September 29, 2022
Howard Katzenberg is a seasoned entrepreneur and early “FinTech” industry pioneer, with significant expertise in scaling venture-backed businesses through IPO, strategic planning, financial leadership, and financial technology.
Currently, Howard is the Founder and CEO of Glean AI, the only Accounts Payable company that combines smart automation with spend intelligence and helps companies save money on their vendor expense. Prior to Glean, Howard was the CFO of Better.com, the leading home finance company, where he enabled the company to grow revenue 5x while significantly accelerating its path to profitability. Before joining Better.com, Howard served as the CFO of OnDeck, the leading small business lending company. Under his leadership as CFO, OnDeck consistently grew over 100% annually, completed one of the first FinTech IPOs in 2014, and was regularly recognized as a top place to work.
Julian: Hey everyone. Thanks for joining the behind company lines podcast here today, we have Howard Katzenberg, founder and CEO of glean AI. The only accounts payable company that combines smart automation with spend intelligence and helps companies save money on their vendor expenses. Howard, thank you so much for joining the show today.
I'm really excited to learn more about yourself, your background. We chatted a little bit before in, in, in the past and really excited for our audience to really get to know you. But before we jump in, what were you doing before you started. .
Howard: Yeah. So thanks for having me, Julian. I love the podcast.
And before starting glean, I was the CFO. So I was one of the founding employee. Well, one of the employees on the founding team at on deck capital, like the on deck capital was an online small business lender that kind of pioneered online lending from 2008 all the way through like, you know, 2021 before it got acquired.
Yeah. Before FinTech was even award. Yeah. So I was. One of the first employees there and was there for 10 years, became CFO, took him [00:01:00] public during that time. And after 10 years joined better.com to be there. CFO was there for about a year and a half until I got really pissed off that I couldn't strategically manage my vendor spend as much as like, as I thought I could be.
Yeah. So started glean as a result and I happy to get dig much more into that founding story. Yeah,
Julian: yeah, of course. And, and, and I'm so excited to, to learn more, cuz you've been quite part of a, a few startups and exits and, and you know, really have some, some great experience to kind of dive into.
But I'm curious, why couldn't you manage a vendor spend? What, what was the problem there?
Howard: So, at, at, at better, I was confused. My company's natural . Better, you know, we were growing like very rapidly. When I came on board, we were doing like 2 million a month and I was only there a little bit more than a year, but by the time we left, it was 10 million left.
So five X growth over just like a one year period. You [00:02:00] can imagine to support that growth. We were spending a tremendous amount of marketing. Yeah. Building up the organization, bringing on all these new capabilities. So the company just got too big where you. As a finance team leader, I didn't know every vendor that we had.
And as our burn rate was increasing as a result of that growth, I wanted to make sure that we had some contingency plans in place in case like, you know, the growth wouldn't materialize, or we just needed to you know, cut down and reduce the amount of spend that we. So when we looked at my team and I looked at, you know, what could we do on the vendor side?
I had naturally just assumed that, you know, we were using bill.com that had all our invoices in and to pay bills. I had assumed that if I logged in, they'd be, there would be some reporting or analytics section that could. You know, show me what the historical trends line trend lines were with certain vendors and allowed me to really dig into, see what are we purchasing from these vendors?
[00:03:00] And you know, what's up for renewal soon. And to my much to my disappointment, the only report I could pull was one that told me about my accounts payable, aging, you know, what was current? What was 30 days fast due 60 days, nineties, et cetera. I didn't care about that. Yeah. I really cared about like, why did we choose the vendors we're working.
What are we purchasing from them? Do we have a good deal from a pricing perspective? Can we renegotiate in the coming months and ultimately, are we seeing an ROI? Are we seeing value from this relationship? And I realize, you know, bill.com could not answer that. And the, the other systems that we were using, like QuickBooks or at, at the time, it was probably NetSuite.
I couldn't pull. The information I needed around the vendor relationship. Yeah. It just doesn't exist. It's a data problem that unfortunately like the source of truth for all finance teams is what's in their general ledger system. And for any vendor transaction, the general ledger really only cares about two things.
