Join us for a conversation with Prashant Fuloria, CEO of Fundbox, a working capital platform for small businesses. Did you know that 82% of small business failures are because of a cash flow gap or a working capital challenge? That’s where Fundbox comes in: to create solutions that level the playing field for small businesses and help them succeed.
Although automation and user simplicity is essential to their product development, customer engagement is critical to the Fundbox mission to provide relevant solutions that help their customers focus on growing their business. It’s clear that Prashant is passionate about what he does and making a difference for his customers. Listen in to learn more!
Watch the episode here:
Listen to the Podcast here:
About Prashant Fuloria
Prashant became CEO of Fundbox in 2020, after serving as COO and CPO. He joined Fundbox in 2016 from Yahoo, where he was SVP of Advertising Products. Prashant came to Yahoo through the acquisition of Flurry, then the world’s largest mobile analytics platform, where he was CPO. Before Flurry, he was Senior Product Director at Facebook, responsible for advertising products and monetizing the Facebook platform. Prior to that, Prashant was an early product leader at Google where he built the company’s global billing and payment network and ran all products for the APAC region.
Solving The Biggest Small Business Problem With Prashant Fuloria
How Listening To Small Business Owners Led To $3 Billion In Loans
Betsy, first of all, I want to take a shout-out because I know we have not talked about it extensively, but we have a new book out. I want to make a shout-out for that. It’s something that we put a lot of time and effort into and something that I know a lot of people would get value from. Our new book, Betsy, what is it?
It’s called The Rarest Advantage: How to Co-Create Strategic Value to Retain and Expand Your Key Customer Accounts. We are excited about it. We’ve got some great feedback. It’s available on Amazon. Check it out.
It’s a little shameless plug there, but I wanted to bring it up because a lot of what we’re going to talk about now is small businesses. It’s about how small businesses can grow. If they’re thinking about how to grow, they’ve got to be thinking about their strategic customers, core customers, and strategic customers that they need to grow.
Let’s set that aside for a moment. I am excited to talk about who we’re interviewing, Prashant from Fundbox. He is the CEO of Fundbox. What I loved about this interview and what the audience is going to pick up on is that he is passionate about what he does. He will go through some statistics. I’m going to throw a few of them out here but read this. He talks about 82% of small businesses fail because of cashflow issues. It’s not bad management or a bad product. It’s because, frankly, the money doesn’t come in as fast as the money going out. They’ve got to manage that cashflow.
We’re talking 30-day net and 60-day net payment terms are what kills a lot of small businesses. The other piece to this, and this one shocked me, is there’s $1 trillion in unpaid invoices owed to small businesses. $1 trillion dollars is huge. I studied economics in my undergrad program. It’s not just about how much money is in the economy. It’s how fast that money turns over. If small businesses have access to that $1 trillion two weeks faster, it speeds up. It means they can spend, invest, and use that money. We could literally grow the economy by turning that money over faster because they’ll get it in, use it to pay expenses or investments, get paid again, and the cycle continues. We’re in this potential recession. We’ve got this inflation happening. One way to solve that is to turn the money over faster, not to hold back and slow it down.
What Fundbox is designed to do is to help those small businesses do that. He’s passionate about their mission. We’ll be talking a little bit about that. They have a cool model for how they incorporate their mission throughout the entire fabric of the organization. I agree with you. The impact of being able to help these small businesses that have good businesses, good people, good products, good services, and good customers, it’s the cashflow issue.
He does talk a little bit about how the bigger organizations draw that out and put a hardship on the small businesses by paying in 30, 60, and sometimes 90 days. It’s a rule of engagement. If you want to work with us, 90 days it is. There’s little room for negotiation. As a small business, we’ve run into that as well. I feel the pain that he was describing on it. Enough of us talking about what we’re going to hear. Let’s jump in and hear from Prashant Fuloria, CEO of Fundbox.
Welcome, Prashant. We’re happy to have you here.
Thank you so much for having me.
We’re going to dive in. We are excited to talk to you. Let’s kick it off with you talking to us about who you are. Tell us about your company, Fundbox, and your journey on how you got to this point in your career.
