Julian: Hey everyone. Thank you so much for joining the Behind Company Lines podcast. Today we have Andrew Hoag, CEO and founder of Teampay. Teampay helps high growth companies streamline the purchasing process across virtual cards, physical cards, invoices, and reimbursement. Andrew, thank you so much for joining us on the show.

I'm so excited to chat with you and get to know your background, your experience. I know this isn't your first startup. This is, you know, after a few iterations of other successful ventures and so I'm really excited to, to dive into the lessons you've learned, the different advice you'd give. But before we get into all that, what were you doing before you started Teampay?

Andrew: Yeah, so I I've been a serial entrepreneur for the last decade, started my career in government corporate. Built supercomputers for NASA secured banks, and then spent the last decade in and around the startup space. I had a small company that I started in 2008, about four months before the Layman Brothers crisis and sold that in 2012.

Took a couple years off in Europe and then started getting, kind of getting the itch again. I think once you're an entrepreneur, always an entrepreneur. And moved to New York in 2016 and we launched Teampay in 2017.  

Julian: incredible. And what was the transition like from building supercomputers at NASA and then jump jumping into startups and starting to build companies? was that? Is there anything, any, anything that you took from that experience that was helpful or valuable or were you just always kind of an entrepreneur at heart and kind of it decided at some point that you needed to take the leap.  

Andrew: Yeah, I mean, I think startups are harder than supercomputers, but , , you know, I think for me it's, I've always been entrepreneurial little bit of, you know, combination of wanderlust and not just accepting things at face value or the status quo.

So I think that was part of the motivation and. You know, I was very fortunate early in my career to work with great engineers, great technical talent, develop really strong models of thinking and mental models that I think are useful even today. Clarity of thought, clarity of purpose. And I think all that carries over when you're doing something, which I would argue is probably more difficult than you know, supercomputer, engineering.

Julian: Do you have any examples or any I guess, common structures of thought that you use that has been helpful or beneficial for the different companies? Any examples that you can share?  

Andrew: Yeah, I mean, one of the things I learned very early in my career from, you know, some of the amazing engineering and technical talent that I had access to at NASA was this idea that simple is hard, and complexity is lazy and I think it's very easy for someone to come up with a complex solution.

It's very difficult for someone to come up with a simple solution. Yeah. And so if you look at, you know, especially when it comes to product design, product development oftentimes I believe that. You get more velocity, you get more engagement by doing less. And I think most founders, the first time through, I have this problem.

I think most people think that by adding more features, you actually can do more. And really it's doing less and making things simple. So I think that's something that carries through today of just this idea that simple is hard. And it takes a long time to get to a simple solution. Whereas the complex solution is the one that usually you come to right away and then you spend a bunch of your time stripping it away to its core essence.

Yeah. Elon Musk talks about first principles, thinking it's kind of a similar type approach around just, you know, or Occam's razor. There's a bunch of these other kind of mental frameworks. But just acknowledging that simple is hard and doing something simple not only is elegant, but actually requires a lot of effort and thought and work.

Julian: Yeah. What are the actions that you do you take to get to the simple solution? Are you going through customer, you know, requests are, and then breaking down the components that are most necessary or most commonly requested. Are you building and then kind of taking this whole product and then stripping away different features based on your own intuition?

What's the process like? If I was a founder kind of going through a similar experience what advice would you give?  

Andrew: Yeah. I think it's a combination of a triad of things, right? I think one. Customers don't always know what they want. Right. Canonically, this is called the faster horse problem, right?

If you went and surveyed people, they don't understand the job to be done, right? They're like, it's not about getting from point A to point B, I just want a horse that I don't have to water and feed so often when they can run faster. So customers don't always know how to express what they want, right?

So you have to listen to that feedback. But then also identifying in the. Where's the gap in hitting the market? Timing? Right. With Teampay in particular, we recognized early on that the way companies behave has changed. So there's been a change in behavior, which is in most modern businesses, every single employee is part of the purchasing team.

Yeah. And you know, when I started my career, if I went out and bought something to use at work, I would. Like that just didn't happen. And so that shift caused a gap in the market in terms of the tools. So understanding the market space and the landscape where the blue ocean of opportunity is really important thinking.

