BerGeron: 0:04

Think of the world of tomorrow, when you're buying steel from the internet completely, you get into a to the platform of choice. And not only that you can optimize based on the country you were buying from you optimize globally, instantly, with shipping costs, with the ability to get the terms you want, with everything. Just like a consumer is doing today, which looks so obvious. Think of what that will do. For supply chain in general

TomRaftery: 0:36

Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast. The number one podcast, focusing on the digitization of supply chain. And I'm your host global vice-president at SAP Tom Raftery. Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have my special guest Bar. Bar, welcome to the podcast. Would you like to introduce yourself.

BerGeron: 1:03

It's great to be here. Thank you. maybe start about talking generally about myself. I'm an Israeli. I live in Tel Aviv. I was an officer in the army for five years in the armoured corps. Worked at different defense companies. I studied industrial engineering and did my master's in philosophy. And I got into FinTech, in PayPal, the Israeli branch. it was based on an acquisition of hard sciences, the company that created really the golden standard of how the risk, uh, is being managed today with companies like Riskified and falter and so forth. Did different risk roles, was responsible for my last role was responsible for the global strategy against account takeover. My, uh, co-founder and better half, a Yoni, which runs Balance with me. Before doing Balance. I got intimate with FinTech and specifically with B2B ecommerce, got obsessed with the idea of digitalizing, B2B and the economy as a whole. but my father had cancer, uh so it took a lot of time to see an oncologist. And decided to leave my day job with Yani, my co-founder to build QA AI, which was a company that leveraged data science. We built a data science platform to connect to healthcare providers and optimize, queue appointments. So we would, uh, we will predict things like who'll become a no show and what should be the optimal appointment length. to try and make the day of the physician more efficient and as a result, creating more cues and more availability for, patients. we decided with time after working with big HMO's, and the UK, US and Israel, we decided it's not scalable enough. And it's actually kind of hard to sell to healthcare providers. So we decided, yeah, we decided to give the technology to one of the biggest HMO's in Israel and continuing our journey as entrepreneurs with Balance. Balance in a nutshell is just an attempt to maybe an aggregation of insights from the time, with Paypal and other companies. To create a B2B payment experience online that doesn't suck the motive to do it is, as I said before, can we help digitalize the economy? That was the question. And because of our payment experience and the pains we saw decide, okay, let's tackle the payment side. So we started yCombinator, some of, you know, as like a prestige, incubator. in the Silicon Valley, companies like Stripe and Airbnb, uh, was them. And we just got very close with the concept of B2B marketplaces, which we found fascinating because. One, it's a very, very interesting businesses looking to, really digitalize supply chain in general, and more specifically the order experience in a specific vertical. So we saw it in like procurement back then it was the start of COVID. So we started in PPE, but others as well, like chemicals as well. So we decided we were crazy enough to say. There wasn't so many of them back then, but because that was our mission, really to support those innovators, we decided to tackle that first, the challenge of a B2B payment in a market place is very, very, very. Like big and the market didn't seem that big. If you look at b2b market in the us back then, but there was some crazy folks that decided to help us um, building this company our seed investors, Lightspeed and Stripe. The payment company was one of them, and Natalie and Max Levchen. Founders of PayPal and affirm, and the long list of others that said, yeah, it's a problem worth solving. with time it became more and more obvious that this is it's a focus point and now it's a very hot topic in the VC environment. And we just made it our sole focus, to solve that problem. And today. After we did an addition around, we raised more than $30 million and working from New York and from Israel, we have the privilege to be on the frontline of the, with those innovators in different verticals. We see, you know, chemicals, textile, lumbers, steel, you name it. All of them are going online. And we see them, and it's a very, very exciting to see the data and to see the progress of those companies and our ability to support them. The thing that's in general, what Balance is. I can talk a bit more about how it works, but very generally just yeah.

TomRaftery: 5:45

Sure, yeah. no, I mean, it is a nice ideal to try and create a pay to pay or sorry, a B2B payment system that doesn't suck, but just for people who might be unaware, i.e. Me, how, how do B2B payments systems suck? In what way do they suck and how do you fix that?

