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Medical debt is the number one reason people go bankrupt in the United States. So, you would think there would be a plethora of fintech companies attacking this problem from many angles. And while there are certainly lenders willing to finance medical procedures there are few companies taking a holistic approach to patient financial health.
My next guest on the Fintech One-on-One podcast is Itzik Cohen, the CEO and Co-Founder of PayZen. He saw the problems medical debt has created firsthand when working in the debt settlement space and he decided to do something about it. PayZen is the first company that looks at all the options available for patients as they try to afford their healthcare.
In this podcast you will learn:
The idea that led to the founding of PayZen.
The state of medical debt in the United States today.
What the “operating system for healthcare affordability” means.
Their north star at PayZen.
The different types of products they offer.
How they are finding and analyzing all this medical and financial data.
What kinds of providers they are working with.
How they are able to integrate their technology so quickly.
Itzik’s thoughts on removing medical bills from their credit report.
His vision for PayZen.
Read a transcript of our conversation below.
Fintech One-on-One Episode No. 454 – Itzik Cohen
Peter Renton 00:01
Welcome to the Fintech One-on-One podcast. This is Peter Renton, Chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one-on-one interview show in all of fintech. Thank you for joining me on this journey. If you liked this podcast, you should check out our sister shows The Fintech Blueprint with Lex Sokolin and Fintech Coffee Break with Isabelle Castro, or listen to everything we produce by subscribing to the Fintech Nexus podcast channel.
Peter Renton 00:39
Before we get started, I want to remind you that Fintech Nexus is now a digital media company. We have sold our events business and are 100% focused on being the leading digital media company for fintech. What does this mean for you? You can now engage with one of the largest fintech communities, over 200,000 people, through a variety of digital products, webinars, in-depth white papers, podcasts, email blasts, advertising, and much more. We can create a custom program designed just for you. If you want to reach a senior fintech audience, then please contact sales at fintech nexus.com today.
Peter Renton 01:21
Today on the show, I’m delighted to welcome Itzik Cohen, he is the CEO and co-founder of PayZen. Now PayZen is a super interesting company. They’re operating in the healthcare space, but they really are bringing a fintech approach to health care, which we obviously get into in some depth. And this is not just a lending solution, it’s not BNPL. As you’ll see in this discussion, this is a really holistic solution, what Itzik calls the operating system for healthcare affordability. We obviously talk about what that means, we talk about the data they’re using, their approach to AI. We talk about delinquencies, we talk about credit reports, and much more. It was a fascinating discussion. Hope you enjoy the show.
Peter Renton 02:11
Welcome to the podcast. Itzik.
Itzik Cohen 02:13
Good to see you again. Peter.
Peter Renton 02:15
Great to see you. Yes, we’re just saying it’s been a while from, from your days at Prosper, when I first met you. But anyway, let’s kick it off by giving the listeners a little bit of background about yourself. You’ve been around fintech for a little while. So tell us some of the highlights of your career to date.
I think we both met what I call in fintech 1.0, which is the old peer-to-peer transitioning to marketplace lending. In Prosper, I was Chief Business Officer and responsible for top line growth, partnerships and strategy of the company. And yeah, I mean, we had a great run, you know, I left in 2016. And what I was trying to do afterwards, was trying to disrupt the debt settlement industry. And you know, how people are aware of that industry. But I saw some data, while I was at Prosper that led me to believe that the highly lucrative cash rich industry with no real disruption, when it comes to technology, the idea was more to create an automated system rather than relying on call centers and make it more fair and democratic in a way for both creditors and consumers who need assistance in negotiating their debt. I was able to create a very successful business, I wasn’t able to disrupt it. So the company is Beyond Finance with I think, number one or two now in the nation when it comes to debt settlement volumes. I found it very hard to get all the creditors signed up for something, everybody agreeing on the same model. And that was kind of the weakness in my thesis. But again, this is a great cash flow business and doing great right now. But one of the things that led me to do what to do right now at PayZen, was actually some data points I’d seen while I was at Beyond Finance, towards the end of my time there, and it’s basically the speed of growth of medical debt in the United States.
