Evaluating funding options for Amazon and eCommerce sellers ⎜ Payability ⎜ EP 134

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This is a podcast episode titled, Evaluating funding options for Amazon and eCommerce sellers ⎜ Payability ⎜ EP 134. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Jacob Schwartz of Payability about evaluating funding options for Amazon and eCommerce sellers.</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>

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. Happy Friday, everyone. Welcome to another episode of Crossover Commerce, presented by PingPong payments. This is Episode 134 of Crossover Commerce. I'm your host, Ryan Cramer, and this is my corner of the internet where I bring the best and brightest of the Amazon and e- commerce industry to help get some knowledge and to help you level up your knowledge of the Amazon and e- commerce space, apply it to your business model, and hopefully moving forward and helping you grow. We're growth partners, therefore that's what all this podcast is about, is growing your business to move forward. That being said, Crossover Commerce is presented by PingPong payments, now helping over a million customers worldwide and transferring over$ 115 million every single day, to a grand total of more than$ 90 billion overall. PingPong payments is now helping and being a growth partner to e- commerce and Amazon sellers worldwide, helping you pay out your VAs, your manufacturers, your suppliers, and even your employees worldwide and receiving in different currencies no longer a problem with PingPong. Go ahead and sign up today in that link and click below. It's going to be fantastic, so go ahead and sign up for free and start saving money and put it to your bottom line today. And speaking of money, that is what we're going to be talking about today, financing and just funds in general. Lots of people know that being an entrepreneur is expensive most of the time, in the fact you can go back to the good old days of taking out a loan and applying it to either retail or storefronts, or just in general goods. But we're going to be talking about applying capital to your Amazon business or your e- commerce business and helping that growth to spur further growth down the road. And that's what we're going to be talking about, of course today. So without further ado, of course, on this Friday, we're keeping it casual, but we're going to be talking about finances. Hopefully you're getting paid hopefully maybe today, but that being said, it's payday every day for him and his team over there at Payability. Jacob Schwartz from Payability. Jacob, what's going on, man? How are you doing? And where are you... Not calling from, where are you coming from inaudible today?

Jacob Schwartz: I'm good, Ryan. Very nice to see you. I am out of Astoria, New York. Born and bred New Yorker, I've been here for my entire life, and actually my last week here in Astoria. Will be making a move over to Brooklyn Greenpoint next week, so-

Ryan Cramer: Really?

Jacob Schwartz: ...crosstalk process of one of those hefty moves. And yeah, it's been good. It's been a great experience. Astoria is one of the melting pots of New York and food culture. It was an overall great experience, and I'm very happy to be here on this gorgeous Friday afternoon here in New York, so how is the weather over there in Indianapolis?

Ryan Cramer: Yeah, so Indianapolis, for the listener who is listening to this, Indianapolis is in the Midwest. If you're not familiar with the United States, it is a humid melting pot. It feels like if you walked into a sauna, and then if you open the door and you sat in there for about five minutes. It feels like that constantly. It's a wet blanket when you walk outside, so the Midwest is just weird melting pot of all sorts of humidity, heat. It's also cold, and we have 18, 000 different seasons, so next week it could snow for all I know. I'm not really sure, so. But yeah, it's pretty hot and humid today, now that we got... It's always weather, but yeah, working inside, it's always a blessing to have air conditioning, for sure, so. But yeah, it's cool. So you're moving to Brooklyn. I don't know the distance wise in terms of that, but why move to Brooklyn? Is just more opportunity there, or company made you do it? What was one of those things?

Jacob Schwartz: Yeah, great question. I mean, Brooklyn has just always been an attractive borough for myself, specifically North Brooklyn, Williamsburg, Greenpoint is... It's a young hip, happening area and I'm going to live about two blocks away from McCarren Park, which is one of the big parks in Brooklyn, so to have that asset by me and be able to have a little bit of a different culture, younger culture, it's what I'm excited about. The bars, the nightlife, and that's really what Brooklyn brings to the table.

Ryan Cramer: Yeah, I love that. And I actually have friends, I want to say running around New York City right now, so when you said move to Brooklyn, I was... It seems like New York has all of its eyes on it, like opening back up and lots of things are happening, so that's really exciting for you and the team, so on East Coast. You've been in finance for quite a while, right? What's that financial background, if you will, to paint the picture for our listeners, our audience, and then why jump into Payability? Because you've been here for a decent while.

Jacob Schwartz: Of course. Yeah, so I'll start at the very beginning. Back in 2015, I started at a company called OnDeck, which is one of the largest direct lenders to brick and mortar, and pretty much all small businesses. Started my career out in sales, direct sales for this lender, and pretty much paved the way for my career to this day was building that interest for FinTech, for financing for lending. Overall, I pretty much started out there, outbound hustling, calling cold leads and working my way up to more of a inbound structured seasoned role where I was getting a little bit more of a dense pipeline. And from there, I moved over to another company called Fundera, which is a marketplace for all business lending options. That was a huge change up. It was moving over from a direct lender to a marketplace, essentially going from selling one option to potentially 50 or 60 is... It's a lot. It's definitely a lot, and there's a lot of financing options out there, and that's really what I learned at Fundera, is everywhere up from government SBA financing, down to FinTech, line of credit factoring. Pretty much got the full rundown of every single option on the market for any specific inaudible out there, so Fundera pretty much gave me that base of what this financing landscape looks like, and OnDeck gave me the first stepping stone of what lending and what financing is. And then from there, I moved into business development and to where I'm at today in partnerships over at another company called BlueVine, which is another very, very large direct lender. And essentially there, managing the channel partners and partnerships, getting the lay of the land for how to build revenue from partnerships, pretty much indirect sales is how I call it, and being able to drive deal flow from our partners. And from there, I was able to take on this role and move into e- commerce at Payability. This was during the pandemic, and there was a lot of excitement around e- commerce, Payability, what everything was going on with the model and our company, so it was a very, very exciting opportunity. And I'm still learning about e- commerce every single day, but it's been a journey and here I am heading up the business development and strategic partnerships team.