And then third, it's a little bit of intuition and a little bit of your own inside and essence, right? So it's kind of making a bet. . Yeah. And you know, going back to the early days of Teampay, when we launched the product, I had to explain to people what virtual cards were. There was a lot of explanation of why this was beneficial.

And there were definitely like the first few months where I thought I was the only crazy one in the universe that wanted this. And as we learned and iterated and got feedback. So I think taking those three kind of signals, your own intuition in the market and the customers is really important. And.

The other thing to the point about simplicity is you end up, you know, I find this, I do this a lot, both with presentations with products, you end up kind of putting everything together into one consolidated view and then you strip it out, right? Yeah. And so there's this editing process that always happens.

And so, you know, that's kind of, to me, part of the creative cycle of you. You take all the feedback, you put it all in, and then you start to tease out and. really things down to their bare essence. And that requires, like I mentioned earlier, some first principles thinking that requires really understanding the triads of those problems.

where you're willing to make bets and hypotheses. But at the end of the day you want to, you know, take into account the feedback, but then remove all the noise. And that's more of the art of the job than the science.  

Julian: Yeah. How do you balance, it sounds like, you know, a lot of the early days of Teampay, you had to educate, you know, your customer base on what exactly you know, the technology was and the implementation of virtual cards and the benefits of those.

How do you balance out for founders out there who are maybe in a similar position. How do you balance out the education component and making sure it's not salesy, but really genuinely pieces of education that you're helping inform your market on better solutions? Not necessarily maybe your solution, but overall, what, I guess either the future of the technology is gonna be, you know, is there certain wording or phrasing that you use?

Are there certain you know, ways to go about that process or entering those conversations? What would you, how would you balance that out? Either early on Yeah. Or even. .  

Andrew: Yeah, that's a great question cuz I think a lot of a lot of founders tend to kind of push with features and product.

And, you know, I always used to say like, nobody wakes up in the morning and wants to manage a bunch of corporate cards. Like that's not what they dream to do, . And so, you know, the first step is understanding the customer's problem, which is, I want in the Teampay case, the customer problem is, I wanna make it really.

for employees to buy the things they need to do their job while staying in compliance with the company policy. Yeah. And immediately those two are at odds. There's some tension there of like, wanna make it easy, but we gotta stay in policy. Right. And so I think when you have those conversations and you're trying to educate the customer,

It starts with empathy. It's one of our core values at Teampay. It starts with understanding the customer's need and the customer's pain points and problems, and then being consultative towards a solution, which may include product features. It may not, right? Yeah. But it's that consultative approach where you're actually working on the same side of the table as a customer to help them solve their problem.

That I find is the winning strategy. When you. You know, encountering your sales.  

Julian: Yeah. Looking back a little bit, just based on your experience and having the successful experiences in terms of, you know, starting something, going through an acquisition building and even con being a consultant on a lot of different companies I'm curious to ask, you know, what are some things that companies maybe not consider when they're launching products?

You, you mentioned a second ago, companies focus on, or founders focus on leading with products and. But is there anything that you see is commonly missed or not considered when companies are either launching a product or educating their market or things along that nature?  

Andrew: Yeah, I mean, I think it's easy to underestimate the gravity and inertia, of human behavior. Yeah. And just getting people to do something different. And I think a lot of companies think about a better mouse trap and they understand, they can articulate really. Why the mouse trap is better. Yeah. But they don't always understand the incentive for the person to use the product.

Yeah. And what drives their activation and engagement with the product. Right. Yeah. And so I think that's a really important part is understanding the change management on the customer. Because ultimately it goes back to my prior point. Software for software's sake doesn't help anyone. You actually need to be solving a business.

Yeah. And so what's their motivation to solve that business problem? Paul Graham calls it the hair on fire problem of like, is this a hair on fire thing for your buyer? And you really have to understand like what are they motivated to do and why they're motivated. Yeah. I'll give you an example of one that's probably not obvious or wasn't obvious to me, which is most employees only interact with their finance team when they've done something.

right? . You think about that, right? It's like you coded this wrong, you didn't turn in the receipt, you're late on your expenses. Who is this vendor? You didn't fill out this form, the right person didn't approve it. You're over budget. That's the interaction. So it's a negative interaction with the finance team of like, you did something wrong, and the players like, look, I'm just trying to do my job , right?

