Welcome to the Use Case Podcast, episode 264. Today we’ll be talking to Ansel from Finch about the use case or business case for why his customers choose Finch.
Finch allows you to securely access your customers’ census, payroll and benefits data across 170+ HRIS and payroll systems with a single integration.
Give the show a listen and please let me know what you think. Thanks, William.
Show length: 21 minutes
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Welcome to RecruitingDaily’s Use Case Podcast, a show dedicated to the storytelling that happens, or should happen, when practitioners purchase technology. Each episode is designed to inspire new ways and ideas to make your business better, as we speak with the brightest minds in recruitment and HR tech. That’s what we do. Here’s your host, William Tincup.
William Tincup (00:26):
Let’s just jump in. This is William Tincup, and you are listening to the Use Case Podcast. Today, we have Ansel on from Finch, and we’ll be learning about the business case or the use case for why his prospects and customers pick Finch. So let’s just jump right into it. Ansel, would you do us a favor and introduce both yourself and Finch?
Ansel Parikh (00:45):
Yeah. And thanks for having me here, William. I’m really excited to talk about Finch with you and share some of the exciting and interesting things that we’ve discovered in our journey. So I’m Ansel Parikh, one of the co-founders of Finch and COO. Really focused on a lot of our fun partnerships, go-to-market, but also the wonderful world of compliance and some of the operations side of things.
And so what Finch is, is we’re an API platform for employment data. And what that means is that we let applications like a 401K provider, benefits, compensation plan products be able to securely and easily connect to their end client’s organization-wide employment data. And so a lot of this information’s locked up in payroll systems, HR systems, benefit, things like that.
William Tincup (01:38):
And so right now, do we have a focus in terms of market or verticals or anything like that, size of the company?
Ansel Parikh (01:46):
Yeah, most definitely. So we focus three main areas, and I’ll give you a quick picture there. But what we do and maybe just to make sure we iterate it, we sell, it’s a B2B2E employers model. So we’re not necessarily directly selling to employers themselves, but we’ll sell to the trusted applications that they use that they want to talk to their source of truth.
And so three main verticals, if I had to break them down. I can go into more details, but give you at least a sense or a pictures. The first one is HR tech, so that’s employee engagement, recognition platforms. Your, what you see at term or what you see at HR tech as well. And then the second vertical is really specifically, benefits. We do split this out differently because it is a complicated but exciting world.
And so we are really working with 401K providers, HSA, there’s even new companies that do climate related benefits. It’s actually a pretty wild ecosystem and we see a lot of opportunity there. And then the final one is more B2B FinTech companies. And so this could be a workers compensation insurance company or a business expense management company that needs to utilize different layers of data from employment systems to underwrite policies or even automate a specific workflow that usually requires a bunch of Excel file uploads.
So definitely a wide footprint. Overall, there’s 28 discreet use cases, but I’m happy to do one or two that are actually maybe a little more important.
William Tincup (03:27):
Let’s do that. But first of all, let me ask you about your origin story. Why did you and your partners, why did y’all start Finch?
Ansel Parikh (03:34):
I wish I could say we were born for this-
William Tincup (03:38):
“When I was 16, I had this idea…”
Ansel Parikh (03:41):
Yeah, I definitely saw the value of payroll and HR system. But I mean, I think like most people you talk to, it’s pretty non-linear. I was in venture capital for a bunch of years before this and invested in infrastructure, but ultimately started our own thing. And so this is probably the fifth thing that Jeremy, my co-founder and CEO, have built together. But maybe to the long-short of it is we were, right before COVID started, we’d been building something more in lending infrastructure.
Really allowing a company to offer a lending product within their own [inaudible 00:04:15]. Pretty esoteric, pretty specific. You probably seen some trends here of, “These guys get into very strange, gnarly problems.” But unfortunately, pandemic hit and every lending partner we had, every potential customer said, “Hold on, I’m not doing anything right now. I don’t even know if I can make the next payroll.”
So we had a really unique lender come to us and said, “Hey, I lend to small businesses and the government has this new program called the Paycheck Protection Program.” And this is literally aimed at, “How do I make sure that companies don’t have to lay off people right away?” They can get a non-recourse loan from a lender, but that the government effectively gives you to keep people employed.
And we thought that was pretty fascinating, unique, once in a lifetime thing for us to see. And so they were like, “Hey, we need payroll data to figure out how much we can lend to someone.” And naturally, as young entrepreneurs that don’t know how to say no, we were like, “Yeah, totally. We’ll solve that problem for sure.” Little did we know it’s much more complicated [inaudible 00:05:22]. And we started-
William Tincup (05:24):
And some of these systems don’t talk to each other.
