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I sat down with Ohad Samet, CEO & Co-Founder of TrueML, a leading platform of fintech products to enable intelligent, digital customer communication, which includes TrueAccord, a leading debt recovery and collections platform with a consumer-friendly digital experience. They are backed by AmEx, Arbor Ventures, BoxGroup, Felicis, Homebrew, Nyca, Max Levchin, and many more.
Ohad is also an industry veteran and previously held leadership roles at PayPal and Klarna.
In this episode, we discuss:
Lessons learned at PayPal and Klarna. What drives the success of these organizations?
“When we were acquired by PayPal, PayPal was still owned by eBay. And they came they gave us a very corporate America orientation about the values of eBay. And one of the values that we scoffed at the most, because we were grizzled fraud prevention people, was ‘people are basically good’. And you know what? People are basically good!”
Ohad spent years at Fraud Sciences, an Israeli company that was later acquired by PayPal. They also pioneered some of the anti-fraud concepts used in online payments to this day. Their secret? There was a shift in focus from traditional fraud prevention to enablement. This involved identifying positive behaviors using signals, rather than just focusing on negative behaviors. This novel approach was significant in the field of fraud prevention and risk management. Additionally, at Ohad highlights the creation of a unique system where subject matter experts (SMEs) were trained from scratch and then used to automate processes based on their expertise. This approach was particularly effective in areas with limited data or complex performance metrics, paving the way for a new kind of data scientist role.
Reflecting on his time at Klarna, Ohad emphasizes the critical role of strong, visionary leadership in driving a company's success. The significant impact of founders and CEOs who possess the determination and ability to turn visions into reality, cannot be understated. This as a key differentiator between successful and unsuccessful companies.
How TrueAccord has pioneered a humane, consumer-friendly approach to debt collection
“I don't know what debt collection needed to look like 50 years ago, but I know what it needed to look like 10 years ago, and what it needs to look like today... People want to feel in control. People want to feel a change in their life, people want to feel like they can be proud of the redemption arc of their story. And for us, that's what we want to give them.”
At TrueAccord, focusing on the servicing aspect of credit underwriting is the key. This involves understanding the consumer's situation, reminding them of their obligations, and making the payment process easier. They recognized that this area was not receiving adequate attention and saw an opportunity for improvement and innovation. TrueAccord's product, 'Recover', is designed to compete with traditional collection agencies. It approaches debt collection like a sales and marketing campaign, selling the idea of debt repayment to consumers as a form of personal agency and control. This approach leads to higher engagement from consumers who are willing to address their debts, and it also facilitates a more humane way of handling opt-outs.
Samet focuses on the need for a modern approach to debt collection that aligns with contemporary communication habits and legal requirements. He advocates for making people feel in control and proud of overcoming their financial challenges. This approach is based on the belief that people are inherently good and want to fulfill their responsibilities. By creating an environment of understanding and support, TrueAccord aims to foster a positive cycle where consumers are more likely to pay their debts and engage with other financial services.
The state of BNPL and why Ohad thinks the category is here to stay and he hopes it displaces payday loans
“There's a narrative around things blowing up, when Buy Now Pay Later saw its delinquencies go up - people were like oh, BNPL is done. BNPL is not done, it's just a higher turnover product that sees the delinquency come faster than a private credit card, where people max out their balance, and then they take 180 days to charge off.”
The BNPL industry is undergoing a normalization process rather than facing a crisis. While delinquencies in BNPL may have risen, this is part of a natural adjustment in the market, not an indication of the industry's failure. This normalization could appear dramatic compared to pandemic-era trends, but it's a return to more typical market conditions. In addition, for Ohad the term BNPL is often confused with POS lending. He suggests that true BNPL should be defined narrowly as short-term credit options like 'pay in four' that reduce shopping friction and increase basket size, as opposed to larger loans that are essentially POS financing. Both types of products are here to stay, but they serve different purposes and markets. Samet believes that BNPL, especially short-term credit options, will continue to be a significant part of the credit landscape. He hopes these products will replace more predatory lending options like payday loans. He also notes that major BNPL players like Affirm and Klarna are expanding into traditional credit card territory, indicating a diversification of credit products to meet varying consumer needs.
Advice on managing your relationship with VCs… and a lot more!
“The problem starts when founders and others expect VCs to be what they're not. And I think that in the boom years of COVID, and before, some junior people in the VC industry were also confused about what it was.”
Understanding the True Nature of most VC-Founder Relationships is crucial. Founders and investors often have misconceptions about their relationship, expecting them to be more than what they are. He notes that during the boom years, there was a tendency to forget that the interests of VCs and founders are not always aligned. VCs are primarily money managers focused on growth and returns, while founders are deeply invested in their single business. It's important to maintain a functional and high-functioning relationship with VCs by not expecting them to be best friends or to automatically provide funding. Ideally, you can have strong, sometimes argumentative, but ultimately productive interactions with VCs, recognizing the professional nature of the relationship.
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Miguel Armaza is Co-Founder & Managing General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.
Ohad Samet, CEO & Co-Founder of TrueML – Re-Inventing a $20 Billion Industry, The State of BNPL, Why VCs Are Not Your Friends