The who the vendor is and [00:04:00] the amount that you owe them. It disregards every other piece of information on the invoice or the contract that says here's the length of the relationship here is the, the things you're purchasing. Here's the unit prices you're paying. Here's the, like the quantities you're ordering.
Yeah. And I had to do a manual audit with my team to get all that information and really roll up our sleeves. Understand exactly where there were savings opportunities. So we did this at, at better. And it took us about three weeks. We went through every vendor relationship printed out like three months of invoices and just like roll like one line item by line item invoice by invoice vendor by vendor.
And we found over a million and a half dollars of like annual savings opportunities based on the run rate we had at the time, which was about 15 to 20 million of vendor spend. So long story short, short. That process, you know, enabled me to kind of say, Hey, why isn't this? What we just did this manual wall audit?
Why can't we automate it? Because what we're doing is looking at tables [00:05:00] on invoices, putting into a data structure and. And then generating insights and then following up with the budget owners. So that's really where the idea behind glean started based on all the problems that existed. And then the legacy text
Julian: stack that we used, man, three weeks to go through that full audit.
I'm sure that was brutal. Not, not only going through the audit to go. You made me. Yeah. Yeah. Before we go into glean, which, which I I'm really excited about the technology and the insights you are able to help companies with, because I think, you know, a lot of times people don't understand when you're building, so.
The amount of different vendors and tools that you have to work with to be able to enable your team to have certain like productivity measurements or increases and and some aren't worth, you know, their weight and go on the shelf. I was using a a, I won't say the name, but a document tool to manage some kind of internal documentation and ended up just sitting on the shelf for three weeks.
And then, you know, my CEO my, my, my co-founder was like, are we using this? And I was like, I don't, I really don't think. And you know, that conversation could have been been sooner, but take me back a little bit towards your experience on [00:06:00] OnDeck, because I was reading about its success and, you know, obviously the IPO was extremely successful, but it was growing at like a hundred percent annually.
What kind of whether it's strategies or structure do you kind of attribute that level of success? You know, building from. you know, conception to, you know, a successful exit, like an IPO. What are some of the key things that, that you think led to that success?
Howard: It was, you know, just very clear product market fit.
If you go back historically prior to like 2000, but prior to the 2008 recession, even in boom times in like 2005, 2006, that's when OnDeck was founded the way, if you were a small business owner, the way you could finance your your business was either one through an SBA loan, which took sometimes months to get approved.
And then you would have to personally guarantee that loan or. The alternative was [00:07:00] using your, the equity in your home. Take out a personal home equity line of credit, where you're putting up your, the, your house as the collateral. And then you could take out the proceeds to help fund your business.
The concept of a short term, working capital loan for small businesses didn't really exist because the underwriting to understand that business, their cash flow pro profile it's it's history, it's industry, etc. That was always a very manual process, which is why I took the SBA so many months to actually approve it.
So what OnDeck did was basically to say, Hey, how do we really leverage technology? And the fact that we can access bureaus credit reports bank post credit card processing statements, bank, account information, all that information digitally these days to make an underwriting sec decision in seconds, as opposed to.
And therefore have our cost to create one of these loans, be much lower that we could make a six month loan or a 12 month loan, much more affordable [00:08:00] because of the use case for small businesses. A lot of times it's like, Hey, I just need to bring inventory in. I'm gonna cycle that out within the next three to six months.
So I don't need a five year loan for that. In fact, that would be very counterproductive to using it again and again. So the technology was there. To really lower the cost to decision and decision accurately. And at the same time, the demand had always been there. So we really unlocked that demand.
Now. You know, we had to figure out like what messaging was most effective and what were the price rates that, that were that were fair to the customer and attractive what were the channels, you know, through, through partners or, or sending kind of direct mail solicitation ourselves that that could really be optimized and, you know, post product market fit.
That's where we focused on, like, how do we acquire these. Effectively cost effectively through different channels. Yeah. And that fueled a lot of the growth from all the, the learnings and analysis that we did. Yeah. On the customer acquisition side.
Julian: Yeah. How, [00:09:00] how would you how would you describe the process of like learning and, and, and developing product market fit and then learning it and analyzing and where to, to focus on whether it was marketing and different capacities or, you know, feature building, how would you describe that process?