Ryan Cramer: That's amazing. Our paths are very similar in context. My background comes in e- commerce focus and SaaS, and then I moved into FinTech here, just a little bit opposite. FinTech moving into e- commerce, so that being said, I think a lot of people who are listening to this is what's the most surprising thing as a numbers person, and then coming into the e- commerce world or online world, what are the most surprising aspects that you've noticed, and what are the easy similarities that you think are FinTech speaking to? Because we're both FinTech companies by definition. inaudible payment, who sponsors the podcast, but then also Payability, very similar context doing different things. What are the similarities, but then also the surprises that you've encountered along the way?

Jacob Schwartz: Yeah, great question. In regards to similarities, I think the number one thing is cash. Cash is king, and all businesses will always need capital to grow. And that is always going to be the largest similarity for every industry. The other similarity is there's not much of a difference between a brick and mortar and an e- commerce when it comes to growth. I think a lot of the funding solutions can fit in as long as the opportunity is there. And that's really what I've learned along the way. I think the main difference here is that e- commerce is so new compared to traditional lending and brick and mortar lending, is that it can be viewed as risky for some of the FinTech lenders, for some of the traditional lenders. And it's really just such a new space that it is hard to underwrite and hard to predict the future of e- commerce, so when you think about brick and mortar have been around forever, commercial space compared to strictly selling online, those are just the main differences. It's new industry compared to how the world was before.

Ryan Cramer: Absolutely. And with that regards, I think it's really fascinating because we see this ebb flow of people in trying to get online. You actually recently just actually came back from a conference which I think a lot of people-

Jacob Schwartz: Yes.

Ryan Cramer: It's this measuring stick of where the industry stands now today, right? A lot of people if they don't know, the Prosper Show happened a week or so ago now, maybe a little bit longer than a week. It feels like a decade ago for a lot of people from what I hear, they're still recovering from it. I think that was one of those things, is like after 18 months or so, people are understanding that there's so many trends that happened during lockdown or COVID, or just during quarantine in general. And then all of a sudden, you see those trends start to emerge back when you can converse with people and you get everyone into a room to talk at once.

Jacob Schwartz: Of course.

Ryan Cramer: So that being said, you were there in person, on the ground, boots on the ground, having conversations. What are the most noticeable things, if you can highlight for us who weren't there, or were there? What are the most interesting trends as like a numbers guy, or just in general for this industry?

Jacob Schwartz: Yeah, great question. Overall, just got to say, Prosper, this was my first Prosper experience, was absolutely amazing. The people, the booths, the vendors, everything was spectacular, and just to have that energy of... Maybe it was about 2, 000 to 3, 000 people in a room, was absolutely amazing and awesome to see from a business development standpoint. But the major trends, number one, the aggregator space is booming, and we are seeing players pop up left and right. And we are just seeing people come over to our booth that we have never heard of, and companies that are popping up that are brand new. I mean, the aggregator space in itself is really only one to two years old, so when you think about this, it is really exponential growth at this point. I'd say the other major trend was this shift to Walmart and the need to talk about Walmart sellers, and the growth on Walmart was very interesting for us as a company. How do Amazon sellers expand into that market, and more so, how there were Walmart sellers they're looking to get knowledge on Amazon, so that was interesting as well. And then obviously the PPC industry and the the exponential growth that we've seen there with some of these large companies, and how they were probably extremely underrepresented in the past four years now have such a large presence at Prosper. Those were some of the main trends that we saw.

Ryan Cramer: Awesome. Well, and diving into each of those, there's a lot of nuances that come from them. We've had people on the show in the past, many different aggregators in the space, both new and very popular. With money being the core topic of this in the financing world, are you surprised that this happened all of a sudden, where quote unquote, VC money or venture capital money and potentially eventually private equity money, both two different things, but now has entered the space? Is that a good thing, bad thing, or it's a wait and see what happens still from your lens?

Jacob Schwartz: Yeah. I mean, I think it can definitely be a very good thing for some of these larger players who are established right now. I think, as the barrier to entry is pretty easy to come in and just say, " We're going to acquire and run these FBA businesses." That's what scares me a little bit, is how many of these players going to come in and how many will succeed? And I assume at some point, there will be... I know you've discussed on the show. Some sort of roll up into these larger aggregators, so that is probably the most interesting thing there, is how will some of these smaller guys succeed in this very expanding sea, and how quickly it's happening?

Ryan Cramer: Absolutely. Your job is actually to empower these... Stepping away from these aggregators for a second. Maybe to empower obviously the small and medium sized businesses to grow, and what that looks like for a lot of what your customers see, our customer see, is the ability to have capital and access to it, and also to invest that into a profitable way to ensure they can grow appropriately, but also without taking an arm and a leg and given it and selling it off, clearly. With that being said, the model around Payability is almost like a loan essentially, from what I've understand and very just high level. For people who don't know what financing or lending in this space looks like, how does that work, and maybe how does it differentiate from any other company out there?