Peter Renton 04:22
Itzik Cohen 04:23
And you know, in debt settlement, you see all kinds of debt being involved credit card debts, personal loans, student loans, other types of debt. But surprisingly, the growth, the fastest growing type of debt we were enrolling was medical debt. And, you know, after I sold my equity in the company, I got back to San Francisco and started digging in and turns out there is really a major problem, a crisis actually in healthcare in the United States when it comes to affordability. It’s still the number one reason for bankruptcy in the United States, even for people who are insured, people who have jobs. The way health plans are structured these days, they usually include, a lot of them are including High Deductible Health Plans. So the deductibles are growing, they’ve actually been doubling in the last two decades. So it’s growing about 15% a year. And there’s a major shift of payment responsibility from the insurance companies, the payers, to the patients. And that burden is just becoming unsustainable both to patients and to provide, medical providers who will now have financial friction between them and patients when it comes to getting fully paid for the services they provide.
Peter Renton 05:34
Itzik Cohen 05:35
And that was the idea for PayZen. Essentially, it’s a fintech problem. It’s a natural fintech problem. It’s an underwriting data, data science and modeling problem. How come no one really created a purposely built product to solve the affordability crisis in healthcare in the United States. And that was the mission that PayZen set out to do, and got the band back together. Some colleague from Prosper, Tobias, who is now my COO, and my CTO from Beyond Finance, who is now my co-founder and CTO at PayZen. And here we are four years later, and we’re about to turn cashflow positive next year and doing about 6x a year in growth. And it’s a very healthy business. That’s doing a lot of good things, good things in the world. So I’m very happy.
Peter Renton 06:26
Okay. Okay, so then let’s dig in well I think everyone realizes there’s a problem with with medical debt and the its affordability. So how exactly are you tackling this? What do you provide?
Itzik Cohen 06:38
So first of all, let’s kind of qualify the problem and slice and dice where PayZen is playing right now and where we’re going to expand to. So annually, medical providers are billing patients, after insurance, about $430 billion a year. This is the number I mean, it’s a massive number.
Peter Renton 06:58
Itzik Cohen 06:59
Now, when you think about how many people are actually paying in full, 20%, that is the amount that people are paying, out of that huge number. The rest is, you know, a combination of bad debt, collections, financial assistance that is really manual, it’s a mess, it’s totally broken. And essentially, when you think about it, from a venture capital perspective, in the last 20 years, if we look at the investments that were made in healthcare, and health tech, most of the investments focused on the interaction between the providers and the payers, because that’s where most of the value used to be, most of the value used to be between the payers and the providers. So things like denial management, prior authorization, coding, those are the type of technology to really get the investment. But if you’re a provider, something that used to be 5% of your revenue is now becoming 25% of your revenue and you can’t collect. So obviously, we’re the first platform that’s addressing the friction between the patients and the providers. Now, how do we do this?
Itzik Cohen 08:04
The first thing we had to really solve is, how do we get data to really make any sense out of this mess? Essentially, a thesis was most people are interested in paying their bills and obligations. We’ve seen it around our career in fintech, I mean, most people are decent, want to pay their obligations. Can you actually provide them a product that will make it more feasible for them without overburdening them using data. So we needed to create a product that can really integrate easily into the EHR systems of providers, meaning we want to understand the data about each patient, understand what they’re going through, their job, their health plan, the procedures they’re going through, and of course, then enrich that data with financial data. So by merging those two datasets, you’re getting a really good picture about someone’s ability to pay, someone’s financial situation. But then you can make a decision based on some predictive models that we created of what product you want to offer that person? Is that person, is there a good idea a good fit for financial assistance? Could be in getting a discount, could be getting their bill completely canceled. Or is that person more appropriate for breaking down their big bill to multiple payments over time, of course, with no interest and no fees. That’s our products. Focus is, the North Star we have is we never charge interest, we never charge fees from the patients. We don’t think that making healthcare more expensive should be a part of our solution. And I’ll get to how we make money in a minute. But essentially, we’re now proactively approaching patients that we think can pay their bill over time with no interest with offers. And say, Dear Peter, your recent bill with SO and SO provider was eligible for 90 Plus payment plan. Click here to pay, it’s very automatic. You see all your bills, you’re getting underwritten. We give you some terms that you can select from that we think are appropriate for you. You select the bill, select that term, you can make a payment method and as far as you’re concerned, you done. Essentially, we brought the checkout experience from e-commerce, right, into the healthcare experience. Because if you look at the NPS scores of paying for health care, it’s 20.
