Airbase is an all-in-one spend management platform designed to deliver more control, visibility, and automation to today’s finance teams. It helps companies to combine spend approvals with virtual cards, physical cards, invoice management and check payments into a single platform. This gives finance teams full control and visibility into expenses, and the ability to automate the reconciliation process.
For the interview, we had Thejo Kote, Founder and CEO of Airbase. Thejo came to the US in 2009 to pursue his Masters. Since then, he has built two successful companies in the US. He spoke to Komal Pattanayak of VCBay.
Komal: Please tell us something about yourself and your company Airbase.
Thejo Kote: I’m Thejo Kote and I’m the founder and CEO of Airbase. I’m originally from India. I grew up in Mysore, spent a long time in Bangalore and I came to the US in 2009 and I’ve lived here since then. I came here to pursue my passion for doing something of my own in terms of entrepreneurship and had the chance to do that. I’ve been very fortunate from that perspective. And this is my second company.
With Airbase we are essentially trying to solve the problem that I learned about building my first company and I learned about an experience and that’s around how companies spend money. If you look at all of the money that companies spend, usually it’s payroll, that is people’s salaries, and then there is everything else. So that’s the non-payroll spending that would be marketing and software and food and travel and a hundred other things that companies tend to spend money on. That’s a very complicated process for, especially small and mid-size companies. If you look at companies that have less than a thousand employees and how do they manage all the non-payroll spending, there are many different systems that they have to adopt.
Some money is being spent on corporate cards. They’re also receiving invoices that have to be processed and paid out via ACH or check or something like that. And that. As a category of product called bill payments products, like bill.com that have to be used, uh, you know, employees are spending money on your own and then coming and reimbursing it.
All this is happening on email and is a very ad hoc process. There’s no audit trail. All of this means that the downstream accounting processes and work that is involved is very manual. You go get data from different systems to record it in NetSuite and QuickBooks and all these other systems.
So that’s kind of the problem we solve. Instead of having silos for spending money across all of these different systems, Airbase unifies all of it, consolidating all of that experience and the entire life cycle of how money is spent.
Komal: You said that you wanted to move to the USA to become an entrepreneur. May I ask why the USA?
Thejo Kote: When I was kind of thinking about this in 2007-09, that timeframe, there wasn’t much of a startup ecosystem in India. Now there is a much more vibrant startup ecosystem. But the place to be if you want to be a technology entrepreneur was Silicon Valley. In a lot of ways, it still is. My motivation was to say that if that’s kind of a goal I’ve set for myself, I probably should go to the place.
I came here as a student. I got my master’s started for a couple of years, and then I got the chance to just go live my dream,
The way I’ve always thought about it is that if I was an artist during the Renaissance memory, I would have found my way to Florence or some other place where that was the centre of that way of doing things. So that’s why Silicon Valley.
Komal: Airbase is a globally distributed and fully remote company. What have been the challenges and difficulties that you’ve faced in terms of hiring or employing engagement etc.?
Thejo Kote: That’s always an ongoing challenge. Building a globally distributed team has its pros and cons. If you can spend time with people in person, it allows you to build a better relationship and allows you to get to know them better and all those kinds of things. But we try to stimulate that as much as possible, even when people are remote. We are doing things like randomly matching people on a weekly basis so that they can just catch up for 30 minutes and get to know each other. There are many other things that we do to kind of manufacture serendipity
In WFH, you’re only getting on meetings with an agenda and it is hard to have those unplanned conversations and discussions where a lot of the things come out of them. We try to kind of create the environment and opportunities for those kinds of things to happen wherever possible. But there are so many other pros to doing the global team in terms of access to talent and the ability to hire quickly and grow quickly, and just finding smart people anywhere in the world. A lot of our product development team is in India. Lots of people love the fact that they don’t have to spend two and a half or three hours a day on the road.
Komal: While you were building and scaling Airbase did you ever feel the need to have a co-founder by your side?
Thejo Kote: Not this time. The decision to have a co-founder is not an obvious one. It could be driven by you know, logical thinking. It has to be driven by a separation of duties and dividing and conquering because one person doesn’t bring all the necessary.
For example, I had a co-founder in my previous company because he brought specific expertise and technology that we were taking to market and developing and I didn’t have those skills. It was a good team and combination that ultimately allowed us to succeed.
With Airbase. My question simply was all the things that we need to do in the early days, given the nature of the business, do I need somebody else to come to help me do it? When it came to product development or understanding the customer’s pain point or when it came to actually sell to customers, getting those initial customers before I hired a more professional sales team, I didn’t feel like I needed somebody to help with any of those things.