And so understanding the motivation and the finance person to have a positive conversation with their. When Teampay gets deployed in customers, the end users thank their finance team for giving them a tool. Yeah. And that's very different than if you think about historical, like expense tools or any sort of procurement tools, like, God forbid that you ask your employees to use filling out forms, doing a bunch of bureaucracy, a bunch of paperwork, and you know, we started getting love letters from the end users sent to their controller or accountants.

And the accountants are like, wait a. You're actually doing a better process and you're grateful for what I'm doing, and like that's the judo move. But it comes back to understanding the incentive structure for the various people that are participating in buying that product.

Julian: Yeah. Yeah. And in regards to, you know, I was looking at your background and I didn't, I listened to a couple podcasts that you were that you were on previously and one thing that really in interested me was you were on a podcast and you were talking about fundraising.

So before we get into Teampay and mechanics of what the product does, which I definitely want to go into describe a little bit about the fundraising process for founders who are either in the midst of it or looking to brave. You mentioned something previously. Kind of going in a safe direction for your pre-seed round or, and running different processes and thinking about smart money versus dumb money.

Describe a little bit about maybe a few key lessons that you can share with other founders in terms of the fundraising process that you think. Are extremely valuable and translatable to maybe multiple different types of businesses, if you will.  

Andrew: Yeah. I mean, first off, all of our investors are smart, so we only have smart money.

Yeah. I, you know, that's a very broad question. I think. There's fundraising tends to be a very difficult topic for certain founders. Sure. Particularly ones that are product led and they're really trying to solve a problem. And fundraising looks kind of like the side job, but you realize over time that as a CEO there's really only a couple things that you have control over.

First is make sure the company doesn't run out of. Second is make sure the company doesn't run outta money. And third is make sure the company doesn't run outta money. Like that's kind of it. And success oftentimes is just getting up off the mat once more than the other guy. Kind of the paraphrasing of Muhammad Ali quote.

And so in that sense, like fundraising is probably one of the most important jobs for founders, but everybody looks at it as a means to an. And so you tend not to give it sometimes the attention it deserves. And I, you know, I fell into that. It was 10,000 hours. My first startup. Like we never really had raised enough money to fund any sort of runway.

We were constantly in fundraising mode all the time. And that's just a very tough existence. So, you know, it's a very. Kind of topic. And I think as founders attack that it does take some practice, it takes some discipline, and it probably takes a little bit of chutzpah. It takes a little bit of just like being willing to walk away.

Yeah. Because at the end of the day, you've gotta focus on building your business. And if you think about it, the investors are getting a free ride off your work. Yeah. Yeah. And so understanding like the investors want you to feel like you know you're working for them, but at the end of the day, like you're the one doing all the work, and if the company fails in their portfolio, they've got nine other, 10 other 20 other companies that could succeed.

Whereas for you, this is your life's work. And so understanding the role that the investor plays, what they're looking for in terms of financial return, what they're concerned about in terms of risk, I think really. approach those fundraising conversations and then finding the right partnership there to solve kind of those issues for both sides. But yeah, I mean, it's a big, it's a big topic.

Julian: Yeah. Yeah. What have you done differently with Teampay that's different from your first company that you ran in terms of the fundraising process? Is it more consistency? Partnering with better with better investors. What in particular there was maybe a couple lessons that you learned that you're, you've taken with Teampay?

Andrew: Yeah, I think there's a little bit. My first company I had the tendency to get money in the door and then like I really wanted to work on the business, so I go back and work on the business, but I never really got enough money. So I think the planning milestone part, I knew the first time around, but I may not have had the discipline so much.

Whereas this time, . You know, it's very clear, like especially if you're, you know, I'm assuming we're talking about venture capital. There's like very clear like entrance and exit criteria for each stage of the business, and there's different types of risk, right? So a pree round, you're pretty much betting on the people because the product could change and maybe the market could change, but there probably is no product.

Maybe there's a little bit of a market idea, but you're just betting on the people at that point. At a seed stage, you've. The market kind of identified, and you've got some early product, but probably not a lot of traction at the series A stage. You should have some elements of product market fit, meaning you found the product and the market and it's working and there's a flywheel.

At the series B stage, you're starting to scale and you need to show that you can actually scale your product development, your go-to-market strategy, you. You put more money into the business and get more out, and then as you get later and closer to the public markets, right? Then you're starting to look at EBITDA and like actual cash generated by the business, gross margin, all those kinds of things.

