Trailer Episode

Making Business Banking Frictionless with Jeremy Klaperman of Rho

Many small and medium-sized businesses in the country rely on a disparate range of financial services to help manage their accounts, expenses, and payments. Unfortunately, this system lends itself to time-consuming processes and inefficiencies that get in the way of growth.

That’s why Rho is integrating all the financial services businesses need into one easy platform. With Rho, finance teams can view everything in one spot, scrap inefficient processes, and focus on driving value and growth.

In today’s episode of The Modern CFO, host Andrew Seski talks with Rho CFO Jeremy Klaperman about how to 1) organize information systems, 2) build out an integrated data infrastructure from day one, and 3) embrace cultures of integrity from the CFO position. With decades of experience at elite financial organizations such as Goldman Sachs, D.E. Shaw, and Citadel, Jeremy expertly navigates his role as Chief Financial Officer.

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Please note that the transcript is AI-generated and may contain errors. The content in the podcast is not intended as investment advice, and is meant for informational and entertainment purposes only.

[00:00:00] Andrew Seski: Hello, everyone. Welcome back to another episode of The Modern CFO Podcast. As always, I'm your host, Andrew Seski. Today, I'm thrilled to be joined by Jeremy Klaperman, CFO of Rho. Jeremy, thank you so much for joining me today. I'm excited to talk.

[00:00:23] Jeremy Klaperman: Thanks so much for having me. Really excited to be here.

[00:00:26] Andrew Seski: So, Jeremy, you've spent most of your career across some of the most storied investment firms, from Goldman to D. E. Shaw to Citadel. But this is your first foray into the CFO role. I'd love to hear a little bit about what it's been like over the last six months crossing this chasm.

[00:00:45] Jeremy Klaperman: It's been great. It's something that I've been looking forward to doing and planning for a while. And I think of my 20 years in investment banking and investment management as training for this because I either advised or invested in companies from all regions, from all industries, many different market cycles, whether it's the original tech bubble burst of the early 2000s to the global financial crisis to COVID. And I've had so many reps speaking with CFOs and CEOs. I've built up a great playbook of what I think best practices are and also pitfalls to avoid from everything from high level strategy to accounting to operations. And what I try to do with that is bring that to bear in my current role. And so, I view the last 20 years as kind of giving me the best practices and building up to what I'm doing now.

[00:01:40] Andrew Seski: So, can you tell us what Rho is and what the future of frictionless finance means to you?

[00:01:47] Jeremy Klaperman: Absolutely. So, Rho provides a wide range of financial services as well as spend management software to small and medium businesses. And a lot of our clients, almost all the small and medium businesses in the country have a disparate range of providers currently that give them all these things. They might have a bank, a credit card company, an investment firm that helps them manage their treasury and their cash. They might even have a FX transfer provider if they do a lot of international business. So, they could have two, three, or four providers of financial services. Increasingly, companies are using software on the spend management side for things like tracking expenses or automating bill pay and accounts payable. So, they could have one, two, three providers on the software side. They have all these disparate systems that don't work well, don't talk to each other, and it creates a lot of manual processes, errors, inefficiency. And the finance teams end up spending a huge amount of time just trying to do basic tasks rather than controlling their finances well, gaining strategic insights, running the business. So, what we do is we take out the entire stack on the financial side and the software side with one integrated all-in-one solution that's very easy to use and the entire finance team can centrally control and command the finances.

[00:03:10] Andrew Seski: So, was this something that was important to you prior to joining? Were these inefficiencies something that you were able to identify, you know, on the other side of the table as an investor as well?

[00:03:20] Jeremy Klaperman: Well, you can often identify the output or the symptoms of these, which is you're speaking to a CFO or CEO, you ask them what a key question is on the business, and they don't clearly have at their fingertips what you would think would be an important insight or just an important piece of knowledge. And that often comes from the data and the systems in the company not being well configured. So, having your key financial services and software services all-in-one integrated solution is one step, but not the only step you need to provide your management with the right information to run the business well.