Jacob Schwartz: Yeah. In regards to Payability, so we are not a lender per se. Essentially we offer two products here, so more on the factoring in advance side is how we look at it. Payability's flagship product is called Instant Access, which is essentially accelerated payouts for delayed marketplace sellers, so anyone selling on an Amazon, a Walmart, Newegg. You're waiting on those net 14s, potentially out to net 20, net 30s. What we're doing is turning those net 14s into net 1s, so essentially, anyone who's on our Instant Access product is able to accelerate their growth with consistent cash flow to have that cash on hand to invest back into marketing, to inventory. It's really an essential tool for some of those smaller sellers as they want to grow. If this is something that's you want to take into the future and not so much a hobby, to have consistent cash flows is going to be necessary to grow your business, and not just have it like a side hustle. Payability offers sellers, ranging from$2, 000 a month in sales to we have sellers doing$ 10 million a month in sales, the cashflow they need to continue to grow, or just to continue to have that cash on hand. On the flip side, we offer a capital advance product, so we had a bunch of sellers who were on our Instant Access product that said, " Hey, this is awesome, consistent cash flow is great, but can you make me a loan for a more targeted investment?" That's when we rolled out Instant Advance, which is essentially just a capital advance. What we're doing is we're taking a look at historical data, the last 9 to 12 months of sales, and what's going into someone's Amazon store, their Shopify store, and be able to predict what they're going to do next month in sales. And that's generally what we are going to give off in the form of advance, which is generally set on about a 20 week schedule, so relatively shorter term compared to some of the options out there, but really meant for those quick inventory flips, those marketing expenses were, let's just say you have a 5X ROAS as or an ACoS. You're going to see that return quickly, and that's really what we hope with with our capital advance product, is that our sellers are using this in the best way. And then the other end is speed and accessibility. Payability has the ability to produce approvals in under 24 hours, and that is, without a doubt in the financing industry, a very key aspect to how a business owner thinks.

Ryan Cramer: Gotcha. Well, with that being... I'm going to walk through a little bit about that, if people might be struggling or grappling like, hey, how do I even know I need this kind of thing? I think the question always comes up with sellers, at least when they ask me is, how do I know I'm ready for growth, in general? What kind of numbers should I be looking at in terms of, hey, I'm going to be successful, or if I can look at velocity, and then I plug in a new number, which typically comes with more inventory, you can actually sell more? If you could take the rate at which you're selling and you plug it into your formula... I'm assuming that Payability works on some sort of, hey, how quickly they're going through or turning over inventory, that way, you can somewhat predict how long before you can get money, or you need money back into a supplier and whatnot. How do you know when they're ready? Is there a timeframe, or is there a number metric that you're looking for?

Jacob Schwartz: Yeah, I think that's a great question. I mean, obviously a lot of our customers are coming to us with the request for financing, so they're at that point where they think that they need growth. And I think that the major factor for us is looking at the last 90 days and being able to see are these trends moving in the right direction in terms of sales? If we're looking at those last 90 days, we want to see that graph that's moving up into that right quadrant. The upper right quadrant is a consistent growth, so generally, the most important thing is that we are seeing month over month of growth on sales. And that's always going to be key.

Ryan Cramer: Okay, so with that being said, is it... What happens if I'm a seasonal product and obviously have seasonality with everything? Month over month, it's obviously going to dictate there's going to be inaudible months. How does that come in effect with a model like what you're describing?

Jacob Schwartz: Yeah, that's a great question. In terms of seasonality, obviously that's something that we account for in our underwriting model, is that there are seasonal businesses. And it's something that I always suggest, is don't go looking for the financing exactly when you need it. Go a little bit before and make sure that you're setting yourself up for success, so more so being able to present your file as a reasonable business to give off a potential offer. So yes, we understand seasonality of products, and that does factor into our underwriting model, but that does not preclude anyone from getting approved, that's for sure.

Ryan Cramer: Gotcha. Well, that's good. Obviously, I think a seller would go and say, " I realize that my products are seasonality, and a lot of people like to plan for that in forecasting." And speaking of forecasting, I think last year was... And even still nowadays, there's wrenches thrown in trying to forecast in terms of goods that are needed, supplies, how often to forecast for inventory. And that's the biggest hurdle right now I think a lot of sellers are understanding is not just the fees that they continue to creep up. We've seen over the past 18 months, containers become four times more expensive than they were in 2020, even 2019, and prices continue to increase and ebb and flow. How does that also factor in with as sales continue to rise with them, and costs continue to rise as well? You're not seeing maybe that margin, if you will. There's no gap that you're closing. How are we assisting in that growth model if you can't forecast inventory longevity, or even just getting here to be able to sell through it?

Jacob Schwartz: Yeah, that's a great question. And I think it's... I mean, in terms of what we've seen over 2020 is obviously we understand that the cost are rising, and that margins are shrinking. I mean, the one thing with our Instant Access product is we have sellers that are coming in September and potentially leaving in January or February, when they don't need the access or need those accelerated payouts anymore. It's one of those products on the factoring side is that it's a pay, you come and go as you need it and don't need to continue to take on that debt or that extra fee to be able to fund your business. On the advanced side, obviously I mean, it's something that is playing into the underwriting the rates and terms that our customers are receiving is the margins, obviously, is going to be key in terms of underwriting. But I can say that in terms of modeling, there has been some sort of shift over the past year.

Ryan Cramer: Okay, so when I'm working with a Payability, what are the components that I should have ready at hand? Is there any red flags that people need to look out for or avoid in terms of... Not to hide from you, because obviously financial books are easy to add together. I even had a talk recently. What we do is basically ninth grade math or even lower. Its ratios and it's putting margins back to your bottom line in terms of conversions and saving money. But that being said, you guys have to look at all these forecasting models for future, not actual numbers, so what numbers do they need to be have important and have ready at your disposal if they're going to be looking into financing like that?

Jacob Schwartz: Yeah, of course. And obviously we have an API connection with Amazon, and we're getting access into someone's Shopify store, per se, so I mean, some of the major trends are obviously going to be the number of products, the categories that you're in, the sales velocity, the conversions that we're seeing there. Yeah, just to dig a little bit deeper. Yeah, like I say, number of products, order returns and refunds, marketplace payments. Yeah, these are just some of the off the top of the head, but I'd say always first is probably existing debt. If you have any existing debt out there, it's always going to hinder your process to get more capital. You're essentially over leveraging yourself if you have too much debt, and as a provider, as a facilitator of capital, I think that's always going to be first to us, is to see, hey, have you taken on any capital in the last 30, 60, 90 days, and how is that going to affect potentially a weekly or a monthly payment that's going to be coming out of your potentially business bank account?

