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Podcast: ft. Alex Baydin - Staying On Message (and Compliant) at Scale

NetWise Sep 16, 2021 11:54:15 AM
Data-Driven Marketer - Alex Baydin

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Show Notes:

Founder & CEO of PerformLine (The King of Compliance), Alex Baydin, dropped into the data basement this week to chat with Brian and Adam. PerformLine is a pioneer in the regtech industry and is focused on making sure customer facing messages in regulated industries are compliant.
 
Here are some highlights:
  • If consumers are not given proper and accurate information, they may get harmed in process of interacting with a company. PerformLine helps companies ensure their own marketing scripts are compliant and that marketing teams stay on message, on brand, and within legal bounds even as the companies scale into higher volume marketing tactics like social media.
  • Many companies also rely on 3rd party affiliates for their marketing efforts. PerformLine helps surveil these partners to help find potential issues such as brand damage and regulatory actions.
  • The importance of monitoring both rules (regulatory enforcement, lawsuit, fines, etc.) and brand guidelines (consistent with core values, on message). PerformLine can do both.
  • Marketers are not in marketing it to worry about compliance. 80% of PerformLine customers are in the compliance department. But they keep marketing departments out of trouble.
  • "Ignorance is not an excuse." - Alex - When it come to non-compliance with certain regulations, not knowing about the law is not a sufficient excuse. Burying your head in the sand could result in a mess to clean up down the line.
  • Vertical Disintegration - software companies specializing in a single area - print companies that are just APIs is an example.
  • Does one dream of being a compliance expert as a child? No, but as software ate the advertising and marketing business, it becomes clear that there is opportunity in regtech.
  • PerformLine saw the opportunity to build a SaaS product after much interaction with compliance professionals who stated they needed more tools.
  • Software eating something results in business data-driven opportunities. Marketers want analytic dashboards.
  • In the wake of the financial crisis - compliance became a hot space in every sector of consumer finance.
  • The PerformLine COMPLY Conference started as a 1/2 day customer summit and grew to a regtech conference. In its 3rd year, COMPLY was largest regtech conference, becoming a hub for compliance professionals. COMPLY has an active slack channel, job boards, and helps support the community in many other ways.
  • If you find a bunch of people with questions, you can build a community - pulling people together. (Like we're doing here 😊)
  • The robots are NOT coming for your job. Innovation and technology just create new opportunity. Go with it.
  • Regulators, regulated entities and tech service providers are coming together to help solve revolutionary challenges.
  • API connections can help efficiency.

Links

Join the Data-Driven Marketer Discord: https://discord.gg/XtueptFubh
 
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Transcript:

Alex Baydin:

I feel like as a child of the '80s, all the sitcoms, when you first started not hearing a laugh track, it was weird, right?

Adam Kerpelman:

Yeah.

Alex Baydin:

And then you'd get the disclaimer sometimes, "Filmed before a live studio audience." And you're like, "Really?"

Adam Kerpelman:

Right.

Brian Jones:

Yeah.

Adam Kerpelman:

I always assumed-

Brian Jones:

There were signs that flashed too, like, "Laugh now."

Adam Kerpelman:

And then I thought, "Well, I wonder if we..." I mean, now that everybody lives in Zoom, could we get producers for our conference calls to just run a laugh track for us, or whatever?

Brian Jones:

Oh, that's a good idea.

Alex Baydin:

That's a really good idea.

Adam Kerpelman:

Just spice it up a little?

Alex Baydin:

Or through the boss, you can just get a pause sign in your Zoom box, and then [crossstalk 00:00:36].

Adam Kerpelman:

Right. Hey, everybody. It's the data-Driven Marketer sponsored by NetWise. I'm Adam.

Brian Jones:

I'm Brian.

Alex Baydin:

I'm Alex.

Adam Kerpelman:

Welcome back for another hang in the data basement. Thanks for joining us, and special thanks to our guest this week, Alex Baydin, founder and CEO of PerformLine. Yeah, thanks for joining us.

Alex Baydin:

Thanks you. Nice to be here with you guys. I'm looking forward to it.

Adam Kerpelman:

Yeah. So, let's just jump right into it. You want to tell us a little bit about PerformLine and your background, what you guys do and how you got there?

