IPO Watch: Zebit – 'Amazon for the under-served meets Afterpay'

Marc Schneider is the CEO of Zebit, which is an upcoming IPO. The company has an interesting model, it’s an e-commerce platform with a built-in buy-now-pay-later offering. But how Zebit differentiates itself from the likes of Afterpay and Zip is the market that they’re chasing, which is the growing proportion of the US population considered to be credit challenged. That is, those that are considered too high risk to qualify for a credit card or even other buy-now-pay-later providers.

Zebit is aiming to be the antidote for this, using an algorithm they’ve developed to analyse potential customers and their likelihood of paying up. Marc, therefore, has labelled the company as the 'Amazon for the under-served' and he knows the customer base quite well because, for a large part of his life, he was in the shoes of those customers. They’re looking to raise around A$35 million dollars at $1.58 a share, which implies a market capitalisation of around $149 million. The funds will be used to accelerate their growth in North America, which Marc tells me about.

Here’s Marc Schneider, the CEO of Zebit.

Table of contents
'Amazon for the under-served'
Addressable market
Managing risk of customers
Marc's personal connection to customer-base
Revenue model and margins
US buy-now-pay-later competition
IPO details and use of funds

Thanks for joining us, Marc. You call Zebit 'the Amazon for the under-served'. Could you explain what this means in the context of what Zebit is and how it works?

Yeah, I’d be happy to and I think that’s an excellent question. Let me give you a little bit of context of the problem we’re solving and I think the solution that we put forward will make a lot more sense. There are over 120 million people in the United States that are credit challenged. Credit challenged is really defined by the FICO score, that’s the metric that is used here in the United States by which credit is extended to people to give them low interest rate credit cards, the ability to finance products, or the ability to take out a cash loan at a decent rate. We have about 47 per cent of the adult population that is basically wiped out or prevented from entering mainstream credit because of their FICO score and that’s how we define credit challenged.

They typically, over the last 30 to 40 years, have been really relegated toward very high-cost, predatorial alternatives. We have a couple of industries here in the United States that do product financing, rent to own and lease to own or the industries where you can get slim pickings around electronics, appliances and furniture, and then you get the honour of paying 200 per cent over retail to 400 per cent over retail, depending on the state that you actually live in. Zebit is a mission-driven company. I founded the company to disintermediate these very predatorial alternatives, give credit-challenged consumers a first-class experience to buy the things they need over a wide variety of product verticals, we have 25.

And then allow them to pay over a decent amount of term, which is six months right now. We are an e-commerce company, we’re based in San Diego, we operate in 50 states and we call ourselves the Amazon for the under-served sort of meets Afterpay, because we not only sell the goods and services, but we also have our own in-house technology, data science technology, to help us underwrite customers, extend store credit so they can shop on Zebit and then pay us back over time. That’s kind of where the Amazon for the under-served comes. We’re the one-stop-shopping solution no matter if you’re electronics, home, furniture, fragrance, tyres, you want to take a vacation, etcetera, for this huge customer segment that continues to grow and that continues to have, I would say, absolute neglect from any sort of innovative perspective to change their status in terms of what they have access to, so that’s where we really come in.

Could you elaborate a bit more on that, on the addressable market that you were just talking about that you’re targeting in the USA and what per cent of the population that actually includes?

Yeah, I would be happy to. A lot of the buy-now-pay-later players, which have a very different operating model that we do. They’re geared to increase the order conversion of another e-commerce company and they take a commission of 2 to 4 per cent of the total transaction value. We are actually the merchant, we have the full gross margin here that we obtain and we’re the only e-commerce company in the United States that is actually addressing this market. There’s about 250 million adults in the United States, but 47 per cent of them, or around 120 million, have what we call an impaired credit score. We have about 45 million people that have no credit score at all, so either they’ve never generated one or their data is way too old for it to be scored.

Then we have another approximately 75 million people that have had an impaired score. That impairment could have come from financial volatility throughout their lifecycle, but any delinquencies, late payments, defaults, bankruptcies, etcetera, really puts you in a predicament. Then when, of course, you’re only able to finance products through very predatorial alternatives, these product structures are structured actually to fail and then trap you in a cycle of debt. In 2019 alone, this group paid $66 billion dollars of interest fees and penalties, that’s on top of the 200 to 400 per cent over retail that they end up paying for goods and services. This is a very big group of people that goes across socioeconomic sort of lines, it’s everyday Americans.