Ryan Cramer: Great. How are people paying you back if you're upfront? Is a like just instant access to their funds, or is there a schedule? How does it work? I'm always telling myself... You were talking about not a loan, but obviously financing this, you would need job profits in their corner. I want to think like I'm thinking through like as a seller. There's so many different variables that inaudible, right? As I might have to have a Prime Day, or I might have to compete with competitors. My price is going to fluctuate, my price might go down for a little bit. How are they, at the end of every two weeks when Amazon pays out a customer, is that when they have to instantly pay back, or how do those terms work? Because this is something that I'm personally curious about and how, if I'm going to invest in a company or have a company invest in me, I want him to be friendly on my terms, ad not just like be... Like I said, I think the term is like house poor. It's all fancy and looks good on the outside, but on the inside like nothing is still working, we're back to square one. So how does that work?

Jacob Schwartz: Of course, yeah. And that is always the best question in terms of Payability, as it is a little bit confusing on the Amazon side. Generally we want it to work for the customer, so generally, we will be in a flow of funds with Amazon per se. Where Amazon is paying us directly at the end of that 14 days, and so what we're doing is on the ship level, we are fronting between 70% to 90% of sales upfront. What you're getting essentially is a Payability dashboard is access to that 70% to 90% of sales, which you can go ahead and transfer over to your bank account, or put that on a Payability seller card, which offers up to 2% cashback. We have sellers that are utilizing that cashback card, essentially just a glorified debit card, to gain cash back and then offset their fees completely, and essentially have access to their capital for almost no cost. And yeah, that's really the benefit there. Amazon is paying us directly, we're releasing that additional 10% to 30% when Amazon pays us. We like to be in that flow. And then on the advance side, generally that's a credit and debit into the business checking account.

Ryan Cramer: Okay, so what about if this is like a one time, like I'm just scrambling for inventory if something happened to it, or there's a delay or act of God? Heaven forbid my inventory gets stuck on water, or it gets overthrown and just delays on terms of access to capital? Is that something they tap into more with you guys, or how does that work if something with goods they need to repay for, or if... I'm trying to think in that flow of something like catastrophic happening, just to put minds at ease of saying, " Listen, you're not going to owe any more here." Or whatever that looks like in that end.

Jacob Schwartz: Yeah. I mean, in one- off situations like that, so you're saying if somewhere on our factoring product, and something like this were to happen. Of course, we understand and that these situations arise, so we are working with every seller on an individual basis. But I mean, generally, you have a 30 day notice in terms of cancellation, so if this is something that's not working out in terms of your business, you can go ahead and cancel with Payability and come back when the time is right. If you can't afford that cost or that additional cost, or if you foresee some issue in terms of payment, obviously that is something that we can work with in terms of cancellation, or being able to rollover, essentially, those costs.

Ryan Cramer: Gotcha. If I just wanted a one time investment in my ecosystem, that's also doable and can be done, correct? Like I just to tap in for five grand or something like that, like a quick tap into and then pay off and go separate ways. That's a functionality, correct? As well.

Jacob Schwartz: Yeah, that's a great question. With our capital advance, essentially if, let's just say you're on our factoring product and you need an additional$5, 000, you can go ahead and apply for that capital advance and get that structured$ 5, 000 investment that you need, so we take a marketplace agnostic view. And that's really what's beneficial to Payability, is that if you're selling on multiple channels, multiple marketplaces, we're going to take that holistic viewpoint of hey, you're selling across Amazon, eBay, Walmart, and we're not going to pigeonhole you to one specific marketplace. Whereas if you're on an Amazon lending, you're strictly on your Amazon sales or any other product out there, like a Shopify capital, so that's really what's beneficial to Payability, is that we're looking at the whole picture, not just one end of the business.

Ryan Cramer: Gotcha. Since you guys crosstalk that looks at e- commerce and not just Amazon specifically, your functionality also applies to sellers who are working on Shopify, as well as... Excuse me. Walmart marketplace, is that correct?

Jacob Schwartz: Correct. Yeah, and we power Newegg's capital solution, so it's Newegg Capital, powered by Payability. For their third- party sellers, they're able to get access to our Instant Access product through their platform, so that's something that's special to us. And on the partnerships team, thinking about to replicate those relationships and being able to expand our marketplace reach. I mean, we want to be able to assist every single seller out there.

Ryan Cramer: Awesome. So what's the exciting thing internally at these different marketplaces? I'm a big proponent here at PingPong. Obviously, we're growth partners, and we love working internationally with all sorts of sellers and tying into like Rakuten and MercadoLibre. And you mentioned Newegg, Wayfair, all those types of marketplaces, which, by the way, welcome to the e- commerce world. If you don't know those exists, those also third- party sellers are selling on. As brands continue to grow, and it's my personal belief that brands starting Amazon and then they work outward, and it's a little bit easier of a journey. But as they continue to grow, what's the exciting thing for Payability moving forward? Is it a certain marketplace? Is it a certain area of the world that you're able to tap into yet? What's that internal discussion going on?

Jacob Schwartz: Yeah, that's an awesome question. And from my end on the partnerships team, and what really excites us is this idea of embedded FinTech. And so taking that relationship like a Newegg, and how can we replicate that process with pretty much anyone within the industry? Even if you're offering say a PPC analytics tool, or you're offering a sourcing tool, how can we embed our solution into either the Amazon ecosystem or into other marketplaces to provide that seamless UX for users? And that's really how we want to see it, is that embedded FinTech, embedded solutions are here to stay, and how can we take the Payability solution and embed that pretty much everywhere where it's applicable to harness our customers?