Alex Baydin:

Yeah, absolutely. So, we are pioneers in the RegTech industry, regulatory technology, and we're focused on a problem that a lot of companies have that are in regulated industries, which is making sure that all of their sales and marketing, communications, and really all of their ongoing customer interactions are compliant with rules and regulations around avoiding deception for prospective customers and really truth in advertising type laws. And different industries have a different extent of laws and best practices and regs. We spend a lot of our time in the consumer finance space, which really became a big focus of regulators after the financial crisis through the creation of Dodd-Frank and the creation of the Consumer Financial Protection Bureau.

Alex Baydin:

If you stop and think for a little bit, you find this pattern in a lot of other big industries. Every pharmaceutical ad you've ever seen on television, the majority of that ad is what you call fair balance given to safety information. Don't take this drug if you're pregnant, if these conditions persist, call your doctor, may cause blindness, et cetera, et cetera. But you see it in some technology offerings, you see it in insurance, you see it in legalized gambling, you see it in a lot of different areas where consumers historically, if they're not given proper and accurate information may get harmed in the process of interacting with the company in purchasing their services. So, that's where we come in. And often, we're helping companies ensure that their own marketing and sales scripts and communications are compliant. But in today's world of the data-driven marketer, there is a big reliance on third parties to get your message out there and to help you meet your customer acquisition goals.

Alex Baydin:

So, quite a bit of what we do and what our platform does is surveilling third party partners, whether those are affiliates, call centers, social media influencers, that our customers are working with either directly or indirectly to help find and discover when there's a potential issue there, and to remediate, and to take action before there could be some brand damage, an upset customer, or to the worst extreme, a regulatory action against that company if it's happening repetitively at scale.

Brian Jones:

Very interesting. Here's a really broad question that's on my mind all the time. Does all marketing, does all branding, does all messaging the companies put out have some level of compliance? Are there rules and regulations for what I as an entity, as a business... Or not I, an entity as a business in the United States can and can't do? Or does it only come into play at certain industries, certain business types, certain sizes, stuff like that?

Alex Baydin:

Yeah, I think there's probably some... There's certainly regulators like the FTC that are industry-specific, that have guidelines and rules almost for every advertisement type. And then there's industry-specific regulators. So, like FINRA for broker dealers, or the OCC for banks and FinTechs, that have very industry-specific rules and guidelines that need to be followed. But I'll give you some examples of rules and regs across industries, would be things like GDPR, or recorded disclaimers, letting a consumer know that their call is being recorded. That's not industry specific.

Alex Baydin:

And even if you might be in an industry where the regulations are light, if you're a serious company, you have brand guidelines. And that's the other area where we help our customers, is there's the rules where you could face regulatory enforcement, or class action lawsuit, or an attorney general issue, but then there's like, "Hey, are your partners and even your own employees upholding your brand guidelines when they're talking about your products and services? Are they using the appropriate descriptions? Are they making sure your brand and messaging is not aligned with some sort of message that's not consistent with their core values?"

Brian Jones:

Interesting.

Alex Baydin:

And that's another way that our product and solution is used.

Adam Kerpelman:

I can't remember if it was in the intro or before we started recording at this point, but you mentioned you've been at it for a while in the space. I'm curious, your take or, I guess, maybe this is already represented in the way it describes a product, but media has changed so much just in the last 10 years in terms of, if nothing else, its speed. I imagine social media teams that I oversee, the idea that they would be able to run every tweet past legal is just not realistic, especially if you want to use engagement tactics and things. If you want to be able to take a trending topic and get in the replies and really work some of those growth marketing tactics, I don't have time to run that by legal.

Adam Kerpelman:

And so, you end up with this thing where... Hopefully, what you get out of legal is the willingness to take the tack that, "Well, we can clean it up after..." Worst case, to cease and desist that we clean it up after the fact." But really, it sounds like what you're working with is the place where because that stuff's gotten so fast, now we need... We started using software to talk to one another, and now we have to use software to maintain the level of compliance that any corporate entity would require regarding any sort of outgoing messaging, so you can get on it as quickly as possible if the Wendy's Twitter account is too offensive or whatever, because they're already famous for going after troll tack on Twitter, I guess. But, I guess, I'm curious, your take on that evolution.

Alex Baydin:

Yeah. Yeah. So, first, I'll talk about speed and then I'll talk about... Then I'll answer your question around automation for compliance and why it's happening. So, are either of you guys skiers? Are you guys down on skiers?

Adam Kerpelman:

Yes.

Alex Baydin:

Okay. So, what do you wear in your head now when you ski?

Adam Kerpelman:

A helmet.

