Building the Financial Platform for the Physical Economy with Daniel Simon, CEO of Coast

Daniel Simon is the founder and CEO of Coast, which builds fleet payments, expense management and bill pay for businesses that work in the field, from plumbers and HVAC companies to construction firms and school bus operators. He previously co-founded Bread, an early buy now pay later company that sold for around $500 million in 2020. We talk about how Coast replaced the old fuel card model with open loop Visa cards and real-time vehicle data, why going deep on the trades beats building for everyone, and how the AI data center build-out is driving demand across the physical economy.

What We Covered

• From Wall Street software engineer to Yale Law School
• The insight behind Bread and the early days of buy now pay later
• How essential workers during the pandemic led to fleet payments
• Why fintech left the physical economy behind
• The problems with closed loop fuel cards
• Interchangeable cards and SMS check-ins instead of PIN pads
• Using telematics data to block fuel fraud in real time
• Expanding from fuel into expense management and bill pay
• Why Coast targets light and medium duty fleets, not over-the-road trucking
• The AI data center build-out and demand for skilled trades
• Going deep on vertical needs versus horizontal expense platforms
• Embedded partnerships and the five-year vision

Key Takeaways

• The phone in the driver’s pocket changes everything. Legacy fuel cards rely on PINs and odometer readings typed into a pump, which drivers share and fudge. Coast sends interchangeable cards that drivers check into by text message, so every transaction is tied to the right person and the right vehicle.
• Vehicle data plus transaction data stops fraud. By merging telematics GPS and fuel gauge readings with line item data from Visa, Coast can decline a purchase when the vehicle is nowhere near the pump, or cap a fill-up at what the tank can actually hold.
• Fuel is the wedge, not the business. Customers spend 3 to 5% of revenue on fuel but 15 to 30% on things they already put on cards. That is why Coast has expanded into expense management and bill pay, with working capital, business banking and more on the roadmap.
• The AI boom has a physical side. Data centers need electricians, plumbers and HVAC crews, and every business in the trades is now competing for the same workers. That makes control and visibility over a growing field workforce more valuable than ever.

About Daniel Simon

Daniel Simon is the founder and CEO of Coast, which he started in 2020. He began his career as a software engineer at a boutique technology consultancy, leading teams that built systems for investment banks, asset managers and hedge funds. He then went to Yale Law School, where he co-founded Bread, a consumer credit and payments company that was sold in 2020 for around $500 million.

Cleaned Transcript

Daniel (00:10):
We have incredible amounts of data from all the transactions that our customers are doing. We have data down to the grade and location on fuel prices at hundreds of thousands of locations in the United States every day, sometimes multiple times a day. We have all that information from the vehicles in terms of their GPS and gauge readings and everything like that, which allows us in the product to do things in terms of business insights for the customer that are operated by AI that we have built or are building, to say things like, hey, Mr. Plumbing Company owner, your guys on their jobs, they went this way yesterday and they bought gas here, here, and here. But if they’d gone that way and gone there, there and there, you would have saved hundreds of dollars. You would have been able to get to another job, you would have grown your business faster.

Peter:
This is the Fintech One-on-One Podcast, the show for fintech enthusiasts looking to better understand the leaders shaping fintech and banking today. My name is Peter Renton, and since 2013, I’ve been conducting in-depth interviews with fintech founders and banking executives. My guest today is Daniel Simon, the founder and CEO of Coast.

Now, Daniel started his career as a software engineer building systems for investment banks, asset managers, and hedge funds. He then went to Yale Law School and while there he co-founded Bread, an early buy now pay later company that was sold in 2020 for around $500 million.

In our conversation, we talk about how the essential workers during the pandemic led him to fleet payments. We get into how Coast replaced the old fuel card model with open loop Visa cards, SMS check-ins, and real-time telematics data that can block a fraudulent tank fill-up.

