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Leaders In Payments
Leaders In Payments
Shai Gabay, Co-Founder & CEO of Trustmi | Episode 356
Curious about the future of B2B payments and their security? Learn from Shai Gabay, co-founder and CEO of Trustmi, as he unveils his journey from a small town near Tel Aviv to creating a groundbreaking payment security platform in the U.S. Discover how TrustMi is revolutionizing industries like pharmaceuticals, manufacturing, and hospitality by safeguarding $185 billion in transactions and preventing $5 billion in errors and fraud. Gain insights into the evolving landscape of cyber threats and understand the necessity of modern solutions to stay ahead. Shai's experience from military intelligence to entrepreneurship offers a compelling narrative on leveraging technology to tackle complex business issues.
This episode is a must-listen for anyone interested in the intersection of technology and finance. Shai Gabay's journey and TrustMi's achievements provide a compelling narrative of innovation, security, and the future of B2B payments. By subscribing and engaging with the podcast, listeners can stay informed about the latest trends and insights shaping the financial landscape.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Greg Myers:Hello everyone and welcome to the Leaders in Payments podcast. I'm your host, greg Myers, and on today's show we have Shai Gabbay, the co-founder and CEO of TrustMe. So welcome to the show. Hi, how are you? I'm doing great. Thanks for being here. Let's go ahead and dive in, if you don't mind. Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that.
Shai Gabay:Okay, cool. So my name is Shai Gab. I am the co-founder and CEO of TrustMe. I came from a long experience in cybersecurity, but we'll cover that probably later. I grew up in a small town north to Tel Aviv, like one hour north to that, and moved to the US almost one and two months ago. So yeah, that's roughly about myself.
Greg Myers:Okay, great. Well, let's go ahead and talk about the company. So tell our audience what TrustMe does.
Shai Gabay:So TrustMe is a B2B payment security platform. Basically what we do, we are protecting those payments. We discovered that there is a lot of problems in B2B payment. When we started the company, the first thing that we did we tried to understand what's happening in the payment landscape and we learned at first there was a lot of disruption. When speaking about B2C side, think about how you're doing your own personal payment. Everything evolved, everything becomes super easy, fast and secure. But take that experience and go to the other side, to corporate finance, to B2E side, how you pay your own vendors. That's not the same experience, right? It's a totally different area with a lot of complexity, a lot of manual work and in fact, because of that, it's become the most vulnerable attack surface exists today. So we saw that there was a lot of payment fraud as a very big issue, but because of those complexity, also a lot of payment mistakes and 1% to 3% of the entire payment are mistakes.
Shai Gabay:So that's why we went after that area and basically what TrustMe does we're a SaaS solution that connects to the end-to-end of the B2B payment flows and we're basically connecting the dots for you. So the B2B payment is complex because first it involves a lot of different people inside and outside the organization, but then you have a lot of different systems Procurement portals, ERPs, the payment itself but each one of them are siloed and, at the end, manually validated. So what we are doing, we're connecting those drugs and making sure that each payment goes to the right place at the right time with the right amount. So eliminate PEM fraud, internal or external, but also those payment mistakes.
Greg Myers:Okay, so within B2B payments, are there specific verticals you focus on? So?
Shai Gabay:most of our customers today are in five sectors, but we are mostly focused on where there are big supply chain and high volume of payment and scale. But if you ask the specific vectors, we are more focused on pharmaceutical manufacturing, return hospitality tech and insurance. That's the five. Okay, and when did the company start? So we founded the company in November 21, so almost three years ago.
Greg Myers:Okay, okay, and how's it going so far?
Shai Gabay:Growing, growing. Yeah, we're protecting big companies in the US. Most of our customers are Fortune 500 organization customers like Colgate, cna, chipotle and others At scale. I'm going to say that only last year we processed around $185 billion for our customers and from that we were able to detect and prevent something like 5 billion of payment mistakes. More than 50% were duplicate invoices, although there are different types of typos and more than 500 of millions of fraud, and, until today, zero false positives.
Greg Myers:Wow, okay. So how much of it is fraud like bad actors versus just mistakes, because humans are so involved?
