Ramp: The Card-Sized Finance Team
The counterintuitive strategy behind the fastest-growing corporate card company
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Hi friends 👋 ,
Happy Thursday! This is the last Thursday email I’m sending this year.
Over the course of the year, I’ve found a nice rhythm: Mondays are for deep dives for big, public companies or pieces on general trends I’m noticing that I think are particularly impactful. Thursdays are for learning more about companies at a much earlier stage that are shaping and building into those trends. We do that in a couple of ways:
Not Boring Investment Memos. Public-facing investment memos on companies that the Not Boring Syndicate invests in, together, to demystify early stage fundraising.
Sponsored Deep Dives. Companies pay me to help tell their story (I got mouths to feed!).
When I rolled out the Sponsored Deep Dive with MainStreet, I was a little trepidatious. Would people think I was a sellout or that my analysis is biased? But the response has been super positive. I think it’s because I’ll only ever write about companies whose products I believe in, that have interesting stories to tell and lessons to learn, and that I’d write about whether or not I was being paid (please don’t tell Ramp). I write too much as it is to waste time writing about boring companies. Sponsored deep dives actually give me, and Not Boring readers, direct access and a behind-the-scenes peek into the people and companies building the future.
I couldn’t be more thrilled to close out the 2020 Thursdays -- which have become the startup-focused days -- on one of the most exciting startups out there: Ramp.
When I started doing deep dives, I promised that I would tell you how I was being paid, right upfront. This one is a hybrid: Ramp is paying me an upfront fee, with upside if some of you sign up to make Ramp your company’s corporate card. (Which you totally should, btw.)
Let’s get to it.
Ramp: The Card-Sized Finance Team
Ramp makes a corporate card that wants to help companies spend less money. It’s playing in a crowded space, facing off against multi-billion dollar competitors, and actively trying to get customers to pay it less money. And somehow, it’s working.
This morning, Ramp is announcing that it raised $30 million from D1 Capital, Coatue Management, and Founders Fund. It’s not surprising that investors are excited. Ramp is the fastest corporate card ever to $100 million in transaction volume.
A survey is one thing; the proof is in the hires. One of every three people on Ramp’s 60-person (and growing) team is a former founder. Ramp is a fintech and engineering all-star team aligned towards building the financial stack of the future and saving companies money.
Turns out, companies like saving money. Ramp’s customer roster includes some of the fastest-growing companies in the world, because fast growth works both ways: the good things grow quickly, but the bad things do too. Ramp helps its customers eliminate wasteful spend that can get out of control, so they can focus on investing in growth.
It’s how Ramp saves companies money, and its unintuitive product roadmap, that makes the company so fascinating. Ramp’s story is chock full of lessons for startups, investors, and casual business nerds alike. We’ll learn:
The Offer. Ramp is offering Not Boring companies $500 for signing up. We’ll cover that first so we can spend the rest of the essay analyzing.
Understanding Eric Glyman. Believing that a corporate card actually wants companies to spend less takes some mental gymnastics, unless you’ve met Ramp’s CEO.
Ramp’s Sweet Spot. It’s more tech than the corporate card companies, and more corporate card than the tech companies.
Corporate Card Counter-Positioning. Ramp’s early moat comes from counter-positioning against corporate cards designed to make companies spend more.
The Trojan Corporate Card. The corporate card isn’t the focus; it’s a necessary tool.
Killing Expensify and Concur. Today, Ramp released the expense management killer I’ve wanted to exist forever.
Ramp’s Vision. Ramp just wants to help companies build better businesses.
Let’s start with the offer: Ramp is dead simple to set up and wants to give you money:
Deploy. Deploying Ramp at your company takes 15 minutes, and 98% of finance teams say it’s easy to set up. I’m worried about the other 2%, frankly.
Get Cash Back. Get 1.5% cashback on everything you buy, no complicated rewards.
Make $500. For being Not Boring, Ramp will give you $500 when you pay off your first $1k.