BerGeron: 6:14

That's a beautiful question. Let's talk about the existing situation rating. So today, the offline world of B2B trade is a one that is very heavy on relationships. It's really hard to move from one vendor to another. And that situation, makes it very, very inefficient for buyers to optimize prices and to find new supply especially with the, problem of digital supply chain, as a whole, which is something that these are very early. So if you have a problem getting steel from your supplier, you're essentially stuck and it takes it out of time to move from one to the other. So B2B e-commerce just makes sense. Right? That's the basic that's create a world when it's easier online, like in the B2C space to find, new suppliers or to support first suppliers to grow, and think of themselves as retailers those think of themselves as a high growth business in potential. So this evolution is happening and changing really the way trade is working on the discovery side of the transaction, right? Finding the person that can sell what you need. And vice versa, the challenge, is that they are creating those e-commerce experiences. It's easy to find what you need, but when you want to do all this, you get stuck because credit card is, we know from the consumer space is not suitable for a B2B need. So obviously simple gateways don't work online. So what's happening is that you need to pick up the phone and call this e-commerce brand that just build this B2B e-commerce experience and you need to start doing the order manually, the quote, and invoices, and request terms, and getting going through the due diligence and references. Can you get terms, setting up like the payment preference of like the wires and, and the checks. and that's okay. In low scale in the old world. It's not okay. It's pretty shit, but it's oh, it's okay. Because it's, it's manageable. because you have, I don't know, dozens of customers, maybe 100 customers, you have a big AR team and you think it's okay. But when you go online, a beautiful thing is starting to happen. You see more and more buyers are finding you online. You're using acquisition tools, and you want to scale as the seller and the way to do all those offline. It's just not scalable. So the experience is becoming worse and worse for the buyer and the seller and, uh, industry is just created, just stuck in this bottleneck of all that, even though the discovery is becoming better and better. So Balance, is trying to take a really a Stripe-like approach in the light where you can embed the Balance and Balance is starting from the pay and from the checkout. First of all, we created a first B2B checkout experience. That's a strong statement in essence, what the, what it is is first of all, it's it's consumer grade beautifully designed. It's really nice to use it. It's like all of us are using as consumers. That's the first thing that is really nice to feel. The second is that you can get self-serve invoices straight from the checkout and forwarded the relevant finance guy. On the invoice itself when you do wires or checks Balance has the technology and payment capability to automatically reconcile it with the invoice. Because we were holding the two sides and the bank and the bank details is something we create. So the experience for the buyer is seamless. It's the same thing he knows from the offline space, but for the merchant, he's getting paid a reconcile payment with the abstraction. They are balanced. It's always the same. They can pay with checks or wires. You get paid the same way. So it's beautiful in that sense, you can also pay with ACH, or card. And the other side, which is really critical is the terms piece. For the long tail and for the big ones, Balance has a unique risk that technology can just underwrite automatically big lines and gives the merchant the ability to get paid instantly and easily. Like it was a card payment all the time. While then buyers are getting just the flexibility that, you know, from the offline space to pay with the terms and with the payment preferences they want. Now, this is not where it stops because the innovation of e-commerce is building marketplaces. We see brands, huge brands, not only building an e-commerce experience, but bringing other vendors at the back to enrich their supply. So they need to pay the vendors as well. And to pay the vendor. You need to want to be removed from the flow of funds because it's not your transaction and you don't want to be in that regulation, uh, side of things. So we are removing them from the flow of funds, creating like a Balance account for them and creating the pay out. connected directly between the two sides and the different softwares. So as to think that the milestone based and everything that is a B2B payment off capture credit notes, everything is in the platform. So it really, makes the transaction something that is so seamless, and connected that it's not longer a problem, but I think that's in essence, how we tackle this thing.

TomRaftery: 11:59

So you're, you're essentially you're, de-risking the process for the two sides of the transaction, right?.