So every stage has criteria. Now, the market adjusts, as we've seen over the last couple years. It's been a pretty wild swing from 2021 to 2022 and like where multiples are and how investors are valuing companies. Yeah. But at the end of the day, the criteria for building the business. Kind of in that abstract way, don't change.

Just the prices and the amounts change a little bit. So I think understanding that map and building that strategy, that milestone strategy is really important. I think a lot of founders think about the activities that the money enables, but they don't think about the outcomes. Yeah. And so really what you want to do is show the investor at the end of this, Because the money has a runway and we're not gonna get profitable at the end of this money.

Here's what the business looks like and that business, the way it should look at the end of the money should be really attractive to the next stage of investor that wants to invest in those businesses. And so understanding those milestones I think are really important.  

Julian: Incredible. Moving into Teampay and thinking about, you know, what you're building now, were you always in inspired by procurement were, was this the company that you had envisioned that you were gonna run next?

Or was it a pain that you just, you needed to solve in a problem that was just nagging at you? What? What was it, one or the other or something different that inspired you to start  

Andrew: Teampay?  

Yeah, I mean, ever since I was a kid, I dreamed of selling procurement software to accounting teams and the supercomputer thing, the NASA thing was just an easy one.

No seriously, I it was more the latter. It was more this itch that just came up and I felt obvious to scratch and I think. When I started, there was a lot of quizzical looks as there always are when you're trying to do something new. And this is before kind of the innovation in corporate cards and all these things that's happened in the last few years that have brought more of this mainstream.

And everybody had talking about consumer, everybody was talking about, you know, char, Chargebee, stripe. Zora, Braintree, PayPal, all these companies, square all these companies collecting money, and nobody was really focused on spending money. And I found that a really interesting problem. And it's a massive tam.

It's 28 trillion of B2B payments in the US alone, and nobody owns. The spend side of that and penetrating that 28 trillion spending TAM is really valuable. And there's gonna be different players at different segments of the market. And then the last part for me, when I looked across the incumbents and the solutions, there really was no one who had touched the market in the last 10 to 15 years.

right? Expensify is 17, 18 years old. Coupa is around the same age. These are all companies that were built for a different generation of business. , and I felt like that was the opportunity. So it was one of these things where for six months I probably tried to talk myself out of doing this. And I just kept coming back to the size of the market, the blue ocean of opportunity, the strategy part of it, and really got enamored with the opportunity.

And fortunately we hit the timing almost perfect.  

Julian: Yeah. What were those other technologies missing or maybe weren't considering with the new kind of wave of companies that were being built?  

Andrew: Yeah, I think there were two. That's a great question cuz there were two considerations there that I recognized.

One was this idea of embedded finance. And so we have a patent around creating a request, getting an approval, and then attaching all that metadata to a card and to a payment method. And so, you know, this idea of like, I want to ask for something and as a result I get a way to buy something. Actually, historically, those have been different systems.

So you'd get an approval and then you'd buy it over here. And there was no connection between those two things. And in hindsight, it seems obvious. Remember? Simple is hard. Yeah. But it wasn't obvious at the time in connecting those two things. So you know, now that's morphed into this idea of like embedded finance or embedded payments.

But again, for us, we've always had this vision around software being the wedge. Yeah, solving the user problem with the software solution and embedding the finance and payments technology in that gave us a lot of strategic power. And then the second thing, there's just a lot of data and there's a lot of opportunities to use data to be smarter and improve these products.

And you know, I'll give you an example. Some of the legacy players, like when they look at vendors, every vendor is created for every customer. And you don't really need to do that because there's only one Uber in the world and you don't need 10,000 copies of Uber in your database. Yeah. So, You know, the data part of this and data canonical equalization and all that creates a really interesting flywheel and advantage as well.

And I think the previous generation of companies were not set up to use data in that way. And so I think those were kind of two of the payments and the data part were two technological innovations that enabled this type of software to be possible now.

Julian: Yeah, just outta curiosity, is there anything that companies spend a lot on that consistently? Is it like, you know, is it cloud services? Is it you know, paying for coffee? I don't know. Is there anything that you've seen that companies are consistently paying for?  

Andrew: Well, it changes, you know, it's been interesting cause we have a really interesting viewpoint on this, where it changes based on the time and the economy.