Daniel explains how fuel led Coast into expense management, bill pay, and soon working capital, and why going deep on plumbers and HVAC companies beats building for everyone. We also discuss what the AI data center build-out means for the skilled trades and his vision for Coast as the financial platform for the physical economy. Now let’s get on with the show.

Peter (02:20):
Welcome to the podcast, Daniel.

Daniel:
Thanks for having me, Peter. Good to see ya.

Peter:
Let’s kick it off by giving the listeners a little bit of background about yourself. I know this is not your first rodeo, so why don’t you hit on a summary of your career to date?

Daniel:
So I’m Daniel. I’m the founder and CEO of Coast. To your point, it’s my second startup. I previously started a company called Bread, which is a consumer credit and payments business and what the kids call buy now pay later these days. So if you know companies like Affirm or Klarna, it was very much in that category. And that was a venture-backed business, Series A, B, C. And we ended up selling the company in 2020 for around 500 million. So it was a really happy outcome after a number of years of hard work, and taking a lot of the experience in credit and payments on the consumer side at Bread and applying it now to a B2B commercial context at Coast, which I’m sure we’ll talk about. Before that, I grew up as a software engineer in financial services. So not fintech in the way that these companies are in a venture-backed sense, but more institutional. I worked at a boutique technology consultancy that specialized in financial services. And my job was to go lead teams to design and build systems at investment banks, asset managers, hedge funds, like all the Wall Street stuff. Great career. Worked with super smart people, a bunch of whom actually work here now at Coast, and built what I still think was really cutting edge technology for a bunch of great clients. But I was also interested in politics and policy and other stuff, and I wasn’t going to get there from my tech career. And I figured if I go to Yale Law School, people will think I’m smart. And so I went, and now people do, and, you know, tried a bunch of stuff while I was in law school and business school there. And, you know, it was around that time that interesting people with interesting ideas started approaching me about co-founding fintech companies. The guy who became my co-founder in the first business was one of them. So I started that company in the last semester of school and ran it for about five and a half, six years after that. So a bit of an idiosyncratic background, done a bit of a bunch of stuff. Actually kind of feels like it works out really well running a fintech business or two. So that’s where I came from.

Peter:
So before we get into Coast, I do want to just touch on Bread for a little bit because it was a success story. And, you know, I’m curious about when you were founding Bread. I mean, BNPL was still in its early days, like Affirm had been going for a couple of years and Afterpay in Australia was doing well, but it wasn’t an obvious move back then. What did you see that really was the opportunity there?

Daniel:
And actually, like, sort of a lot of the dynamics that made me excited about the opportunity at Bread have carried over into the business that we’re doing at Coast. Like a lot of things kind of rhyme. Back then, at least, we started the company in 2014. And to your point, basically nobody had heard of Affirm. Affirm took a little while to, like, land on the business that became the one that it grew so fantastically to today. No one had heard of Klarna. Afterpay was in Australia. But what was really, as you know very, very well, the major focus of attention in fintech at the time was what used to be called the peer-to-peer lending businesses, now called kind of the marketplace online lenders, folks like LendingClub, Prosper, obviously, and others, you know, where they sort of created this, like, really great business for personal lending that was challenging traditional personal loans from the banks. And they were growing really, really quickly and were leveraging technology and consumer friendliness and transparency versus incumbent offerings.

But the insight was that, like, at the time they were maybe doing like $10 billion of loan volume, you know, on an annual basis, these new upstarts, when the actual balance of unsecured consumer credit in the United States was like a trillion dollars. And most of that was on credit cards, right? So the core idea was if you can bring that technology and transparency and consumer friendliness from the new online marketplace lenders and bring it to the part of customers’ financial lives that’s about them paying for stuff, you could build something absolutely massive for the rest of the consumer lending economy. And that was the key insight. Now, when we started, like, we were like, it’s gonna be an app and you can download money when you’re at the checkout. We had no idea what we were doing, right? And pretty quickly we figured out that going directly to consumer on that was not gonna work. And then we had thought, you know, like, hey, what if there was a button, right? Where when you’re shopping online, you can be able to finance the purchase that you’re making right there. And, you know, to the earlier discussion, a few other people had the same idea at the same time, but we hadn’t heard of Affirm, like we hadn’t heard of Klarna. And it turned out that the insight was correct. Now, when we started, e-commerce had not known anything about financing. We started selling and people were like, financing, what’s that? It sounds gross, I don’t want it. But over time, like, a lot of us kind of educated the market on the product category.