BerGeron: 12:07

Yeah, we like to call it facilitating trust. If the old world is trying to do it in an unscalable way, Balance is, is like a layer that is creating a trust between the two sides and saying, we will enable you as a buyer to get the terms for you to move from your existing vendor. It's one of the biggest friction point to move from a vendor is the terms you have with them. So we will give you the same terms you need, and you can pay however you want. It doesn't matter how the vendor is getting paid. You're getting what you need. And the vendor is just getting the, beautiful, transaction experience he knows from the credit card place, you know, without the hassle of trying to manage transaction.

TomRaftery: 12:51

And are you like acting as kind of like a bank in the middle an escrow account?.

BerGeron: 12:57

Yeah, some of those capabilities are, can be considered as an escrow account.

TomRaftery: 13:02

Phenomenal. Phenomenal. Can you talk about some of the industries that you working particularly well with? Give us some examples.

BerGeron: 13:13

Sure. first of all, there's so many, there's dozens of them. Yeah. It's, you know, we are a reflection of the industry. It's not really, it's not us, it's them. So first of all, we have few in steel, steel, you will not believe how defends they are in the purchasing side of things. it's I think most I'm saying like something very strong, so take it with a grain of salt. Um, but I think in my intuition right now, from the data in front of the customers, we have, a significant portion of steel, supply chain and specifically like purchasing in the US is digitalized today in some level. Okay. I know a lot of buyers. There's thousands of big buyers of steel in, the U S and I think there's a very significant chunk of them buying steel online. That's crazy steel. No one would believe me. if you know, I'm just talking about someone from the street, it sounds ridiculous. But it's happening. We see it. So that's one chemicals, amazing innovation. We have one customer, is calling a Chem Direct, an amazing company, connecting buyers and suppliers in chemicals and are doing such a phenomenal job. You will not believe how hard it is for a hospital to find chemicals. It's ridiculous.

TomRaftery: 14:45

So chemicals, not pharmaceuticals.

BerGeron: 14:48

It can be pharmaceuticals as well, but there's so many use cases. Chemicals are like the, the basics of everything. Uh, I just learned it from this customer. There's so many, customers for those things. And I just got fascinated about, you know, I'm thinking about the payment side and overall like, uh, the innovation and the vertical, but they demonstrate. How hard it is to just find a chemical that you need. So those buyers are super excited about this, platform and and we're just happy to be, had to be there to help. So that's chemicals. Also textile is doing an amazing job. Shout out to a Dior, an amazing company doing, um, one of the biggest B2B marketplace of fashion. helping digitalizing the supply chain in fashion. And so many more like lumber, till exchange, doing the same. and so many more like you will not believe, like there's like, there's a B2B marketplace we have of antennas, it's antennas. There was one that was. The very random. You want to see something, you want to hear something more random than this, which should be, you'll be amazed with. So I don't know if I'm saying it right, but there's one B2B marketplace we have that is connecting franchise. Think of buyers they want to build a restaurant. They want to have a restaurant business and they don't want to build it with their own brands. So they can go to that website then. Um, I'm saying something that is not sure that the brand is there, but they can come to a McDonald's for example, and can ask to open a new branch, which is crazy. And they can like, you know, check the different prices may be between McDonald's and burger king and McDonald's and burger king. I'm not saying you're in this platform, just giving it as an example. What a beautiful thing, what a beautiful thing, uh, And antennas. Yeah. And there's so many more, you would not believe it. It's crazy. Yeah, the world is changing and no one knows that's what gets me, so, so excited. Like the world, like the economy is going through a digitalization phase that is much, much, much more significant than what, you know, the consulting companies saying the reports it's so much deeper. It's so much wider. it's really, it really is something very, very exciting to talk about and I'm sure that with time, all the media, companies will see it, then it will be the number one thing everyone is talking about.

TomRaftery: 17:32

Okay. And why has this space been so slow to innovate

BerGeron: 17:38

Oh, wow. So many reasons. I think one is, I think one is tradition. it's very, very what

TomRaftery: 18:22

or is it inertia?