I’m Prashant. I’m the CEO of Fundbox. Fundbox is a working capital solution for small businesses. We’ll talk a bit about that. I’ve been at Fundbox for several years, but have spent a little over two decades in Silicon Valley working in various product and technology roles. I’m a tech exec now, but I’m a product manager at heart. I grew up in the discipline of product management at companies like Google and Facebook, where I spent over a decade. I also did a few startups in between, one of which was acquired by Yahoo. Most recently was SVP at Yahoo before joining Fundbox a six and a half years ago.
I’m excited about technology and about being able to build products that have an impact. That is the reason why when I saw Fundbox, I fell in love with the company. I knew I had to be part of the team. Fundbox is a working capital platform for small businesses. Our mission is to use technology to help small business owners manage and optimize their cashflow so that they can better run and grow their businesses. In order to do this, we provide a number of tools for small business owners by revolving line of credit, one-time loans, and a spend management tool, all within our Fundbox product suite.
Our small business customers can either access our products and services natively, that means on our website or our mobile app, or they can access us inside other systems and ecosystems they might work in. For example, we’re in the Stripe App Marketplace. If you use Stripe for payments, you can use Fundbox to get access to working capital. We’re natively embedded inside QuickBooks. If you’re a small business owner who uses QuickBooks, you can use Fundbox as well or other partners like Zoho, FreshBooks, Synchrony Bank, and so on. Our mission is to reach as many customers as we can, either directly or through partners into whom we embed our services.
Can you talk to us a little bit more specifically about your customers? Who is the person that first comes to Fundbox? Why do they come to Fundbox? What are some of the challenges they’re experiencing that they would need that line of credit and the things you do to help them? What do you see there in terms of your customer base?
Our customer is a small business. The word small business is quite broad, especially in the US, where the Small Business Administration calls every business with less than 500 employees a small business. That’s a wide range. By that definition, Fundbox, with 350 employees, is also a small business, but the customers we are talking about are at the smaller end of the small business spectrum. These people are sole proprietors or freelancers, or they may have a few employees, maybe 12 or maybe about 20 employees or so. Their annual revenues could be a few tens of thousands of dollars to maybe a few hundreds of thousands of dollars, maybe up to $1 million or $ 2 million a year, but not much larger than that.
This is an important part of the market because it turns out that the vast majority of the 32.5 million small businesses in the US are less than $1 million in revenue and relatively small in size in terms of the number of employees. It’s also that part of the small business economy, which is the most underserved. These are small businesses that are looking for solutions all across the spectrum of customer acquisition as well as financial services. When it comes to financial services, there aren’t that many options readily available to small business owners. It turns out that 82% of small business failures are because of a cashflow gap or a working capital challenge.
82% of small business failures are because of a cash flow gap or a working capital challenge.CLICK TO TWEET
It’s not because the business was fundamentally bad and didn’t have any customers or they were delivering a lousy product or service. It’s because they were not able to make the timing of inbound and outbound cashflows work. That’s terrible that that still happens with working capital, which is oxygen for a small business. You need it every day. You need it to work. The way the traditional financial services sector is set up, it’s difficult for a bank to address the needs of these small businesses because it’s way too expensive to assess a small business in a highly human capital-oriented manual way.
It costs the average bank $3,000 to $4,000 to assess a small business. That’s way too expensive if they’re only looking for a relatively small or modest financial product. This is where you need technology and automation to serve these customers in a scalable way. Our customers run the gamut from products and services across that from B2B and small businesses that serve other businesses to B2C across all the states in the US. It’s a lot of geographic vertical diversity.
What unites them all is they’re out there trying to build something. They’re trying to build a business. They’re trying to grow it. The number one challenge they always face is that you have to invest upfront in headcount, materials, and supplies in order to get paid later. If you add up all the unpaid invoices owed to a small business in the US, that’s about $1 trillion. There’s $1 trillion of capital out there that is lying locked up and unavailable to these small business owners that they could have used to help them run and grow their businesses.
The first challenge (small businesses) always face is that you have to invest upfront to get paid later.CLICK TO TWEET
I find it fascinating. The size and scope of this, until we talked in our prep session, I did not realize how significant it was. I’ve been running a small business for the greater part of my career. Betsy’s been doing the same thing. When you talk about a couple of these metrics, I want to go back to them for the reader, $1 trillion dollars in capital in unpaid invoices. We look at the economy. Now, we’ve got inflation and a potential recession going on. There’s money out there that’s on hold. I’ve been through in my business having to figure out, “Do I do fifteen days net? Do I do 30 days net? Do I allow them to do 40 days?”
