Burger King. That Burger King will never ever get opened up, because the flat fees would just be too hard. Then the friction, the upfront friction is too great, but if there was that revenue share component to it, like, okay, as my revenue grows, I'm going to pay you a portion of that revenue, I actually can start my Burger King, finally. I could start this new Burger King. I could start five Burger Kings, because I don't have that... Obviously, the reality of this example is just I guess we're speaking crosstalk

Ryan Cramer: Right, we're hypothesizing.

Akash Khanolkar: These aren't hypotheticals that the realities for a Burger King, I'm not sure.

Ryan Cramer: We're not CEOs of... Yeah, we're not CEOs of Burger King or anything like that. Well, I would also think too, like the negative side, I'm going to be devil's advocate always in these kinds of conversations, to your theoretics of... And then I think that the base model is just operation cost, and then just what it would take to either open it in general, and that's probably based upon the retail location of the land, or the building operations or whatever that's baked in. I'm not really even sure what the revenue stream is going towards. Again, it would be going towards corporate, the rest of it is owned by the franchisee, or that's what they earn out. But in terms of like just the base model of them using that service, you would think they would want to have a product almost inaudible... Is it almost like this deterrent of so that, like you said, now I can open five Burger Kings. Everywhere I look is there's a Burger King. To a point you don't want your product to flood the market. It used to be absolutely everywhere, and it'd be just like overwhelming to a component. Almost like a Starbucks model, like everywhere you turn, it's on a corner. It almost would feel like that that is the base fee, or they are based on that model, because anyone can open up a Starbucks. They always want coffee. They can do that, based upon how many people are walking through that door, but there's no... From Burger King corporate, or... It's hard to think too, because there's so much that goes into that franchisee model. I would think that there would have to be like just a business cost and know what to expect, instead of inaudible open up in the middle of nowhere. If I have 10 customers a day, that's great. If I have 500 customers a day, that's completely different. Like that's where the model goes, but at the end of the day, you're still making money off those people, so it's hard to say how much is too much, or inaudible some sort of base, as well as an earning percentage that's on top of that.

Akash Khanolkar: Yeah, I mean, you can slice and dice this, and that's the point. You can slice and dice this thing however. And it might just be flat fees, or it might be, like you said, flat fees, plus traffic, plus revenue percentage. It could be so many different things, there's-

Ryan Cramer: Right. Well, and those are physical tangible products, I know you guys at Octane use special crosstalk

Akash Khanolkar: Yeah, crosstalk. Yeah, exactly. And when you think about it, you think about it, going back to the gym membership idea, I mean, the fact that it's a physical location, and a gym is about the people around you, it might never even... Competition is different. When we're thinking about competition for a gym, it's about the other gyms in that location, as opposed to enterprise software, where it's completely global. There's different criteria there, there's different problems to solve.

Ryan Cramer: Especially in the repeat business model of, you're not going to eat, you hope, you're not going to be eating at Burger King every single day. The repeat business models is almost the... It goes into the acquisition cost of how often can I get this person through the door, by knowing that they're not going to be doing that every day? When it's a software- based solution that you might be using for your business, or just in terms of operating for customers on your level that they're going to be using that service or software continuously, like a cell phone, or... But there's not a day off, or a time off. All those things make more sense instead of a usage- based model of physical tangible products, where you can't just consume it every single moment of every single day. That'd be impossible. With that being said, where's the future... If it's pointing in this direction, where does it continue to grow and evolve? How's that look for businesses? If I'm a software owner right now listening to this, or if I'm a business owner, entrepreneur, e- business owner, what should I look for in the future, in that regards?

Akash Khanolkar: Yes, so we are definitely going to see... I mean, in the shorter term, and I mean in the next two, three years, we're going to see a pretty significant movement towards a lot of enterprise softwares just moving to usage- based billing. There's going to be organizational changes that happens because of that. It's more about the product selling itself than a salesperson coming and saying, " Buy my thing, buy my thing." I think there's going to be a lot of just organizational... There's going to be a lot more focus on customer success than there is going to be in like pure sales. I mean, I think there's... We're going to just see a lot of changes there, and it's more about just building incredible product that people love and continue to grow and use. That's in the next two to three years. I think beyond that, we're going to just see really advanced billing capabilities, like saying, " Based on..." And again, this is not across the board, every single company can leverage this, but surge pricing, I'm sure that surge price... I think about the Uber surge pricing. I'm sure that there's going to be aspects of that in any product, and any enterprise software, or... When I say surge pricing, I mean the fact of maybe certain hours or times things might be cheaper, versus other times, and-

Ryan Cramer: Almost like a seasonality, or something like that.

Akash Khanolkar: Yes. For examples, yes, seasonality could be part of it. It depends on the product, but I think we're just going to see a lot more advanced capabilities from a billing and pricing perspective. Yeah.

Ryan Cramer: And for international commerce, because that's where we dabble in, international payments, is there some sort of thought around that model too, of... Obviously, currency fluctuations go up and down constantly, but if you're trying to do something on an international scale... The reason I ask this is because international commerce represented about 20% of business last year in the e- commerce space, so that means if somebody was buying your products, 20% of your customers are coming from a different location, different country than crosstalk... Yeah, and that's globally. Is that something where this model fits into that as well of more of like a currency, because country to country there's all these different regulations requirements in that regards, but then also you have the... This is our inaudible, but you have the blockchain of a Fintech of cryptocurrency and things like that, where it's not regulated by one country- centric thing, and it's hard to predictively say what the value is on that. Is there anything that you're seeing in the future inaudible about in the regard, around blockchain, cryptocurrency or international currencies?