BerGeron: 18:24

I think it's a, it's just a strong tradition of having a relationship based business, that you know, your buyers and your father knows those buyers. and it's a really, really, clear the way you make money. You don't have high ambitions because you're very used to the 8% margins. You don't monetize through other ways. And I think, you know, like with other things, it starts with the simple side at the end, the, the B the B to C e-commerce side, we feel like, you know, it's so trivial. We don't even think about it. You know, that you're in 99% of cases, you will, if you want to buy like a pair of Nike's, you will get the best value and the best price. Without putting any efforts to it. Like it will be so, so easy. Even if you're going to your local retailer in the street, you will probably take your phone out and check really quickly and Amazon and see what the price is. you know, that thing, it's a

TomRaftery: 19:30

loyalty. There's no,

BerGeron: 19:31

There's no

TomRaftery: 19:32

loyalty. Yeah. At

BerGeron: 19:33

zero, zero. If you know his name, it's, it's amazing. And it's just amazing, you know, and this is it's more new than what we, intuitively think. it doesn't exist from when I was a kid, you know, 15 years ago, 20 years ago you would go to your local retailer and you buy the shoes in the same freaking place. All the time you don't have any visibility. You're calling your friend, with like a stupid phone, form your home phone. You don't have any visibility to anything today. It's any, it's only like 10, 15 years. It's nothing. So it makes sense that this is the time it took for the internet to kick in for the B2B, which is so much more complex. but it's happening man it's happening. And it's beautiful.

TomRaftery: 20:27

And is it making things, do you think more efficient or is it just making them faster or both or something else entirely?

BerGeron: 20:37

I really think is that it creates competition and competition, increase margins for everyone. And,

TomRaftery: 20:47

Wait to competition. Competition increases margins for everyone. I would have taught competition with decreased margins for everyone.

BerGeron: 20:55

I think that at the end, right, what we have right now is a few companies. everything is more centralized than be central. Because the big companies that have, that holds a lot of the markets in those verticals and all of a sudden with the e-commerce technologies of the world, um, you as a buyer has much more room to choose. So all of those small ones that needs to compete with, you know, you're right. That's in the zero sum game of it. It's, you know what. I will correct myself. What will happen? What will happen with this innovation of making the, the vertical more, more sophisticated and more efficient is not only that you will see a higher distribution of the pie with more players, you will see the pie getting bigger. This is what happens when you create this efficiency. You just spend more, you know how we know it because this is what's happening B2C. You create that efficiency and you just spend more, you just spend more, you buy more. So we can think of what does that mean if we spend more on those side of the supply chain, but in general, everything will be much more robust, much more big. So I think, you know, we have a customer, Choco, Choco is a name you've never heard about. But it's a company, that is working, in the food industry. and they are connecting bars and restaurants and suppliers

TomRaftery: 22:36

Okay.

BerGeron: 22:37

and they are enabling restaurants to find new supply. I'm not being strict to one vertical. So let's say you as a restaurant and buying carrots and, and meat. In the old world, you have that specific vendor you're buying meat from you don't really have time to do like benchmarking of prices or you do it once every, I don't know how much time, but it's hard. It's hard to do it. With this. With those technology platforms, you can do that benchmarking every day. You can choose a different provider based on different current criteria that the platform can provide. Every day. that's, it's like, it's like very small change in like from a technology standpoint, it feels like, okay, that's obvious we have it for a long time in B2C, but we don't have it in the 93% of the, the rest of the economy. We just don't have it. You know, we don't have it. And the implication is so massive.

TomRaftery: 23:50

sure I'm sure this has big implications as well for currency transactions, because, you know, you're, you're probably dealing with organizations that are dealing in different currencies

BerGeron: 24:03

Yes, completely.

TomRaftery: 24:05

that usually creates a level and an extra level of friction as well, between organizations so. You're removing that I'm guessing.