Alex Baydin:

A helmet. That's right. If you remember, when helmets first came out, I don't know, 20... they used to just be for racers, and we all used to wear knit hats or whatever. And then helmets became a thing, and it was best practice. And you're like, "All right. Well, this thing is going to keep me safe." But then you realized, "You know what? I'm actually a little bit of a better skier. I'll ski a little faster. I'll point my skis downhill a little more. Maybe I'll ski in the trees more than I used to." And you all of a sudden realized like, not only is this thing a safety tool, but it's actually enhancing my performance, and that's how we think about PerformLine as an application. We're the ski helmet or the seat belt so that marketing can move fast, so that you can try new tactics. You want to try Twitter? Try Twitter. You want to try TikTok? Try TikTok.

Alex Baydin:

And you can do it at the speed you want to do it without having to get slowed down by what in your mind maybe your impression of, "Well, it'll take forever to get a compliance approval on this." Because customer acquisition is what drives businesses, but you got to make sure that you do it in a way where you're mitigating your risk, and you're careful, and you're catching things before they become a problem. So, that's how we think about speed and why we exist. Yes, we're there to mitigate risk and help make the compliance professional's life easier and data-driven and more efficient, but we're really there so that companies can move faster to acquire customers in different channels and test new things.

Adam Kerpelman:

The funny thing about the helmet analogy is that used to be my argument against wearing a helmet when I didn't want to. Mum would be like, "You should really wear a helmet." And I'd be like, "Well, it'll make me more reckless." Then she'd be like, "Okay, fine." And then she watched me run into a tree without one at one point and then was like, "No, you're wearing a helmet now."

Alex Baydin:

You're wearing a helmet.

Adam Kerpelman:

"You're reckless either way."

Alex Baydin:

Yeah. And in terms of that story that you told us about legal, yeah, I think it's some companies and some industries that you're going to play like that. Maybe you should. If you're a small company in a non-regulated space, you got to get traction, you got to get the ball rolling. But if you're a large entity in a regulated space, and either you've been warned by a regulator or you just saw a competitor of yours pay $100 million fine, you're not going to shoot first and ask questions later. You need to have compliant messaging in market to the extent you can control it. And we're there to discover when non-compliant content is out there so it can be remediated quickly. And we do this on five channels: web, contact center, social, messaging, and email.

Alex Baydin:

And then we recently launched our sixth channel, which is proactive compliance monitoring, document review, so that if you are a large customer of ours, like Quicken Loans, and you send out a lot of rocket, I should say, today, you send a lot of direct mail, typically, a company of that size would have a several-week internal SLA review between content creation, review by content controls or compliance, approval to drop that email. Using our technology, we can score an email, or a direct mail, or a PDF, or brochure in almost near real time and tell the marketer, "Hey, this looks great, except you have an outdated interest rate." Or, "This looks great, but the disclaimer needs to be updated for this new fair lending law in the state," without ever having to go to the content controls. And that just means more customers faster in a compliant way.

Adam Kerpelman:

Yeah, I can say, as somebody who's worked with companies of different sizes, it's frustrating a lot of times to get plugged into a system that has that seven-week turnaround on a thing, because it doesn't keep sales or the people above you in the marketing department from demanding the things that they want to have happen really quickly. And then you go like, "I can't put that."

Alex Baydin:

It's illegal.

Adam Kerpelman:

"Again, it's going to take me seven weeks just to get it approved. And then we might make some changes, and then it's another seven weeks," and then it's just definitely difficult. And then-

Alex Baydin:

And so, we're really trying to cut those cycles down.

Brian Jones:

So, is your-

Adam Kerpelman:

Are they one of the customer primarily of the marketing departments that are coming to you? Is that the user?

Alex Baydin:

Initially, it was. When we pivoted... Maybe we can talk about the backstory in a bit when you want to. But when we first became a SaaS business, because we had been working with marketing departments in our previous business, that was the initial customer. But then as we got more and more success and penetration with bigger enterprises that actually had dedicated marketing and compliance teams and folks, those people became our customer. They're actually a better customer for us for a few reasons. One, they are the end user. And I think you don't get into marketing because you want to get keen on compliance. So, as a marketer, you may have to spend a little bit of your time worried about compliance, but it's not your number one priority.

