Podium CEO Eric Rea thinks local merchants have been largely ignored, but if he has his way they'll be modernized with seamless messaging and payments.
The company is focused on enabling small businesses ranging from tire shops to car dealers to dentists message customers and process payments seamlessly. We caught up with Rea to talk about the company's strategy, product lineup and impact on small businesses.
Podium has a starter edition with free options and then payment plans that meld messaging, transactions and now hardware via a card reader. Podium has offerings for single location businesses and ones with multiple locations across industries.
Why small businesses? "We're serving a massively underserved market which is local SMB. This is anything from a tire shop to a dentist to a car dealership to a plumber," said Rea. "This is a market that needed to be served better." Rea also has a personal reason for focusing on these local businesses: His family owned one in Canada. Through working at his dad's tire shop and then going into computer science, Rea started to see the possibilities. "It was a mom-and-pop shop I guess, but it was a tire shop doing about $3.5 million in gross revenue," said Rea. "This is a real business so why isn't there something for it."
The opportunity. Rea said small businesses are underserved and in need of technology help since "consumers expect a lot more from these businesses now."
Podium's suite of communication tools for SMBs
Why aren't technology companies focusing on local SMBs? Rea said traditionally the market is very fragmented and it's been hard to acquire customers. Owners are busy and are likely helping customers all day so there's not a lot of proactive thought about technology. What's changing, however, is that some of these SMBs are being passed on to a younger generation that is putting an emphasis on technology. "These businesses realize that they need to change the way they are interacting with customers," said Rea.
COVID-19 accelerated digital transformation for SMBs too. Rea said many SMBs closed the first few months of the pandemic, but then went digital quickly. Podium's business boomed starting in June 2020. "Everybody realized that the world continues to spin, and they need to change the way they operate," said Rea. "We can't expect our customers to drive to a store and swipe their credit card. We can't expect our customers to only rely on landline telephone to communicate."
The vision. "Our vision is to power 100% of the communication for local businesses and 100% of their transactions and make those modern experiences for the consumer and business," said Rea. In practice, that vision means easy conversion from a text message to a payment. It also means consumers can use whatever channel is most convenient for them.
An integrated approach to customer messaging for SMBs.
How did Podium get into payments? Rea said the company noticed trends in the interactions among its 100,000 customers and a big issue was payments. "About 30% of the conversations had something to do with the transaction or a payment," said Rea, who said some SMBs were sending invoices via mail or using the phone to compete credit card transactions. "There was an opportunity for us to make it easier for the consumer to pay and then also get a figure out a way to get these merchants paid faster," he said.
Payments via text.
Expanding into hardware with a card reader. Podium launched a card reader that was its first move into hardware. The plan is to give SMBs a complete messaging and payments stack. "Our customers now have people going into their stores and we need to tie every payment together with our platform," said Rea. Rea added that building a hardware product was a new foray, but Podium saw an opportunity to simplify payments. The attach rate for Podium's card reader has been strong because previous point of sale systems and card readers weren't integrated with other parts of the business. "Every time somebody swipes their card there are so many other things you can do as a business with promotions, invitations and reviews," said Rea.
Podium's first foray into hardware.
Point of sale competition. Rea acknowledges that the payment industry is crowded and there are a lot of players. However, Podium is betting that combining its software and hardware can entice SMBs looking to replace an outdated tech stack. "We were surprised how few of our customers are using a modern point of sale product," said Rea.
Balancing profits and value for customers. Rea said local merchants are often paying higher rates for things like credit card processing and e-commerce transactions. "They're just not getting a fair shake and they're paying too much," said Rea. Podium's plan is to use its software business to offer really competitive rates on credit card processing. "We don't have to charge these high rates to our customers," said Rea. Ultimately, Rea expects Podium's revenue to be evenly split between software and payments.
The importance of APIs and integration. Podium integrates with 180 SMB providers, said Rea. He said many common SMB systems don't have APIs, but Podium has worked to integrate to reduce friction for customers.
Podium's roadmap. Rea said the focus for Podium is using communication as a base to move into financial technology. The goal will be to ultimately "give our customers access to their revenue quicker through a Podium bank account." "You should have access to those funds right away," said Rea.