And it became really important to folks who were selling stuff online to give their customers payments options that allowed them to afford it and work for their payments and cash flow schedule. So obviously the business took off, but it was really the core insight that if you can bring what we saw in marketplace lending to people’s day-to-day lives, to paying for stuff, you could build something really huge.

Peter:
And so you exited in 2020 and then you started Coast fairly soon after that, going from consumer lending to commercial fuel cards for fleets and what have you. Not an obvious next move. How did you land on this opportunity and what convinced you that it was an opportunity that had a lot of potential?

Daniel (07:45):
So when I left Bread, I knew I was going to do something new in fintech, but I didn’t have the thing that was exciting to me. So I kicked around for a while. I was an advisor to a handful of startups. I was an entrepreneur in residence at a Silicon Valley venture firm. And it was actually pretty great after six years laser focused on the problems of one business to say, what’s everybody else working on? You know, what are the other problems and challenges out there? What’s exciting? What’s not exciting in fintech? That time was COVID. And one thing that really stuck out during that time, so everybody was inside.

And the folks that you had a lot of visibility on were what we used to call back then the essential workers, like the folks who actually operated in the field, the plumbers, the HVAC folks, electricians, who actually had to be out there every day, usually, even, you know, in a non-pandemic circumstance, but they were the only folks who were out there in the pandemic context. And so I started digging into, like, just as a fintech guy, like, what is the payments life of these kinds of companies like? And what I found, actually, somewhat to my surprise, is there’s a huge ecosystem that serves, like, the very particular specialized needs of these customers. Huge incumbents in those categories. And nobody was, like, really sort of serving their needs in a modern way. Fintech, as we understand it, had very much left behind folks in categories like, you know, your plumbing and HVAC, your construction businesses, your limo companies and ambulances and specialty transportation.

No one was, like, really building for them in the way that you’ve seen so many, you know, great innovations in the consumer side of fintech and in certain B2B and commercial that go after completely different kinds of companies. But there’s so many specialized needs. If you’re giving the technician who works for your plumbing company the company credit card, you want to make sure that they’re buying the right grade of gas. You want to make sure they’re not going into the convenience store to buy cigarettes and chips with the company card. They’re not using it to fill up their family car’s gas tank or sell gas to the guy behind them in line at the gas station. You need this really specialized software. And it turns out there’s a couple companies in the US that do this. They’re absolutely huge. Like, they don’t always treat their customers exactly how a customer might want to be treated. And they’re built on technology that hasn’t seen a lot of innovation the last decade plus. And what I saw was that there’s an opportunity now to build something better for various reasons, which is what I believe that at Coast we’ve done.

And, you know, tying it back to the previous conversation about Bread and why there was an insight there, you know, you look, who we were trying to disrupt at the time was the store credit card companies, you know, like the folks who make your West Elm credit card or the Gap credit card or what have you, that had not really adapted to the internet and, like, the new way of people buying stuff. And there were only a handful of them, they were very huge and profitable, and we saw an opportunity to disrupt them. That’s the way that I feel about the incumbents in this category today. They’re really, really big. They’re solving a huge need for a massive sector of the economy with a business model that’s proven to work at a huge scale, but there hasn’t been any challenge to them, any innovation. So it kind of rhymed with the stuff that got me excited about starting Bread a dozen years ago. And we’ve been at it now for six years.

Peter:
So can you just describe then what is the suite of product offerings that you have today?