Ryan Cramer: Gotcha. With that being said, and growth forecasting in that regards, how are... I guess, what's the scariest thing that you're hearing customers say in terms of world of uncertainty, or like... Money is so sacred in terms of this world, and you and I both know that it's the most sacred thing to invest into, but also to keep it safe and secure. How are all these things playing about on your end in terms of like safety and security, and allowing people to just understand, hey, we have your back? There's nothing that's going to happen with your information, or just funds, or in general, and we're not trying to take advantage of sellers in a predictable circumstance. What are those conversations like on that end, in that crosstalk

Jacob Schwartz: Yeah, of course. Yeah, and that's obviously number one that comes up from a traditional sales call is that ourselves, we're using the same encryption as a bank, so in terms of information and security, your information is completely safe, and to say that there's any sort of breach there is just not really applicable to us. We don't do personal credit checks, so we're not doing dig deeps, digging deep into credit and business credit and things like that, so yeah, it's really just the encryption level alleviating those issues, and letting them know that we don't foresee any issues of security. It hasn't happened in the past, and that if you can trust your Chase Bank, you can trust Payability in terms of security. I mean, I think the other bigger picture is cost. And obviously, we're getting into a conversation with every single client is, so how can you explain costs in the most transparent way? How can you make this make sense for my business, and then how does this stack up in terms of... Obviously, the APR question comes up amongst the financing industry, and those are some of the main pain points and concerns that probably most of our sales team see on a day to day basis.

Ryan Cramer: For you, is there a nightmare that you constantly have waking up in this space yet? Have you developed any worst case scenarios that are constantly going on in your head?

Jacob Schwartz: Worst case scenarios. I mean, obviously I'm sure the one that comes up with everyone is maybe one day Amazon wakes up and decides to flip a switch and everything changes in terms of... On our end, obviously accelerated payouts that now what if everyone's getting paid out every day? Obviously this is something that Amazon can't really do per se, due to obviously a ton of things, so that's always number one in terms of paranoia and waking up in the middle of the night. But I guess the other end is competition, just like we're talking about in terms of these aggregators, there's a wide array of competitors in the e- commerce funding space, and we do see them pop up on a day to day basis. And I guess we're trying to figure out what is the secret sauce? What is anyone doing that's different? And at the end of the day, I mean, Payability has been around since 2015, 2016, so we really have this data and this leverage of data. And that's really something that keeps me sleeping at night, is that we have been around so long, and that we can predict these things and have historical data on the past.

Ryan Cramer: Gotcha. Looking at since you come from a majority of a FinTech world, Jacob, for a listener out there, there's so many different options, and I know I constantly talked with our partners or even just sellers that are like, " Oh, I'm paying my supplier with PayPal." Or something like that, in USD, and they're in China. A lot of sellers who we work with internationally are trying to find the most convenient ways possible. A lot of that has to do with the US dollar. Is there a currency or an economy that Payability is very much friendly towards in terms of helping with financing and lending? If I'm a seller in country XYZ, is it actually more friendly than if I were in a different country with a different weight of currency? Does that make sense?

Jacob Schwartz: Yeah, that does make sense. Payability strictly supports dotcom marketplaces, but yeah, we have the ability, so anyone who's selling, say in the UK or in China, if they're selling on a dotcom marketplace, essentially we can go ahead and set them up with a PingPong account on the back end to go ahead and convert that currency. crosstalk

Ryan Cramer: Look at that. Oh, man, I didn't even tee you up for that. That was beautiful.

Jacob Schwartz: This was not planned, everyone. This was crosstalk

Ryan Cramer: crosstalk. I have no questions, I'm just going off the top my head for a listener out there. They should know this by now. A listener out there knows that I don't have any planned set of questions, it just naturally flows. And you're right, we do help with the functionality on the back end with that, so that's the partnership aspect of this, is working with other companies too. Since you're getting a gauge of the e- commerce space, I come from a world of competitive SaaS technology, right?

Jacob Schwartz: Yes.

Ryan Cramer: Everyone's trying to say, " Use my tool, don't use that tool." Which I think they're all fascinating, but believe it or not, they're all talking to the same data points. They just look different, or they feel different, and they're just a little bit different functionalities, maybe a couple tweaks here and there. Finance world is a little bit different. It's all rates and what projections can be in how you really... It's almost like... Is this the fair way to look at and say it'd be risk tolerance?

Jacob Schwartz: Mm- hmm( affirmative).

Ryan Cramer: Maybe that comes up a lot in the financial world's jargon, if you will. Is there like a, with your competitor, how do you compare apples to oranges? If three companies line by line look at the same customer, what's different one versus the other, versus you guys? And then you get different numbers all over the board. Does that make sense?

Jacob Schwartz: Yeah, that does make sense. I think it's important to differentiate here. I mean, in terms of the advance side, obviously when you're giving capital in the form of an advance, there's only so many data points that you can check and differentiate yourself from giving a capital advance, so it's a pretty standardized product, I'd say. When you go to some of these larger providers, it becomes the dollar size, the term length that you can give out if you're given an equity portion to this deal, what that looks like, and what those rates and terms look like. So yeah, it's really always going to fall back to the rate, the term, what can this provider offer me? I think on the other end here is that a lot of these providers, these lenders, it is a big market and inaudible can get scary for an e- commerce seller, or for any business owner, is that you go to Google and you're typing in business loans or business funding, and usually those top three or four options might not be the best option for you, so I just implore everyone to dig deep in terms of financing and really look for the specific option, and always apply with multiple providers to see what your best option is.