There are a trillion dollars in unpaid invoices to small businesses in the US.CLICK TO TWEET
I had one company that was a Fortune 100 company wanting to do 60 to 90 days net. I said, “No. I can’t afford that.” It’s interesting. They want to hold onto their capital, but they don’t realize that the experts, a lot of consultants, are small business owners. The experts can’t afford to do that. On the other side, 82% of businesses fail due to cashflow is astonishing because we hear a lot. I got my MBA and all that, but it didn’t help me run my business better because it’s a small business, not a large one. They don’t talk about the cashflow side of things. They tend to blame it on the business owner that they didn’t have the skills or something like that. The reality is that it is expensive to start a business. This whole technology side is insightful. It’s important to pull this out.
I’m going to say two things that are counterintuitive and almost ironic. This cashflow gap that you talk about, the timing of inbound and outbound cashflows, hurts most when you are a growing business. If your business is in a steady state, over time, inflows and outflows are about the same, and you can build up a reserve and generally be ok. When you are a growing business, you have to invest upfront to get revenues and cash later. You are spending more today than you’re making today in revenue because you’re investing for future revenues. Ironically, this cashflow gap hurts growing businesses right at the time when they need capital most.
That’s one thing. The other thing is it’s also ironic that, especially if you’re a B2B small business, like a small business that serves other businesses, the more blue chip your customers are, the bigger the problem because the larger your customers, the more negotiating leverage they have. They could say, “It’s net 90 or nothing,” and then you have to make the decision about whether to serve them that way and then get paid 3, maybe 4 months after the fact. Some of these larger companies have armies of finance people whose job is to manage their cashflow and optimize that, which comes at the expense of the small business owner’s cashflow.
That’s also ironic because the higher quality or the larger your customers are, the more challenging it is. A person once told me, “Prashant, when it comes to B2B, the bigger B always wins,” which means that the bigger business has the leverage. That’s something that we’d like to be able to change. We’d like to be able to create a bit more of a level playing field for businesses to interact and operate. That’s our mission. If you think technology provides the tools and solutions for a small business that might otherwise only be available to midcap, a mid-size, or a larger.
When it comes to B2B, the bigger B always wins.CLICK TO TWEET
Prashant, you mentioned the word mission. That’s what I was thinking as you were talking about this. You’re passionate about the plight of small business owners, what you can do to help solve those challenges for them, and what that means in a global sense. The better small businesses do, the better our economy and the better families do all of that. Can you talk a bit more about that mission focus and how your company views customer engagement, customer everything, and how you show up for your customers?
The mission that we have of serving small businesses, it’s helpful for us because it helps ground us in what we need to do. It also helps motivate us because, in any company’s lifecycle, there are always ups and downs and challenges. If you are trying to do something bigger than yourself, it helps you take that next step and another next step and keep moving forward. It’s also interesting that these days, especially in a pandemic/post-pandemic world where people are working virtually, everybody’s on some video conferencing platform, there is so much mobility when it comes to where you want to work as an employee. Any of our employees at Fundbox could easily get on a Zoom call and get another job.
At that point, what ties people to a company is what they see in it beyond just, “Here’s a paycheck. Here’s an occupation.” It’s around, “Who am I working with? What mission are we on?” The more we recognize and appreciate what we are trying to accomplish, the more we are able to connect with people within the company as well around this is who we are. Who we are may be great for someone, but may not be the right job for somebody else, but that way, you’re able to attract the people who find us exciting. Many of our employees have been or are small business owners themselves.
For example, the chief of staff at Fundbox, his uncle and his father started a burger place in San Francisco. It’s called Sam’s Burgers. It’s one of the most celebrated burger joints in San Francisco. The famous chef Anthony Bourdain once came by and said, “This is the best burger I’ve ever had.” The place gained some notoriety as a result of that. He’s seeing both at work, what we’re doing to solve small businesses, but when he returns and talks to his family, he’s seeing a real small business that is benefiting.
Those connections strengthen that mission. For people whose parents have run small businesses or who see their friends or family members run small businesses, how that translates into how we interact with our customers is interesting because it’s almost like a dichotomy. On the one hand, we’re a tech company where a lot of what we want to do is to be able to use technology to serve small businesses in a scalable way. There’s a lot about data technology as simple a product as possible so that the vast majority of our customers don’t need to call or talk to us to be able to use our product. At the same time, we also want to be there in case they do need help, and we want to talk to them.