When you don’t live here you kind of think the United States is this country that has seen macroeconomic growth over the last 10 years, etcetera, but all you have to do is flip on the tellie and what you see there, the protests, the anger and resentment that has existed here for decades is really, in my opinion, centred around financial instability and the inability to actually break out from your cycle of debt. Our wage differential is increased over the last 10 years, 1 per cent of the population owns 89 per cent of the stock market. It’s really tough for the majority of people to get ahead, especially when they’ve suffered credit impairment or they’re in product structures that constantly put penalties and fees on top of what you owe, you just never break out.

It is everybody from gig economy workers, to policemen, firefighters, nurses, people coming out of college or graduate school, all the way up to retirees. At the end of the day, 78 per cent of our population lives paycheque to paycheque and then 47 per cent of that population has an impaired score. We have a huge market here that nobody’s addressing, mainly because they haven’t figured out how to crack the code on de-risking this customer. This customer typically defaults at a higher rate if they’re taking out a cash loan and that’s mostly because they’re overpaying for the cash in terms of a 400 per cent APR loan, etc. We have built that tech over the last three to four years.

We are very good at understanding who should we let in, how to assess their affordability, how to give them a line and then how to allow them to shop inside of Zebit to make sure that we’re not tipping them over and they have the ability to pay us back.

You’re obviously lending to a market segment that the banks and even other buy-now-pay-later providers are thinking are too risky to lend to. What analysis are you privy to so you can be confident that these people will repay you?

That’s also a great question. There is no off-the-shelf solution to figure out whether a credit challenged individual will pay you back. You actually have to develop your own big dataset – and I apologise, I don’t mean to use any sort of buzz terms. Since we founded the company, especially over the last three years, everything we’ve been doing is about testing. You have to build your own data and understand the risk of this customer. Yes, we are using third party data to understand somebody’s identity and the device and the age of their email and whether they have eight social security numbers attached to them when they don’t even know or they’re part of a fraud ring.

And yes, we are using third party data to understand if they’re employed and/or their income – like 24 months of bank statement data, etcetera. We get two bites of the apple. One is, when we acquire the customer and we spent the last three to four years testing a bunch of different acquisition channels to understand how do we target our value proposition, what is the risk of those audiences we’re bringing in? But once they come on our platform, we build really powerful machine learning models, one at the point of registration that’s really identifying their identity – and you have to be really good at this because one out of every two people in the United States, their credentials have been breached, they’ve been breached by one of our own credit bureaus and you just have to look in the news around that.

We have models that are really looking at, are you who you say you are as you come in? We have other models that are looking at, can you afford what we think we’re about to give you in terms of your income, employment, so we don’t over-extend you? But the most competitive advantage of what we do is I think we’re the only company that I know of in the world – and I’ve worked in Latin America, I’ve worked in Asia, I’ve worked in Europe, etcetera – that is doing real-time underwriting at our own point of sale using consumer behaviour.

Everything a customer does in our marketplace, their browsing behaviour, how many order attempts they make, their level of line utilisation, what they’re shopping for, when they’re shopping, all the what we call graft network effects – how the billing and shipping, etcetera, all relate to all of the million and a half orders we take and the hundreds of thousands of order attempts that have been tried on our platform, all build into what we call ‘propensity to pay’ or willingness to pay at the point of sale.

We have models that actually govern whether we accept that incremental order based on the consumer risk behaviour inherent of who is actually trying to make that order – a first-time customer, a customer that’s registered with us six months ago but is buying now all of a sudden for the first time, a customer that’s been on the platform for three years, has bought 50 orders, has spent $10,000 dollars and now they’re repayment behaviour is destabilising? The models discern risk on a granular basis based on every order.

This is what we do that’s special that nobody else does, but we’ve had to invest tens of millions of dollars in trying everything from audiences to product configurations, to how much down-payment at checkout somebody pays, to how much is financed, to the goods that we show certain people and don’t show to others, to the term, etcetera… All of this has culminated over the last three to four years in us building now third-generation models that are being deployed actually in the next seven days to cover all of this Q4 revenue. That’s something that you can’t buy off the shelf. We’ve had to build on our own so we can understand the risk to meet our financial objectives.

And I was reading you also have a personal understanding of this market too given you’ve been in their situation growing up. How has your own personal experience enabled you to understand this market better?