Peter Renton 10:12
Itzik Cohen 10:13
But if you’re looking at our NPS score, it’s 71. Right. So essentially, we’re doing something right by elevating…people have some expectations now, when you use Shopify or Stripe or any type of e-commerce engine, everything is a part of that natural flow. I mean, even if you want financing, that’s included in your Shopify experience, you can, you know, Affirm is there and other types of BNPLs are there. So we just wanted to make that checkout experience completely natural. And within the expectations people have now when it comes to buying something online, you’re paying for something online, let’s make it very natural, easy and transparent. So you make your payment. As far as you’re concerned, you’re good, our integration back to the provider is such that we say Peter paid, stop collecting on Peter. So you know, we’re completely connected into the workflows of the provider, that way, you’re not gonna keep getting harassed by the provider to pay your bill, it’s all done. And now we offer the provider, a way to accelerate the capital, which is another very needed thing for medical providers, because they have huge cash flow problems these days. And when we say to the provider, you know, Peter, you know, we can dynamically assess the risk of every individual. And we can price that risk, essentially, we putting a price on Peter. So for your, for your 12 month term plan, based on your repayment risk, we’re willing to pay X amount a day after you enroll, we pay the provider, we’re buying the assets off their hands, and we’re servicing those assets. And basically, it’s off their balance sheet, don’t have to deal with it anymore. They’re done.
Itzik Cohen 10:49
So essentially, we automated the whole process for them to get their cash, they have no risk, there’s no cost of collecting, they have no reason to do anything, other than just giving us more volume in a way, right. That’s what usually happens with PayZen. So that was our first product, it addresses a major part of the market, meaning that use case where somebody goes to the doctor, you know, they do something, the insurance pays a portion of it, and then 30 days later, they get a bill, that is that use case I just described, you’re addressing a big portion of the market. But out of the $430 billion, wallet share I described that addresses another 20%. It’s not going to complete the picture because some people have different, affordability is not just a one product, one and done, that’s why we call it the affordability operating system, because now, you know we have a second product, which is the PayZen Care Card. The Care Card is also providing affordability but as a different use case. These days, providers are obligated to provide transparency, price transparency to the patient, essentially, it’s a part of the No Surprise Bills Act. You don’t want to be surprised with a bill that you did not expect after you do some kind of procedure because that’s not fair. Great. So now the provider tells you okay, Peter, your procedure is going to be, we ran your insurance, that’s great. You’ve got to pay $2,000. How do you want to take care of that? And people are saying, well, that’s great, you’re very transparent, but I still can’t afford it. So what are we doing about it?
Itzik Cohen 13:17
So you see a dynamic where a lot of people have different care, which is really bad for them and their health. Providers are providing less services, because now less people are, because of the sticker shock, they say wow I can’t do this. I’ll do it next year, if it’s not urgent, so it’s bad for everybody. So what we came up with is basically a Care Card, which is basically activated by the provider and they tell you don’t worry, Peter, you’re already approved because we approve 100% of patients, activate your card, every swipe you make, it will turn into a payment plan, you can afford, You pay no interest, no fees, you never pay more than you can afford. Essentially, you have a payment method that is a payment plan in your pocket in the form factor of a card, it works on the same platform, same financing, same risk, same everything, but essentially, in a form factor of a card. So that’s our second product.
Peter Renton 14:10
Is that like a debit card or a credit card? Is it running on the Visa rails?
Itzik Cohen 14:14
It’s a commercial debit card that we issue in partnership with our providers.
Peter Renton 14:18
Okay, got it.