Daniel:
So the core initial product was the fleet and fuel payments offering. Like I mentioned before, like, if you run one of these businesses, like, and you know, it’s a really long list. It could be school bus companies, it could be pool guys, it could be obviously every aspect of construction, oil and gas and energy, utility, like all these businesses need to have the majority of their workforce in the field.

And because of the nature of their work, they need to give them a company credit card, which is something that’s pretty unusual and distinct about these kinds of companies in the field economy that you wouldn’t have if you had thousands of customer service reps or a manufacturing business. But in this case, you need to give them the company credit card. So what we started with was a solution where you can control that technician’s or driver’s spend with really precise control and visibility. You got different guys and they’re switching vehicles and they’re sharing cards and you need visibility at the level of the vehicle and the driver and the combination, the line item detail. And we absolutely reinvented that category to be able to solve a need that the customers already know that they have because they’re already using an incumbent solution. And we basically said we can make this 10 times better. But from there, you know, our customers are like, you know, you’re giving us all this control on fuel, but there’s other stuff that we spend in the field, whether it be parking and tolls or car washes or parts and maintenance or picking up extra supplies at Home Depot when you didn’t get them at the warehouse. And that was a real challenge for them because a lot of the incumbent solutions are built on so-called closed loop. They’re not Visa or Mastercard. They’re the specialized payments networks that these gas stations have had to specially integrate into. But we work with Visa, like, and as the old slogan goes, we’re everywhere you want to be.

So when we started giving our customers the ability to open up those categories of spend for their field technicians, but with really precise control and visibility, that was a no-brainer, because in the past they had to either use general cards, a second program, which is the invitation for abuse and fraud, or some cumbersome system of receipts and reimbursements. Having one solution, but with that control, that really took off. And then our customers started to say to us, okay, but can I have that same control for all the other purchases I make that are not in the field? Like, I’m buying inventory from supply houses online for construction jobs and the like, and those are big expenses. Can you use the same tools to allow me to control who buys what and how we enrich the data around those transactions? And so we built out that expense management product suite. So I would say, like, that expense management and commercial payment solution is the major product, because our customers spend between three and five percent of their revenue on gas, but they spend between 15 and 30% of their revenue on stuff that they’re already putting on credit cards in general today. So there’s a 5x plus upsize opportunity in terms of the volume that you capture from the customer. And we can say that we can give you this in a single pane of glass. It connects to the systems that matter in your life, the field services management software that’s your system of record, your vertical specific ERPs and accounting platforms, and also handle the fleet stuff and the field stuff. That’s really landing with our customers. So we rolled out the features to make that a compelling offering, like virtual cards and team budgets and expenses syncing to accounting and ERP platforms with policy exception and approval and review workflows. And there’s plenty of work left to do on the product side, but it’s a pretty powerful product. On top of that, people were asking, okay, some of my expenses are cardable, but I’m only getting a slice of my payments life viewed by Coast.

What about all the stuff I’m getting invoiced for? So we launched an AP and a bill pay product. So people can ingest invoices and manage vendors and pay out not just on cards, but on ACH, checks, wires. Obviously, like, for the customer, it’s great to have that solution. But the fact that it works off of the same logic, the same idea about job costing and job codes and cost codes and, like, all the stuff that matters in trade specific accounting and reconciliation, it works the same way as the card transactions do, in a single platform, once again, that integrates with the systems that matter to them. That really rounded out the payables suite. And that’s where we’re just getting started, by the way. Like, we plan to launch a working capital product for our customers because we have such an insight into their payments lives. And therefore, we can help them smooth out their cash flows, which is something that matters to our customers. Eventually, business banking products, possibly even insurance products with a partner, or vehicle leasing and financing. This very specialized, vertical specific, tailor-made product of the fleet payment solution is a wedge to build this holistic financial services platform for these industries that we serve. And that’s been incredibly exciting.

Peter:
Go back to what you said initially, and this was the fleet card that the guy in the field, you know, he’s using your credit card, which is just a Visa card. It’s not one of the specialized networks. How does your technology work so that he can’t bring in his personal car and fill it up on a Friday night?