It’s good to have a co-founder to support you that you are not taking all of the weight and the load yourself. Maybe that makes sense if you’re a first-time founder, who’s never experienced it and you don’t want to get thrown into that experience just by yourself.
Komal: What’s your competitive landscape like and how do you distinguish yourself from your competitors?
Thejo Kote: I talked about the transition that’s happening. The entire ecosystem is going from siloed specific tools to a consolidated platform. That spend management category is getting defined in that small and mid-market segment.
It’s going from these siloed categories of corporate cards, bill payments, expense, reimbursements to a broader category called spend management. This is something I’ve been saying for years now and there’s been a lot of noise in the market about just corporate cards.
I think that a few companies like Brex, Ramp and Divvy, have been very focused on just saying that look, we have a better corporate card and you should come and use a better corporate card than incumbents like American express. A bunch of them have raised large amounts of money focusing on the corporate card segment. In the past three to six months, all of them are also seeing that spend management is a long-term opportunity here and that category is getting a lot more attention.
It was a couple of weeks ago, Bill.com acquired a company called Divvy for USD 2.5 billion. And they have a huge validation where Bill.com is basically saying there is a bill payments product. Of course they’re a public company, a US$ 10 billion company. And now they’re saying that, okay, I see where the market is going, the consolidation is happening. I have bill payments and now I need a corporate card product. I need a reimbursement product. And so they bought Divvy to give them the corporate card product. Maybe they’ll go buy somebody else to give them an expense reimbursement. We’ll see how that evolves. But it was definitely a huge validation of something I’ve been saying for a few years now that this is where the market is going.
As the spend management category gets defined, there are a whole bunch of companies. The analogy I like to think about is the general ledger or accounting software category. So, for the smaller end of the market, you have players like QuickBooks and Xero and they all go off to the smaller end of the market. They’re all very good businesses on their own, but then there are also very successful companies like NetSuite and Intacct, Sage Intacct, and companies like that.
In the majority of the cases, when we are talking to customers, we still run into silos. They’re using a corporate card system and Bill.com and Expensify, and they have three or four systems and then we have them consolidated into one platform. So that’s how the competitive landscape looks like at Highland.
Komal: On the website of Airbase, you have mentioned “Ready to replace bill.com?” Do you think that this is healthy competition or there’s some backstory we don’t know of?
Thejo Kote: It’s just standard stuff that everybody does. Because you can go to any company’s website and they have pages dedicated to competition because everybody’s searching for alternatives. Bill.com has been around for 15 years and because a lot of people are searching on Google for a Bill.com alternative.
For SEO purposes, you want to have a page where people are actually actively searching for those kinds of things. You want to give them the opportunity to cover you, and you want to tell your story. If you’re ready to replace a Bill.com, here’s what you get in return.
It’s a very standard aspect of marketing and pretty much every company does it for all of the other companies that they are competing with.
Komal: Does Airbase also have any such acquisitions in the pipeline?
Thejo Kote: I think it’s very early days for us. We have a lot of work to do in terms of building out into the product roadmap and continue to grow our customer base. And we don’t feel the need in a large company like Bill.com.
For larger companies, they have to acquire to innovate, right? We don’t feel that need, we are small and nimble. No plans at the moment for us to acquire any other companies or anything like that. But that might change in the future because we have a broad kind of goal in terms of the breadth and depth of solution that we want to provide.
Komal: What has the feedback from your customers been like?
Thejo Kote: It’s been incredible. You should go to like these neutral third party websites, like G2 crowd and Capterra and just search for Airbase and read the reviews that, and look at what people our customers say about us. The feedback so far has been tremendous.
Komal: Before founding Airbase, you had founded two other ventures. Can you share what were the learnings or what challenges you faced and how you learnt from your mistakes?
Thejo Kote: There are lots of lessons in every area of company building. Hiring and building teams, culture, values, and fundraising, how to listen to customers and when to listen to them and when not to listen to them and the list goes on.
The outcome of my previous company was great. It all worked out, we had a great acquisition and that was all fantastic. But there were still a lot of lessons. I feel like it could have been even bigger. It’s not like I’m not happy, but I feel like it could have been a lot bigger if I hadn’t made some of those mistakes.
Komal: What’s in the pipeline for Airbase?
Thejo Kote: Our vision has always been to consolidate and bring every non-payroll dollar to the platform, right? So that is the breadth of it. And all of the different products that I talked about in there is the depth of it. More than 90% of our product roadmap is driven by customers and the world of data loss are the problems they’re facing on a day-to-day basis.
Our roadmap gets defined based on that. We consider the accounting and finance people to be our primary customers. We try to deeply understand what problems they face on a day-to-day basis. And, um, we continue to go solve those. And I think that’s a big opportunity.
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