Alex Baydin:

So, having a customer that has a lot of usage in our platform as a SaaS business, that's interested in having proof you can use, and now has a method to build relationships internally with our marketing partner through shared data, that's been helpful for us and really helpful for the compliance department. So, I'd say, now, about 80% of our customers and users are in the compliance department, 20 are still in marketing, and it does depend how the company is set up. And we have a very large credit card issuer client who does credit card online, card acquisition, and they ask their acquisition team to manage their affiliates for not just performance, but for compliance. So, they're using our tool to crawl and score sites like Credit Karma, and NerdWallet, and LendingTree, and making sure that all their card offerings are accurate and up to date and the Schumer box is present, and all that good stuff.

Adam Kerpelman:

Interesting. I hadn't thought about that aspect of like in the world of aggregated information on the many websites that are all relisting things from other sites for the affiliate juice or whatever, that you might end up with misrepresentation on those market places.

Alex Baydin:

Honestly, that was our initial use case because those sites are pretty opaque. So, it's hard to find where your offering is. And listen, most brands don't send something to their partners or put in market if it's violating a regulation or has outdated information. It does happen, and we do have customers that use us to police their own materials. But it's often the third party, and maybe the ad is past hands a couple of times, or maybe the third party is paid a really juicy bounty every time they get an application.

Alex Baydin:

And you've got some clever person in the optimization team who is saying, "Oh, jeez, when I put free next to money, my conversion rate doubles. All right, well, you just violated Truth in Lending Act, mortgage advertising best practices. You just violated 15 UDAAP issues there." But if you're an optimization expert who really isn't thinking about compliance, you just saw your numbers improve. So, using us to find those instances, that's really where the-

Adam Kerpelman:

Interesting.

Alex Baydin:

... wow factor is, I think.

Adam Kerpelman:

So, I wonder, and maybe this is a good bridge into the story of, like you mentioned, the pivot into where you are now. I'm curious if you got... As you introduced the product that you have now and you started to roll it out, I'm curious, did you get resistance from... Like I mentioned, at some point, I worked in legal tech, which then overlaps with RegTech for a while. And we used to get a lot of pushback that we knew was coming from our internal competition at the companies. It's like legal trying to poke holes in the product that we're offering because they don't want to lose their jobs to software. It's always a paranoia, I think, for any professional, I guess, these days, but-

Alex Baydin:

So, yeah, I think we're past that and the bus has left the station. Most of the first conversations we have, it's a scale issue. "I can't keep up with the amount of presence," or, "We just doubled our contact center. We went from 100 loan officers to 300 loan officers. Random sampling of calls isn't cutting it anymore." Or they're looking at the ROI story and they're like, "All right. I've two people monitoring my affiliates. I now have 200 aggregators that all have thousands of URLs under them." Where we did get some resistance was when we first brought the SaaS offering to market and this was 10 years ago. We started in the online education space because there was three things happening back then in online education, really large ad spend.

Alex Baydin:

So, at the time, three of Google's top 10 largest advertisers were University of Phoenix, Kaplan University, and the EDMC school network like Art Institute and South University. That's one circle. The second circle that intersects with that is mounting compliance pressure. So, the Department of Education was cracking down on for-profit schools for deceptive marketing like, "Hey, get your degree in one year and earn $100,000 as a prep cook." Your culinary degree online or what have you. And they were threatening to pull title for funding from some of the schools. So, that was the lifeblood.

Alex Baydin:

And then the third circle that intersected was a lot of reliance on third party lead aggregators that were pretty opaque to the advertiser. So, those are either call centers that were live-transferring leads, or affiliates, or what have you. So, when we went to that market, some of the early pushback we got was, are we better off not knowing? If you guys produce findings and proof that our partners are deceiving students, then all of a sudden, we're responsible for that and we can get in trouble. So, it was like ostrich defense, but that quickly changed. That space got shaken up, though. A lot of those schools, no longer around.

Alex Baydin:

The ones that were committed to compliance and cleaning up some of the bad practices of the past survived in some form or another. Some became not-for-profits, others merged with traditional school systems, and some just did the right thing and survived. But when we moved into the consumer finance vertical, we got none of that. And that's why we're like, "Oh, this is where we need to be." We got, "We have budget for surveillance tools. Here's the team that's going to use it. We have 5 million customers. We have their best interests at heart. We need to make sure that they know what they're signing up for." So, it just felt a little different. It was about bringing technology into that side of the enterprise where it was really manual prior to us getting there.

Brian Jones:

That's interesting.

Adam Kerpelman:

They also deal with regulatory bodies that will levy fines after the fact regardless of plausible deniability, so they're not going to try-

Alex Baydin:

Well, they all did, just some of those guys wanted to believe if they didn't know they were safe.