Ryan Cramer: What's the most excited you got when working with a client and saw that they were able to grow XYZ? Is there a feel good story that you're able to help usher along, and maybe paint a picture for a seller or listener out there who's like, " I want a real world application." Were just stuck in a rut and then all of a sudden just like a little nudge in the right direction, a little bit of assistance, almost like walking them across the road, if they're trying to find their way, and you were able to walk them across safely from oncoming traffic. Do you have a story like that?

Jacob Schwartz: Yeah, I do. And I mean, it's a story that that is pretty much Payability general. We had a client, Josh at Go Buddha, and essentially, he was the chef at the Cleveland Indians before the pandemic hit and-

Ryan Cramer: No longer the Cleveland Indians now. Fun fact, right?

Jacob Schwartz: Correct. Yes, yes.

Ryan Cramer: They just changed their team name. Anyways, side note.

Jacob Schwartz: To the guardians, yes.

Ryan Cramer: The Guardians, okay.

Jacob Schwartz: Yeah. No, that's it.

Ryan Cramer: For those listening-

Jacob Schwartz: crosstalk

Ryan Cramer: Yeah, it's a baseball thing, if you're a big fan like myself, and I'm assuming Jacob, so. Go on, sorry.

Jacob Schwartz: Yeah. No, I'm a big Yankees fan, and it's not going too well for us ever. But yeah-

Ryan Cramer: I'm a Cubs fan, it's okay.

Jacob Schwartz: So when the pandemic hit, Josh at GO Buddha had to pivot, and he pivoted to an online meal prep kit, and essentially was able to set up shop. And it's really just the story of the pandemic and the story of growth with Payability is people have pivoted into e- commerce, but no one is going to take a chance on a business that's been around for two, three, four months. It's really unheard of in the industry, and that's really where Payability came in, is that we were able to give him that opportunity and be able to fund him on an advanced product and be able to give him the capital to continue to grow. That being said, Josh went on to continue to grow the GO Buddha business and went on to do the opposite of what sellers do, is that he opened up a brick and mortar location with his success, so sort of the reverse of what sellers do. Josh is continuing to thrive and it really comes to having that growth capital to start out. And like I was saying, not many people are going to take a chance, not many providers will take a chance on someone who's that young of a business. And that's one of the issues with e- commerce as well, is that if you are so young, traditional lending, FinTech lenders, a lot of them will not take a look at you.

Ryan Cramer: That's fantastic. I love stories like that where, again in e- commerce... This is another thing a lot of people understand, that especially tying it back to the aggregator role when we had this conversation is that businesses have only been really truly around in the FBA sense of third- party selling for about six, seven years, right? Look at historical data. Not a lot there, besides seven years of data. That constantly changes as products become better, people become smarter, data points becoming more ingrained into how to forecast sales and whatnot. You're talking about something that created in a very difficult time when a lot of people were losing jobs, money wasn't being invested, people were putting holds on lots of different things. This person came in, started selling and changed their business model to an online functionality, but now it's really cool to see that person get that opportunity where there is that investment into someone who can continue to grow, whether it be like a chance, if you want to call it a chance, or just smart money, just putting it on the right people who have entrepreneur mentality, right?

Jacob Schwartz: Yes.

Ryan Cramer: Is that the it factor, maybe the secret sauce of you guys? You have to see these people and say, " I get it. I have no problem investing, or I say, taking the chance on these people?"

Jacob Schwartz: Of course. Yeah, and I think the real trade off here is that obviously we're structuring our programs in the short term were we want to see that there is going to be some investment, and that that return is going to come quick. If you have the business model, you have the plan, the ability to produce what you think is going to be a return in that five to six month period, these options make complete sense for you. And that's why for a story like this, in GO Buddha, we're happy to invest in businesses that have the growth potential.

Ryan Cramer: Gotcha. Yeah, and that's the beauty about entrepreneurship and lifestyle. You actually mentioned that you can use Payability to help them invest into retail opportunity. Is that what I heard correctly, or did I misunderstand?

Jacob Schwartz: Yeah, so Josh just went on to grow that business successfully with that funding, and then he took that and opened up a brick and mortar store with his growth.

Ryan Cramer: Gotcha.

Jacob Schwartz: I mean, without that initial seed capital, that initial advance that we gave off, it might have been difficult, and it is difficult for a lot of sellers to go from that$2, 000 month in sales range, or even if you're at$ 20,000 a month, to 100, or 50, or to a million. And that's really what that capital can do for you, as long as you understand your opportunity versus your cost. And that's really the biggest part.

Ryan Cramer: Right. And speed is a very big component, right? And naturally, progression, there might be this uplift and this natural rise in everything for the sellers, but you're speeding up the process even more, right? More sales become more velocity, higher opportunity, more capital to be gained to reinvest back in your own inventory, to just expand the brand quicker, so instead of taking that something that might be 18 months, you're basically fast forwarding to maybe like eight months instead, or cutting off a year of that, or what that looks like. Very cool. Just for clarification, I guess that leads me to one more clarifying point from Payability's side of things, those investments. If I'm working with you, what can I apply that money towards? Is it just inventory? Is it a PPC? What are the things and tangible products or services that I can use this money towards?

Jacob Schwartz: Yeah, that's a great question. Being that this is a capital advance, I mean, it's pretty much open to whatever you want. It's being dispersed into your checking account, no one is saying, " Hey, we're going to check up on you." It's really based on what we expect the growth to be. We're looking at the trends, like we said, of historical data, so we're seeing what your sales look like and we're hoping that these funds are going into inventory or to market. And obviously, those are the two biggest use cases for an e- commerce seller, an Amazon seller, is that if you have a quick 30, 60 day flip, and you can get two to three rounds of inventory flips out of that six month offer, or five month offer, essentially you're lowering your cost of capital completely. Because when you're looking at a 12, 16, 18, 36 month option, your cost of capital is going to go way up when you talk about our factoring. We're giving you the lowest factoring with the ability to go ahead and make those inventory flips. If you have that 5X, 6X ROAS, or ACoS, being able to see that return quickly and understand hey, I'm paying X amount, but I am getting this in return in terms of opportunity. So those are the major things that go into it.