Ansel Parikh (05:27):
Yeah, exactly. And you’re like, “We need to do a SFTP, or someone needs to send us an Excel file, and we got manually reformat it.” So I think it was just a, that was a lynch point. We ultimately didn’t move fast enough to even solve for that problem. But it got us thinking and iterating towards some sort of solution that could be utilized not just for a limited government program, but actually something much broader that helps, at the end of the day, employers choose the applications and software that actually they need for their own business.
William Tincup (06:01):
So I hate software categories. I’ll just put in my biases out on the table. I despise them because things like, you’d defy a category singular. But we also know that people, they have budgets. That you, at one point, fall in some expel spreadsheet and you’re a line item somewhere for finance or HR or ops, or all the above. What do you classify yourself as? And maybe even, how do your customers classify you?
Ansel Parikh (06:35):
It’s a good question. That’s all the software teams are always trying to figure out, “How do I create a new line item?” And so I think for us, and I think it’s pretty unique in that we are, and it’s a way you position yourself… But for us, our buyer is say it’s you’ve got a big 401K provider, and I choose that because that’s one that’s a power user of us.
They have maybe a product manager that handles the, “Hey, when a new company signs up, I want to make sure their onboarding experience is super easy. I don’t want them to have to go and give me an Excel file every week. I want them to be able to click a button and sync their data with me.” And so what’s interesting or valuable about that is there’s two pieces of the, call it value equation of where the budget comes from.
One is for them, they can go, “This helps me get implementation times faster. I can onboard someone way faster.” And so for them, they view this as a almost sales enablement tool, which is pretty interesting. Not something we expected when we first started.
William Tincup (07:37):
I love that.
Ansel Parikh (07:41):
I think the more concrete one is the, “We’re going to save your engineers months and months of work.” And if there’s one thing that every company we talk to is short on, it’s literally engineers like time and effort. And so for them, I think especially building these integrations, even if you’re an engineer, it’s just not exciting work.
We have a bunch of weirdly passionate people that like doing that, but I could tell you most people don’t. And so they really view it as a opportunity cost for engineering to work on something that is important to that end employer, that HR admin that wants to go, “I want to have more offerings of different plans,” or, “I want to make sure that I can automate my employees that are eligible for this benefit to jump on immediately.
I don’t necessarily want to spend 14 hours a month syncing data with your system. You need to get the latest and greatest information.”
William Tincup (08:39):
So one of the pains in integrations, at least historically, has been that you have some platforms that are closed, or for whatever reason they’re not documented or their APIs are just weak. And again, some of it might just be it’s because it’s older technology. What have you run into, especially as it relates to some of the HR tech applications that you’ve been interacting with? What’s shocking to you and what is giving you hope? And you don’t have to name names, I don’t already care about that.
It’s just the API world is such a really interesting world that the practitioners don’t really know much about and don’t care. They just want it to work. They just want it to work. And it used to be, historically it would be one vendor would look at another vendor go, “Are you going to pay for it? Are you going to pay for it? Are you going to pay for it?” I think we’re past some of that-ish, but I want to get your just take on just HR and the integrations of these different disparate systems.
Ansel Parikh (09:52):
Yeah. No, I think there’s two pieces or key pieces of friction. I think there’s one component, and this is our goal right now, is how do we bifurcate these two pieces so that you can create the right incentives. And so maybe the first piece that’s challenging is that, and again, not all the providers… ADP’s figured this out and they make lots of money on it, is that they said, “We’re going to make a marketplace so that anyone that wants to integrate with us has to go through a marketplace process.”
And effectively any employer that they have, they have over a million employers that they service in the world… any of them that find that application, that marketplace, like Apple, the application then pays a nice chunk of rev share to them. But ADP gets a lot of money and that application can access a larger group of end customers. And so the problem with some of those is that that process, just getting on, going through all the hoops, especially for a large organization, it can take six months to a year.
And so that by itself is a, “Wait, I got to do this for every single system in the best case scenario?” That’s painful. But then the second component is the technical part, and that’s where we’re really focusing. Is, even if you can get through that whole process in a week, [inaudible 00:11:13] go out and build an integration with that specific system. And they always have these unique incompatibilities across systems.
The minute you decide to go, “I’m going to do this all in-house,” you got to figure out some sort of normalized way to patch all the different ways that some people call a start date and they call it something else in a different system. There’s so many weird inconsistencies. I think for us, we were like-
William Tincup (11:40):
One would say a lack of standards.
Ansel Parikh (11:42):
Yes. Oddly, I’m on the board of HR Open Standards, an organization that’s been around for years. And it is still, we talk about it every month and we’re like, “Oh my goodness, there’s a standard for benefits data. There’s one for insurance data.” You’re like, “There is?” “There is.”