Yeah. Right. So, you know, like in Q2 and Q3 of 2020, Everybody liked Amazon spending it, spending furniture, spending. Everybody was outfitting their home offices. An office of 35 people was now 35 offices of one. And so there was this explosion of like office spending and per diems and all these kinds of things.

And then of course, travel went to zero, right? And now travel has come back and we start to see more corporate type office expenditures. Marketing and advertising. We saw rollover in February of. Yeah, right. People didn't even start talking about a recession. And we saw customers start to pull back on acquisition spending in q1.

So, you know, a lot of that is tied to the cyclical nature of the economy, and we get to see that move around. And it's a really interesting viewpoint, I think on the macro.  

Julian: Yeah. Tell us a little bit about the traction. You started, you know, Teampay, I think was what Six years ago and now 2017.

Yeah. 2017. Right. So, tell us a little bit about, you know, the partners you're working with. What's been exciting about this year's, you know, growth, what are you excited about the next coming year? Are there any products or features that you're excited to, to launch? Tell us a little bit about what's going on now with Teampay, what you're excited about.

Andrew: Yeah, we just announced last week not only our funding round, which was earlier this year, but. We announced sun New executives that we hired. So I've hired a cfo, cro, my CTO I hired earlier, and a VP of Cs and a VP of people. . And so for me it's, you know, as we take the company to the next stage of growth, yeah, remember those milestones we were talking about series B to series C bringing an executive team around that actually has done that type of sprint.

So, you know, that's me getting the right people on the bus, which I think is really important. I think from a partner in ecosystem standpoint, we've been very happy with the receptivity that we've received. We've had a longstanding partnership with Silicon Valley Bank. We also, Recently Ink a partnership with MasterCard.

So we've been working with MasterCard across their network. And so that's really interesting driving transformation in terms of commercial payments. Yeah, with the MasterCard platform. So we're really excited about what we're gonna be able to roll out there in 2023. So I think that's a little bit of a forward look.

And then I think, you know, the next stage of the business is just continuing to sit on that machine and grow the business. We've been very fortunate to keep customers for a very long time. We've had dozens of companies go public using our software. We expect that to continue as the I P O window opens again, probably of next year.

And so I feel like we're in a very good position both in the mid-market and the enterprise segment, just to keep growing and expanding with the new resources, with the new people on the team and with, you know, just that really large market that we're taking a chunk out of.  

Julian: Yeah. What are the biggest risks that Teampay faces today?

Andrew: Yeah I think about that a lot. I mean, obviously the macro economy always creates more. when you have multiples contracting, when you have capital drying up. Although I think that will thaw probably at the beginning of next year. . you have businesses spending less, right. Which is, you know, a key part of our product.

We want to help them save money in times like this. But I also think a lot of it comes down to execution and agility. . And so that's something we're constantly drilling into the team. We've kept the team fairly small. We have not raised a lot of capital to keep us narrowly focused compared to some other players in the space.

And I think that's proven in our favor in times like this, where focus matters. Yeah. And you need to peel back some of those projects. So I think, you know, the risk is always. getting greedy, or maybe your eyes are bigger than your stomach in a sense, and staying focused and making sure that you're executing all the things that you need to execute and you just keep winning the hearts and minds of your customers.

Julian: Yeah. If everything goes well, what's the long-term vision for Teampay?  

Andrew: Yeah, I mean, I wouldn't have spent spending, you know, seven to 10 years or more of my life on this if I didn't think there was a big opportunity here. Right. If you think about the place that Teampays, There's a lot of big companies that help you manage corporate resources, right?

So like Box or Dropbox help you manage your storage in the cloud. Okta helps you manage your software access and login control. There isn't a company that helps you manage access to money. Yeah, and it's really back to my earlier point. It's the only thing in a business you can. . And so I think there is a, you know, 5,000 billion company to be built in controlling and managing access to money for businesses.

And we need to focus on our particular segment. We need to understand where the puck is going from the customer side. But there's a massive company to be built here and probably multiple companies to be built serving different customers of different segments.  

Julian: Yeah. That's incredible. I always like to ask this question, not only for my audience, but also for selfish research purposes whether it was early in your career or now what books or people have influenced you the most?

