Can a business software provider be both vertically and horizontally focused at the same time? SpotOn President R.J. Horsley thinks so.
Based in San Francisco, SpotOn was founded in 2017 and offers payment processing alongside small business management software for small and medium-sized businesses. The company provides specific solutions for individual verticals such as restaurants and salons, but it doesn’t limit itself to those markets, Horsley told PaymentFacilitator.
“We can pick off certain verticals and have the end-to-end solution, but that doesn’t preclude us from being horizontal as well and providing value to a whole bunch of types of businesses,” he said.
According to Horsley, the common element that connects the needs of its business clients across markets is relationship-building. SpotOn offers a review management tool that enables businesses to monitor and react to what’s being said about them online.
“Good, bad or ugly, everyone should know what people are saying about them and be responsive,” he said. “in today’s day and age, you have to be.”
The company also offers a digital marketing platform that enables businesses to communicate with their customers. Horsley describes relationships as the biggest competitive advantage smaller businesses have against their larger competitors.
“When you’re competing against big companies, it’s hard to win on price. Quality is really hard to prove; it’s pretty subjective. But relationship is the piece that big companies can’t replicate,” he said.
According to Horsley, SpotOn’s strategy has developed through the experience of its founders, Matt and Zach Hyman. The pair have been in the payment processing space for 20 years, starting and selling two other payments companies prior to starting SpotOn.
As a result of that experience, they came to realize that small businesses were “starved for technology – especially the technology that’s becoming an ever-increasing advantage for enterprise companies,” Horsley said. So they set out to determine how they could provide value to small businesses that went beyond payment processing.
Both of those previous companies operated as ISOs, so that’s the path the founders chose in creating SpotOn – which recently extended its relationship with TSYS.
“Those are our roots,” said Horsley.
At the time, the company hasn’t eliminated the possibility of pursuing a payment facilitator model down the road. “I think it’s a journey for us,” he said.
Ultimately, the company’s business model has to fit its vision, which is focused on the merchant experience.
“We want to be in control of the payment piece as much as we can rather than having a wrapper around it. Our goal is to own the end-to-end relationship so we can control the experience and provide the value that we say we’re providing.”.
SpotOn’s approach has attracted the attention of investors. In June, the company announced that it had raised $40 million from Franklin Templeton and Dragoneer Investment Group.
“SpotOn’s rapid growth and ability to bring real value to the SMB market has been incredibly impressive,” Chris Anderson, vice president and portfolio manager at Franklin Templeton, said in that announcement.
“Whether you’re a restaurant looking for a cloud-based point-of-sale solution, a salon looking to book appointments through a custom-built website, or an auto repair shop looking for ways to build relationships with customers, SpotOn has developed a variety of powerful solutions for all types of merchants.”
The company plans to use its funding to build out its restaurant business, but also to double its 350-person field sales team and invest in product development.
“The point of raising money is to accelerate,” Horsley said.