BerGeron: 24:15

Completely. the international element, is very, very significant in, in trade and creates a lot of pains to think of, uh, not only the currency and obviously the challenges of with the current, you know, um, Political and, you know, the general climate of, of the relationships between countries, you don't have high confidence that the amount, you put as, in the point of sale, when you schedule the order will be the same amount you would need to pay in the, you know, we think about it as often capture, right? The moment. Often the transaction that captured the moment you need to pay after delivery was made. And if it's like, if it's food, you weighed it and see how much it weights. it's a challenge because there are gaps. Um, things are much more fractured than it used to be. So that's one and second think of terms you want to pay after delivery. How do you evaluate the ability of a new buyers from a different country? To pay after delivery. You don't know him, but you need to do it if you want to compete.

TomRaftery: 25:27

Sure.

BerGeron: 25:28

So that's

TomRaftery: 25:29

Yeah, yeah, yeah,

BerGeron: 25:30

such an inherent, inherent challenges of the new world, which we're so excited about.

TomRaftery: 25:36

Okay. And, you know, looking to the future, how do you see the, the future of supply chains evolving? And, how will Balance be helping with that?

BerGeron: 25:50

This is probably the thing we're most, passionate about. when you think about the essence of those customers, we talked about what they do for supply chain is that they create, alternatives, and in a world of alternatives, The efficiency of a specific vertical or a specific channel of distribution, um, can be so, so much more robust and so much more efficient. We think about steel, and the average buyer that is getting stuck because there's a problem with freight on this specific country. think of a world. I think of the world of tomorrow, when you're buying steel from the internet completely, you get into a platform of choice. And not only that you can optimize based on the country you were buying from you optimize globally, instantly with shipping costs with the ability to get the terms you want with everything. Just like a consumer is doing today, which looks so obvious. Think of what that will do for supply chain in general. All the challenges we have the problem in pricing because there's because the demand and supply are not really connected. Everything is in silos today. and that drives prices up or down. Everything is really, really getting crazy. When you create that efficiency, that sophistication, that connectivity, in the world, there's nothing like it. What can bring more innovation or change things in the cost of living for everyone, what will be more significant than changing the pipes and the building blocks of how the economy works. You tell me, like, can you imagine something being more significant for us as consumer even, you know, it's easy to buy Nike's, but is it easy to buy the textile and rubber you need to make that shoe? And how has that influence the prices of what we're paying? You know, it, it really is, can be the next industrial revolution.

TomRaftery: 28:04

Cool. Cool, cool, cool Bar, if well we're, we're coming to the end of the podcast now, is there. Is there any question I haven't asked you that you wish I had, or any aspect of this we haven't touched on that you think it's important for people to think about?.

BerGeron: 28:20

If you're, if you had a business, that is selling to other businesses, and you're not thinking about the online space. And digitalizing your business in general, you are making a mistake. and the implication it will have is much broader than the media can teach you. They don't know it yet, but it's bigger and much more massive than you can see from the outside. Everyone are innovating. Everyone are going online and buyers know that they have alternatives. So what was a nice to have few years ago? It's a must have, so, yeah. And happy by the way to chat about it with anyone that wants to talk about it. Uh, we can share insights. We can share data, we can share thoughts. Uh, we just see them and we're excited about it really.

TomRaftery: 29:20

Cool. Cool. That brings me to my last question nicely. Thank you for that segue. If people do want to know more about yourself or about Balance or any of the things we talked about in the podcast today, where would you have me direct them?.

BerGeron: 29:35

First of all, you could just send me an email with bar@getbalance.com. Obviously the website of getbalance.com. Bar Geron with an E G E R O N. on LinkedIn and Twitter. And yeah, anything, every thoughts just send away. We are more than happy to help bring this innovation in a faster pace. This, this is, this is our passion.

TomRaftery: 30:03

Phenomenal, phenomenal, excellent Bar that's been really, really interesting. Thanks a million for coming on the podcast today.

BerGeron: 30:10

Thank you so so much. It was so fun.

TomRaftery: 30:12

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, head on over to sap.com/digital supply chain, or, or simply drop me an email to tom.raftery at sap.com. If you like to show, please, don't forget to subscribe to it in your podcast application at choice to get new episodes, as soon as they are published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks catch you all next time.