[00:03:57] Andrew Seski: So, I wanna talk a little bit about, you know, using some of these tools yourself as a CFO for the first time now and sort of what that foray looks like. I am so lucky to have a really, really unique subset and cohort of guests on the show. Some come from banking. Some come from, you know, Big Four and audit. Some, you know, were in the Navy or the military. And it's really interesting to see, you know, kind of a career progression that lands somebody in this financial leadership role. And would love to discuss, you know, you said your entire career was basically training for this opportunity. Did you always see it that way? Or is this new role something that you took a long time to consider, kinda a different risk profile and really different environment? Or has it been kind of a natural progression of your career?

[00:04:46] Jeremy Klaperman: Over the last decade, I've become more and more interested in it. At least for me, when I graduated from school, I didn't know exactly what I wanted to be. I knew the kind of skills I wanted to learn and what I enjoyed doing, so I went down this path. And I think it's, after working with companies for so long, what I wanna do was not be an outsider or an advisor or an investor for a portfolio, but really get in on the inside; have a portfolio of one company where I'm on the team that's driving the growth, creating the value. So, it was really a natural evolution over the last 10 years where I determined that this is what I want to do.

[00:05:20] Andrew Seski: I'm curious to know if you have kind of a definition of what you'd consider a modern CFO. I think everyone is really interested in general in some of the firms that you've worked at. I mean, they're, you know, the household names of Citadel or Goldman. It must be really interesting to have some of those unique experiences and learning from some of the brightest, you know, financial minds, you know, on the planet. So, kinda curious to see if you've got anything — you mentioned being able to put together a playbook of pitfalls to avoid or, you know, things that are more aspirational as maybe some leadership skills. But, yeah. Curious if you've got a definition of a modern CFO and maybe some of those unique lessons that you've learned over the years.

[00:05:57] Jeremy Klaperman: Absolutely. Well, first I do feel very fortunate for having been able to work at these places and learn from all the brilliant people there. And in addition, I had another component of learning, which is being able to speak with the CEOs and CFOs of many successful companies and learning how they think about all the things that a CFO would. So, when I think of the modern CFO, I think of using data and analysis holistically to make better decisions, data-driven decisions, that will improve outcomes for the business. The CFO that you think of as the classic CFO in the sixties or seventies just reported the numbers. They had an accounting system. They told you at the end of the month or the quarter what happened. But the modern CFO tells you not only what's going to happen, which is a capability focused on really with the rise of FP&A in the last 20 years, but what we want to happen and how we're going to make it happen. Or at least they have a voice in that discussion. And I view the CFO as a curator of not just financial information but operating information — all data in an integrated way — providing it to all the leaders of the business and having conversations with everyone on what is this data telling us. What are we doing well that we could do more of? What are we doing badly that we need to do better? And if you're, you know, the greatest companies in my experience are ones that are always reviewing the data, monitoring and analyzing everything, and then using it to make better decisions and drive better outcomes. That's something that I've observed in all the companies I've had the good fortune of interacting with. But also really, really seeing that at work well at the firms that I've worked at. Goldman Sachs, the Citadel are excellent at monitoring, measuring, analyzing, and using the data to drive outcomes.

[00:07:51] Andrew Seski: That's excellent. That's really helpful. I'm curious as to — I get really different responses on some of the many hats that CFOs are wearing these days, whether it's, you know, a unique function in HR trying to acquire the right talent in this kind of unique market environment where there's a lot of churn or if it's how difficult fundraising can be. I'm kind of curious in your first six months here. Have there been any surprises of hats that you've maybe you've put on for the very first time, like I mentioned, you know, finding talent and maybe actively raising and doing all of these kind of, you know, disparate tasks or maybe even just managing a relationship with, you know, your board and your CEO? Have there been any major surprises or anything that you are happy to continue to kind of nurture the skillset of for the first time?

[00:08:37] Jeremy Klaperman: I'd say no major surprises, but you've hit on one of the characteristics of the CFO job that appeals to me, which is that it's a multidisciplinary role. That's why you have people coming into it from all those different backgrounds you mentioned before that are successful. And it also varies greatly depending on what company you're at. It's very heterogeneous. The CFO of one company could be completely different than another. And so, I think the ability to wear all these hats without them all falling off your head is key to being a good CFO. And I'm fortunate here because I have a broad-based role. So, not only accounting and FP&A, but also providing data overall; getting involved in discussions with our investors and capital partners in all aspects of the business. And it's just been a great experience. So, when I think of all the CFO roles that are out there in the market, I feel fortunate to have this one at this company.