Yeah, I tend not to share that with a lot of people but I’m certainly willing to do it with you. It’s a little embarrassing but it also has structured who I am, what my values are, and kind of what hardwires me to be a CEO and also a hands-on operator. I’ve been on my own since 15 years old. I grew up in Mesa, Arizona, in the middle of the desert. I had a disabled mother who couldn’t work and a pretty abusive father that basically took all our money and left, and so we experienced everything from government subsidies, going and standing in line and having food stamps in the United States, all the way to the Salvation Army helping us with government cheese and milk and stuff like that, to Section 8 housing, which is really called HUD housing, where our house was foreclosed on, we’re kicked out, we’re homeless. I’ve had work since I’ve been 15 years old and put myself through undergrad and grad school while supporting my disabled mother.

I learned pretty early on as a kid around what are the financial alternatives that are open to somebody that doesn’t have good credit – which my mother never applied for any credit, my father did all of that and so she was stranded like one of the consumers now that have no credit score at all. Because she couldn’t work and we couldn’t validate any kind of income, we were sort of very much relegated to the rent-to-own space, where you rent a thousand dollar couch, you’re paying in payments, you miss a payment, they repossess it… But you take that thousand dollar couch in the state of Arizona, it’s a term and you end up paying $3,800 bucks for it – and it’s used.

So, look, I faced a lot of different challenges growing up, but one of my commitments to myself – and I think that’s where I started my career early on in the World Bank and the Inter-American Development Bank and put myself through Wharton Undergrad and University of Chicago while working full time and sending money back, and really learning about businesses in different industries through consulting and then working with a former SEC Chairman at the height of corporate fraud to build him a business and then getting into e-commerce, etcetera – fast-forward, I’m turning 51 in about a month here. I’ve had a deep and personal commitment to try to make a difference in my lifetime and yes, I have built a lot of companies, I’ve turned a lot of companies around, I have taken them out of bankruptcy, etcetera…

Zebit is one of my most important give-backs, not only to myself, my employee base that is representative of my customer base, but really to make a fundamental difference in people’s lives. And I see that every day we get consumers acknowledging that we’ve given them a second chance, we’ve given them a no-interest facility where they can buy what they need at fair prices and pay-back. This is really just a culmination of 30 years of being an operator and really wanting to see this succeed, because we know that if we don’t fundamentally have a value proposition that changes this society, the gap is going to get bigger and bigger and bigger.

And you know what, it’s easy to move up credit. It’s very easy for me, if I wanted to, to move up credit into near-prime, prime and super-prime and do something very similar to the other buy-now-pay-later, but it’s very difficult to move backward in the chain because of the competencies. I think we’re doing something incredible, I think that we can extend it not only in the US but to other countries and I also think that while we’re not a non-profit, we’re really searching for profitability and our aspiration is to be full-year profitable in 2022, we’re building something that fundamentally has to happen, it’s the right time to happen, it disrupts all this predatory nonsense that’s going on and we’re finding that we don’t have a lot of competition doing it. Why? Because it’s hard to do.

But you’re right, it is very personal to me and that’s why I get up every morning, enthusiastic about the challenges we’re going to face, but this is like going up Everest without oxygen multiple times because nobody’s done this before. This is not a better mouse trap, this is a totally different operating model and a way to address this market, which I think we have about a five-year advantage of doing this and we’re not done. There’s further optimisation to do, there’s further learnings but we’re well on our way to cracking the code here.

You’ve talked already about this social unrest that’s happening in America at the moment and a lot of our listeners are based in Australia, so we see the highlights on the news and things like that, but do you think these issues in terms of people struggling to access credit and that social unrest that you discussed has become more pronounced in the US throughout COVID?

No, I actually don’t. I think it’s existed for the last 30 to 40 years, everybody’s known about it. This is the largest invisible population in our country, which is crazy because everybody, when I talk to investors, “Where do you find these customers?” They’re everybody. It’s 47 per cent of the adults. The wage gap and the disparity between wage especially as you’re factoring in different ethnicities is tremendous here in the United States. I lived in Mexico City for five years, I’ve worked in Latin America – there is no sort of middle class there, but there is a middle class here in the United States, but the gap continues to grow wider and wider and wider and if you don’t have a step up, if you don’t have education, if you don’t have financial stability, if you don’t have the parental structure early on, you end up getting lost here.