If you work at a company, big or small, young or old, Ramp wants to help you save money. Ramp does all the hard stuff, so it’s really easy for you to get started. See for yourself:
But if Ramp -- the company -- were actually dead simple, we wouldn’t be here talking about it today. C’mon. Ramp gets deep into the financial rails to build a suite of financial software around the card that saves companies time and money.
That sounds like good marketing copy, and it is, but it’s also the truth. Because Ramp isn’t a corporate card, really. It’s an engineering-driven fintech focused on improving the operating efficiency and long-term success of growing businesses. The corporate card is just how it gets close enough to the metal to make everything else it does seamless.
Ramp is the only spend management platform and corporate card that can automate your accounting and lower your bills. Today, that shows up in four ways:
Control. Ramp lets you set policies, streamline approval processes, and issue cards that control spend for all of your vendors.
Visibility. Because Ramp issues corporate cards, it exposes your spend in real-time, and lets you see into the future by predicting spend on payments and subscriptions.
Savings. Ramp gives you 1.5% cashback on every purchase, and analyzes transactions to proactively identify ways your company can cut expenses.
Back in 2018, when Adam Neumann was flying corporate jets stuffed with weed across the globe, profligate spending was the thing to do. In 2020, it’s all about running capital efficient businesses. That doesn’t mean it’s gotten easier to spend smarter. With the shift to remote, chances are everybody on your team asked for new must-have software, expensed more lunches, bought new home-office furniture. Now that you’re closing your books for the year, you’re probably seeing how much all of those little things add up.
Ramp is built to help you see, manage, and lower all of that spend, in real-time. If you just want to start saving in 15 minutes, sign up for Ramp right now.
Once you’ve signed up, keep reading, because Ramp is a case study in taking the long view, counter-positioning, and how nice people can finish first.
To Understand Ramp, You Need to Understand Eric Glyman
If the whole “we want companies to spend less even though we make less money if they do” thing sounds too good to be true, I hear you, but you haven’t met Eric Glyman.
Is the CEO and co-founder of a company that was in the middle of 15x 9-month growth.
Raised $25 million in February from top VCs for one of the top startups in NYC.
Sold his first startup with Ramp co-founder and CTO Karim Atiyeh, Paribus, to Capital One in 2016, months after graduating from Y Combinator.
Write a free newsletter, which had 14k subscribers at the time.
I came prepared to talk business - in, out, let him get back to running his 50+ person company. Thirty minutes into the call, our fully allotted time, we were still talking about our personal lives. He was fully focused on me: how I got to the point of writing a newsletter full-time, what interested me, what I liked to do, and my family. I mentioned that Puja and I were about to have a son, and he beamed and asked more. He was genuinely curious and really, really nice.
I tell you all of this not because Eric is paying me, but to illustrate that Ramp is a different kind of corporate card company, run by a different kind of CEO.
Ramp is the fastest corporate card ever to hit $100 million in transaction volume (it launched in March 2019), but when I asked Eric about the company’s sales process, it didn’t sound at all aggressive. He told me that it was all about understanding the problems that potential customers have and figuring out whether and how Ramp could help. He described it as more product development than sales. The kinds of things that founders say, except in this case, I believed him.
Saving people money is core to Eric and Karim’s personal missions. Their first company, Paribus, automatically saved consumers money by scanning their emails for potential savings on the things they bought. Capital One acquired the company in 2016, and by the time Eric and Karim left, they were saving consumers over $100 million per year. But the mission wasn’t complete. They wanted to see if they could help companies save money, too.
To make the mission a reality, Eric and Karim put together an astonishingly good team and investor roster.
Team. Ramp’s team backs up VC Guide’s survey. Members of Ramp’s Engineering team finished at the top of their classes at MIT, Harvard and Stanford, were top ranked in the world at mathematics, and previously worked at places like Jane Street, Facebook AI Research, Google Research, and more. The Design team hails from the School of Visual Arts, Facebook and Ideo.
Eric and Karim attracted top talent like Nik Koblov (former VP of Engineering at Affirm), Srinath Srinivasan (former Head of Credit Strategy at Goldman’s Marcus and Apple Card), and Miriam Mark (former VP of Sales at WeWork). As Ramp grows at breakneck speed, it’s hiring people from leading companies like Uber, Plaid, Namely, Fundera, Square, and Not Boring favorite, Slack.
