Branch embeds into Stripe Connect to offer instant pay and tax filing for 1099 workers

Yeah. Have a great rest of your day. We'll talk to you soon.

Great to meet you. Great to meet you.

Have a good one. Uh up next we have Atif Sadiki from Branch. He's the founder and CEO. He's in the waiting room.

Let's bring him in.

At how are you doing?

What's going on?

Doing well. How are you guys? We're great. Thanks so much for taking the time to join the show. Uh since this is the first time on the show, would you mind uh giving us a little bit of introduction on yourself and the company?

Absolutely. Yeah. Tiff, founder, CEO. Uh Ranch is the leading workforce financial infrastructure that delivers faster, more flexible options for people to get paid. So we focus on, you know, the majority of the American economy that works in an hourly job, gig job, tip job. So could be gig workers, nurses, restaurant workers getting their tips instantly. And you know, I think really companies are turning to branch because they know faster payments can help them strengthen worker loyalty, saving you time and money.

I was actually tuning in earlier. I heard your combo with the better money you guys around uh

Yeah, the Uber the Uber driver payouts. That's companies.

Yeah, we work with companies like Uber, Instacart.

That's amazing. That's perfect. Uh quick question. What is the screw award or the spring award behind you? What is that?

This one right here.

It looks like a spring. Like a giant spring.

Yeah. 2020 webbby award winner for

That's a Webby.

That's a Webbby.

Did you win that for branch?

For branch. Yeah. In 2020.

That's amazing. Yeah. Webbby is deeply underrated. Um anyway, uh give us the give us a a tour of the business currently. I mean, if you're working with Uber, obviously big company, but uh how how how can I think about the shape of the business? Are you in person, multiple offices, uh scale of fundraising, just get me up to speed on the on the scale of your operation?

Yeah. Um we're we're distributed, uh we have a couple offices, uh sales office, one in Tampa, but uh distributed workforce about 230 employees, raised over $und00 million of equity, and yeah, it's uh it's been we're off to the races now. Um, you know, I think, um, you know, one area where we've been really leaning into as of late is just the, uh, embedded finance offerings, and that's kind of the news today, right?

So, is that is that embedding into another B2B company that is acting as like the the the master payroll provider for an organization.

That's right. Yeah. So, think uh platforms. Sure.

Right. It could be a vertical SAS where they touch our end users around, you know, these gig or hourly work forces where we can live right there and make it really frictionless for those end users.

Yeah. I've had a few uh like HR platforms where I've had like a few employees on on hourly and they've sort of added like oh if you want to add this plugin or add-on I could uh and I don't know if we were using branch back then this was years ago but um

but but yeah makes a lot of sense that that would need to seep through the rest of the HR uh his software suites across the

pros and cons in building in an important but uh let's say less hyped category than stable coins. something like AI, like do you feel like you have to perform even more than you would because like if you want to get the attention of the capital markets, you really need to prove that you're um uh you know, basically have to prove everything in the numbers.

That's right. Yeah. I think um you know often times a lot of this is just education and how big the problem is, right? Especially when it comes to like attracting and retaining talent. I don't think a lot of people know like how fast these workers turn. So, anything you can do to kind of slow down that turn is huge impact right to the bottom line of these companies. You know, we've seen companies retain, you know, using a service like branch is like retain user 60% longer than they normally would, right? So, if you think about everything that goes into getting a new worker on, onboarding them, that's a huge cost.

Yeah. what uh what are the key features that result in lower churn, higher retention?

Yeah, I think a lot of it has to do with this idea of just really improving workers cash flow at the end of the day. Okay. Right. So, if you look at the industries we work in um especially uh as of late more of these 1099 industries, cash flow is huge for them, right? It's the difference between

uh them going out and using that to go earn more money, right? Uber drivers putting gas in their car to go out there and drive.

Yeah. So, if there's two if there's two competing platforms where someone could go to work, one's going to pay them every two weeks, one's going to pay them every single day, they were more likely to go and stick around or stay or choose the one that's paying them on a daily basis essentially.

Yeah, absolutely. And it's becoming table stakes, right? I think a lot of this was driven by like gig economy, the Ubers of the world. We're seeing this now across W2 workforces as well, right? traditional industries there.

You mentioned the 1099 trend or or can you get me up to speed? I remember uh what five years ago there was debate over how uh Uber Uber drivers were going to be paid, whether they were contractors or not. Like what what do you mean when you when you talk about like a 1099 uh workforce? Like what are some examples of that? Yeah, I think there's a, you know, I think the a lot of the headlines focus around sort of ride sharing and the Ubers of the world, but like we're seeing 1099 workforces rise even industries like healthcare, right? We work with some of the largest nurse marketplaces out there where nurses are turning to these platforms to supplement their income, pick up additional shifts on their off hours,

right? Um the other big trend we see is the rise of like the solarreneur, right? uh you're a individual that wants to start their own business and like what are the tools and out there that really help you grow? Um

yeah, which brings me to my other thing. You know, one thing we announced too is that last week we announced with Stripe will be embedded into their connect platform, right? So now if um you're a marketplace or platform in Stripe, you can get up and running with a a digital wallet, a debit card instantly from the Stripe system.

Okay. So yeah, give me an example of a customer company that would wind up using branch through Stripe.

Yeah. Um let's say I mean obviously the marketplace example makes sense to the Uber, but I'll give you maybe like a a mindbody, right? There's a lot of uh they service a lot of like salons. Uh oftent times they're independent uh contractors working for these salons and they want to get them paid faster. Yeah. Right. So they can kind of now offer this as a a branded solution to their independent contractors.

And so if I'm in this hair hair salon example, I imagine that I have some sort of like general W2 focused payroll system set up for like the corporate employees. Uh, but is there an advantage to having the money sort of stay within the Stripe ecosystem and then get $1099 to the contractors that I'm paying because I don't have to move the money around or something like is that it?

Yeah, that that's it. Yeah. I mean, in addition to just like minimal API lift, right? The other is like no preunding. Like Stripe has the money and so we can move that money right there. So it's not like you're having to come up with the capital, preund it, sit in an Astro account and use that working capital.

Okay. So yeah, like in this in this example, like a customer comes in, they pay, it's processed on Stripe Rails, and so the money's right there. So it's much easier to move directly into the bank account of the of of the worker who provided the service all in the same day. So we're just sort of squeezing days out of the working capital budget as much as possible.

That That's right. And I think for the worker themselves, right, it becomes like a financial hub for them, right? As a solarpreneur, you're starting it out. We we've offered, you know, addition to just like fee free banking and there's like cash back rewards that are very relevant.

Yeah.

To workplace expenses. I mean Uber drivers are getting up to like 10% cash back on gas in certain cases which is which is huge.

Yeah. Is uh are is a big piece of basically are you seeing any acceleration like form filling and regulatory filings alongside 1099s and and the workers actually onboarding? Is that like a for uh a a point of friction or something that you've been working on like improving?

That's right. Yeah. You know, the other announcement we had was that we did uh end toend tax filing capabilities for 1099 workers. Yeah. Right. So, in addition to like faster payments, I think another critical infrastructure needed is like collecting W9s, IRS verifications, earnings trackings, right? Just all in a seamless