Itzik Cohen 14:19
So their provider actually enjoy another layer of benefits here, which you know, their logo is not the card to, they get loyalty. So essentially a card that was issued by one provider cannot be used at a different provider. So they have to come back to you as a provider to kind of keep using that payment method. So that creates more of a closed loop and loyalty to the provider, which is another thing to try to create. We’ve provided an affordability ahead of procedures, a pre-procedure kind of, a pre-care affordability option. You know that address probably another 5% of cases right now based on the wallet share. But we’re very quickly expanding into additional affordability use cases, some of them have to do with, you know, charity automation. And I don’t know if you heard about that problem, I certainly didn’t hear about it before I started PayZen. I was a fintech guy, I wasn’t a healthcare guy. But we have to learn quickly. 15% of people are meeting what we call the eligibility for charity care. That means that if the provider can prove that they are below the federal poverty level, by a certain percentage, they can get their bill cancelled or get a big discount, and the provider will get paid by the government around 60 cents/$1.
Itzik Cohen 15:35
The problem is that they can’t underwrite those patients, because they don’t have the data, they don’t have the tools. And they don’t have a product that can actually do that. So what they do now is they use call centers, and they’re trying to call people and once they get somebody on the phone, they’re trying to fill out forms for financial assistance. And then you have to process those forms. It’s a manual work, it’s not really what you would expect from a 21st century type of technology and operation. What we do is when we think somebody actually shouldn’t pay their bill, but maybe meet some kind of charity eligibility, the engagement to you would be different than paying your bills. We’ll tell you, Peter, your bill can be canceled because you’re you’re meeting financial assistance criteria, click here to confirm or something like that, right. You click, we ask you several questions, we’re making sure that you are below the federal poverty level, we approve you, we ask you to upload your pay stub, and an ID. Again, we automated the whole process for the provider. Now, we didn’t lend $1 here, we automated the process for the provider, we took a transaction fee. But it’s so much more efficient, and so much cheaper for the provider to use an automated system rather than use call centers and get really bad efficiency. So this is how the operating system for affordability is going to extend and meet patients in more use cases. And our goal is to get to address as much of that wallet share of the overall billing by providers to patients as possible with technology. That’s the vision of PayZen.
Peter Renton 17:11
I appreciate that detailed explanation there. Because I’ve seen you guys talked about as sort of a BNPL for healthcare, but that doesn’t really capture it, as you just described there. You really have a lot of different areas. And as you’re talking, I’m struck by the fact that this is, you talked about a data problem. And that’s really what’s behind all of this, you need to have enough data to be able to see what avenue to push people down. So how are you getting this data? And I’d love to sort of get some explanation on the underwriting and maybe what role AI is playing in all of this?
Itzik Cohen 17:45
That’s a very good question. So data was the foundation of how we got started. And in order to get this data, you need to invest quite a lot of engineering work and product development into the integration with providers. And it’s not easy. It’s very complex, you can imagine. Those are very large systems with very sensitive information. So first of all, how do we make it easy for the provider to interact with us and get this integration done? So we needed to make our APIs and our connection to those different EHRs really easy to, and simple, and secure. Pretty large number of EHRs in the United States. There’s Epic, Cerner, there’s MEDITECH, there’s Athena, there’s so many of them. Trying to find a solution that will actually address all of them? Again, that was a really big investment off the bat that PayZen has made. And then today, once we sign up provider, as one of our customers, it takes us two weeks, two weeks and up and running. So it’s almost unheard of in healthcare, to do something so quickly when it comes to getting you up and running. We have a really good playbook. We know what to ask for. We know what systems they’re using already. Our team? I mean, actually, it takes us three days. But we do we use two weeks for testing just to make sure that the data integrity is there. Now, what is the data we’re getting? We’re getting a lot of their, basically data from their billing system, right? So that billing system includes a lot of unique things that you would not see in typical BNPL. Right, essentially, you’ll see not only the out of pocket, but you see procedure code, you see past procedures, future procedures that they’re going to do, the type of insurance they have, the type of job, et cetera, et cetera. Sometimes the person who is the guarantor of the bill is not the patient, right? So you have to kind of understand the roles that people are paying. Sometimes you have a child that’s going through a procedure. Well, the child is the patient, but you as a parent, are the payer, right? So somebody who was paying for the procedure.