William Tincup (12:01):
There’s a reason we have an Android charger and an iPhone charger.
Ansel Parikh (12:04):
William Tincup (12:06):
At one point, you’d like to think that the two of them come together and go, “Let’s just build this other one and just make it universal.” Not as easy as that, especially with some of the larger companies. I think the smaller, maybe even the newer companies would probably be up for that. But the older, more established players in the industry are probably set in their ways.
Ansel Parikh (12:28):
And the incentive isn’t there.
William Tincup (12:29):
That’s right. That’s a good point.
Ansel Parikh (12:33):
And you need the end employers. We have to eventually get the HR people to go, “We all need you all to work together on this because otherwise we’re not going to pick using anyone that doesn’t use a standard.” And that takes a lot of cultivation and really understanding what is the priorities for that HR person at the end level going, “This is how I should be spending my time.”
And so it’ll take time to get there. It’s a lot of education and not everyone even knows how to spell API. So that’s a whole different transition. But it’s one that we see. We are pretty hopeful. We are definitely surprised at how much the conversation has changed over the last, call it four to five years around just the openness of data and understanding the leverage points there.
I think half the providers are, the payroll systems, HR system that we talk to, they’re like, “We’re actually reevaluating our entire data strategy. We’d love to find a way to do this with you.” And so I think there’s definitely a light at the end of the tunnel, the tunnel might just be a bit longer than we’d hope. But that’s a-
William Tincup (13:41):
Yeah. There’s a light. It could be a train, but there’s a light.
Ansel Parikh (13:46):
The train of innovation, hopefully.
William Tincup (13:48):
It’s a train of innovation. We’re going to be run over by a train of innovation. So one of the things I wanted to ask you about is when folks talk about native integrations versus things that do one-to-many like Zapier or other applications like that, or MuleSoft or something like that, how do you again… For the practitioners that are listening, both HR and TA, they might not know as much about APIs.
They know about data and data needs to flow fluidly between application and application, from sourcing all the way across to out placement. It doesn’t always work that way of course, but they know it should work that way. But I don’t think if I were to quiz most practitioners and say, “What’s a native integration? What does that look like for you?”
They probably have no idea what that is. So what’s your take when you look at the market on native integrations with different systems, like Workday or Ceridian or ADP or whatever, versus using someone that’s already built libraries and they’ve already built the connection points?
Ansel Parikh (15:00):
That’s a good question, and this is a thing that we think about a lot, so it’s actually very on point. I think if you’re going to do a native integrations, usually the reasoning why we see a lot of companies that maybe go down that road is if they need a really specific set of data that’s maybe not accessible to even all systems. Maybe a good example is if you’re a performance management system like Lattice.
For them, it’d be great to have census data and some, “Who works where?” But they want to get very granular. So anything that you put into that system that may include how much is this person’s bonus target? Do you have custom fields that say this is their OKRs? There’s a bunch of extra places you can toss data into these systems. And it depends on the employer, it depends on the system.
And so if you’re really trying to go, “I need to capture every single edge case and I’m going to make my own system super configurable because the experience is going to be very different for every single employer,” that’s where you need to go native. Because you probably even need to go to the provider and say, “You don’t actually allow access to this data. I need you to build that for my use case.”
And frankly, obviously as the middle man, have some of that power, but that takes some time. Whereas if you’re going, “I need to get people’s T-shirt sizes. I need to get all this extra stuff and I need to maybe make changes into those systems.” So maybe sensitive changes like, “I need to change someone’s compensation.” That shouldn’t necessarily be something you should be doing through a middle man because if there’s an error, that impacts someones life.
William Tincup (16:47):
Oh, yeah. So you can mess up a lot of things in HR, succession planning, performance, onboarding. You can mess up. I mean it’s just wildly accepted that you can mess up almost every… Paychecks? No.
Ansel Parikh (17:04):
William Tincup (17:05):
Can’t mess up a paycheck, not even once. There’s a tenseness to that. Let me ask you about the buy side for a second. Questions that the practitioners and/or prospects, what should they be asking you at Finch?
Ansel Parikh (17:27):
I think one of the things they should ask more, and we have been asking but it’s one of those things that’s pretty counterintuitive, is based off of my customer base or where I’m… maybe I’m targeting specific sector, industry, geography, how many systems do I need to actually integrate with?
William Tincup (17:46):
That’s a great question.
Ansel Parikh (17:49):
We did a full white paper on this just because I wanted to know personally, and I was astounded. There’s 5,700 different payroll and HR systems in the US. I have no idea why.