Adam Kerpelman:

Right.

Brian Jones:

Yeah.

Alex Baydin:

So, we had a lot of webinars about, with lawyers, like ignorance is not an excuse. You're still going to be... You're still going to get in trouble.

Adam Kerpelman:

Right.

Brian Jones:

Totally. You're in a really interesting position, and the way you pitched the value prop of your business at the beginning, which I really liked how you did that, the ski helmet and how it enables you to be more flexible, more nimble, and more aggressive with your business, it's really making sense here as I see what you enable because at a bigger picture level, you enable a whole new model for businesses. In business, there's a lot of talk about vertical integration, like buying up the steps so you can like control what's going on. But what I see in parallel to that, something that's new in the world, is vertical disintegration, where companies are specializing in a single little area.

Brian Jones:

For instance, the thing that's coming to mind for me right now is print companies that are just APIs, where everyone else now prints through them via a software interface and they're not doing a lot of other stuff, and so enabling all these other layers of ways to go to market. All these layers of software companies are scraping offerings and reprocessing them in affiliate programs, and there's so much innovation available there. But it also removes you one, two, three, four, maybe many layers from how your business operates and what your brand looks like. And so, you in this space are really not only allowing a company to comply better and to leverage tools they're using, but you're enabling whole new levels of innovation for business from a data and software perspective that we can't do without it. It's gotten too unwieldy. It feels like already. So, we need something like this to really take it to the next level.

Alex Baydin:

Yeah, that's a really insightful observation about our story and what we're doing, and we hope that's the case. That's our mission and we hope our customers do feel that they can try more things without fear of significant slowdowns to make that happen. But there's a balance. A couple of high profile FinTechs got in trouble last year for doing some things like offering free checking without the proper licenses, or hacking like a bank without being licensed like a bank, and if there's a lot going on in FinTech. So, you can move really quick, but there are some times where you need to slow down a little bit and get your ducks in a row.

Adam Kerpelman:

Well, I think it's one of those things that... The emergent need for the solution makes sense in the space that we talk about so often on the podcast, which is just how every time you add a new layer of abstraction to your ability to do whatever, even if that layer of abstraction, like you said, is on a company level, all we do is print things. That just stuff comes in, and we print it, and we put it in the mail, and that's it. But still you added that layer of abstraction which creates complexity further back up the chain, right?

Alex Baydin:

Right. Right.

Adam Kerpelman:

So, we are so far past the level of complexity that you can keep in human brains anymore.

Alex Baydin:

Yeah. Yeah.

Adam Kerpelman:

That if we don't have the software solutions, we can't-

Alex Baydin:

We can't do it. Yeah.

Adam Kerpelman:

We get a scale problem. You can't put enough bodies in a room to-

Alex Baydin:

That's right.

Adam Kerpelman:

... solve a problem anymore because it's-

Alex Baydin:

That's right.

Adam Kerpelman:

... a million requests a day or whatever.

Alex Baydin:

Right. Right.

Adam Kerpelman:

So, yeah, I guess, to the question of the story and the pivot and how you ended up here, maybe that's a good segue right there. Because, I guess, what signals did you say that caused you to say, "Okay. This is where this is going and so we should do this instead"?

Alex Baydin:

Yeah. And it definitely was a pivot. I can't say as a small child I dreamed of being a compliance expert. That was never something I gave a lot of thought to. But what happened was, my entrepreneurial journey started in launching a media business, and it was a ad network. So, it was a performance-based ad network. And we had quite a few clients in regulated industries, whether it was finance, insurance, or education, and we knew that a lot of the networks we were competing with were blind networks, meaning our customers would buy leads and clicks from us and pay us a performance bounty or goal for that clicker lead as they would, our competitors.

Alex Baydin:

But the standard deal in that industry was that the networks were going to stay blind to the advertiser, meaning they weren't going to reveal where their traffic came from. And there was, I guess, a fear of being disintermediated by the advertiser that, "Hey, if we tell you that we're bidding on these keyword terms, or that we have these bloggers in our network or these emailers, you'll just go direct and cut us out, and why would you need us?" And I always question that. Does it a Fortune 1,000 company or Fortune 100 company really want to curate 20 mom bloggers? Don't they have other bigger things to be worrying about? So, what we decided was to do the opposite of that and be as transparent as possible.