Peter Renton 17:46
That’s amazing to me, because medical bills have been such a, people have been doing medical billing for decades, right. And the bureaus don’t know that payment behavior? That’s crazy.
Itzik Cohen 21:19
So we really need to understand what the data means when it comes to affordability. And then of course, you understand a pretty good, you have a pretty good picture of the individual and what they’re going through. But then you need to understand, okay, how do I get financial data, income data, so that I can actually determine someone’s ability to pay the overall liabilities, etc. So you have to enrich that data with more financial attributes. And only then you can kind of apply your predictive models, which are using a lot of AI and machine learning. So a lot of our performance data from our servicing, is feeding our machine back and say, Well, these people need a different term, because they’re struggling with this type of terms and the amount per month, you know, for somebody who was making that type of income a year is too much. So let’s kind of lower the payment to income ratio, and it’s to kind of be adjusted. So, you know, beyond a very successful business with a lot of technology modes, when it comes to the integration, and the solutions we’re building on top of it, by unique data sets of merging clinical and billing data from the EHR system. Plus, the combination of financial data on top of that, is extremely unique. And it’s hard. Essentially, if you go to the bureaus right now, and would ask to buy a retro set of medical payments, you wouldn’t be able to because nobody really reports those things. For a credit card payment or loan payment, providers are not furnishing data to the Bureaus, right. So essentially, we have to build it from scratch, something that we had to really invest a lot of time and money, quite frankly into.
Itzik Cohen 21:47
They only know, and that the CFPB is actually pretty active there now, and we’re very happy that they’re doing that. But the only thing that has been recorded is if you don’t pay, then you get dinged on your credit credit report, as a medical debt or something, but, but your actual payment behavior, and payment record until then, is completely unknown. Nobody is furnishing those on a monthly basis to the bureau. So essentially, somebody needed to build those things from scratch, and I’m glad we invested in that.
Peter Renton 22:19
So that means, like you are now furnishing payment behavior to all your customers?
Itzik Cohen 22:24
No. We’re not furnishing payment behavior to anybody.
Peter Renton 22:27
Are you providing this information back to the bureaus?
Itzik Cohen 22:29
Peter Renton 22:30
Okay, so it’s your proprietary data?
Itzik Cohen 22:32
Peter Renton 22:33
Itzik Cohen 22:34
We think it’s, quite frankly, the heart of the company, when it comes to our ability to really analyze and benefit patients and providers in the best way possible. It’s our own IP that we spent sweat and blood on to create, and we are certainly using it to everybody’s advantage, but we’re not furnishing that data back to anybody else.
Peter Renton 23:01
Interesting, interesting. Okay, so does a provider have to be a certain scale before you’ll kind of get involved? I mean, obviously we’ve got lots of major providers in this country. But there’s also lots of small time doctors offices that are independent, like who you’re working with?
Itzik Cohen 23:17
So we defined our ICP very well, our ideal customer profile, very well. We usually work with very large healthcare providers. The reason for that is, first of all, you’re spending about six to eight months to close an account, there’s a lot more volume coming out of each account if they’re a big. So essentially, if you’re thinking about size, we’re looking at what is their net patient revenue for provider? And that’s how we determine the size of the opportunity. Typically, we work with providers that are about half a billion dollars of net patient revenue, and above. I can tell you that our latest big provider has over $50 billion in revenue, right? So when you think about the potential for us, is a lot bigger because of the size of the provider. Now, we do have providers that are smaller than that. And they actually need it the most. Rural providers, rural hospitals, community hospitals, they’re really struggling. We’re working with them as well. But we’re not really focusing on marketing to those providers right now, because we think, look, right now, we’re growing so fast, we have an opportunity to capture a big portion of the market. It’s a very large market, we think we will have competition down the road. We expect it to happen, so far. I mean, we don’t see anybody who is doing things the way we’re doing it. So we want to capture the big, the big enterprise customers, because we think it’s going to benefit more patients this way. And obviously it’s advantageous to us.