Daniel (15:55):
So the traditional incumbent solutions, and so I’ll step back and sort of tell you how this problem has been addressed, not perfectly, but has been addressed so far with the existing solutions that dominate the market. Historically, the fuel card business, which is primarily closed loop, not exclusively in the US, but primarily closed loop, is the manager gives you, the technician, a company fuel card. Usually they leave it in the glove box or visor of the vehicle. And you roll up to the gas pump, you pull out that card, you put it in the automated fuel dispenser, the gas pump, and there’s that little dial pad that’s on the pump next to the card reader, which prompts you to say, what is your VIN? So we know the vehicle. What is your personal PIN? What is your driver ID? What is your odometer reading? And you punch all of that in, and that’s being used to determine what the actual use of funds is going to, in terms of what fill-ups, what gallons are going into what vehicles and by whom. And it’s a very bad experience because, first of all, the data’s horrible. Drivers share PINs with one another all the time so that they can go skirt around those controls. The card gets misplaced. It’s permanently attached to a vehicle. And so if you put it in another vehicle, then all of your data is screwed up. They get out of the vehicle cab in the freezing cold, they forgot what the odometer reading says. They just hit 99999 in order to keep moving.

And so you can’t really make any decisions and you don’t actually have security and visibility and control, which is what this product category exists to provide. So we said when we started building the product, look, all of those products were designed before everybody had a mobile phone in their pocket. What can you do with that? Like, what can you do differently? If you have a clean sheet of paper and you want to make this 10 times better, like, how do you do it?

And so what we decided was, like, you know, what we’re gonna do is we’re not gonna have cards permanently assigned to vehicles or to people. We’re gonna send people, like, a fungible, interchangeable stack of plastic cards that don’t have people’s names or vehicles on them. They just have these IDs like ABC123, 124, 125, etc. And you can give them to your drivers to keep in their wallets if you want. You can leave them in the glove box or visor of the vehicle if you want, like, keep a stack of extras in the drawer of the office. It doesn’t matter, it works the same way. You get into the vehicle at the beginning of the day. You pull the card out from wherever it is. You text the ID on the card, ABC123, to Coast. It says, it’s Peter, because your boss put you in the system with that phone number. Are you still driving Mercedes Sprinter van license plate XYZ or something else? Okay, great. Now all of the transactions that you attempt to authorize go through the policies that apply to you, that apply to that vehicle. Like, we get that line item data.

Like, until you check into a different card or someone else checks into that one, you can lose it, you can break it, it doesn’t matter. You pull another one from the drawer in the office, and the same policies continue to apply once you check in. And that’s much more secure because you need to actually authenticate in a way that we know it’s actually you, as opposed to just sharing a PIN. All of the stuff that I described over SMS, you can obviously also do with our mobile app, but, like, not everybody uses the mobile app, but we want to have that solution for everyone.

And beyond that, what we started to do, like, one of the insights when we started the company, what was very different from when the incumbents were started, is that there’s now ubiquity of telematics devices, which is data about the vehicle. There’s these boxes that plug into the data port of the onboard computer of the vehicle, pull out information like precise GPS location, speed, braking, fuel, odometer readings, whatever, send it by a cell signal to a cloud platform where a third party API consumer like me can get at it.

So if one of our customers is using one of these, which most of them now are, I can do things like, hey, why are you trying to make a purchase at a merchant location where I know that the real-time GPS location of the vehicle that you’re supposed to be driving is far away from that merchant? I can decline that in real time. I can flag that. Why did you make a purchase of a certain number of gallons of gas and I didn’t see your fuel gauge go up by the corresponding percentage? Where’s the missing fuel? Were you, like, selling it to somebody else at the gas station or filling up your family car? Or in fact, it can even block that by only allowing you to purchase the amount of fuel that exists as empty in your gas tank based on the real-time reading of your fuel gauge. And more and more of those kinds of solutions where we’re merging the vehicle data with the transaction data that we get very richly from Visa to be able to give so much more control and visibility than these users are really used to. It’s that vertical depth that, like, really makes the product so outstanding for these customers. They can’t use a general credit card or corporate card solution to be able to use their, you know, long tail telematics provider and still be able to control down to that gallon of gas kind of purchase of fuel expenses, and that’s where we shine.