I'm sure it was fairly repeatable.
Howard: It became at some point, listen, you always want to be experimenting. Yeah. In direct mail, you have like your, the, the, the current control that's performing the best, and then you have different different tests. Right. And you know, we, we were constantly doing variations of, of direct mail, email messaging.
But I think the one thing to, to really keep in mind is what you want to solve for is the margin. Cost per acquisition, not your average cost per acquisition. Yeah. And ultimately it's like, if I spend another dollar here, what's the cost. So my first, you know, first $10,000 of spend on direct mail was really, really efficient.
The, the, the tax were really, really low, but the next 10,000 it's gonna be harder to find the [00:10:00] respondent. So your, your, your response rate or conversion rate goes down, the more you spend. So at some point you have to say, My spend my incremental spend on direct mail is not as good as my incremental spend on Google.
So I'm gonna put more my next dollar into Google. So that's the thing I think. And this is where my CFO background helps me, I guess, at glean is like really focused on that, that marginal cost per acquisition by
Julian: channel. Yeah. Yeah. That makes sense. And now at glean, you know, helping kind of in. You know, companies manage their spend and with vendors and expenses and things along that nature.
How does the technology enable that that ability for companies now to take kind of ownership of not only what they're spending for per vendor but the overall, like, you know, rate of rate of invest or rate of return on, on, you know, that that's been, that they're that they're utilizing for those vendors.
Howard: Yeah. So at clean, we talk about like the spend accountability. And, you know, basically it goes something like this that [00:11:00] we're unlocking the, the value of an untapped data set. That's like line item, information on your bills and and, and receipts with that untapped data. Now we can generate insights fast, like in real time, as the bills are coming in and relevant insights about that bill or about that vendor relat.
These are insights that were not generated in the past. So based on now having this information, it creates, it leads to conversations occurring between finance teams and the actual people spending in the organization. And again, conversations that never happened in the past those conversations. And this is like the, the main point lead to action in the form of either better negotiated.
Or maybe it'd spend decisions who were like, Hey, let's this, this relationship isn't working out. We're not seeing the ROI that was expected. Let's cut back. So, you know, what glean does is it arms all the decision makers with the visibility, the context, and the [00:12:00] ability to collaborate so that they're making smart, wise smart decisions.
And here's the best part that we hear from our, our customers as that cycle repeats the spenders in the organization. Like we're inculcating a healthy culture of spend accountability. Yeah. Where they're spending like owners because they're, they feel included and they have access to all the same information as the finance
Amazing. Amazing. What, what are some of the key pieces of analysis that, that you focus on or that company should focus on? That, that glean helps kind of uncover. .
Howard: Yeah. So if I could do a screen share here, I'm not gonna do it, but like, it would be really good to see the product, but
Julian: you can, you can, if you want, , it's, it's completely accessible if you'd like, but go ahead.
Howard: Do you, do you want me to, yeah, go ahead. Go ahead. So gimme, gimme a second. It might take a minute or two to pull up.
All right. I think. I think I have it here.[00:13:00]
Can you see it?
Julian: Not yet. Go ahead. You should do share down there and then oh, yep. It's coming up. Oh, wait. No, that's my screen, judge. Push the share button at the bottom there, then we'll be able to see the product.
Howard: All right. I think I'm, you know what I. The button, the share button was hidden. Oh. Cause I had minimized my, my screen. All right. Can you see my screen now? Yes, sir. All right. So this is an AWS invoice, probably one of the top vendors in the world. And certainly one of the top vendors at all the companies I've been at and their invoices are terrible.
So for us, we're a pretty small company, but even our invoice is like four pages. Yeah. It's just like this listing of all these products and services that we're Purchas. From them, it's not sorted in any intuitive way. My biggest line item is my EC two spend here, but it's not on the first page. It's like, I don't know what order, [00:14:00] what logic they're using to sort these line items.
And then I only see my spend for March. So my simple storage service was $143 in March. I don't know what it was in February or or January now using glean. You know, we kind of changed all of that. Here. I could see how my spend compares to prior periods. If I wanted to, I could click on any of these bars to get you know, that invoice and, and take a look at it over here.