I think it’s hard for people that – you guys have really great safety nets in terms of the healthcare etcetera, we have nothing here in the United States. It’s not getting better. Is it worsened by COVID? I think it’s more pronounced because typically during a recession, whether 2008 through 2012, there’s usually a long signal. The credit-challenged individuals usually persevere much better than any of the near-prime, prime or super-prime customers because volatility is kind of already baked into their sort of credit losses. They’re the last to get cut, right? Because you’re cutting all the six-figure people, etcetera, etcetera…

This pandemic driven recession impacted everybody and it just made things much more pronounced in terms of what people are doing to struggle. Some of our subsidies that have recently been instated through unemployment and unemployment sweeteners I think have tried to stabilise the unemployed base through this period of time. And unemployment is coming down, I think we’re now at about eight and a half million but we’re still about three to four times what we should be. But I think it’s just made it more pronounced and the resentment – I’ll stay away from politics, but we have a very interesting political environment here where the divisiveness is also making, what I would say, the financial inequality become more and more known.

People are angry in the United States, they’re angry because they can’t get ahead. We’re 50 states that are cobbled together mostly by a land mass, with a couple of exceptions, but we are very different. We’re almost like 50 different countries with different levels of literacy, financial stability, job and wage growth, etcetera, and I think now the public is seeing, really, the deep cracks that have always existed here. But now people are just fed up about it and they want some change.

And just back to Zebit, in terms of your revenue model, what percentage of your revenue actually comes from the sale of goods and the margin that you were talking about earlier?

100 per cent. We are an e-commerce company, we make our money very simply. The difference between the cost of goods sold that we get through our 100 per cent dropship network. We don’t buy inventory in advance, we don’t have warehouses, we don’t discount, we know the concept of returns, we’ve really streamlined the operating model of our e-commerce side so we can retain the vast gross margin that really eats away at all other e-commerce companies as they buy stuff and then they have to discount it and then they end up just selling it for 10 cents on the dollar through a pallet.

We preserve the full gross margin. Our gross margins are around 27.5 per cent and what we have are credit losses, right? I consider credit losses sort of a cost of acquisition and the objective isn’t to drive credit losses to zero, the objective is to make sure that you understand how much revenue you’re cutting out versus how much bad debt you’re avoiding. But we have the full 27.5 per cent, we don’t make any money through charging interest, we don’t make any money by charging a late fee if somebody goes delinquent and we don’t charge any money – like a lot of the buy-now-pay-later players have instituted, this concept of defer your payment, pay us $10 bucks or whatever it is, which actually would show a lot of destabilisation in the credit risk of the individual. We don’t make any money off of that.

We make our money through e-commerce. We have to be good at the data science front and the other key that we have to be good at is, we can’t have a one-time customer that comes in, buys and never buys again. That’s where the one-stop-shop, your original question around Amazon for the under-served… This customer, who has a really horrible next best alternative, will consolidate their shopping with us. We’ve had customers on the platform for three-four years, they continue to contribute a material part of revenue. We had customers who we acquired in 2016 and they bought, I think, $2.6 million dollars; and in 2019 they contributed $2.2 million of the total $85 million dollars’ of revenue in 2019.

It’s not like all the customers survived, but the ones that have, their credit lines are growing, their spend is growing and what they’re really doing is they’re de-risking their own revenue. Let me give you a very specific example. If you paid off an order in full over six months on our platform, automatically your expected bad debt or credit loss drops to like 9 per cent. If you’ve been here for 24 to 36 months, you’re expected bad debt is somewhere in the 2 to 4 per cent range.

So what have we done? We have fundamentally transformed a credit challenged customer who typically defaults on a cash loan at anywhere from 25 to 50 per cent – so you give them $1,000 bucks, 25 to 50 per cent never pay you a dime. We’ve transformed these people by giving them a financially responsible product, an ability to shop at fair prices, an ability to pay back over six months and their credit losses look like prime credit card loss debt in the 2 to 3 per cent range.

As we scale this business and as repeat purchases continue to build up a bulk of revenue, that revenue separates apart from what we’re doing on de-risking a first-time customer through our models, that revenue inherently and structurally is de-risking itself. At scale, you’re not only getting the benefits of lower transaction cost, but your revenue is de-risking itself to where the new customers you’re bringing in aren’t making that much of an impact. We’re not there yet, that scale will start to really happen at $200-225 million dollars, which will be there in the 2022 range when we cross the threshold of profitability and really hit our stride.

I was just looking at your revenue history and projection for the 2020 financial year. It says your revenue for Financial Year ’19 was $85.5 million, as you mentioned, and you’ve projected $82.2 million for Financial Year ’20, so a bit lower. Have you needed to adjust your costs a lot in order to soften the blow from COVID?