Peter:
So you said that you’re working with companies that have people in the field. It seems like your potential customer base is far beyond what you started with. Who are you going after? How do you describe your target market today?

Daniel:
So Coast serves many thousands of live active customers, many. We don’t do over-the-road trucking. Like, people hear the word fleet and they think truck, the combination tractor trailer that hauls stuff over the road. It’s a very different need in their payment solutions. It’s a different kind of business because the proportion of their business that’s spent on fuel is much, much greater. And so there are different considerations that go into how they think about payment solutions. So from the very beginning, we decided that we weren’t going to address that space today, although we may in the future, given how the payment network has grown up for us. Where we focus is on the vehicle fleets that operate light and medium duty vehicles. So we’re talking here about the plumbers, basically: home services, pest control, alarm companies, HVAC, electrical, landscaping, local deliveries, limos, school buses, florists, construction. This is a huge one for us, like oil and gas and utility.

All the vehicles are parking in the same lot at the end of every day, because for those folks, they’re not buying fleet payment solutions because they’re looking for a few pennies off on a gallon of gas or because they need seven days of credit float. Fundamentally, they’re buying because when you give that plumber who works for you the company credit card, you need control and you need software. And that’s what we sell fundamentally. Now, we don’t do micro. We don’t do a guy and his brother-in-law with a plumbing company, the proverbial chuck in a truck, as they call it in our industry. Like, of those many thousands, if you picked a median customer of ours, it would be a four million dollar revenue, 20 truck HVAC installation business, let’s say, and we’ve got thousands of customers that look like that on the platform. But we close deals every single week with companies that have hundreds of vehicles, thousands of vehicles. And we do it on pretty quick sales cycles. Like, we don’t need to educate these people on the product category. They’re using solutions from the incumbents. They don’t necessarily feel they’re getting what they want from the incumbents. And when they’re looking for something new, we say that we’ve got it. And the incumbents haven’t really integrated into the operating lives of these businesses. So there isn’t major surgery or brain damage to switch. And more and more our revenue is coming from those mid-market and enterprise customers versus SMB, but we grew up in SMB and that’s who we still mean to serve.

Peter (22:58):
And it strikes me, as you mentioned all that, like, you have a pretty unique window into the AI boom and the data center build-out, because a lot of that’s all construction. And particularly if you say you’re working in more of the enterprise type area, I imagine that there are a few of your customers that are involved in that. It’s certainly a booming area. What are you actually seeing in your data? And where is the fintech opportunity for this on the physical side of the AI boom?

Daniel:
People, when they think about the data center build-out, are thinking about the impact that it has on all of the consumers of AI, but there’s a physical real world impact that’s manifested in the demand for all of these skilled trades to be able to support that build-out. Jensen at NVIDIA says that, like, those physical trades, they need to be, I don’t remember the exact quote, but it was something very close to, it’s going to be doubling and doubling and doubling every year, which isn’t quite right, but, like, it is growing really fast. I saw something that said that job postings for electricians versus four years ago are up 80%. Like, it’s huge growth. I mean, the physical economy sectors in the US in general are growing incredibly fast, and part of it is very much driven by the AI data center build-out. There’s so much that needs to go into that work. And what that ends up creating is demand for these workers across the board. Even if you’re a business that’s not involved in data center build-out, you’re going after the same electricians and plumbers and HVAC folks as those data center builders are. So what it’s meant is that, like, people really care about making sure that, like, they can get these folks, they can keep them effective, they can keep them on their jobs. It matters a lot. So the tooling, first of all, like, these industries, like I said, are growing as a result, due to the demand. The tools that they need to control a growing workforce, have visibility and reporting on that workforce and what they’re doing with the company payments solution, only grows as the data center build-out has increased demand so dramatically.