[00:09:36] Andrew Seski: Very cool. I wanna dive into some of the things that are happening right now to kind of, you know, timestamp this podcast into history. I think we've kind of shifted over, and correct me if you've got a different vantage point, but at least in the venture-backed world just recently kind of gone from growth at all costs to, you know, maybe being a little bit more conservative in runway and maybe thinking with maybe a bit more long term of a view. And I'm curious as to what you're thinking about in 2023 in terms of strategic growth and how you're thinking about investing Rho's assets and kind of how you're thinking about scaling just in kind of a unique market environment where it feels, you know, somewhat volatile and maybe has, you know, some rising interest rates. But just given your probably ability over your decades of investing, just having a really good understanding of what growth looks like in consideration of a lot of macro-economic and global and geopolitical instability as well.

[00:10:34] Jeremy Klaperman: All good questions. We are fortunate here in that our product, the demand for it is relatively acyclical. So, a product that helps you save money, boost income, better control your finances, is in demand as much during bad times, if not more than good times. I think actually what we're seeing is that people like our product equally, whether in good times or bad times. So, the demand function is somewhat acyclical. So, our growth engine, therefore, is much more within our control as opposed to a kind of demand-taker based on the current market environment. And in fact, our growth has been accelerating. So, we are looking forward to the coming year. And just like everyone in the market, we are balancing growth with burn and capital availability. And I think what I've seen successful companies do and successful investors do is be aware of cycles. At different points in time, growth at all costs and infinite burn will be acceptable. And then at other times, the pendulum will swing to the other side. And so, from a planning perspective, what we try to do is consider paths that we can adjust and will be effective in all environments. And more generally, when we're considering things, don't only focus on a discrete outcome. Rather, consider a range of outcomes. Consider in advance what would happen if this external factor moved or this market-based factor moved or demand was different, etc. And then come up with a plan in advance. So, we'll never be surprised. We should never just focus on one particular outcome and have one particular set of assumptions and then be shocked when the world changes. I think that's another thing from my background that's helped a lot. I've seen, you know, massive swings in just the space of a year between, you know, a company with tens of billions of dollars and one going bankrupt when, you know, when the Minsky moment occurs. So, just keeping in mind that things can change drastically and being able to have plan or plans for all different weather environments is something important to us.

[00:12:39] Andrew Seski: Yeah. It sounds like you've got a really healthy consideration for market cycles. I think that's really important as you're, you know, we're all at the end of the year here, and we're all planning and in planning mode, so I think it's a healthy thing to have in the back of all of our minds. One of the themes I want to touch on is communication and transparency in your — I think there's kind of this stereotype of CFOs who get to, you know, hide behind Excel. And, you know, we're on a podcast right now and the role of a CFO has to be, you know, the financial leader in the kind of the face of the finance team. And I'm kind of curious as to, you know, the — and we could probably tie it into how Rho probably creates some more transparency around, you know, consolidated data, too, which is probably helpful for communicating with investors in general. But really curious to hear how you think about communication in your role and, you know, what the goal is of transparency with the rest of the team to communicate the decisions and those strategies and that breadth of, you know, potential outcomes.

[00:13:36] Jeremy Klaperman: Those are great points. I think that we can observe in many successful companies the characteristics of integrity, excellence, transparency, both in terms of internal communications as well as external with investors. And those, not surprisingly, are highly correlated to and always go hand-in-hand with excellent operational and financial performance, almost always. You can have — what we also sometimes observe is a company that doesn't have those things but is in the right place at the right time and it's really hot and it catches a wave, but then when the tide goes out, if you don't have those core principles and modes of operation, then everything falls apart. We can always, we kind of see those scattered across the corporate graveyard.