Akash Khanolkar: Yeah. I mean, I'm not... At least in the enterprise software space, I'm not seeing too much about that. Obviously, from an international payments perspective, there's always the conversations around regulation, and rules and regulations there, but specifically in regards to crypto, I'm not seeing too much... I just don't know too much about it, to be honest.

Ryan Cramer: No, you're fine. I mean, we've mentioned in our inaudible like with PayPal being accepted, accepting cryptocurrency, you look at companies like Tesla, they were accepting Bitcoin for a while. All those kinds of transactions happen on a consumer to business level, but business to business... I've always told people this. It's really hard to understand the regulatory aspects of one company can value something so highly, yet another one can completely just shoot it down. Does that make sense of, they don't see the value, they don't see the... Doesn't make sense to them as a business to either operate, to hold, can exchange that sort of currency, their goods for that service, or that currency, just because of, if it goes away, it goes away, and then you're out that valuation of whatever that currency is at that juncture. It's hard to say that in regards of globalized, or what is accepted across the board, and what that value dictates in that regard. Is software where we're going to see much of the innovation in this regard, or is it going to be more of a service to service, or business services that are going to really drive the needle? Who's going to be driving this innovation, moving forward, that you think? If it's not you guys. I'm assuming it's going to be you guys, but...

Akash Khanolkar: Yeah. Well, I mean, what I do see a lot of times now is that just the... There's software companies that are coming up that are making it really easy... Well, one, to just accept so many different forms of payment, and that interface is becoming available to enterprise software, so what we're seeing is okay, buyers, maybe they want to pay for something with crypto, and then now there's a gateway that can support that handshake between the buyer and the seller. And yeah, I think it goes back, and I keep bringing this up, but it goes back to flexibility. We're just going to have a lot of options as consumers to buy things, how we want to buy things, when we want to buy things. I mean, we talked about like a firm and how you can actually even pay for things that... That's really the big change that we're seeing in the Fintech space. You can buy things wherever with however-

Ryan Cramer: However you want.

Akash Khanolkar: ...however you want to do it, and it's super easy. Startups, like software companies like Octane, we're facilitating that flexibility. That's really what it is.

Ryan Cramer: And that's where the value is, I think, for sure. That being said, with Octane, what are you excited about moving forward with as the company evolves into Q4 and 2022 and beyond? What's that exciting nature for the company that you are developing and your team are developing, and helping people create that flexibility for themselves?

Akash Khanolkar: Yeah. I mean, we're excited to partner with companies and create just new revenue potential for software business. I really feel like every customer we onboard, they're like business partners. I mean, we're helping them create new billing models to charge their customers and do that in a reliable way. I mean, that's a pretty amazing experience that our team gets to have every day, and our objective is to find new ways and more ways to make them even more profitable, and we have some interesting ideas on how we hope to do that. And that's the... I mean, that's what we're pretty excited about.

Ryan Cramer: Amazing. Well, hey, thanks for coming on today and spending some time just educating our audience. Lots of people were tuned in for the whole time, so I know what we were talking about is fascinating, just in terms of that regards, but if people want to learn more information, connect with you, how do they get in touch with you?

Akash Khanolkar: Yeah. I mean, email me directly at A- K- A- S- H, akash @ getoctane. io. Happy to field any questions, have a conversation. Yeah.

Ryan Cramer: Yeah, we'll put it in the comment section too, so then people can... Obviously, for the website where they can go to, it's getoctane.io, and people can check that out. If you're interested to learn more or talk with Akash and his team, go ahead and do that and reach out to him via email as well. Hey, thanks so much for hopping on Crossover Commerce today, just talking through... Now, I know a lot of it's theoretics, and you and I see that in very similar light. I always like to push buttons and see, does this industry pertain to this industry? How it overlaps. How can we keep it separate? Is it more going to be overlapping just even more so? I think that's what's exciting about the future of development, innovation and companies like yours who are just making more viable, and people have options. And options are good thing in a lot of inaudible, unless you are a very indecisive person, so that being said, thanks for building out that and hopping on Crossover Commerce today, Akash.

Akash Khanolkar: Thanks. Thank you so much for having me, Ryan. Appreciate it.

Ryan Cramer: Absolutely. And again, everyone, thank you so much for hopping on another episode of Crossover Commerce. Again, just so much information to dive into. I sit here and think to myself constantly when I'm just listening and learning from people like Akash and his team just the simplistic nature of, when you have choices, that's a good thing, and innovation comes from making those choices easier and easier for businesses and companies and consumers to use. With that being said, I want to thank everyone who's listening to this, or who are watching today live on Facebook, LinkedIn, YouTube and Twitter. Again, this is presented by PingPong payments. You can check out and sign up for a free account with PingPong payments today. You can do that by checking out the link in the show notes or the comment section below. That being said, we'll catch you guys next week on another series of episodes of Crossover Commerce, but until then, make sure you guys all take care. We'll see you then.

DESCRIPTION

Ryan Cramer of Crossover Commerce talks with Akash Khanolkar of Octane one-on-one about the future of enterprise billing.

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Today's Host

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🎙 Ryan Cramer - Host

|Partnership & Influencer Marketing Manager

Today's Guests

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Akash Khanolkar

|Co-Founder of Octane