Episode 138: Exploring the Software and Fintech Landscape with Roi Ben Daniel of Received

Understanding the unique challenges of B2B billing is pivotal in the fintech world. On the recent episode of the “Subscriptions: Scaled” podcast, Roi Ben Daniel, Founder and CEO of Received, delves into the intricacies that separate B2B from standard billing systems, emphasizing the importance of targeted solutions for B2B sales-led organizations.

A Journey From Traditional Finance to Fintech Innovator

Roi's journey wasn't straightforward. Trained as an accountant and lawyer, he deviated from these traditional paths, much to his father's chagrin, finding his passion in fintech. His stint at Visa was transformative, marking his entry into the world of payments and fintech. During these formative years, Roi witnessed firsthand the reluctance of giants like Visa and MasterCard to embrace fintech, a decision he implies they regretted as fintech started "taking market share and building new payment channels."

Roi’s extensive background led him to a realization: the unexplored potential in B2B payments lies in the processes enveloping the payment, rather than the transaction itself.

Roi’s experience coalesced into Received, which solves complex billing. The company addresses a gap in the market for sales-led organizations that require more sophisticated, nuanced billing solutions than those designed for straightforward B2B transactions or B2C subscription models.

“Sales means complex pricing and bespoke contracts,” Roi points out, highlighting the inadequacy of one-size-fits-all subscription solutions for businesses with unique, negotiated contracts. The need for “surgical accuracy” in these scenarios is what Received aims to provide.

Before Received, companies grappled with limited, unsatisfactory options. Custom in-house solutions were prevalent, born out of frustration with market-available options. These solutions, however, were often cost-inefficient and lacked scalability. Doing it manually, another common approach, would only work up to a certain complexity and volume point.

The third route, which Roi criticizes, involved repurposing subscription management systems for complex B2B sales scenarios, leading to inefficiencies and dissatisfaction. “There’s a ton of frustration that we see there,” Roi admits, acknowledging that many of Received’s clients come seeking refuge from these ill-fitting solutions.

Roi encapsulates the distinction between B2B and more conventional billing systems in one word: negotiation. Unlike B2C transactions, where prices are fixed, B2B relationships typically involve a dialogue, resulting in uniquely negotiated contracts. This complexity, Roi stresses, justifies the existence of specialized solutions like Received.

The Balancing Act: Usage-Based vs. Subscription Pricing

Tech companies are facing a tug-of-war in pricing models, caught between investor expectations and customer preferences. While investors advocate for the predictability of subscription models, especially evident during market downtrends, customers push for usage-based pricing, seeking value-aligned costs. The crux of Roi Ben Daniel’s argument lies in companies' adaptability, advocating for no one-size-fits-all solution.

“There’s no winner here. It’s not like usage versus subscription. I think the next phase of the CFO office and companies, in general, is just having the capability to light up any pricing model that you may want to and make sense at that point in time.” - Roi Ben Daniel

Roi encapsulates a forward-looking perspective on pricing strategies: dynamic, adaptable and attuned to the market's heartbeat.

Hybrid Models: Bridging the Gap

The concept of hybrid pricing models emerges as a front-runner in the conversation. By combining elements of stability from subscription with the fairness of usage-based pricing, companies can cater to a broad spectrum of needs. This duality is particularly relevant in services, an aspect often undervalued in SaaS, despite its constant presence and significant potential for revenue.

Moreover, Roi highlights a common misstep: undercharging for these invaluable services. The advice is clear — packaging services into recurring revenue models or, interestingly, applying usage-based pricing even here, reflects a more astute understanding of the service’s worth, ensuring no money is left on the table.

Transparency in pricing is pivotal, especially in a landscape where customers are ever more informed and connected. Discussions should center on the value provided, ensuring customers never feel shortchanged. This approach fortifies the company's position, justifying price points within reasonable ranges, and acknowledging the shared understanding that different-sized entities naturally command different investments.

Roi says, “People get it. They’re not stupid. They know how things work.”

AI in Business: Enabler, Not Replacement

Addressing the buzz around AI, Roi calls for pragmatism. He criticizes the overhyped discourse around AI, blockchain and Web3, advocating instead for concrete use cases and incremental adoption. He believes AI’s immediate future lies in revolutionizing data classification, a seemingly narrow field with massive implications for reconciliation and data integrity.

“Before we talk about the AI making you breakfast and putting you to sleep, let's talk about how manual it still is to reconcile invoices.” - Roi Ben Daniel

He dismisses superficial use cases of AI, underscoring that its value isn't in replacing humans but in enhancing efficiency, particularly in areas requiring precision, like invoice reconciliation.

Discussing sensitive processes like chasing significant invoice payments, Roi stresses the indispensability of the human touch. He cautions against relying on AI for delicate tasks where preserving client relationships is crucial, affirming that certain nuances and decision-making aspects cannot be entrusted to AI.

The Dichotomy of Verticalization and Consolidation

Straddling two seemingly opposing trends, the fintech sector is witnessing a push towards both verticalization and consolidation. Vertical solutions, as Roi Ben Daniel explains, cater to the nuanced demands of specific industries, something generic software can no longer adequately serve. This hyper-focus on specialized needs marks a departure from the one-size-fits-all approach.

Conversely, the industry is simultaneously gravitating towards consolidation. Buyers' dwindling patience is shaping this trend, with a growing preference for comprehensive solutions from a single provider. This juxtaposition, although seemingly contradictory, forms a symbiotic relationship, driving the market forward.

The Unpredictable Road Ahead

As for the future of payments and fintech at large, certainty seems to be a luxury. Open banking, once heralded as a revolutionary concept, didn't quite ignite the market transformation many anticipated. Roi's insight into this perceived “flop” underscores the industry's unpredictability, cautioning against premature excitement around certain innovations.

The intricacies of the payment ecosystem, from localized nuances to global networks, contribute to this uncertainty. Roi candidly admits, "It's anyone's guess," highlighting the futility of predictions in an arena where change is the only constant. Even the giants of the industry aren't immune to this volatility, with major networks like Visa facing their own set of challenges amidst evolving market dynamics.

Navigating the Fintech Maze

The episode winds down with reflections on the industry's trajectory. While some might seek definitive answers or clear forecasts, the dialogue underscores a critical acceptance of fintech's fluid nature. Companies rise, trends fade and new players continually emerge on this unpredictable stage.

For tech CEOs and industry professionals, this conversation serves as a reminder: in the world of fintech, adaptability isn't just advantageous — it's essential. Staying informed, remaining nimble and embracing the industry's inherent unpredictability might just be the keys to navigating the exciting labyrinth that is financial technology.

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