Shai Gabay:So I'm going to say on the fraud element, a big portion is criminals, cyber criminals. It's become a very good market for them. When I started my career, especially at the bank, we saw those things and most of the time people were relying on manual controls and a lot of awareness and education. Basically, you will train your team to know. If someone sends you an email with spelling mistakes or stuff like that, you'll know that probably it's a scammer that tried to take your money right.
Shai Gabay:But the evolution of the technology and think about Gen AI and deepfake and all that that created new tools for the attacker that they can really leverage at scale. And still most of the customers or most of the organization today are still relying on the same manual controls and processes and education, but the new attacks you won't be able to detect it. It's not working anymore.
Speaker 1:Okay.
Greg Myers:So you said SaaS model, so maybe walk us through kind of what the pricing model looks like.
Shai Gabay:Yeah, so I mentioned that we are a platform. We are not doing only payment security. We started in the payment security because the step that we saw that everyone has a problem, that's our way to start the process. We also believe that, at the end of the day, organizations need to have a solution that will be very easy to deploy but also easy to use and, more to that, not changing the way that you do your business. So for us, our mission was defined based on that. We believe that our mission is secure and payment seamless. So that's what we started with.
Shai Gabay:But then we saw that again, like speaking in the beginning, the landscape of payment involved a lot on the B2C side. Why not to do the similarity to those things in the B2B side? So on top of those payment security models that's our core functionality we have other models that are focused on other events our core functionality we have other models that are focused on other events, like SOX compliance, like payment flow. That is focused more on the efficiency of the payment cycle and also on the payment mistakes. Then we have our secure vendor onboarding. We have a dedicated use case also for claim flow. It's a different type of scenario, but still very similar and also continuous life cycles of your vendors and suppliers. So our pricing is compromised based on three parameters, that is mostly volume, the amount of vendor that you have your work in, how many transactions you're doing and what's the total sum.
Greg Myers:And on top of that, which modules you're using Okay, okay makes sense, and sort of how do you go to market? Do you have a direct sales team? Do you work through partner channels? How do you go to market? So I'm going to say all of the above.
Shai Gabay:But yeah, most of that again early stage company. So we're mostly going direct and doing different events and different conferences and different activities like that, but we're also working with a few channels and partners as well, okay, okay, well, what would you say differentiates you from your competitors out there?
Shai Gabay:Yeah. So that's a great question and you know, when we started the company, we invested a lot in really understanding how finance people think, what they have today and so on. So we saw different types of point solutions and, in addition to the manual controls and processes, that's a common thing, and today I'm going to say that most of our competition is the status quo, meaning there are solutions that can really solve the problem and there are not manual controls or processes. But we also saw different types of things that organizations don't really do, Like, for example, bank account validation. So we saw a lot of cases that basically, what they do they ask for different services like GAIAC and so on, that basically you'll verify that that's a legitimate bank account, and when we started the company, we also fought to do something like that.
Shai Gabay:But then we realized that there are two main problems with that approach. First, no one has all the data Meaning from coverage perspective. It's very hard to get all those bank details and so on. Second, it's considered sensitive information that you cannot share and the banks are not sharing this information. So it's really hard to have a very big coverage and dynamic and updated one. Now the other problem with that we learned that it's not effective. It's not really a security mechanism. It's like more checkbooks in the compliance process. And why is that?
Shai Gabay:We saw only last year, thousands of cases. Basically, what happened is that when the attacker compromised the old suppliers, they went after their finance people. They found a lot of documents that they leveraged to pass the KOSC of the bank and open a legitimate bank account on their behalf. So then, even if you do bank account validation, it's a legitimate account. What other result you can expect that? So that's one type of solution that we saw.
Shai Gabay:Of course, we saw different companies using email security, of course, but email security cannot solve the problem as well. Email security focuses more on the maliciousness. They try to detect ransomware, different attacks, phishing scams that try to collect your information and so on. But when the attacker compromises your supplier and they just try to ask you to change the band details, there's nothing malicious there. So they don't really design in that way. And we also saw a different type of solution that's focused only on the ERP, for example, when they have a change there. But again, they are missing the context. So we didn't find, and I think that's the biggest advantage of TrustMe is that we are basically connecting to the entire chain. We see everything that's going on and being able to really understand what happened and what's not. That makes us super accurate and that's why we don't have false positives, but also that's what makes us very easy to deploy, easy to use and streamlined.