Investors. Today, Ramp announced a $30 million investment from D1 Capital, Coatue, and existing investors. D1 is an under-the-radar public/private market crossover fund with an impressive track record, and Ramp represents the earliest stage investment they’ve ever made. Miami-bound Keith Rabois, a fintech wizard with a phenomenal track record at PayPal, Square, and Opendoor, led the initial $25 million round in 2019 at Founders Fund, and sits on the company’s board. Prior Ramp investors include the founders and CEOs at companies like Warby Parker, Twitch, Away, Opendoor, Plaid and Rent the Runway.
With all due respect to corporate cards, Ramp wasn’t able to attract all of these people to spend their time and money building another piece of plastic.
Ramp’s Sweet Spot
When I talked to people about Ramp, one of the main questions I got was: “Isn’t this just like Brex?” Oh oh oh, very glad you asked.
Competitor corporate card companies are mainly sales and marketing-led. As I write this (literally, at 6:31pm est Wednesday night), Brex is sending out emails to potential customers offering them free iPads to sign up for an account and complete their first transaction (2020 quotas!). On the other hand, pure-play software products don’t own the transaction, so they physically can’t be as smooth, accurate, or instant as Ramp.
Ramp exists in a sweet spot: it’s an engineering and product-driven company slash corporate card (and not the other way around).
It’s so much more deeply integrated throughout the financial rails that it can do things that competitors like Amex and Brex just can’t (or don’t), like:
Text a cardholder the second a transaction occurs to enter a receipt, up limit via text, or anything else that a company might want to trigger 😯
Automatically match receipts in the moment or months later 😮
Categorize transactions based on data from the actual merchant, including wild things like matching transactions to contractors based on their LinkedIn page 😲
Approve or deny a transaction based on the company’s expense policy at the point-of-sale, before it ever goes through 🤯
That’s a great place for Ramp to be. Starting with engineering and product, building delightful experiences, and then adding sales and marketing jet fuel is much easier to do than the opposite. As Patrick Collison, the CEO of another magical fintech startup, Stripe, told Tim Ferriss:
If they [startups] can create a product that is so much better than the status quo that they start to get organic traction, once you attach a real sales and marketing engine to that, it’s going to be really frickin hard for a big company to effectively compete because this organizational transformation to being good at software is just profoundly hard.
Here’s the jiu jitsu though. Even if Brex or Amex were somehow able to build a world-class engineering team and re-build the product to match Ramp’s from a technical perspective, their hands are tied. Ramp’s executed the strategy version of the Five Point Palm Exploding Heart Technique.
Corporate Card Counter-Positioning
Ramp’s competitors are like Bill in Kill Bill. If they take a step in Ramp’s direction, they’re dead. Here’s why.
Ramp’s corporate card product itself is no frills -- just 1.5% cashback. Technically, it’s a charge card, not a credit card, which means that companies need to pay off their balance each month, and that Ramp makes no money on interest. It only makes money by charging a small interchange fee on every transaction, just like a typical card company.
Unlike a typical corporate card, though, Ramp doesn’t give companies rewards for spending. No 5x on Ubers, 3x on gas, 2x on food. Just 1.5% cashback. Again, looks simple, but it’s actually brilliant counter-positioning.
Counter-positioning is one of Hamilton Helmer’s 7 Powers. Flo Crivello describes it as “the practice of developing your business model such that incumbents have conflicting incentives preventing them to compete effectively.” It might be my favorite of the Seven.
Corporate cards make money based on how much their customers spend. They’re incentivized to get businesses to spend more. As a result, most corporate cards offer rewards or points for spending more money. Amex, the 800-lb incumbent in the space, built a $96 billion market cap business by offering the best rewards program on the market.
Ramp doesn’t offer rewards. It’s counter to the mission. Why incentivize companies for spending more when you want to help them spend less? Ramp’s positioning makes it impossible for competitors to compete directly without fundamentally altering their value prop to customers.