Andrew: Yeah, I mean, that, that changes with time. I mean, I think the most is hard. There was an early book that I read that I, when I started my founding journey that I thought was great, which was called Founders at Work. . And it's about, it's an inside look at a lot of the famous founders, right?

And like how the PayPal founder, when they went public, thought it all was gonna fall apart. And just imposter syndrome that founders have along the journey. So I think, you know, founders at Work is a great. I love the Ben Horowitz. The hard thing about hard things, right? I think that's also a lot of empathy for the founder journey.

And then more recently I've been referring to it Takes What It Takes, which is by Trevor Moawad rest in Peace, but he was a executive and sports coach, performance coach. Yeah. And he talks a lot about, it's a little bit of stoic philosophy through the lens of sports. Yeah. But understanding how you deal with failures, how you deal with successes, how you continue to improve on your performance.

You know, and so I think that's one that I've been referring to a little bit. more recently is we just continue to focus on growing and scaling and doing the work on myself as well as the work on the business.  

Julian: Yeah. How do you stay kind of, motivated or kind of go through the emotional tool that founders go through?

Is there any pieces of advice or any, anything you do in your daily and personal life that, that kind of balances out the stress of building the company?  

Andrew: Yeah. My version of Prozac is sun, sleep and exercise. That's and so while I didn't get Sunday day here in New York, I, you know, I did knock off like my personal best in the last few months with the run this morning.

Great. And I think that's just super important, right? Yeah. So it was raining, it was cloudy, but I'm like, I'm just, you know, I've gotta get this run in. It helps me with my mental state. The exercise part I noticed for me is really important. Yeah. That gets me outta my head, especially more complex things.

I kite surf, I do, you know, downhill kind of back country skiing, those types of things, which, Keep my brain occupied and help distract me, I found really helpful. And then making sure that I get a good night's sleep. I tend not to drink alcohol during the week. I have a routine where I wind down. I have clear boundaries between work.

So, you know, there is a process there, but I've improved on this dramatically over the last few years.  

Julian: Yeah. Did the discipline come from previous experiences or out of anything that you do you actually?

Andrew: Yeah. The discipline came from doing it wrong for a long time. , and just, you know, feeling, feeling the stress, friends, family, like, you know, just not being able to show up for people in my life.

And, you know, first you gotta show up for yourself. Yeah. And I think that's really where the discipline came from. And then recognizing that when I show up for myself, I get better performance, not only out of myself, but out of my team, and outta my company?  

Julian: Incredible. I love that. Last question that I like to ask that I've been troubleshooting and I think I'm gonna keep it. If you weren't working on Teampay, what would you be working on?  

Andrew: I don't know if I have an answer to that right now. It's like, you know, it's like if you're passionate about something, what would you be passionate about if you weren't? It's really hard for me to ab test that. I probably would be doing some other startup.

Yeah, I don't know. Like, it's just, it. Once you take an idea in and you commit, I think the commitment's really important. Obviously, you know, regardless of what happens, like, I'm gonna be fine and we're all gonna be fine no matter what happens. And so very few things in our lives anymore are existential.

We're not getting chased by a bear into a cave. But I do think, like for me, that commitment and focus is front and center. So, you know, it's probably a crappy answer, but I just don't know what I'm doing other than this cause. This is what I get excited about when I get out of bed every morning.

Julian: Yeah. No, it's an honest answer and I appreciate it, and I always like to give my guests, I know we're coming at the top of the episode here, but I always like to give my guests a chance to give us your plugs. What are your LinkedIns? What are your Twitters? Where can we find you? Where can we support the vision and the goal and the mission, and be excited about as a customer potentially of Teampay?

Andrew: Yeah, I mean, we work really well for companies that are scaling. If you're over 50 people, you've hired your first finance person in there and you're trying to get your arms around everything, like come check us out, Teampay.co. So we're always happy to have a chat with you. You can follow me on Twitter @ajhoag.

And you know, I'm sure you can put the handle in the byline there, but I don't tweet that often. But when I do, I hope, try to do it with a lot of value and you know, feel free to come and follow the journey. We're excited and appreciate, you know, everybody listening through this.  

Julian: Amazing. Well, Andrew, I hope you enjoyed yourself and thank you so much for joining the Behind Company Lines podcast.

Andrew: It's great. Thank you so much, Julian. This was fun.  

Julian: Of course.