[00:14:23] One reason I like this company is the founders and the company, more generally, really operate with those principles of excellence, integrity, and transparency. So, the company in my mind was really in the top decile for its size, scale, and age in terms of those characteristics and other characteristics. And I could come in and build on that rather than cleaning up a mess, to use the colloquial terms that some of my counterparts use in other situations. So, I really love that aspect. And what the founders talk about here, they actually lay out specific qualities, characteristics that they want people's behavior and interaction to have. And they use it in all different ways. So, when you're giving feedback to someone, like, great job on this project, people often list like, hey, you embodied characteristic a, b, and c from our principles. I always loved the principled approach and focus the team on integrity, excellence, best practices, but they had a better implementation of it here. They had a way of kind of getting it out and having everyone do it day in and day out if in your communications, if you're doing a large task or a small task and it's been great internally. Externally, what we do is try to overcommunicate with very clear disclosure. And again, just in the last 20 years, I so often see companies that have excellent disclosure often have excellent performance 'cause it's kind of like a sign of their internal logic or thinking. If you can explain something really clearly, it means you've thought it through. You understand it well. And that's the analogy I see in companies' corporate disclosure. So, what we — we have great investors, we're thrilled to have them and an excellent relationship with them. And part of that is getting all this data in front of them regularly in an efficient way very transparently and that I think is, again, a key aspect of the function.

[00:16:18] Andrew Seski: Yeah, I completely understand. I think that overcommunicating and being really concise with those communications, it not only creates a better bond of trust, but also can, you know, maybe even create more patient capital if there are CFOs listening about, you know, concerned a little bit about burn. I think overcommunicating creates a little bit more patience just because you don't have to pick up the phone and call a CFO wondering, you know, where financials are or what's the latest at the firm. So, I think that's a really, really good point and probably increasingly important as, you know, if the markets were to start to melt down a bit as everyone thinks about their valuations and fundraising in a tricky environment.

[00:16:57] I did want to kind of cover an idea around some of the positive externalities it sounds like Rho can provide as well. So, I'm thinking about, we're talking about transparency and communication. When you have all these disparate systems, it must be pretty difficult to be accurate in reporting in some of these data and all the spend management if it's across all these different systems. It could probably be a pretty onerous task to be able to communicate what's going on. Are there other positive externalities that maybe aren't as clear that you've seen that companies have been, you know, some of your clients are working with have kind of realized?

[00:17:33] Jeremy Klaperman: I think one of the benefits is, as you say, if you have a simple all-in-one platform that allows you to view everything in one spot, you then obviously will have a better understanding of the information and can further communicate it or using it for your own analysis. But the other thing we provide is the ability to automate your workflows and remove all these manual processes, which require a lot of time or inefficiency or create a lot of error, and have a very efficient, high-quality process. So, whatever you were doing before, whether it's, you know, collecting employee receipts or paying your bills or monitoring credit card usage, you can cut the amount of time you're spending on that depending on what you're doing by, you know, 90%. And that is a huge gain because then you can use that time instead of, you know, running around chasing receipts and opening up, you know, four different websites from different companies to try to figure out what's going on to drive value in the business. What, where are we off budget? Where are we ahead of budget? What adjustments should we make? That's where we want the team spending the time. You don't want them emailing people to ask for, you know, receipts from lunch two weeks ago.

[00:18:36] Andrew Seski: Right. And then you're kind of hitting on the point of how you define a modern CFO who can, you know, be more strategic, be more forward-looking than backwards-reporting. It seems like a lot of this is a, part of this role is being, you know, slowly automated. And if you can put all of that into the same platform, you can focus on where you can actually have the most amount of leverage and, you know, impact.

[00:18:58] Jeremy Klaperman: You're right. You know, if I was going into a new company, the first thing I wanna do is organize the information systems. Make them all consistent and easily accessible in an automated self-serve manner. That means whoever should get some piece of information can get it by themselves when they want at any time in some simple manner. I pull it up on your, you know, business intelligence tool or whatever website is relevant. So, our software and our platform in terms of financial services and spend management would be the first thing I would do. That's a very easy decision to make. How you build out a data warehouse and data infrastructure outside of that is very, is an art just as much of a science and is very company-specific. And that is a whole undertaking. But just getting your stack of financial and spend management software providers, you know, taking out eight providers, putting in one, that's an easy thing to do off the bat.