Speaker 1:Okay.
Greg Myers:And you said, just kind of trying to understand, you're a platform mainly large businesses. Is there a reason, is it just a timing thing, that you haven't focused on, say, medium and small businesses? Because even medium and small businesses have a lot of vendors and have to pay. There's a lot of B2B transactions. So just curious why you started at the big merchant side.
Shai Gabay:Also a great question. And I must say that when we started the company we at the beginning thought that we would go to SMB or SME. But then when we expand in our market validation we learned that when the company becomes bigger, the problem becomes much worse. And you know the attacker. They're going after the big payouts, they try not to demolish the organization that they attack because they want to come back and back and so on.
Speaker 1:So think about it like that. Where are?
Shai Gabay:they targeting their effort when they can steal more money. So that's part of the reason. Second, again, part of what we try to build is the trust network as well, when you go to the big companies, they have much bigger supply chain, and so on. So our data set becomes much more in-pitch.
Greg Myers:Gotcha. That makes sense. So, as you know, payments, fintech, big industry, a lot of moving parts, a lot of change. Where do you see the industry headed? And obviously you can answer this in the context of what you do, but where do you see the industry headed in the next, say, maybe three to five years?
Shai Gabay:So, look, I think that a couple of areas to discuss here. First, we're in an area that everyone wants to do something with AI. Every conference that you go, every conversation that you'll do, someone is thinking about Gen AI, what we can do with that. So I think that in the next few years, we'll see a lot of experiments, what can be achieved using those tools and I'm going to say that there are a lot of things that today are really highly manual and can be automated using those technologies but it's going to be more like co-pilot or decision support. If those tools not need to replace people, they need to enrich their capabilities and help them to do what they're doing today in a much better efficient, much better accuracy and, like what we're doing fighting bad AI with good AI, right. So that's one aspect of that, and I think that's what you'll see in the next few years, because adoption is not something that's happening in a moment. Especially in the finance area, people are really keen on their processes and accuracy is a big part of that. They really want to see that it's working, to trust that it's working.
Shai Gabay:Later on, I think that a lot of things will start to really change the way that we're doing business, I believe will change. You know B2B didn't change for a long time. The business, I believe will change. You know B2B didn't change for a long time. The way that we do payment today it's still more of the same. There are a lot of checks, a lot of wires and a lot of ACH. So I'm sure that that will be also a big area. That will be something in the future, meaning there will be much better solution or easiest solution to send money, and that's going to change as well. But at the end of the day and that's why we're doing what we're doing I believe that solution companies need to start to evolve and use in technology that can really help their bottlenecks and really use cases that they have today.
Shai Gabay:You know, when I was at the bank, I did a lot of innovation and one of the areas that I really experiment is always new technologies. But one of the things that I learned is that technology needs to solve specific business cases and just to experiment with different technologies if you don't really know exactly what you're trying to solve. That's not the way to go.
Greg Myers:Okay, well, let's switch gears a little bit and talk about you. So it's a good segue into what you were just talking about. So tell us about your career journey, sort of where you started and how you got to founding the company.
Shai Gabay:So I was always a curious child, I'm going to say. When I was a kid I really tried to disassemble electronics and stuff like that. I can tell you, when I was really young my father didn't appreciate it, because I only break things. I didn't know how to assemble it back. Later on, when I was around 13, I started working. When I was 18, I went to the military.
Shai Gabay:I spent eight years in intelligence corps playing a lot of offensive, and then I realized that there was a much bigger challenge and it will be playing defense, not offense. So I thought what would be the most target organization? Probably a bank. So I joined a bank and been there for eight years doing defense. Down this period of time I worked with a lot of early stage companies and did a lot of innovation.