Peter Renton 24:51
So just on that then, you talked about your your quick implementation. I imagine some of these larger companies must have our archaic systems, right, maybe written in COBOL, in the 70s? And how are you? How are you able to kind of integrate so quickly into a variety of different, let’s say, you know, some of which will be very archaic type systems?
Itzik Cohen 25:15
So, you actually, that is a great follow up question to your previous question. Because when you work with large providers, typically, there are no archaic systems, because those providers paid millions of dollars to companies like Epic. And I have to say, Epic did an amazing job of unifying the dataset. And the integration points for us, because it’s pretty much universal when it comes to, you know, one Epic system, you kind of, you’re close to the next right. So if you take Cerner, and Epic, MEDITECH, and Athena, you’re covering 90% of the market, right? So. So essentially, we’re trying not to work with small dentist office and small physician groups, because that could be very archaic, because a lot of those physician groups are kind of roll ups, PE-backed roll ups that are basically buying a bunch of physician groups, and they each have their own system. And it’s a big mess, right? So we think that, you know, getting a big provider up and running in a month or two weeks is much better for everybody than dealing with a smaller provider with smaller potential for us from a volume perspective, and then deal with kind of integration hell, right. So that’s how we were kind of thinking about the problem. But I have to say, I mean, the data structure in EHR in United States took a few amazing steps forward in the last few years and again, Epic/Cerner, we’re leading that, it’s getting much easier.
Peter Renton 26:49
That’s good to hear. Yeah. I want to go back to credit reports for a second, because I’ve seen some news recently that there, there’s thoughts about removing medical bills from credit reports, you said yourself it’s the number one cause of bankruptcy, what are your thoughts on on that particular issue?
Itzik Cohen 27:06
I think it’s a great move by the CFPB. And think, look, I mean, look at the CFPB. And actually now this task force by HHS and the White House with Treasury, regarding the products that are being offered to patients at the point of payment in providers, and what they’re looking at is high interest, credit cards that are being offered.
Itzik Cohen 27:26
You’re looking at retroactive interest, promotional interest periods which become retroactive down the road, a broken system when it comes to, yes, I do have a provider that gives you a patient finance, but you have to go apply at the provider side. So it’s kind of a book, it’s not fully integrated. So you might talk to a financial assistance at a provider and say, oh, yeah, we’re working with so-and-so company, go apply there and then come back to us, kind of thing. So a lot of those issues are creating high pressure potential for the patients, lack of transparency. There, really if you think about it, the patient is in one of the most vulnerable moments of their lives. I mean, they’re trying to pay for health care and they have enough health worries, the last thing you want to add is more stress, financial stress. So make it easy, make it transparent, and make it cheap. Don’t add more cost by getting somebody in financial trouble because you’re trying to pay their bill. Now, back to the question you made about reporting. I think that people got in trouble because they wanted to get paid, that they want to pay their bills, they’re trying to do the right thing. There were no real good payment options other than what providers were willing to give them. So usually, providers were trying to give payment plans to patients, but usually they would give it for up to a year. Right. So it’s as far as the CFO was willing to carry it on their balance sheet, essentially, which is usually a year, in the rare cases it would be a little longer, but you have if you have $3,000 bill, and you have to pay it in 12 months, and you’re making $60k a year or $80k a year. That’s a heavy burden. So people are falling behind.
Peter Renton 27:26
Itzik Cohen 29:07
Essentially, what happens then is that, you know, you make a few payments, you fall behind, you’ve been reported to the bureaus. Or the debt has been sold to a collection agency, which makes your life hell all because you’re trying to pay your bill. Right. So what we’re saying is, look, I mean, some people need 60 months to pay their bill. Let’s apply and underwrite the bill, the payment terms to someone’s ability to pay rather than some kind of a table that you give people. If somebody gets a $2,000 bill, give him a 12 month and somebody gets $1000, give him six months. I mean, it’s not data driven. It’s just based on some random decision. So I think that the CFPB is doing the right thing by removing that hammer on medical debt collections by saying you know what, you’re not going to have that big of a hammer anymore. Do other things to make healthcare affordable rather than harass people with aggressive collections and ruin their credit down the road. And I will tell you that I started the conversation with saying that our thesis was, and still is that most people are decent and try to pay their medical bills and all their obligations. And it’s absolutely correct. Our loss rates are a lot less than what we thought it would be, when it comes to people who are defaulting on their payment plans. And when you think about it, it makes total sense, we get very good positive selection, people who are signing up for payment plans, well, they intend to pay. The other thing they do is they make the first payment that right there, and the people who don’t want to pay don’t make a first payment. So obviously, we have some issues with people who fell behind and they needed some modifications to their payment plans or some kind of a payment holiday, they need to find a job. And we do that, by the way, which is we think this is the right, the right way of dealing with the problem rather than reporting somebody to the bureau and ruin their credit, and then selling the debt to a collection agency or, you know, it’s just not the right way of dealing with the problem.