[00:19:51] Andrew Seski: So, I wanna segue a little bit. I feel like I don't normally have the opportunity to ask 'cause I've only had a handful of first-time CFOs on the show. But maybe for some of the, you know, people thinking about, you know, aspiring into the role, how did you actually go and meet the founders? I mean, for somebody who's evaluated probably tens of thousands of companies over decades, you know, what was the thing that was really exciting and how did you get in touch with the founders for the first time? I feel like that piece of the story is always really interesting and maybe a little bit nerve-racking for people considering it for the first time.

[00:20:24] Jeremy Klaperman: Absolutely. So, what I tried to do was just run a very thorough, systematic process where I reached out to all my contacts, you know, former colleagues, friends from school, people I had met in business and learned about potential opportunities. And I wanted to spend more time rather than less and meet many more companies rather than fewer. So, literally had hundreds of conversations with many different companies. Often, I would know personally some of the people involved — maybe a founder, maybe someone who works there. And that's important to me because I don't only wanna work at a place with a successful business, but also a place with the right culture and personalities and character, which gets back to the principles we had talked about before. So, I feel like I'm very lucky because in the case of Rho, I had known one of the founders for 15 years from the financial industry and I knew that he was a very high-integrity standup person. And as I learned more and more about the company, I saw that he, you know, it often comes from the top-down. So, I saw that the way he thinks about things is the way that he infused the culture here and that's how it's working. So, I feel like if like you consider the two-by-two matrix of successful business and great culture, I feel I got very lucky 'cause we are in the top-right quadrant for both of those. And it's very fortunate.

[00:21:47] Andrew Seski: Yeah, I really appreciate that. That's awesome. I feel like those who are trying to consider making the leap, you know, maybe they don't have the right school ties or think that their background may not be relevant. But it sounds like your kind of systematic approach to talking to as many people as possible was really, really valuable and you landed kind of exactly where you wanted to, which is a great story.

[00:22:08] Jeremy Klaperman: The one advice I give people is some people have an approach of reviewing some number of opportunities and if they don't work out, then get some more in the hopper. But that won't lead you to necessarily find the best one in the whole universe of opportunities. You wanna get everything in there possible and consider it all for a long period of time and then you'll be able to find the best one if you just have like the all-in parallel. If you do like an incremental or serial approach, you might take one of the first 10 you get, but you'll never get till, you know, 120 on the list, which might be awesome, so.

[00:22:43] Andrew Seski: That's really good advice. That's a really practical way to think about it, too. I'm curious if there's anything — I really like kind of breaking up some of these episodes with talking about big ideas of things that you may feel underestimated in the world or, you know, we're in a really interesting medium, too. I think podcasting is pretty fun for, you know, having long-form conversations. So, always curious to know what CFOs are reading, what they're listening to. I still am a classic Wall Street Journal person and love my podcast and all of that. But always interesting to know what kind of information and what resources are out there that CFOs are reading and listening to and kind of what, you know, what's informing their opinion in what's kind of underestimated in the world today.

[00:23:24] Jeremy Klaperman: The thing I think about most is the role of increasing sophistication of automation. Artificial intelligence is one example of that, probably on the more sophisticated end. But just the increasing sophistication of automation is it can be applied to our everyday tasks or what we're focused on as CFOs. So, one very tangible trend or theme in this area is 10 years ago, everyone's model for forecast in the business was in Excel for small and medium businesses. And increasingly, there's purpose-built software that will do that for you and automates a lot of tasks. So, when you do your monthly close, instead of you or the FP&A person typing in all the numbers for the most recent month of the Excel model, there are tools that will populate that all and do all the monthly updates for you and tools that will configure your or speak to your payroll provider, your HR software, your recruiting software. So, everything's completely integrated, which is really just something that's happened in the last few years. And that's not even the cutting edge of it. That's really just gluing together some existing technologies that aren't very sophisticated to make your life easier. And then you have things like GPT-3 for which the implications I think are still quite unknown, but you can just see how applying that to certain areas of your business could have tremendous impact. And so, in some ways, the finance I think the finance field has not fully embraced or remotely embraced a lot of the technological advances that we are seeing in other areas. It's still quite backwards in many ways.

[00:25:01] Andrew Seski: That's right. I always laugh at the idea of the image of Atlas holding up the world. And I always think of Excel holding up the world of the finance in that way, which, you know, CFOs tend to love their spreadsheets, so completely understand. But it's pretty exciting. I think we're at a really important crux of technology. It seems like Rho is sitting right at that intersection, which is really exciting.