Ryan Cramer: That's very cool. I mean, I'm so excited to hear other growth partners like that in that capability be able to empower other sellers. Like you said, it's almost as if the tide raises all boats. In this capacity, I think it's just really hard for sellers to understand where to trust and where to get those kinds of resources, because resources like and partners like inaudible, for example, getting cash back, putting it in your pocket. I know you guys work closely with them. We're putting more margins to our bottom line just by even paying out in local currency, and you guys are actually helping people with that capability to say, " If I'm here, I can actually be here with a little bit of assistance in that regard." Maybe finally before wrapping up, what's the outlook for you, Jacob? Paint me a picture of good or bad going into Q3, Q4 of what you're looking for, and what's the... You have this landscape and what sellers you're looking to help grow. What is that looking like for sellers going into Q3, Q4? You're seeing good things, bad things, or a little concerning?

Jacob Schwartz: crosstalk

Ryan Cramer: What's the metric, if you will?

Jacob Schwartz: Yeah, great question. I think with the boom of 2020, obviously there was such a large demand, and on our end, the supply, the need for capital going into 2021. We are extremely bullish on Q4 and what that looks like, and the trends that we are seeing is that we're expected October through December, and probably September, to continue to see what Payability have seen over the years, is a large ramp up. And specifically now that a lot of these sellers have grown their businesses substantially, that these holiday seasons will equate to larger customers for us, larger clients that are continuously using our factoring and our Instant Access product. Our expectation here is that we are going to see an everlasting growth into 2022, and into 2023 would be the plan here.

Ryan Cramer: That's amazing. Before we hop off today, you got bigger and better things to do in terms of moving to Brooklyn, which is really exciting. Really excited for you in that regards. But sticking with the financing, you're coming from financial side with technology being so ever changing in this landscape. What are your maybe predictions, or where do you see people utilizing funds and money moving forward? And this is personal, right? You're not speaking on behalf of Payability in this. Do you have a forecast in terms of what finances or FinTech look like as a landscape across the board in the next five years or so?

Jacob Schwartz: Yeah, that's an awesome question, and it leads back to the embedded FinTech. You're going to see providers continue to do this, is embed their financing solution, and that's where the future lies. And it lies in the ability to create such a seamless UX that you can get to a point of one click funded, where essentially, we can API information off and digest that information, produce an offer pretty much in real time. And that would be the hopes here, is that how quickly can... And I think that's the fight with a lot of companies, is how quickly can they produce that offer, and how easily can they give that UX and make that smooth for that transition from one platform to the next, and saying, " Hey, if I'm taking out a Payability Capital offer, do I have to divert from the platform that I'm on, and can I see that offer in real time and what I'm getting?" I think the future of FinTech and finance in the lending, the financing space, is going to rely on these embedded solutions. And then Payability will continue to prove that we provide a sound tool for e- commerce and sellers, and we hope to continue that fight for embedded solutions amongst the ecosystem.

Ryan Cramer: Love it. I love everything you said right there. Is it going to be as crazy as, are we going to be paying our groceries by just walking out, like Amazon Go things, and it's going to be tied to our either thumbprint or something embedded in us? Is that going to happen in the future?

Jacob Schwartz: Correct. Yes, I think that this is all part of the embedded future. And I mean, just one example is we were talking to a bookkeeping firm, and they said, " Oh, we're utilizing an embedded payroll solution." And now they're just able to offer payroll through their bookkeeping solution, so you will continue to see amongst every single industry the ability to embed someone's solution into another platform and say, 'Hey, I'm a one stop shop, and it's powered by XYZ of different companies."

Ryan Cramer: You're talking about inaudible and more ingrained solutions, like a very one systemized processes and ERP?

Jacob Schwartz: Yeah, and it's how a startup can go from providing one solution to X amount of solutions in a matter of time, just by technology and transmitted data, so that is where we see the future. And for us on the FinTech side, there's a lot of opportunity for partnerships and being able to take the Payability solution and provide that amongst all of our ecosystem partners, and a lot of our strategic partners as well.

Ryan Cramer: I love it. I agree again with everything you say. Same thing with PingPong. I think it's really exciting to see where financing, or just money in general... FinTech really just ranges in all these capabilities, and where it's going to get slotted into. It's really cool the engine that you can build, and how they can apply to so many different cars, or different machines and whatnot. Theoretically machines or hypothetical machines. Here obviously, an engine I know we've built is really cool in functionality of just a hole in the market, and you fit it in there. And that's what Payability is doing, which is really neat as well. Is there a... Maybe who inspires you, is there a company or a person that talks FinTech or financing, or inaudible? Put it in that FinTech category. Is there someone that my listener or our listeners should be listening to, or really paying attention to in terms of investments, or like just looking at business wise how they're operating and watching them grow?

Jacob Schwartz: Yeah. I mean, that's a great question, and that's tough. I mean, in terms of, I guess crosstalk

Ryan Cramer: Put you on the spot there.

Jacob Schwartz: Yeah, a mentor or companies... I mean, not to promote other companies, but the large POS providers and PayFac providers like a Square or a Stripe, they have the resources and tools to provide a lot of solutions and be able to do it at lightning speed capacity. And I think they hold a lot of the power in terms of capital and being able to invest in a lot of these solutions, so when you think about the future, it's always we're reading articles on, hey, these players are doing it first. And it's because resources, and it-

Ryan Cramer: Absolutely.