So I think that for us, it’s exciting because, first of all, what AI can do for the way that we run our business and the way that our product can operate. I’ll say as an aside, like, we have incredible amounts of data from, you know, all the transactions that our customers are doing. We have data down to the grade and location on fuel prices at hundreds of thousands of locations in the United States every day, sometimes multiple times a day. We have all that information from the vehicles in terms of their GPS and gauge readings and everything like that, which allows us in the product to do things in terms of business insights for the customer that are operated by AI that we have built or are building, to say things like, hey, Mr. Plumbing Company owner, your guys on their jobs, they went this way yesterday and they bought gas here, here, and here. But if they’d gone that way and gone there, there, and there, you would have saved hundreds of dollars. You would have been able to get to another job, you would have grown your business faster. Right? And so these tools that allow us to do these kinds of things on top of the data that we have are incredibly exciting for us.

But in terms of the demand that’s creating, and in terms of the needs of the owners and managers of these businesses to have control and visibility into what their employees are doing, their businesses are growing partly as a result of the AI build-out. So it’s been a real opportunity for us.

Peter (26:11):
So it strikes me that as you’re moving beyond just the fleet card into more expense management, are you running into Ramp or Brex in any of these more high growth companies that may be in the physical economy but have similar needs to, you know, tech companies?

Daniel:
I won’t talk about any individual company specifically. I think that they can all speak for themselves. But what I will say is, generally speaking, who we’re displacing when we go into expense management is a lot of the traditional corporate card providers. So the folks who are traditionally providing commercial payment solutions to businesses, like, just generally. But as regards some of the modern entrants, the thing is, they’ve built incredible products, but they’re products that are designed for, like, a broad horizontal cross-cutting population, right? These are products that need to work for a Fortune 500 big corporate, they need to work for a venture-backed startup, they need to work for a doctor’s office or a retailer or a manufacturing company. Whereas we go really, really deep, right? I wake up in the morning thinking about this customer, the guy who runs the pool company, right?

And, like, what their needs are, which means that I’m building the 14th telematics integration to be able to get that GPS reading to decline transactions. I’m thinking, for the construction business, about job codes, because they care a lot about job costing every expense. To which job does it go, and the cost codes, and therefore what job completion phase and status you have, building those experiences into those workflows that we provide as an expense management solution, integrating into your field services management software where you’re running your business, your construction specific ERP or accounting platform. And at the same time as doing all that, handling in the same platform the field payments problem, which is the really gnarly problem. Like, that’s a very different value proposition. I don’t say to folks, I’ve built the best expense management solution in the world. There are companies who really have, and I admire them a lot. What I say is I built an expense management solution that’s designed for you and understands the things that matter for your business. And that’s who I think about. And I’m not planning on going into selling products for manufacturers or retailers. I’m thinking about your kind of business, commercial and residential services, construction, specialty transportation, the other categories I talked about. And that really makes a difference. And that, by the way, has allowed us to not have to compete primarily on rewards and rebates and cash back as the part of the product offer. We have great rebates and cash back, but we’re not winning deals because we give our customers the very last basis point versus all the other opportunities that they have to run their corporate spend. It’s because we integrate into the way that they run their businesses. That’s what allows us to win.

Peter:
So then when someone switches over to you guys from one of the traditional solutions, I mean, what does it look like as far as efficiency gains that they get? I’m sure you’re tracking kind of your customers and what impact having Coast as now their provider versus the incumbents has. What does that look like? Is there anything you can tell me as far as metrics?