We extract all the information off the page but we are the only platform that can extract an AWS. Sort it by, by, you know, what contributed most to it and then show you the time series view of like all what's happening with my EC two spend. Wow. And based on that, we can then generate insights. So first off, this is a receipt, so we're saying don't pay it.
We want to avoid any duplicate payments in glean. I can set a budget. So for this month I had a $9,000 budget of which I was over by about a thousand dollars. And then we tell you the [00:15:00] reason. So for every invoice, like our goal is to tell you the story of the invoice so that you actually have to, you know, scrutinize this to to, to each each line item.
So on this bill was up 22% from March. And the biggest driver of the variance was something called Amazon guard duty, which was 10 81, but not build last month. And in fact, Amazon guard duty was new. Like in the prior eight month period, we had never. Now I highlight that because if you think about what I talked about before, like data leading to insights, leading to conversations, leading to action, that's exactly what happened with my team.
So the two people on my team that manage AWS encores already, could you come out in the new line item is so two related, already writes back. Yes. It's a threat detection system from AWS data. Dog is a similar offering. I'll do a price comparison and then Artie writes, you know, I'll move it over to Datadog.
Next month's bill should be lower. Okay. So this is like really awesome for three reasons. If we were using another bill pay platform, this conversation wouldn't have happened, cuz we would not have had that spend insight [00:16:00] two. I, me as a CEO, I get concerned when my AWS bill goes up a thousand. I don't know what the implication is for next month.
So now I'm given the context that it was actually good spend. It was in support of our SOC two initiative and three and probably most important. This conversation, you know, compelled already to seek a cheap, cheaper altern. And then if I show you next month's bill here in may, this is you'll get another sense, sense here of all the other analytics we provide.
It's it's a month over, like any two months you could compare and create an instant variance analysis. So I can see here there is an $800 total month over month decline. The largest driver was in fact, Amazon guard duty. Because, you know, this is now sorted by line and the variance, but it went down from 10 81 to like, you know, one 50 there.
And then, you know, we even break it down further, like how many line items increased how many decreased and, and what was new. So you know, you could click in all these and get, get a filter list there as well. So [00:17:00] that's the type of insights yeah. That we're providing updated, you know, upcoming renewal.
We'll, we'll provide, you know, just my well I'm here. Here's like a zoom invoice where we're paying $200 a seat for standard bids, which is their main product and the annual version of it. One of the gleans here is to negotiate a discount, cuz like we're paying 200, but there's another glean customer paying as low as 1 39 per seat.
Wow. With similar usage. So if I can negotiate that with my 13 seats, that's like an $800.
Julian: That's incredible. What, so, I mean, overall, obviously the implications for a lot of companies are to be able to manage that spend in, you know, cut costs where they need to, or understand that they're investing into the right locations and, and where they're investing into.
But, you know, in terms of the relationship with vendors and, and companies, what are the implications that you see long term with, with a product like glean, being able to compare you know, the different vendors or the different clients that. Glean and can compare those prices. And overall having that ownership of that spend, what are [00:18:00] the implications for startups and as companies grow
Howard: over time?
Yeah, I kind of, you know, talked, talked about it before, but ultimately our goal is to bring, you know, much more visibility. Yeah. And accountability. To to companies spend cultures. Yeah. Cuz it doesn't exist today. And you see people pivoting now. Yeah. Given the state of the markets to like really be focused on cost, but that's not the natural inclination.
Everyone wants to grow revenue and you know, managing expenses, almost an afterthought. So we want to make it so that it's just like part of your competitive advantage. If you using glean, you're spending each dollar responsibly cuz guess. It's how you spend that dictates how you grow your revenue and how you perform as a, as a business from a margin perspective.
And like what longer term investments you're making. It's all. the vendor relationships that you have
Julian: amazing. Now tell me a little bit more about the traction. You, you, you've got this amazing product that, you know, offers so much insight. Star use, communicate, stares, these conversations [00:19:00] that are able to communicate within organizations.
And I mean, it's incredible what, you know, that allows a company to do and, and grow, and especially managing their own, you know, finances moving forward. But who are you working with? What what's got you excited about the current traction of glean you know, now, and, and into the near.