No, actually that was a deliberate management decision. We’ve experienced over 100 per cent year over year compound annual revenue growth from ’17 to ’19. We came into 2020 with our foot on the accelerator thinking we were going to do an IPO on the ASX, May 25^th. We exceeded our forecast in January, February and mid-March, then COVID hit. When COVID hit, my main job as not only the CEO, but also the Chief Operating Officer, I lost line of sight to a capital raise. Even though I started a dual process, an M&A process in the United States – but I had no idea we were going to be able to raise capital in the US or have another opportunity to continue to go down the IPO path in Australia and I had no clue whether it was going to be this year or it was going to be next May, sitting in my seat on March 15^th when the world was collapsing. And so, the lack of growth in 2020, really, we lost about five and a half months of growth through a deliberate management decision to maximise cash on the platform, to give us runway so we can make it to the next capital raise. Really, from March 15^th through the end of July, our platform, I designed it to give us the ability to shape demand so we can shape who comes in, at what registration model tolerances, how much we give them, what’s the down-payment at checkout, what products we show, etcetera… And we really turned up all the knobs to be extremely conservative, to mute demand by 50 per cent.

How do I know this? Because I did the same thing in 2018 for about three months when my, I think, series B capital raise was extending a couple more months and I had to extend the cash runway. I could have taken growth, we could’ve taken share, but we just didn’t have the cash to do it and it’s great to have an operations team that knows how to build a product and get to revenue and increase growth. It’s another thing to have an operations team that protects the balance sheet and protects investor interest to make sure you have a going concern. That’s exactly what I did.

The reason for, what I would say, the flat growth year over year, is because half of March, April, May, June, July and really, August, are all suppressed. Now we’re back to growth. September was a big uptick relative to August and what you can see in the prospectus, the forecast period’s a little wonky, it’s sort of the second half of 2020 and the first half of 2021 because we wanted to provide a 12-month forecast. When you look at the first half of 2021 and you compare it with last year, where we were really not dampening demand, you start seeing that 95 per cent year over year growth rate again. And if you just look at the first half of 2021 which is forecast at $55 million dollars, that typically represents on a historical basis, the first half, about 35 per cent of the revenue.

Because it’s not in the prospectus, I can’t give you the number, but if you take $55 million and divide it by 0.35, you’ll come out with a number that is pretty close to a 95 per cent year over year growth rate, whether you’re comparing it to 2020 or 2019. We have proven we can grow year over year, but we’ve also proven that we’re smart operators and that we have to protect the business. And while it killed me to have to slow down the growth, we had to do it because of the capital raise and now we’re back going into Q4 that looks like about a $40 million dollar three-month period and we’re back acquiring, our approval rates are up, we’re acquiring customers, we’re directly in line with the prospectus and we look forward to putting points on the board again.

Now, if I didn’t have cash constraints, would I have grown at the historical 100 per cent CAGR? I would not have. And the reason why is because I have a six-month product, which is fine – I don’t have a six-week, four-payment model product, right? So we would have raised our thresholds, we probably would have grown and been cherry-picking more at a 30 or 40 per cent rate. Again, that’s Monday morning quarterback, looking backward. But we didn’t have the opportunity to do so because there was no way I was going to run out of capital and not have another opportunity to get where we are today and I’m glad we did that because otherwise we wouldn’t have made it if we would’ve just kept spending on the hope and the prayer that a capital raise would come through.

I wanted to quickly discuss competition in the buy-now-pay-later sector. Obviously, you’re quite separate to that, having your e-commerce platform, but just in general, the buy-now-pay-later sector in the USA is getting quite crowded. Do you feel like you’re a bit protected from the Afterpay, Sezzle and now PayPals, because you’ve got that e-commerce platform that you’ve got as well?

That’s another excellent question. I have great respect for all of the players at Sezzle, Klarna, Openpay, Afterpay, Affirm which is a big one, etcetera… The market here for buy-now-pay-later is extremely crowded, everybody is in the same e-commerce shopping cart instance, and really, what is the stickiness that the customer’s really getting? They’re really not getting a differentiated offering in any way, shape or form, they just have four payments to pay, mostly either over four weeks or six weeks. My own perspective is, eventually there’s going to be a rollup. It’s highly fragmented, everybody’s competing for the same consumer base, you’ll see what has happened I think here with the airline industry, which – how is competition going to play out when demand is fixed? Everybody’s going to start lowering their commissions to take share, right? So you’re going to drop from this 2 to 4 per cent to this 1 per cent, trying to get customer loyalty, or you’re going to see M&A activity pick up where people are just buying to clear the playing field and what’s going to happen.