One thing I’ll tell you is this. We’ve got access to reams of data. We’ve built enormous data sets that are frankly a competitive advantage for us. That’s important. We’ve got a team of amazing data scientists, but there is no substitute for meeting customers and talking to them about what they need. Time and time again, the things that I learn from a customer conversation are things I could probably never figure out by looking at data alone.
What are some of those examples and things that you’ve learned in talking with customers?
There are so many. For example, our entire executive team on a regular basis, goes through customer calls. We go through recorded customer conversations with our support staff or with our salespeople. There are things that you realize when you hear a real customer talking about a real problem. Somebody might be interrupting the call to take a call from a client. They need to respond to their customer. That’s important. You might hear a crying baby in the background, and then you realize that these small business owners, our customers, are not only running a business, which itself is challenging, you are the person.
It’s not like you have an army of people where you’ve got a CFO who takes care of the finances, a CMO who takes care of the marketing, and a COO who takes care of your operations. No, you’re doing it all yourself or maybe with a couple of other people. That’s tough enough. In addition, you’re doing other things. You’re taking care of a family. There are all these other things happening in your life. It helps us understand and motivate us to build simpler products because our customers are desperate for time. Also, understand that there are so many other things happening in their world.
Customer conversations also yield direct insights. I remember talking to a software developer. He does software consultancy and software projects. He was telling me about challenges in getting paid. Tony, it’s exactly like what you said, net 15, net 30, net 60, getting paid way after the fact, and how that was creating a problem for him. He mentioned he had contractors and employees, both. I asked him, “What do you do when you’re late getting paid with your contractors?” He said, “I push out their payments.” With contractors, he was transferring some of that pain down the supply chain. I asked him the same question about his employees, and he said, “I would never delay paying my employees. I’d rather not get paid myself than not pay my people.”
It was clear that he thought differently between his employees and contractors. Paying his employees on time was a matter of pride and honor. It’s a different thing. That was an inspiration for a product that we later built, which we can talk about. It’s hard to get this from data, but when you talk to a person, you realize how much importance it plays in making certain kinds of payments compared to other kinds of payments. Not all your payments are the same. That is an insight that I appreciated.
What advice would you give to a person who has a startup and is trying to grow, and some of the things that could help? You want them to have access to Fundbox, but what are some of the things that could prevent the desperation sometimes that small businesses feel like not waiting too long to engage with a company like Fundbox? When you’re talking with small business owners, what are some of the things that you would coach them on?
Small business owners are always stepping out into a more challenging world. It’s filled with rewards, but it’s a less structured world than the world of a regular 9:00 to 6:00 job. First and foremost, folks need to be prepared for that journey. It is something where we hear customers talk about how they’re even thinking about and working on their businesses over the weekends. In some ways, until you get to a place of great stability, it’s a never-ending 24/7 thing. There are a number of tools out there to help you manage your business now that perhaps weren’t there a few years ago.
Whether it’s using a tool for managing your marketing and your customers or tools for managing your finances like a Fundbox or making sure that you have a good online presence that helps you engage with your customers at a bigger scale, there is a lot going on. What we find is that business owners now are way more digitally savvy and looking for digital solutions than a few years ago. We ran a survey where amongst other things, we learned that despite all the challenges in the economy that are happening, folks are feeling pretty optimistic about the future of their businesses and also want to invest in digital solutions.
The pandemic accelerated the trend toward digitalization across the entire spectrum, including financial services. Being able to get a good handle on your finances is critical. This is a massive generalization, so please forgive me in advance. I find that there are two kinds of business owners. One for whom the business is about the craft. It’s about I’m a painter, so I want to paint, or I like building things, I’m a manufacturer, or I’m in the construction industry. For many of our customers, the thing they like the least is all the money-related work they have to do. They don’t want to have to follow up with the customer to have them pay an invoice. They don’t want to have to spend time looking over their books. They like their craft. That is the majority of small business owners, in my experience.