Howard: so, yeah, we were funded right around when COVID was breaking out.
like the month before we spent two years building the product and hopefully you get a sense of like why we needed two years. We wanna be best in the world at extracting raw information off an invoice or receipt, and then putting structure around it. So I showed you that, that zoom room the the zoom invoice business.
We have to be able to understand, is this the annual version or is it the monthly version? Yeah. Is this a one time like subscription or is it a recurring subscription? So we've invested a lot of our kind of data sciences, data teams, capabilities into, you know, mapping out everything into canonical entities.
Yeah. Putting structure around it [00:20:00] and then being able to generate insights on all the data that we have once everything's normalized and then in economical form. So that took a long time to build. Separately, just building out AP functionality, like the integrations with general ledger systems, the ability to make payments that took a long time as well.
But, you know, come come March of 2022, we were ready to kind of come out and tell our story. And at the time we had about 10, you know, customers in our beta. Now we're we're north of 50, so that's, that's pretty significant growth over the last six, six months. Yeah. And you know, we're, we're seeing like we have a great pipeline.
We're growing, you know, rapidly each month is better than the. So I'm really excited, but we're just like, it's still the first in here
Julian: for clean. Yeah. Yeah. No, that, that's awesome. And congrats on all the growth. That's, it's impressive. And I love that, you know, it, it definitely speaks to the amount of attention that you took to build such a you know, well built product that can, can have these key insights.
And I think the hardest thing is extracting. Data from, you know, a PDF document or any documentation and differentiating the different [00:21:00] pieces on that. I'm sure it took, you know, the, the full length of the two years to, to get it just right. And I'm sure it's gonna take, you know, longer to continue iterating as, as things change.
But I'm curious, and I'd like to ask this a question a lot, because I think it speaks to what founders like to focus on. And a lot of people think about the good but what are some of the biggest risks that you face or that your company faces.
Howard: Yeah, listen. I, I think competitively there's a lot of bill.com has a big target it's back. It's like a 15 billion, 16 billion valuation company. They've had a lot of success. But I think, you know, ripe for disruption with a much more innovative product. You know, our thing is like, we really want the, the differentiation.
To be analytics. Yeah. We've made a heavy investment in that area. There are other companies that are really well funded that have like virtual cards and like manage corporate card programs or do like negotiations as a service. We're all kind of, kind of coming at it differently, but we're all ultimately going after the same dollars from finance teams.
So [00:22:00] that's, that's always a kind of just a concern mm-hmm , although there's maybe a lot of partnership opportunities there as well. And then, you know, just I've been. At many companies growing, not from just zero to one, but one to a thousand. Yeah. So being conscious of like the impact on the team the impact on culture, just managing through that really, you know, rapid rocket, you know, rapid fire growth.
Yeah. And you know, being as sensitive as possible to what made us great from zero to one. Yeah. Ensuring that we're kind of doubling down. Ensure that we're retaining those elements from one to a thousand.
Julian: Yeah. How, how do you retain those elements and, and also focus on culture as you grow?
Howard: So it's funny.
I, I met with someone who does executive coaching for like pre IPO companies recently. And we were talking about this, cuz this is a challenge he has to deal with where part of the psychology sometime with founders is like, oh no, it's not gonna change. We're gonna run the company. Exactly. The.
And it's just, it's like, [00:23:00] there has to be some self-awareness that like, anytime you're growing like that it it's, you're gonna change. And if you go public, guess what? You're gonna have that ticker every day where people were making this judgment call on the value of your company and your employees are gonna be talking about it.
The rumor reveal is gonna start as much as you wanna deny it it's gonna happen. So I think, I think the first part is just acknowledg. That it's a risk. Right. And it's probably inevitable. And then you can work with your team, you know, I would say, don't do it. It's not, it's not like I own this myself.
It's like, Hey guys, this is gonna be a challenge for us. How do we like put the right structure and controls in place and like, right. You know, communication mechanisms that we're, we're kind of being proactive about this and we're putting the plans and structure in place now. So. You at glean right now, we're, we're still small.