[00:25:23] Jeremy Klaperman: Yeah, I mean, Excel has a lot of positive qualities. We love it. There will always be a place for it. But there's so many additional capabilities you can add on or supplement with that.

[00:25:33] Andrew Seski: Totally. I'm curious, as a CFO I think a lot of the finance team looks to you for direction. I'm curious at some of the characteristics — sounds like the founders have really strong core values. As you are getting situated, do you still talk to mentors from previous firms or who do you look to when you're looking for advice and, you know, some of the maybe just maybe other CFOs or other mentors from the past to kind of guide through some of these transitions? Because it's obviously you're very well qualified for your role today, but it's definitely a transition still, right? So.

[00:26:11] Jeremy Klaperman: I think that the CFO role and all my roles are always a progression where there's always more you can be doing; more you can be learning. So, every morning when I wake up, I think, what don't I know? I'm always thinking about what I don't know, what I'm doing badly, how can I learn, how can I try to improve it. I'm always more worried about what I could fall behind on or not do well. And so, what I do to consider that more in addition to just assessing it myself is I ask the same question: What makes an excellent CFO? Tell me some of the characteristics that you've seen in the CFOs you've dealt with that make an excellent CFO. And I've asked this of all the CEOs and CFOs I've met with for many years now. And if I meet someone from a venture capital firm or private equity firm, I ask them that. If I meet so another CFO or a controller or an FP&A person, I ask them that. And I just love polling people on that because you're getting all these feedback from all these different sources, all of which have a good view on what makes a great CFO. And so, I don't just have a few mentors or people that I have a personal relationship that I rely on. I always like to be asking everyone. And one thing I do internally is I shoot a message out every three months, not only to my own team, but to the rest of the company, saying, "What can I do a better job on? What can the finance team do a better job on?" Maybe it has nothing to do with me. What can the team do a better job on? And I just love always getting people's feedback and taking all the little pieces of it to build a mosaic that you can extract some insights from.

[00:27:44] Andrew Seski: Yeah. It's funny that level of humility and openness to take feedback and have all that other opinion. It's funny, it probably has rocket-shift your learning and being able to fill in all of that blank space that would be just the unknown. So, that's a really interesting approach. I think it probably also kind of drives some really healthy culture internally because people know that you are accessible. And I don't know that that's always the case with the C-suite, especially as the firm gets bigger.

[00:28:13] Jeremy Klaperman: It's funny you say that 'cause one, you know, like I have a diary where I write down what everyone told me, which sounds kind of silly, but, you know, you'll remember it at the time, but you might not remember something someone said to you eight years ago. So, it's funny to just go back over time and read all the advice. So, one piece of advice on that topic that I received was be very approachable. You want people to come to you. You don't want to be rude to them or reject the idea. So, I'm always concerned, not concerned, but I always want everyone to be able to come to me with whatever their ideas are. And if I say an idea and it's bad, I want everyone to reject it and tell me, "No, we should do it. We should do it that way instead." Again, I've observed that the best companies not the culture of some person who's, you know, been there for a while or has some title says something and then everyone, you know, hustles to do it. But rather, someone comes up with an idea and other people say, "Well, that's okay, but let's add on this" or, "No, that's not good. Let's do it that way." So, it's super important to me that everyone in the organization overrules me, counterargues with me, or just more generally always gives their opinion and and shares their ideas. And that way the best will bubble to the top.

[00:29:23] Andrew Seski: And that's something that the world of finance takes super seriously as well. I know that Bridgewater, and I think maybe Citadel probably does too, the way that you evaluate decisions and communicate with your team is all highly measured. Is that where some of that stems from or just kind of really consistent across what you've viewed from successful companies?