William Tincup (18:01):
Yeah. No, it doesn’t shock me. Actually I would, prior to COVID, I obviously spent a lot of time on the speaking tour and I would ask people from the stage, I’m like, “How many HR products or HR and recruiting products do you think there are in the world?” And people would answer different answers. They’re like, “I have a Google spreadsheet that has 32,000 HR and recruiting products in the world.” And that’s little things from a wellness play or a wellness app in Portugal to Oracle or something like that. Combine all the oceans, and that’s what you get. You have that many choices, which is great and also terrifying for the practitioners.
Ansel Parikh (18:50):
I mean it’s overwhelming, right?
William Tincup (18:51):
It is overwhelming.
Ansel Parikh (18:52):
The entire industry’s built around just helping you pick the right tools because it’s impossible to know. And so I think maybe that’s the number one, is just people don’t realize them until they start working with us and they’re like, “Whoa, I need 40 integrations.” And I’m like, “Yeah.” This is actually, it’s the long tail. It’s pretty wild in that I think the top 10 only cover around 55% of the US employers.
And then you have companies you’ve never heard of, like Big Fish Payroll, which actually got acquired by iSolved. But there’s just this huge, huge long tail. So I think that’s number one. And maybe the second one is we’re just understanding where does this fit into my product? Where should I be surfacing the request to sync data that will make the person gain the most trust in me and want to do that? The first thing you do, you can’t necessarily ask for, “I need your sensitive data.” That’s really awkward.
William Tincup (19:55):
“How old are you and how much do you weigh?” “What?”
Ansel Parikh (19:57):
Yeah, exactly. And so I think you need to be really thoughtful about when do you ask for this so that there’s highest likelihood that someone’s going to do it, but also that you’re creating that seamless steps of trust. Because that’s ultimately, that’s really what we’re selling. We’re not selling, sure it’s data infrastructure, all these buzzwords but at the end of the day, it’s trust. Can we create a system that is more secure and compliant, but that allows someone to feel comfortable going, “I’m okay sharing specific sets of information with someone that I trust that can use it to take my life better.”
William Tincup (20:34):
What’s interesting is HR and recruiting both want to make more data-driven decisions throughout the organization, pretty much everywhere. But ironically, they don’t trust their data. Or maybe not ironically, maybe with good reason. We’ll put that aside for another podcast. But it’s really interesting when I talk to folks about this. I’m like, “Well in recruiting, we need to make more data-driven decisions about this,” about whatever the bit is.
And it’s like, “But I don’t trust our ATS.” It’s like, “Well, you realize what you’ve just said, right? You understand you need to make more of these types of decisions, yet you don’t trust the data.” And I know you deal with this. I know on some level I know you interact with this, that they realize the importance of all these things being connected and how it will inform them in ways that we probably can’t even connect the dots yet. But they also don’t trust the data, just the historical data that they have.
Ansel Parikh (21:45):
Yeah. I have stories of companies that have, “We put this data. It doesn’t look right.” And then we’ll go back to the employer and say, “Did you accidentally mislabel this?” And they’re like, “Yeah, we totally did.” And we’re like, “Oh, shoot. If we filed this, this would be a fee from the IRS. We got to make sure this is right.” And so there’s definitely some components of that. I do think what’s exciting, I know that we only have a few minutes, but it’s that because we’re more trying to be the data layer, what’s cool is we’re starting to see platforms built on top of us that do compensation management to help expand and things like that.
And so I think what is happening and what will happen over the next couple years, the way you improve that trust is you layer something on top that speaks the language of that HR person. That [inaudible 00:22:36] goes, “Here’s really what retention means, and I know what you’re trying to get out of this in terms of activity.” And I think that’s the thing. Is right now, if you have just a bunch of data scientists cranking through this stuff, they’re going to present and they might be right.
But if you put it in a way that it’s just a dashboard of numbers, there’s no action attached to it or recommendations, I wouldn’t trust that either. Because I’m like, “All right, what does this all mean?” I need context. And I think that’s the next wave that will be [inaudible 00:23:08] and that’s going to be exciting because then we can start to treat entire organizations as groups of individuals. And you can start to really understand down to the team level, down to the manager level, what are the levers to make a better workforce and make people more aligned.
William Tincup (23:26):
“Ansel drops mic, walks off stage.” Thank you so much. Love the work that you’re doing. I love what Finch is doing. And just thank you for the time.
Ansel Parikh (23:36):
No, I appreciate you having me and letting me just brag about the team and the fun stuff that we do in this weird esoteric world.
William Tincup (23:43):
Well if you’re not doing it, who is doing it? So thank you for doing it, and thanks for being on the podcast.
Ansel Parikh (23:51):
And thank you so much, William.
William Tincup (23:51):
Ansel Parikh (23:51):
Have a good day.
William Tincup (23:54):
All right. You too. And thanks for everyone listening to the Use Case Podcast. Until next time.
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William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.