Alex Baydin:

And with every click we sold or lead we sold, we wrote some JavaScript that would capture a screenshot of the referring URL so we could show to the advertiser where that traffic came from. And the idea was that you can clearly see that this is compliant traffic. This wasn't somebody filling out a form to win a free iPhone, this is somebody filling out a form because they're interested in refinancing their house. Or this traffic came from a click on an organic listing on a blog about better tax strategies. So, TurboTax. This is a high intense person here. And what happened was, we started to get feedback on both the quality of the traffic, but more so on the report itself, and our customers was like, "Hey, can you help me figure this out when I buy it from QuinStreet, or AOL, or Yahoo's performance network?"

Alex Baydin:

And that's when the lights started to go off that, gosh, maybe there's a way to turn this into a software business. And then we started learning about SaaS and like, wow, this seems like a better business model. We can keep the customers happy. We just have a base that we can add to and grow, and the multiples are obviously much better than media. That's why you see SaaS multiples that are valued on future revenue or future growth whereas in traditional media, it's really based on what did you do last year? What were your numbers last year? So, we'd like that. And then we discovered that the compliance department, so the marketers maybe would say, "Hey, can I get these reports?" And then we would dig in and we'd be like, "Why do you want them?" And they'd say, "Oh, I've got compliance breathing down my neck."

Alex Baydin:

Or, "We just got a letter from the CFPB about some non-compliant marketing. It's one of our partners, we can't figure it out who." And I'd say, "Well, who are you working with this internally?" And they'd say, "the chief compliance officer." The director of market compliance. So, then I got to talk to those folks and I realized that they were really hungry for some automation that as a class, they were either trying to get technical resources internally to build something, which never really works that well, or they were doing it manually and adding bodies. And traditionally, that's not a group that gets huge budgets. So, we saw a Greenfield opportunity to build product for that buyer persona that could solve this problem.

Adam Kerpelman:

The part of that I love, we keep hearing it over and over as we talk to people in the data-driven context like this, is just that when media and everything like that... When software starts to eat that media space, the data-driven thing is... Yeah, to be able to think of everything in a data-driven way is critical if you want to excel in this space, ultimately. But it just happens. This fundamental shift happens and then suddenly, your customer is asking you for data. Even if it's just followers on Twitter, or retweets, or whatever, they don't think of that as data, but you immediately start getting metric-based feedback as soon as software eats something, almost like that's just part of how technology thinks of the world, if you want to think about a philosophical technology as an entity. The data signal back and then enabling data-driven decisions is just part of what happens when software eats a thing.

Adam Kerpelman:

So, increasingly, we're talking to people who saw that and then went, "Oh, there's the business opportunity here." But then that opportunity also turns into... And then people wanted analytics dashboards. And we didn't think we'd be producing analytics dashboards, but they wanted them. So, here we are. And it turns into a feedback cycle of data-driven growth, ideally, least data-driven mentality, hopefully, toward growth, if you hang around and listen to us. Yeah. So, how then did that grow into the summit and everything?

Alex Baydin:

The conference?

Adam Kerpelman:

Yeah. At what point did that turn into a community situation?

Alex Baydin:

Yeah. Well, we saw some things when we first started talking to that group at the enterprise. And then we spend a lot of time with our customers. In a pre-COVID world, we were seeing existing customer, no less than four times a year for on-site quarterly business reviews. And often, we'd see them more than that. So, we just had a lot of opportunities to get to know these folks, and we heard that they were keen to share our best practices and to hear what other people were doing. You don't think of compliance like a fast-moving space. But in the wake of the financial crisis, in the formation of the CFPB, it was like a whole new world. Under the Obama administration, and Richard Cordray is the director of the CFPB, they were active. They ran that regulator almost like a tech startup. I mean, they were trying new things all the time. They hired like mad and they were everywhere, in every sector of consumer finance.

Alex Baydin:

And so, practitioners are really hungry to connect with one another and share their best practices. So, we started a customer summit, I don't know, eight, nine years ago, and it was really small. Initially, it was half a day and we were in a small room at the Standard Hotel in New York. And then the second year, we started seeing these other kind of events, mostly in Europe, called RegTech conferences. And that was the first time we'd maybe heard the expression and we were like, "RegTech, what's that?" "Regulatory technology." "Oh, that's us. That's what we're doing." And we saw all these kind of companies, like an ecosystem, forming around RegTech. PwC needed a perspective on RegTech, Deloitte needed a perspective on RegTech, big technology companies like IBM and Salesforce needed a perspective on RegTech.