[00:29:43] Jeremy Klaperman: I've observed that at successful companies. And certainly, it's part of those firms that you mentioned. You know, Bridgewater is known for the radical transparency movement. But I think more generally when you're an investor, your hit rate isn't 100%. You have a lot of failures and flops. And maybe as a CFO you can do a great job on some high percentage of whatever you're working on. But as an investor, you'll have huge failures and flops. So, I've always found the best people study the flops more than the success. You would rather review with your team at the end of the year everything that went wrong than everything that went right. So, being an investor is a humbling profession because you're always surrounded by things that could have been done better, more so than other professions. What I've tried to do is always learn from all the mistakes. And if you asked me five years ago "What things do you look for in an investment?" or "What things make a great company?" or any important question, my response would've been influence or would've been the aggregate of all the observations I made over the previous 10 years. So, 15 years ago I thought this was a great idea or this was a great company or that was a good analysis. Then at some point, it went wrong. It wasn't perfect. Maybe it wasn't a financial crisis. Maybe it was, could be for any number of factors. So, by just the way you improve any complex system, you observe when it is making an error or something's going wrong, and then you tweak it, you add it, you augment it. My approach always tries to be the aggregation over time of all the feedback, correcting mistakes, improving what's good. I think that's quite prevalent in the investing area, maybe more so than in general corporate America, but the best companies often have that.

[00:31:29] Andrew Seski: Yeah, absolutely. That's a really interesting point. I appreciate that perspective a lot. I wanna spend a minute kind of zooming out and thinking about, well, we're very end of the year here. Well, for me, a couple weeks of selling left here at Nth, but really curious as to what you're looking forward to in 2023. What's really exciting? Maybe even, you know, just in the next 12 months, what's top of mind right now?

[00:31:51] Jeremy Klaperman: I think the thing we're most passionate at Rho is helping our clients better control and command their finances. So, we have a ton of cool features we rolled out in the last few months. We have a ton more shipping in the coming months. And I'm just excited to hear the feedback of everyone implementing these. I think the favorite thing of people here is when we get a quote from the client, like, oh, you know, we cut down our monthly close by a week or, oh, we, you know, we saved 40 hours because of this or, oh, we finally know how to control this spend for this reason. We love that and we're just trying to do it more and more with all the new things we're shipping. And so, I'm looking forward to hearing the output from that.

[00:32:29] Andrew Seski: Yeah, that's always really, client feedback is so much fun, so valuable. Yeah, it's gonna be an exciting year for Rho, I'm sure. So, is the team starting to take form? So, how many employees are there now?

[00:32:40] Jeremy Klaperman: We have about 215.

[00:32:42] Andrew Seski: Wow. Okay. That's awesome. And the company's only been around for —

[00:32:46] Jeremy Klaperman: Five years.

[00:32:47] Andrew Seski: Five years. Got it. And is this space is fairly competitive, right? I'm kind of curious as to what are some of the defining, are you tackling a certain subset of the market that's still being underserved? Or how do you think about competition in the next year?

[00:33:06] Jeremy Klaperman: Well, from our perspective, we provide a very wide range of both financial services and spend management software. So, while we have competitors for any particular feature or product — you know, for example, a well-known credit card company would be a competitor for our credit card; well-known expense management software company would be a competitor for that component of our software — there's no competitor we think that provides the entire range of everything like we do. There are certainly companies that do one or two financial products and maybe a software product, maybe do a software and one financial product. There's different combos here and there, but we think that we really provide the whole spectrum of what the overwhelming majority of small and medium businesses need. The other thing is we're purpose-built for the small and medium businesses in this country. Some companies target enterprise, S&P 500, you know, super large companies or multinational companies. We are really designed for those small and medium businesses, of which there are a few hundred thousand that are the core of business in our country. So, we have this huge market that we think we provide the comprehensive solution for.

[00:34:17] Andrew Seski: Got it. That's really helpful. That provides a lot of color for, I think, how people can think about where Rho sits. That's awesome. I really appreciate that. I think we should probably spend just a minute. I'm kind of curious still on in your decades of investing and you've traveled extensively and we're just talking about, you know, purpose-built for US small and medium-sized businesses. I'm kinda curious just to hear a little bit about your background just in travel and experiencing, you know, whether or not Rho's gonna go into more merging or global markets. The world of frictionless payments I think is going to increasingly become more global and it might be fun to hear about, you know, early days of traveling to Asia or anything that you'd like to share.