We're only like 25 employees, so we haven't needed to do that, but I'm certainly setting like the expectation that yeah, there's gonna be challenges [00:24:00] on how we operate or as we grow and you know, some of those new ideas or structure that we have to put in place will be very reasonable and others, we might say no to just to say, Hey, we've gotta really hold onto this.
This is a key, like a key value of, of the team today. And we don't really.
Julian: That's where they. Yeah, no, that, that makes sense. And yeah, I think, I think a lot of founders do have that, that idea. But it seems like a lot are, are shifting towards, you know, growing. I was talking to another founder and he was talking about how culture is something he thinks about every, every day and is communicating with his team every day because of the value that it adds to have such a strong, unproductive culture.
And he said it the same thing, he said a lot of that is with the collaboration of his team in helping with the decision making there. if everything goes right, what's the long-term vision for glean.
Howard: So long-term vision is like basically become the all in one platform for like managing strategic vendor operations for a company.
Yeah. [00:25:00] So, you know, from the idea you have, Hey, we have this need for a new workflow management tool. Let's do some discovery on, on who the vendors are. Let's see what feedback has. let me run through a procurement process or an approval process where it goes through legal it and finance for review.
You know, the decision occurs upon that, you know it gets updated in the budget bills are starting to come in and we're analyzing the spend is a compliant with the contractual terms. Are people, you know, preparing for the renewal inevitable renewal. Providing benchmarking data, like I showed with zoom.
Yeah. On here's the deal that we think you can negotiate. And, and ultimately just being that tool for allowing teams to collaborate and making good spend decisions. Yeah. So that's, that's kind of the, the long-term vision for us while enabling them to access the tool from any device. And if they're paying vendors pay any way.
Julian: Yeah, now that's incredible. And I'm excited to see where, where glean goes, not only as a company, but who it [00:26:00] partners with and who helps kind of accomplish more successful you know, not only growth, but, you know, as they scale their companies and their business. I always like to ask this question, not only for my homework, but also for the the audience as well.
What books are people have influenced you the most?
Howard: That's a good question. So. From a book's perspective. I'll answer. Maybe give two, just like I I've had to unlearn a lot about being a CFO as a founder and you know, I've, I've, I've had to be like our chief product advocate as a result. So the mom test by, I think Rob Fitzpatrick, like it really teaches you how to ask good questions, not leading questions to get true, honest, his feedback.
Yeah. On, on your product and, and not just the product. The problems that you're looking to solve. So that, that, that was a very helpful book just for me to kind of learn a lot of kind of product skillset from a more just like leadership and teamwork perspective, five dysfunctions of a team by we wrote that one, [00:27:00] Patrick Lindsay, you know, it's, it's, it's a really short read.
Yeah. Easy story, but you see different personas or personalities in it. Yeah. And it'll ultimately, you know, Patrick recommends a really great framework. For getting buy-in and making sure people are heard and ultimately, you know, what leads to great functional teamwork. So those, those are two books that, that have definitely had an impact on me in terms of people.
I was, you know, working at American express American express in 2001 during nine 11 I was down there that day and, you know, American Express's business model, you know, with T E was completely threatened. Like our headquarters was. Was structurally damaged. We had people who died, you know as a result of that.
And I always look back at you know, kind of how Ken Chanal really just like rose to the challenge. And he's always been like the role model for me, for the type of leader I want to become and how he handled our himself and really just navigated the organization through those really challenging times.
So [00:28:00] Ken.
Julian: Amazing. Well, thank you for sharing that and, and thank you for sharing the knowledge. I, I always appreciate that with, with founders helps not only, you know, me grow, but our audience grow as well. Last little bit, tell us where to support glean. What are your plugs, your LinkedIns, your Twitters, where can we be?
Best supporters of your product and your journey? Yeah. Website
Howard: is glean AI. The Twitter is glean AI. I think also my personal one is Katzen. LinkedIn, you can look at glean AI or or Howard Katzenberg.
Julian: Amazing. Well, thank you so much, Howard. I really appreciate you being on the show. I'm excited to launch this episode and, and give some more gems of knowledge to our audience.
And I'm excited for not only where gleans going today, but where it's gonna head in the future. So thank you again for being on the show.
Howard: My pleasure, Julian. Thanks for having me.
Julian: Of course.