The big vision for Ramp is to help customers build better businesses, and a big part of that is helping them waste less money. Corporate cards get commoditized over time, as do rewards programs (check out Brex’s and Divvy’s, they’re twins). Building the full finance stack and making the lives of the people who make the spending decisions easier, though, is a much stronger position to be in. But making the call to sacrifice short-term revenue in the service of a much bigger long-term goal is difficult and non-obvious.
This is why Ramp excites me so much as a business. Like so many of my very favorite companies, it’s led by a Worldbuilder. As I wrote in Two Ways to Predict the Future, a Worldbuilder:
Predicts something non-obvious about the way the world is moving before others see it and before the market is ready for their ultimate vision.
Timestamps their vision, whether in public announcements or confidential documents.
Creates a wedge into the market and leverages it into a much larger opportunity.
In Ramp’s case:
Predict. Eric and Karim predicted that software would be able to help businesses save money like it did for consumers, and that software should do a lot of the work that the finance team hates doing (and that people often hate the finance team for doing).
Timestamp. Ramp has been public about the fact that it’s building a software company, not a corporate card company. They’re even letting me write this piece all about their strategy. Thanks to counter-positioning, it can be public about its ambitions and competitors can’t do anything about it.
Wedge. Ramp’s corporate card is its wedge into a much larger opportunity.
The Corporate Card Trojan Horse
If you want to build software that helps companies save money, the corporate card is a smart place to start. By involving itself directly in transactions, Ramp is able to see and control spend in real-time, and build software products that non-corporate card companies just can’t.
The corporate card, then, is a Trojan Horse directly into a company’s finances.
From there, it’s building more software to attack all the pain points that finance teams feel. For a group of people who control trillions of dollars in annual spend, CFOs have been comically underserved, but that’s changing. As a16z wrote in April, “Software innovation is finally reaching the finance suite. This innovation ... [allows] CFOs to focus instead on the strategic side of their role.”
Ramp is at the forefront of that innovation, and the opportunity is massive and untapped. Anaplan, which sells planning software, is the go-to example of CFO-suite SaaS. Its market cap has nearly tripled to $9.9 billion since going public two years ago. CFOs want to spend on themselves, for once!
And Anaplan does a fraction of what Ramp will be able to. Today, twenty months in, Ramp already helps with better Issuing, Tracking, and Reconciliation.
Issuing. Like other corporate card companies, Ramp helps finance teams issue physical and virtual cards, set individual spending limits, and streamline approvals. Unlike other corporate card companies, Ramp lets finance teams include advanced controls like category restrictions, review requests through software like Slack, and control what specific vendors can charge.
Tracking. Because it sits in the transaction flow, Ramp can give finance teams real-time visibility at a birds-eye level or transaction-by-transaction. It also predicts future spend based on the data that it has and the subscriptions it knows a company pays for. As businesses spend more on SaaS and APIs, the ability to predict and manage that spend is more important than ever.
Reconciliation. Ramp’s software enforces expense policies automatically, telling users which expenses need a receipt and which don’t, and lets them submit via text in real-time. It also lets finance teams set rules to automate things like expense categorization and receipt collection.
Together, these tools mean that Ramp customers save their finance teams an average of 5.4 days of work per month and relieves them from having to be the monsters who chase you down to submit that last receipt every month. That’s an incalculable benefit to finance’s relationship with the rest of the company, and lets them focus on being more strategic.
What is calculable is the savings. By identifying wasteful or duplicate spend, and flagging when a company spends more on certain software than other Ramp customers, Ramp saves its companies an average of 4% on expenses, or $100k, every year. For now, Ramp doesn’t take a cut of that spend, but it’s easy to imagine that it could in the future, aligning incentives with its customers.
As a reminder, Ramp has been in business for 20 months. It’s already:
Launched a corporate card that’s handled over $100 million in transaction volume.
Built a vendor management system that identifies wasteful spend and saves companies money.
Helped ameliorate the tension between finance and the rest of the company by automating and streamlining expense management.
And it’s just getting started. Today, it’s also announcing a new product that will kill one of the most hated apps every employee has to deal with.