Peter Renton 31:11
Yeah, yeah. Understood. Okay, so then, last question. You’re obviously, so you’re growing fast. You’ve got you got a lot on your plate right now. They’d love to get you to sit back and give the vision for PayZen. Like, where are you taking this?
Itzik Cohen 31:27
I’d say Ill be completely frank with you. We think we are building multi-billion dollar business, there is no lack of TAM. (laughter & cross talk) There are no other real solutions that I could point out and say, well, they’re really doing something similar to what we’re doing. And I would say one thing, you mentioned one thing that you thought we’re like a BNPL, but actually, you realized that we’re not I mean, what one point to make here, because you were spot on Peter, we think that if you’re a credit card company, it’s a situation where if you’re a hammer, everything looks like a nail, right? So if you are credit card company, and I put you in this situation, guess what, you’re going to offer everybody a credit card. If you’re a lender, and I’m going to put you in a situation, your goal would be to lend more money. I’m in a situation where I’m building an operating system, some of my products carry some kind of a balance sheet and financing component to it. But some of my products have just automated the process and made it more efficient. We’re taking a transaction fee, but there’s no lending involved. So essentially, my goal is to solve the problem. The problems can be solved in many different ways, depending on data and the situation. I don’t want to have a bias towards what solution to deploy at any given situation, the data will dictate the solution rather than my product, which I want to lend more. No, that’s not how we’re thinking about it.
Itzik Cohen 32:48
We’re thinking about it very holistically, solve the affordability problem, whatever that might be. And there’s a lot of different solutions to each problem. So back to where are we taking this? So look, I mean, we’re, we’re gonna turn cashflow positive next year, which is pretty amazing in this environment, considering we started the company in the end of 2019. And as soon as we actually got a proof of concept product ready, COVID hit, so try and sell to medical providers when it’s peak COVID crisis. That was interesting. And then of course, the bubble burst on a lot of tech valuations and some financial services, fintech took a big hit, as you know, better than me, The banking crisis earlier this year, you know, so what I’m trying to say is like, the thing that made us successful is very strong focus and discipline the company, not drinking the Kool Aid on valuations, but actually reach milestones and do funding after so kind of be very disciplined, focus on the problem, reached the milestones, then do funding that is good for everybody. We think we’ll be ready for an IPO in 2026. We are, we have a lot of work to do until then. Some of the things we need to add to the company is kind of widen the bench of the C-suite. We’re looking for a few members that are not there yet. We just hired our chief product officer who was, came out of Affirm, wonderful guy. We’re probably going to do our first securitization next year. You know, we’re gonna have to increase our warehouse. Because, you know, we’re growing fast, like I said, there’s a lot of milestones in the next couple of years. But this kind of business with this TAM, with the business model we have and our financials, definitely seems like an IPO business and I think that’s the direction we’re taking it.
Peter Renton 34:50
Okay, well, best of luck, Itzik, really great to have you on the show. Good to chat with you again. And, you know, as I said, it’s a great mission because it’s a huge problem that affects so many tens of millions of people. So, hope you’re able to make this a massive success.
Itzik Cohen 35:07
Exactly. Our mission is to bring financial health to health care.
Peter Renton 35:10
Sounds great. Okay, thanks. Thanks again.
Itzik Cohen 35:13
Thank you, Peter.
Peter Renton 35:16
Well, I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off. I very much appreciate you listening, and I’ll catch you next time. Bye.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.