We also see what’s happening in buy-now-pay-later is, it’s not enough to offer the four payment model. Why is that four payment model interesting here in the US? It’s effectively unregulated. It doesn’t mean you don’t need a licence to operate in certain states if you extend credit, but it’s effectively unregulated. If you go past four payments, you have to start operating under a different regulatory structure. What you see now is you’ll see partnership alliances that are announcing, well, we’re going to give longer term and now we’re going to charge interest, right? So the whole interest-free, four payment model is not really enough, you’re extending it out – and Affirm does that. Affirm not only has a four payment model but they actually charge interest and they have term up to 36 months.

That also is a signal to me because now I see other players getting into that market, that competition’s going to be increasing. And yes, PayPal is getting involved in this, Amazon also has done this over the last couple of years on selected skews with selected customers. Are we protected? We don’t participate for the same customer base. Do I rest on my laurels that nobody’s going to come into this market? I certainly don’t. That’s the importance of having a big capital injection through the IPO in order to get to scale.

And by the way, I think it’s going to be very hard to rip our customer away because we’re kind of the first company that has done right by this customer in decades and I think that’s a testament of our net promoter score, but also a testament of why 24 per cent of our acquisition is free every month, because our customers are rewarding us through free acquisition without any paid incentive. But, yeah, I think we’re semi-protected, but we still have to get big much faster and then I also think there’s probably opportunity over time even for us to do M&A activity to really join forces with a dominant player who wants to cover the complete credit spectrum and have a unified offering to do that with really, our underwriting which is what is special to us.

Just finally, could you quickly run us through the IPO, how much you’re raising and what the funds will be used for?

The IPO, we’re raising around USD$25 million dollars of US capital. The funds are really used to drive marketing acquisition in the forecast and afterwards. We don’t use a lot of our working capital in order to fund orders, we have a debt facility with a great company called Bastion that funds our orders. But it’s working capital for payroll, it’s marketing expenses, it’s general G&A, it’s really to fund the core parts of the business. What I can tell you about the use of funds also is, that not a lot of it is going to any sort of great upsizing in employee compensation and benefits.

If you look at our prospectus, in the forecast period, we were spending, according to the prospectus, like $7.4 million US dollars to generate $109 million of revenue. If you take out the $1.1 million dollars of non-cash stock option increase that we had to stick in there, we’re essentially delivering for $6.3 million dollars, $109 million dollars. We had $6.4 million dollars in 2018 to deliver $45 million in revenue. We’ve raised enough money to get us to profitability and have a little bit of headroom there to also test other lines of growth that are not in the prospectus, but we just wanted to raise enough money to make sure we had the capital to get this business through the next couple of years and then also do it in a way that gives upside to the new investors that are coming in. We were very cognisant of that, coming into a market where the valuations have gone crazy since July in buy-now-pay-later and also in e-commerce. So we didn’t want to play in that bubble of sort of over-valuing the company, going out with such a high valuation just to disappoint investors. Look, none of us can trade – we raised $55 million of venture capital, my venture capitals are all escrowed voluntarily for 24 months, the management team is escrowed, we certainly believe in alignment of incentives and so we want to make sure that Australian investors, especially institutional and retail and even the common investor has a way to participate all the way up as we execute and continue to grow this business.

Because none of us are taking anything off the table at this IPO. There’s no sell-down, it’s absolutely primary and so, we’re operators, we’ll build the valuation through execution and we wanted to make sure we structured the right size of the raise with the right level of valuation that aligned everybody’s incentives and that wouldn’t cause this panic as we have some destabilisation that’s happening macroeconomically around the world, but also here in the United States. You can see how that effects people even with the recent IPO of Plenti, right? People get scared when stuff is overvalued, so we wanted to make sure we are a pure value play here.

Investors are getting in, they understand what they’re getting into and they can ride the upside with us. That’s our give-back to Australia, is to make sure that the people that are investing in us and believing in us now will make money off this deal as we pursue our agenda.

Thanks very much for your time, Marc.

My pleasure, I really appreciate you guys taking the time.

That was Marc Schneider, the CEO of Zebit.