Jacob Schwartz: Yeah, and I think they've got the great ideas, and they've got the resources. And that's something Payability is always going to continue to replicate, is how can we compete with some of these larger players? And I think our solution really fits in with a lot of the same nuances that a Stripe or a Square has. And there's a lot of ability for startups to expand their products and what they offer and be able to compete with these large guys. But I think these large players, for me, have always had my eye to say, " Hey, these people are moving first, they have that first mover advantage. How can we go out and replicate a solution that they're trying to do?"

Ryan Cramer: Right. Well, you guys are in business to business, it's very much a inaudible apples to oranges when you're talking about those companies. They really thrive in the direct to consumer market, or B2C market, if you will. That's what keeps our two businesses very different from them. I know they dabble in a lot, but to be fair, those are two really exciting companies I would also watch and... Is it applied, or... I think it's applied as well. There's a lot of other FinTech, really cool, not just flashy, but very, very cool companies that are tying all these solutions together, which is both good and hopefully they will continue to innovate and grow and help people move forward with datasets, opportunities, and just connectability as well. That being said, Jacob, I know I took way too much time on your Friday. Where do we need to find out how to connect with you if I'm a partner in the e- commerce solution, or if I'm at the next event that you're going to be at, which is... What's it going to be? Event that you're going to be at.

Jacob Schwartz: White Label Expo, and crosstalk

Ryan Cramer: White Label Expo in Vegas, right?

Jacob Schwartz: Yes.

Ryan Cramer: Okay.

Jacob Schwartz: Yes, yes, yes. We will be there, we'll be exhibited, I will be speaking. I will find out exact dates and times, and I can post it here and let you know when I'll be talking at White Label Expo, but that is it. The entire Payability team will be there.

Ryan Cramer: Excellent. Vegas, round two, but you're looking and you're interested in more about Payability, where do I need to go? I put the link there below, but just connect with you. Is it LinkedIn?

Jacob Schwartz: Yes.

Ryan Cramer: Is it any other places?

Jacob Schwartz: Connect with me on LinkedIn. Jacob Schwartz on LinkedIn. Jacobs @ payability. com, or you can reach out to partners @ payability. com. Go to the Payability website, get in contact with our sales team if you're an interested seller, as well, you can find our partner email through the Payability website as well, so those are the main plugs for Payability and for myself, and I hope this has been useful for the community.

Ryan Cramer: Well, I mean, I appreciate you, friend of the show now obviously, with Crossover Commerce. And we appreciate your time, obviously on a Friday, keeping more casual, we're talking about finances and actually using it to apply towards your business and growth future, so I'm super excited that you were able to hop on today. And congrats on the obviously new role since we've connected, joining, and I'm excited about the future of events and obviously meeting with you guys and your team and helping you guys grow as well, so congrats on the opportunities and good luck on the move this weekend.

Jacob Schwartz: Yes, or it's next weekend crosstalk, prepping for it, but-

Ryan Cramer: Next weekend. Yeah, start packing now. That's all I can say right now.

Jacob Schwartz: I've already started. I've got a huge mattress that's right outside my room, I had to take it out for this call, so yeah. The PingPong team has been awesome. It's been a great partnership between us and yourself, and Matt and the team, and we look forward to continuing this relationship, and it's been a pleasure, Ryan.

Ryan Cramer: Awesome. Thanks so much, Jacob. Have a good weekend, and we'll have you guys on again soon. Thank you so much.

Jacob Schwartz: Yes, thank you. Take care. Have a great weekend. Bye.

Ryan Cramer: Awesome. You too. Awesome. Thank you so much, Jacob, again from Payability and his team over there for hopping on Crossover Commerce today. I know this is a Friday, but I want to thank everyone who was able to sit and listen and just involve themselves in financing, and really funding in that capacity. I'm really excited to talk through this with customers. That's one of my passion points, is to find ways for our community to grow, whether it be an Amazon seller or just an e- commerce seller in general. It's super important to know all of the facilities and partners out there that are going to help you take your business to the next level. That's what this is all about. You want to grow your business in different ways, you need some assistance, it's not a bad thing to ask for help. But there are solutions out there to help fix those holes in the market instead of doing it by yourself and navigating the waters. And that's what this channel is all about, that's what PingPong is about, is helping people assist moving forward and growing with the partnership network that we have, but then also helping sellers and empowering them truly to grow to the heights that they need to and want to grow. That being said, I'm Ryan Cramer. This is Crossover Commerce. This is Episode 134 of Crossover Commerce, believe it or not, everyone. If you're watching this, I'm actually going to be off next week, so this will be the first time in all of PingPong or my podcast history that I'm going to take an entire week just to go ahead and spend it with my family, just to take a vacation away from everything. So don't miss me too much, but we will be back for more Crossover Commerce again in August. It's already the eighth month of the year, so it's coming quickly. Q3 is here. We will dive into what Q3 looks like and Q4 when I return back from vacation, but that being said, thanks for hopping on Crossover Commerce. Make sure you go ahead and subscribe to all of our audio platforms, no matter where you listen to podcasts. If you missed an episode, believe it or not, we put those out there on Spotify, Apple Podcast, Google Podcast and Amazon Music so that you can download for free and listen to past episodes at your leisure. There's so many different topics that we've covered here on the show, not just including finance. International growth, we're talking logistics chain, we're talking about improving your product listing, PPC, you name it, we're going to be covering it, but it's all to help you grow your business and take it and grow it 1% at least better. That's my mentality every single time we come on air, so that being said, be safe out there, everyone. Good luck in your endeavors, wherever that might be, on Amazon or off Amazon, but make sure you tune in again and subscribe to those channels next time we go live on Crossover Commerce. Take care.


Ryan Cramer of Crossover Commerce talks with Jacob Schwartz of Payability about evaluating funding options for Amazon and eCommerce sellers.


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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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Jacob Schwartz

|Head of Business Development & Strategic Partnerships at Payability