[00:34:59] Jeremy Klaperman: Sure. Well, from my background, I was really fortunate to not only get jobs at great companies, but also work in interesting areas. And when I was growing up, when I was in middle school and high school, I always wanted to not just live around the world, but work around the world. So, not be a traveler, but work in business in the different regions. So, I spent about half of my time, about 10 years, living in Asia and/or Europe. And I've been fortunate enough to work or live in many of those different countries and have companies or clients in many of those different countries. So, all the major companies of Asia and Europe. And it's been, again, great for my education because I saw what the best companies in Asia do, what the best companies in Europe do, etc. For Rho, we feel our market is so big focusing solely on these hundreds of thousands of US small and medium businesses, we don't have any overseas aspirations at the moment. We just feel like it's, we're at the tip of the iceberg for our home, our core market. We have such a small amount of share. It's unlikely that we would look overseas, at least in the near term.

[00:36:04] Andrew Seski: Got it. Yeah, it's just really fun to hear that there's so much opportunity because it just means that the American dream and entrepreneurial spirit is still very much alive if there's, you know, that huge addressable market here. So, I'm sure that's gonna be fun for some of the feedback that you're gonna hear just in being supportive of entrepreneurs. So, you get to do that by coming in, you know, serving as a CFO, but also actually supporting these small businesses where, you know, maybe these tools would be more institutional grade and maybe less accessible., But now just having the kind of ease of spread of the technology, it's gonna be really valuable and hopefully, you know, continues to support, you know, the backbone of the country.

[00:36:41] Jeremy Klaperman: We hope and look forward to that. So, that's a great way of saying it. And, you know, if you think about, five years ago, if you had laid out this plan to build what they've built here, which I'm kind of the beneficiary of having joined this year, it would be a very ambitious plan to build almost all the financial services that a middle-market company uses, almost all of the spend management software in one offering. There are many companies that built just one of those pillars that took several years and they've built the whole thing in five years. And just getting that right in the US was an ambitious and impressive undertaking. Adding additional countries or expanding is a whole another level of complexity. So, we really wanna take this platform that they've built over the last five years, which is really right for the US, and maximize its full potential here.

[00:37:28] Andrew Seski: So, I guess the last question I have on Rho probably just the onus to get it started. What was the founders' kind of dream when they first got this idea and went out and raised capital for it?

[00:37:42] Jeremy Klaperman: I don't wanna speak for them, but I think their thought was there's, they looked at areas where technology still hasn't had its impact or there was still a lot of disruption to be had or efficiencies to be gained; places where there's still a lot of friction or pain points but also had a huge market. And having reviewed all, you know, the intersection, if you think about the Venn diagram of these two things, they came up with middle-market finances, financial services, and financial management. That was a huge area that, as we've discussed before, was really behind, really backwards. Logging onto different websites, chasing pieces of paper around, you know, sending checks to the mail all day. Same thing. Other than the use of websites from your bank, you know, nothing's changed in decades. So, they thought, here's an area where we can use technology to make significant improvements, reduce all the pain points for the customer. But there's hundreds of thousands of customers. And that is generally a great thing to look at for FinTech companies. It's something that not only has a great market, but also has a great value proposition for the customer and then also has great unit economics or really makes sense for the people who are providing that service as us.

[00:38:54] Andrew Seski: Yeah, I love that. 'Cause there's, it's also probably relatively easy to measure the impact of time saved and money saved, and I think that's really, really valuable. Since we talked about accessibility and being able to be able to contact you, is there any way for people to reach out maybe via LinkedIn or how should people go and learn more about Rho themselves or if it's a good fit for them?

[00:39:18] Jeremy Klaperman: Absolutely. Well, they should follow Rho on all social platforms. LinkedIn, we're very active. And they're welcome to reach out to the Rho page on LinkedIn and/or me as well. Would love to have them follow us.

[00:39:31] Andrew Seski: Awesome. Well, Jeremy, I have loved speaking today. I'm excited to circle back soon because I know Rho's gonna continue to expand and really appreciate all of your time today.

[00:39:40] Jeremy Klaperman: We really appreciate you having us on it. On behalf of everyone from the company, we were super excited when we found out I was invited to join and I'm here on behalf of everyone at the company who's made this dream happen. So, thank you to all them and thank you to you for having us today. We really appreciate it.

[00:39:54] Andrew Seski: Excellent. This has been another episode of The Modern CFO Podcast with Jeremy Klaperman. Thanks again.

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