Alex Baydin:

And then there was investors and incubators starting to support this idea to bring technology, ML, and AI, and other technologies, into these compliance concerns because there was thousands and thousands of pages of regulations that needed to be adhered to and it seemed like a really good problem to apply technology to to get scale. And we said, "Wow, we're..." Not only are we RegTech, but we were probably one of the main pioneers here in the US. And when I think about the clients we have, we've got some size to us compared to some of these other companies that are making some noise. So, why don't we just turn our customer conference into the compliance summit? And then quickly, the third year was like the largest us RegTech conference. And we put our own spin on it. As you can imagine, I don't know if you've ever been to a compliance conference.

Alex Baydin:

But as you can imagine, historically, and for the most part, they don't sound too exciting. But none of us had a deep compliance background. We were marketing tech folks, and ad tech, and media people, and we'd been to inbound, that HubSpot throws, and we'd been to Dreamforce. So, we're like, "Well, people need to be inspired. They need to have fun. Yes, they need to learn some things and network, but this needs to be memorable." So, we went crazy. We had drum line bands come in, we had break dancers. We got really creative keynote speakers that you wouldn't think would make sense at a RegTech conference, that made perfect sense. Frank Abagnale-

Adam Kerpelman:

Very cool.

Alex Baydin:

... the guy from Catch Me If You Can, Commander David Baird ran the Pacific fleet for the US Navy about aircraft carriers and talking about risk and saving lives. And he gave this great presentation about, he would show a video of him in the cockpit and walk everybody through in real time with his voiceover about what it's like to land on an aircraft carrier. And the first one was during the day and it was amazing. And he's like, "Look. And if you like adrenaline like we all do, you would do this all day long." He's like, "Now, I'm going to show you the scariest thing that I have to do and I've done it over 1000 times, what it's like landing at night."

Adam Kerpelman:

Wow.

Alex Baydin:

And then he had the video at night and all you see are these two little dim flashlights. He's like, "That's an 18-year-old kid who's maybe had X amount of months of training, and you entrust him your life that those flashlights are pointing in the right direction." Because they don't light up the aircraft carrier at night for obvious reasons. And just talking about risk and how mitigating risks saves lives. And he just started to build and what we realized was comply became the hub for this community of compliance professionals where it didn't really exist. And that's spun out a couple of really cool things. We have a really active Slack channel for our community, we help people in the community finding jobs in compliance, we help companies find talent. And we've just helped support the community and in turn, they've helped support us.

Adam Kerpelman:

I mean, you started by talking about the different blank tech monitors, the pop up, you get RegTech, MarTech, legal tech, whatever. Software is eating everything. So, everything gets that tech thing at the end. And then it's funny because there's a period where we call it MarTech, or RegTech, or whatever, and then eventually we stop. Because that's just how you do business. And you're just back to calling it the compliance department instead of this weird sort of tech thing. But there's that in-between space where... Listening to your story really brings to mind for me, the extent to which if you find a whole bunch of people with questions, that's the place where the answer becomes a community play from a growth standpoint, because that's a whole group of people that are all literally wandering in the hall going, "I don't know. I don't know.

Adam Kerpelman:

"I don't have an answer. Do you have an answer? I don't know. What do we..." And that's what you can bring to pull people together, and then the conference gets built around that idea of the community and pulling all those people together. And the fact that you can rattle off so many conferences, it's what we should point to every time someone says that the robots are coming for your jobs, or that software is coming for your jobs, to call back to what you're saying before.

Alex Baydin:

Yeah.

Adam Kerpelman:

No, every time software eats a new layer, there's just more people with more questions who go to work to try to find answers to those questions. It's the perfect articulation of the extent to which it just grows new prosperity every time software comes for [crosstalk 00:37:46].

Alex Baydin:

And really, I was thinking about your point about, are people worried that our app would take jobs away? And it's like, where has that happened? I mean, most of the leading software applications are there to help make people more efficient and better at their job, not to replace them. And one of my favorite meetings, we were in a meeting with a very large bank in New York, and I was there with my head of sales, and we had a tough buyer, a buyer who liked to play stump the chump. And she said, "So, how many of my people am I going to get to... Are you telling me I'm going to get to fire my staff if I use PerformLine?"