Daniel:
What I can say is that it’s an enormous impact. First off, their books are closed monthly, like, way sooner, many days sooner than with their traditional solutions, which allows them to have more understanding of their business and save a ton of time on this. We save them time in the actual process of accounts payable booking. Like, so what I mean by that is, using our product, that data feeds into a transaction coding workflow where you’re supposed to apply all of this enrichment to all of the transactions before it gets exported out to those ERPs and field services management softwares. And we use AI to classify the transactions because we know your business, and we say, is this right? And, like, all of a sudden, you’ve skipped a massively time-sucking part of the overall AP process and workflow, because Coast understands your business already and says, like, we know how these should be coded, and we’ve been getting the data also from the expense, like, when it’s happening, because of features that we have, like requiring the technicians, if they want to use the card, we’ll lock you out if you haven’t provided the things that are required that your manager says for a particular transaction. So the efficiency of getting the data that you need to understand your business and to operate the business in the other systems that are outside of Coast, like ERPs and FSMs, is just a massive time saver. And this is something that we hear consistently from our customers versus a traditional offering, which just has none of that. And not only on a vertical specific basis, but even as a general software basis, they’re coming to us.

Peter:
Okay, so last question then. If you could just close with painting a picture for us, where you think Coast will be in five years and what will it look like? What will success look like for you?

Daniel:
The vision I have for Coast in five years is to be the financial platform for the physical economy. A single place where a customer who’s in one of the businesses in the industries that we serve can go for fleet payment solutions, for card solutions, for AP and invoice payment solutions, for business banking, for insurance, for vehicle leasing and financing, for operating capital. To have built that solution that encompasses their needs in a way that’s very integrated and holistic in and of itself, but also vertically integrated into the systems and workflows and processes that matter for them. And it’s a pretty long roadmap. I think that we’re in very early days. But when I look at the size of the publicly traded incumbents and the tens of billions of dollars of enterprise value that they represent, I look at that as the tip of the iceberg of what we can build as this business, because of how much value we can bring to our customers by working off of just the specialized fleet offering that those folks offer and saying, how do we integrate that into an overall platform that really serves all of your financial needs in a way that understands your business? Another part of what I’m seeing, and I think that we’re going to continue to grow over the next five years, is that while we’ve grown our business largely directly, it turns out that there’s a lot of companies that sell to our customers and that our customers really care about, whether it is the telematics providers, like I was talking about, fleet management software, field services management software. I also mentioned retailers and parts and maintenance, the car manufacturers, the OEMs. These folks are selling Coast products with their logo stamped on them because they need a best in class payment solution for their customers that integrates in the rest of what they do. And that’s where we come in.

So we’ve leaned into that with embedded versions of our offering, where some of these partners I described, and we have a lot, have Coast living directly within the surface area of the product they offer to their customers, because it’s such a natural fit with what they already do and the products amplify the value of one another. And so I see a future where Coast always has a direct line of business, but where Coast is a part of so many of the other adjacent parts of our customers’ lives, integrated into the product. It’s something that’s very exciting for me, given how large these markets are that we’re serving, and they are absolutely enormous, and the reach that a lot of these partners already have and the trust they have with those customers. And we are seeing that already in our product and the way that we distribute.

Peter:
Okay. Well, we’ll have to leave it there, Daniel. It really was fascinating learning about the product offerings for the physical economy and what you’re doing at Coast. So thanks again for coming on the show.

Daniel (33:47):
Peter, I really appreciate you having me. It was really fun to talk.

Peter (33:56):
What struck me from this conversation was Daniel’s point about the physical side of the AI boom. We spend so much time talking about AI models and software. But every data center needs electricians, plumbers, and HVAC crews to build it. And as Daniel said, even a business with nothing to do with data centers is now competing for those same workers. That makes a fleet card more strategic than it sounds. When skilled labor is this scarce, owners need visibility into what their crews are doing and tools that keep them productive. The fintech opportunity in AI isn’t only in software, it’s also in serving the businesses pulling the wire and pouring the concrete. Anyway, that’s it for today’s show. If you enjoyed this episode, please go ahead and subscribe, tell a friend, or leave a review. And thanks so much for listening.