Shai Gabay:So at one point I realized that that's my passion. I wanted to solve business problems using technology. But at that point I also felt like, in order to build a company, I'm missing some skills, because till then I did some technology wars which leadership wars? But never did anything around business. And more to that, to work with a startup from the side like being a customer, it's not like being a startup. So I basically decided that I need to learn how to do it first. So I was on my own system, crossed the line to the downside, went to three cybersecurity startups in order to learn how to build my own company, and I did it for six years period, three different cybersecurity companies and almost three years ago I started the Journal of Trust. So that's briefly, my experience to today.
Greg Myers:Okay, so you have a co-founder, right. So the two of you. How did you two get together and meet and come up with this idea?
Shai Gabay:So I'll divide the question to two how we get together and, second, how we found the problem. So, first, one of the key areas that I decided that I need to find is someone that I really want to work with in order to build a company, and my co-founder's name is Eli Ben-Nun. I recruited him to the second startup that I worked in, and we were working together in the last, oh, eight years. I'm going to say so that's how we got together. Now, when I called Eli and told him, look, we're going to build a company, there wasn't a question about it, the and after being in cybersecurity for a long time, I wanted to do something else, because cybersecurity is very crowded.
Shai Gabay:But more to that, the narrative in cybersecurity, the narrative in sales, is more about fear and less about value. I wanted to create something that I can really quantify and show real ROI to my customers. So when I was at the bank, I worked a lot in the fraud area. I did a lot of forecare and I saw a lot of different cases. Some of them were from our corporate customers. Exactly those type of scenarios that someone compromised their suppliers, they asked them to change the bank details and, at the end, they lost a big amount of money. So that's how I was familiar with that.
Shai Gabay:And when we started to do ideation, I went back to that problem and I realized two things First, this problem became much bigger than I remember and, second, no one really solved it.
Shai Gabay:So then we saw a couple of reports, and we saw one report claimed that by 2020, there was a reported loss of $32 billion. So we saw it and then we were like, okay, but we really want to understand that that's a real problem. So we decided to do our own market validation. And that that's a real problem. So we decided to do our own market validation and we started to approach any CFO that was based in the US and was willing to spend some time with us. And in the first three months, we were able to speak with 150 CFOs and it was an amazing journey because everyone told us that that's top priority for them and why money is scary. But, more to that, they told us that what they do today is manual controls and processes, not technology at all, and 90% admit that they suffered a significant loss in the last three years. So that's really caused us to really do that and that's how we really understand how big is their problem, what people do today, and that's why we took the approach that we took today.
Greg Myers:Okay, okay, so what are some things you're passionate about? So, maybe one business-related passion and one personal passion.
Shai Gabay:So business perspective first. I really like to build things, so building a company, it's a passion. But I always like to build things even with my hands. So my grandfather was a carpenter, so I did a lot of things with him and until today I like to do a cool home project with my kids, so that's one of the passions. Another passion is meat. I like to do a cool own project with my kids, so that's one of the passion. Another passion is meat. I like to smoke meat.
Greg Myers:Oh, wow, okay, that's awesome. So if someone came to you maybe they're looking for a job, or, right out of school, maybe they're changing careers and they say, hey, you're in this kind of payments fintech industry, it's growing, it's an industry I want to get into. What kind of payments fintech industry? It's growing, it's an industry I want to get into.
Shai Gabay:What kind of advice would you give them to be successful? First, follow your dreams and think big, don't just put yourself to boundaries. And second, start doing something, because at the end of the day, you can always think, dream and doing big, but you need to start from somewhere. So those will be the two advice, okay okay.
Greg Myers:Yeah, I think that that take action advice is huge for anybody. So we've covered a lot of ground already about you and the company and what you do, and a little about you personally. So is there anything else you'd like to cover before we wrap up the show?
Shai Gabay:I just want people to know that, especially in the finance world, there are better solutions today than manual controls and processes, and you don't need to be afraid to inform technology, because technology can and should be your friend, but it doesn't need to replace you or anything like that. Well, I think that we need to be very well, very lucky to live in those areas, that we can really see a lot of changes and technology can serve a lot of needs.
Greg Myers:Okay, great, I think that's a great way to wrap up the show. So, shai, thank you so much for being here. I know your time is very valuable, so, again, thank you so much. Thank you, doug, and to all you listeners out there, I thank you for your time as well, and until the next story.
Speaker 1:Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening listening, please share on your social channels as well.