You’ve got the other side. There are some small business owners who are financially savvy. We’ve got small business owners who are accountants. They know their finances inside out. Even for people who are a little bit more reluctant to understand or spend time looking at the financial aspects of their business, it’s important because that, going back to the 82%, can make the difference between having a long-term scalable, successful business versus one where you may have a cashflow issue that could seriously jeopardize your business.
It’s fascinating to me to think about the different responsibilities that people have. I do it every day. Betsy does it every day. We’re playing multiple roles in that. How you engage and how you draw the insights out is fascinating. There was something we talked about during our prep session which I want to hit on here. Those are the key principles that you use at Fundbox to operate. Can you talk through what those principles are and how they affect the decisions that you’re making?
We’ve spent some time thinking about what our values are. Those values translate to principles as well. A couple of years ago, we came up with this acronym called MOSAIC. MOSAIC has these six letters. Each letter corresponds to a principle. The first one is M for Mission, which we have spoken about already. We take our mission seriously. We’re focused on it. It’s a big part of who we are.
The second is what we call Ownership. What it means is that we are all owners in Fundbox, which is both literally because people have ownership in terms of equity but also ownership in terms of responsibilities to the company. What I mean by that is, back in the days when we were mostly in the offices, if there were dirty dishes in the sink, anybody, myself included, would go and clean them or put them in the dishwasher and get them there. If something is not right, it’s all of our responsibility to point it out and try to figure out how to solve those problems. You have people going way out of their official job responsibilities to do things they don’t have to do because they feel like, “Fundbox is my company. I want to make it a better company.”
There’s an element of S which is Speed. Ultimately, we are in a world that’s moving fast. By all indications, it’s going to move faster and not slower. Being able to do things quickly, whether it’s communicating quickly, making decisions quickly, or executing quickly is important.
The fourth one, which is A, is a bit of a mouthful. It’s Achva, which is a Hebrew word that means friendship and camaraderie. A piece of context here is that about little less than half of our employees are in Tel Aviv in Israel. A lot of our engineering and data science is in Israel, so we borrowed this word from Hebrew. Achva is about having this team spirit and collaborativeness. When I talk to people who join Fundbox, I ask them, “How are things going? This is your first week or your second week. How does this feel?” They often say, “The one thing is I’m amazed by how friendly the people are. If I have a question, I can go to anybody in the company. In the old days, it used to be I could walk to anybody’s desk. Now, I Slack anybody, and I get a response. Some people go out of the way to explain how things work and so on.”
There’s the I, which is Innovation which is important for us. We want to build products. Solving the needs of small business owners requires innovation because things have been done a particular way for a long time. The last one, C, stands for Clarity. By clarity, what I mean is one is transparency. Most of the information of the company is available to all our employees, but also try to keep clarifying on an ongoing basis, “What are we trying to accomplish? What are the challenges that we’re facing? What happened here? What is this team working on? How does that impact what you are working on?” and trying to drive that transparency such that a lot of people at Fundbox have a pretty good sense of where the company is. You’d be surprised that they understand the opportunities and the challenges. With this value of clarity, my personal philosophy is to share, provide the context, and then people will make the right decisions if they know what you’re trying to accomplish, which is the mission, and they also have all the context around making those decisions.
A lot of folks that run large companies or organizations tend to filter information because they’re concerned about, “This is not good news. How are my people going to react? Will they be disappointed and disheartened?” My simple thinking is if you empower people and treat them like adults, you’ll be surprised at what they’re able to do and how much of the ups and downs they’re able to internalize because they feel like they’re part of the team. They roll with the punches. They move forward. Whereas if you try to selectively share information and massage things too much, it’s not quite as effective.
Prashant, that is timely for me to know. We had an internal conversation about that very thing and about sharing with your employees and the transparency. I love what you said. I’m going to go back to my team and share what you said about context and clarity, which helps them make better decisions on their own because they see the bigger picture.
One of the things that we love to do on this show is to give our guests an opportunity to promote and give a shout-out to a nonprofit or a charitable organization. Is there an organization that you would like to talk about?
There are many organizations that are doing good work. I’m going to talk about one of them, which is not oriented around small businesses, but something else near and dear to my heart. I’m a musician. I love to play and enjoy music. One of the things that have happened over time is music education in schools, especially public schools, has suffered because of a lack of funding.