Killing Expensify and Concur
I’ve been praying for an Expensify killer for a long time.
When I was a little kid, I often wished that God would just come down and tell me what my favorite song, movie, and food would be, so I could just skip everything else and focus on the good stuff. Today, between Spotify and Netflix recommendations, we’re kiiiiinda there on the first two, and now DoorDash has enough money to make a dent in the third. Technology is a wonderful thing.
As I got older, and the realities of being a grownup set in, I had a new wish for technology (which I now realized I had conflated with God as a little guy): can’t you just please make it easier to do my expenses? I swipe my card, that data is captured somewhere, but I somehow have to do like twelve things to get my $80 team outing squared away. WHY?!
Well, technology was listening (as it’s wont to do these days). Ramp built a better solution.
Already, Ramp let companies easily match and reconcile expenses generated on the Ramp card. Because Ramp can issue one-time-use, virtual cards, even employees without their own physical cards can pay for many of the things they buy via Ramp. But some expenses, like cash expenses, car depreciation, or incidentals, can’t be put on a card, so Ramp is rolling out Ramp Reimbursements so employees can submit out of pocket expenses and get paid in Ramp.
That means that companies can now, finally, kill Expensify and Concur and save $10 per employee per month. Plus, for free, Ramp provides a better product.
The reason has to do with this chart:
It’s messy, but what it comes down to is that while Expensify and other non-card expense management systems need to guess blindly, using OCR and transaction outputs, Ramp adds its own transactional data to the mix and turns a complicated guessing problem into a simpler matching problem. As a result, Ramp can match even the hardest receipts, which means no more wave of “Could Not Read Receipt” notifications from Expensify and no more getting yelled at by Finance on the 7th of the month when my expense report is a little late.
Sound good? Sign up for Ramp and get a better Expensify for free.
Like a great SaaS or API product, though, what you get when you first sign up is just the tip of the iceberg. It’s constantly improving and adding functionality. And there’s a lot to add, because Ramp has big plans.
Ramp’s vision is to help companies build better businesses with financial software.
Step 1 is helping them save time and money with a better, software-powered corporate card and a suite of related software that helps automate the manual work that goes into setting spending controls, managing expenses, and tracking spend. Today, its software helps companies understand what they’re spending money on in real-time, eliminate duplicate spend, and negotiate better prices with vendors.
Over time, though, Ramp can do things like protect its customers from price discrimination and automate negotiations with vendors, saving customers money while they sleep using software and the combined bargaining power of thousands of customers.
That hints at the fact that Ramp is ultimately building towards Finance-Team-as-an-API.
To be clear, Ramp won’t replace the finance team, it will just free them up to do the things they’d love to be doing if they weren’t telling people what they can and can’t spend on, collecting and cleaning messy data, and chasing people down to fill out their expense reports.
Given the right tools, finance teams are invaluable strategic partners to a business. A lot of the work that they have to do is simply manual work that results from systems not talking to each other. By letting Ramp handle all of the work they don’t want to be doing anyway, the finance team is freed up to focus on work that adds value to the business and helps it grow. The benefit in saved time and angst could be even bigger than switching from hand-calculated spreadsheets to Excel.
As Ramp takes on all forms of payments and automates more work, companies will be able to make smarter decisions, in real-time. Ramp will get smarter as it ingests more data, and it will get stronger in its ability to negotiate for its customers. It will be able to see what works for its best customers, and share best practices among all of them. It will actually give CFOs the comfort to give employees more freedom over what they buy.
Like a great API, it will free the companies that use it to focus on their points of differentiation. Fewer businesses will fail and more will thrive.
And who knows. Maybe, one day, people might even love their CFO.
Know someone on a finance team who would love to be loved? ‘Tis the season! Share this link with them and they’ll get $500 and never have to track down a receipt again.
Thanks to Dan and Puja for editing, and for Eric for working with me on this!
Don’t know what to get those business nerds or aspiring entrepreneurs on your holiday list? Why not give them the gift of Not Boring? Best part… it’s free!
Thanks for reading, and see you on Monday for the last Not Boring of 2020!