Alex Baydin:

And then my head of sales looked at her and he said, "What do you guys use for marketing automation?" And she said, "Oh, we use Marketo." And he says, "How many people did you let go after your onboarded Marketo?" She said, "None." And he goes, "It's the same thing. It's like, why did you buy Marketo? Your people needed a tool to do the X, Y, and Z and it's made them better. And they're better at tracking their goals and they're efficient. That's just how you need to think about us." I was really proud of him that day.

Brian Jones:

That's great.

Adam Kerpelman:

I like the calm tone like, "There you go. Don't worry about it."

Brian Jones:

So, you mentioned another aspect of all of this that's a level above just any one business or any one industry, the idea of... I think you were talking about the CFPB and how it was being run like a startup. It was being really efficient, it was making a lot of changes, that media was like, "Wait, you don't want that from regulation because now it takes a lot of work to be compliant, and then it messes up your market and your business strategy as regulations change." But we need it to be that way. Things are getting so complicated. The world is changing, technology is changing, business is innovating.

Brian Jones:

So, not only does a product like yours enable the customers to be more innovative, but you enable regulations to innovate quicker. So, how do you see this evolving in partnership? They're allowing regulatory bodies to catch up. That's such a common social and political complaint, "Oh, regulation is making that awful." And often, that is true. The regulations are limiting whatever your industry is from innovating. Are you going to be able to help feed that? Is software like yours going to be able to make regulations more efficient so that businesses can even magnify their efficiencies and more?

Alex Baydin:

We have seen over the last couple of years, regulators reaching out quite a bit to technology companies and hosting things like hackathons. The FCA in the UK has been very good at this, and the CFPB as well. And they're saying already how the rate of change is so rapid. I cannot expect my regulated entities to have the same set of disclosures on a Facebook ad as they have in a three-page brochure. Things have changed.

Alex Baydin:

So, by understanding the technologies that are out there, like PerformLine, and really understanding how FinTechs in this example, how they're changing the game on customer acquisition, I can understand, how should I rewrite the regs on disclosures that are practical and efficient? So, there has been a lot more communication and partnership between both the regulated entity, the regulator, and the technology service provider, to help solve the evolutionary challenges of digital marketing and whatever else is next.

Brian Jones:

Yeah, I see a really interesting future. I've never thought about it in this space, but Adam and I talk a lot about finance and how it can be disrupted as money becomes digitized. And so, that has implications for like tax code. We talk about it as tax code, but it's still just paper that I have to read through. If it were an API layer, my accounting software could automatically do everything. And similar Lee with compliance, we're to a point where we see the software coming together. It's making the sandwich right now and the people are still in there having to read things and digest things, but it sounds like your company provides the digestion of what the regulations are and then automated software that informs, are you meeting them? And there's a point where the regulating bodies can have their software APIs, you can have your software APIs, and the business can just operate and things will be taken care of.

Alex Baydin:

Yeah, and that's just my company. There are a lot of really interesting companies doing some form of that. So, there's Assent, does a really nice job of creating APIs around regulatory change. So, if you're in a particular industry and there's some rule that's changing, you can get a feed of that, or you have an API connection into their database. So, you don't have to read the 90-page guidance from the FTC on a particular rule. And a fiscal note, out of DC, they're doing some really cool work around policy, change of policy discussion. So, they help synthesize what's happening at the policy level. So, there's a lot going on there. There's a lot of really cool companies working on helping to make that much more digestible via technology.

Adam Kerpelman:

We're out of time, but you managed to end-

Alex Baydin:

Whoa. That was fast.

Adam Kerpelman:

You managed to end right on the point that I literally wrote hundreds of pages of things about in law school, about how software needs to eat the law next, so you don't... So, the way to read the law you're trying to comply with isn't that you download a 300-page PDF from a crunchy, old government website. It's ridiculous that we're still passing around pictures of pieces of paper.

Alex Baydin:

It's changing. It's changing.

Adam Kerpelman:

That's exciting. Anyway, thanks for joining us. This was awesome.

Alex Baydin:

Yeah. That was great. I wish we had more time. I'd love to come back and join you guys if you need, if you think it would interesting.

Adam Kerpelman:

Yeah, I was going to say, I'd love to have you back.

Alex Baydin:

Cool.

Brian Jones:

Super interesting what you guys are doing. Really cool business.

Alex Baydin:

Thanks.

Adam Kerpelman:

Thanks to everybody for listening to another one. This has been The Data-Driven Marketer sponsored by NetWise. I'm Adam.

Brian Jones:

I'm Brian.

Alex Baydin:

I'm Alex. Thank you.

Brian Jones:

Take it easy, everybody.