There’s an organization called Little Kids Rock, which was founded by someone I know, a guy named David Wish, who used to be formerly a school teacher himself. Realizing that something had to be done about the need for funding music programs in schools, he started this organization, Little Kids Rock, and has been raising funds to provide instruments like guitars and other things to schools, but then also funding for educational programs. He’s been doing this across the country now for a long time and has been successful in motivating and gathering even famous musicians to be able to contribute to the cause.
I’ve been fortunate to have participated in and performed at some of the Little Kids Rock events myself in the past. It’s incredible because when you see middle school kids or high school kids playing music and developing and spending time and focus on that, it gives them confidence. It keeps them out of trouble. It makes them connect with other people in ways that might not have otherwise been possible. I’m a big fan of David Wish, the Little Kids Rock program, and the nonprofit he started.
That’s awesome. I have to ask, what do you play?
I’m a guitar player. I typically play electric guitar, mostly blues and rock, and a bit of jazz. It’s something that I wish I were doing more of. I haven’t had the time to do that much over the last few years, but it’s always at the back of my mind. Whenever I get some time, I pick out a guitar and play it a little bit. It’s a good thing to be able to go to every now and then.
Tony, any final questions before we wrap?
We have so much good information here. The one question I’d ask would be, in 2 or 3 sentences, what do you see for Fundbox in the next 2 to 3 years?
Our mission will remain the same helping small business customers better run and grow their businesses by helping them with their cashflows. What that means for us in terms of growing our impact are two things. One, serving a lot more customers. One by working with them directly, but by also partnering with more and more ecosystems and providers that serve small businesses. Now we work with a lot of tech companies, like I mentioned, Stripe and Intuit, and so on. That’s our background. That’s our DNA.
We are also going to start working with banks where we embed Fundbox inside of their banking stacks so that they can serve their small business customers using our technology. It’s by having an impact by serving more customers. The other thing is having an impact or growing our impact by adding more products and more ways in which our customers can use us. We started with a line of credit. We added loans to that.
A year ago, we added a spend management tool where people can use our virtual account to make critical business payments. We partnered with Visa to add a card. Now we’ll have a small business flex charge card and add bill pay capabilities. We are always growing our product features such that once a customer is on Fundbox, they can use more and more tools in that toolkit to be able to run their businesses better. For us, that’s how we think about growing our impact, more customers, and more ways to serve them.
I love that because listening to the customer and knowing what they need is such a huge part of this.
You used the word impact, which is a huge impact. As Tony mentioned, we’re both small business owners. That’s the stuff that keeps people awake at night. I love what you’re doing. Best of luck to you moving forward. It’s a fascinating conversation but also an important conversation because small businesses are the engine behind everything we do here. Thank you so much, Prashant. We’re appreciative of your time. We look forward to staying in touch.
Thank you so much for having me.
What a fantastic interview. Prashant is so alive and passionate about what he does. There are many things he pulled out there that we covered so much ground. I want to pull out these pieces here. One, when he talked about how their executive team gets on calls, their executive team gets on these calls with customers. They listen in and listen to the recordings, but they also engage. They have focus groups and an advocacy board. They’re doing all of these things that they can to really know their customer.
The stories he was telling us are fascinating, from the anecdotes where you hear a baby crying in the background and realize that’s probably a mom or a dad taking care of a child while they’re trying to run their business. I’ve been there. He talks about this software developer and understands the different ways they think like, “Am I paying my employees? Am I paying myself? Am I paying my contractors?” We’ve all probably had to make those decisions and hear how they listen for that and then try to come up with solutions so that the business owner doesn’t have to make that decision. That’s powerful to me. That comes back to the whole premise of the show, really knowing your customer.
I love the human aspect of it. Tony, we’ve written about the human aspect a lot extensively in our first book, ProphetAbility, but when we talked about the nonprofit that he’s involved in, you realize he’s the CEO of a fast-growing tech company and he’s playing guitar for little kids so that they can embrace music. You realize that these are people doing human things.
One of my favorite things when we were writing ProphetAbility, was when you said it’s not business to business. It’s human to human. Prashant is an idyllic example of what that means and how that incorporates throughout the fabric of Fundbox. With that, we’re going to wrap. Tony, thanks. It’s always a pleasure doing these conversations with you. Thank you to our audience. If you haven’t yet subscribed to the show, please do and leave a review if you are so inclined. We appreciate you all. We’ll see you next episode.