Ambrook CEO Mackenzie Burnett on American agriculture, rural resilience, and carrying 50lbs of fresh pork on Amtrak

We decided actually early on not to give away free money. So that was a... Controversial in startup land. And I think it actually was controversial at the time. And we grew slower in the beginning because of it. We ended up butchering the pig at the end and we took home that meat. It was like 50 pounds that we carried on the Amtrak. You're the person that people love to have sitting next to them on Amtrak. 90 % of payments in U .S.

agriculture still go through paper check. And it's not because they're behind the times. is because digital payments can be expensive for a lot of these producers.

What are things that people should buy directly from farmers as opposed to in the supermarket?

You can just call up a local farmer and most likely they'll figure out a way to sell you half a cow. How long did it take you to pour a perfect pint?

I'm not sure I would claim these are particularly perfect.

Better than the first couple episodes.

Yeah, for sure. Not that I want to blame the keg, but it was all the kegs. Mackenzie Burnett is the CEO and co-founder of Ambrook. Ambrook provides financial tools for farms to help them stay independent and build better businesses. Cheers. Cheers. I just want to start with Ambrook. Many people who are not in farming will not know what Ambrook is. Tell us the Ambrook product story and how you got here.

Yeah. Yeah, so Ambrook, we build financial management software for farms, ranches, and increasingly other, I would say, industrial mom-and-pop shops. So these are more complex businesses, typically family-run in the U .S. What financial management software means is it's accounting software, payments, and banking. A lot of that is built on Stripe's infrastructure and is, I think, made a lot more possible to be able to bundle a lot of that. I think you had sort of the bundling, the great unbundling, and now you have the great rebundling that has been enabled by a lot of embedded infrastructure tools.

But that is what we build. The broad mission is how do you help American family businesses become more profitable and more resilient? and resiliency is both economically and environmentally resilient. And we had started by trying to help a lot of farms access working capital during the pandemic. And then we pretty quickly realized that while we could help them with these one-off pandemic relief programs, which are actually designed to be extremely simple to apply for and simple to get the money, even then a lot of businesses were struggling to get those checks.

we found that trying to help them with the more routine working capital, whether through public or private lenders and grant givers, it was just basically people didn't have, a lot of these businesses didn't actually have the financial record keeping that you needed to. And it wasn't because they were behind on technology necessarily. It's because their businesses have a level of complexity that you would see, if it was a startup, it would have a CFO. Yes. That was a big unlock in realizing that a lot of, you know, when we were asking, oh, you actually do have all these tools that, you know, are, you know, built for a lot of these S &B sort of accounting software, and they still

weren't able to put together their balance. They couldn't produce a balance sheet, which you need for a loan.

Okay, so farms are very complex businesses. You started off helping them with COVID stimulus, essentially. and then as part of that you realize that just it's very hard to understand the farmer's finances

which got you into financial tooling. Yeah exactly and we spent the first year and a half just trying to access the problem. I think that's what I talked to the team about. It's like your first job as a founder is to get access to the problem and sometimes people get it right pretty quickly and sometimes it takes a little bit to get access to the right problem. So the first thing was just get access to the problem, talking to like hundreds of farmers and the whole ecosystem around them.

So we would talk to a bunch of ag lenders and we're like, well, how do you do it? And they're like, we drive to the farm. And we like put together the balance sheet.

And see what? They're like, yep. A lot of fences.

So they drive to the farm and they sit down in the kitchen table and they actually put together their balance sheet with the producer.

I see. So as an ag lender, you have to actually get in there and help them understand the

finances. Yeah, exactly. So I think that, and that's, I would say that's more typical than not. There's actually a level of complexity here for farms and a lot of these types of like, I would say resource intensive businesses where you're dealing with like locations, inventory, right, loans, right? So you're dealing with a balance sheet heaviness of it. And it's what we call multi-PNL. So you have multiple business lines, multiple pinout payment methods, right? But even like the rise of the pandemic, for example, I think increased, kind of accelerated the complexity of all these businesses because suddenly you could actually have an online shop.

Totally. Yeah, yeah. We bought a lot of Snake River Farms steak during a pandemic. It was really good.

Exactly. Yeah, no, exactly. And I think, and that is a nightmare to bookkeep for.

Yes, yes. Because individual transactions, it's not just like one supplier.

You have to reconcile it against like what actually hits your bank account. And so, yes, it's great. All these tools have accelerated businesses' ability to do business, but it's also increased the complexity of business. And a lot of these businesses, because they're so low margin and have tons of pressures on both sides and both input suppliers and the marketing side of things that are squeezing margins for a lot of these small businesses, they have to diversify in order to be able to – it's smart business to diversify, but it also makes it a much more complicated business to actually figure out where are you making and losing money.

Okay, so I have so many questions. I want to ask questions about your business. And Ember, I also want to ask questions about the general direction of agriculture in the U .S. But maybe let's start with, what segment of the market are you addressing?

Can you guess how many farms in the U .S. make more than 5 million a year in annual sales? There's 2 million farms in the U .S., so that's 1 .8 million.

How many make more than 5 million a year in annual sales? 10 ,000.

Yeah, so it's about 10 ,000. Yeah. Yeah, which is an extreme power law. Right. So 10 ,000 out of like 1 .8 million means that the majority of commercial farmers are doing somewhere south of that. And so they have a level of complexity that might be sort of like the $15 million business, but they are at 500K. Yeah. Okay.

So you're mostly targeting farms that do up to 5 million.

So we started there and now we're starting to work with farms that are larger. Right. But if you just go out and market a product to farms, you are going to get the majority of producers that are in that range between the $250K a year to about $5 million.

And does the product work for everyone? Almond farms in California and dairy farmers and the huge crop farms in the Midwest. Is there any kind of particular segment?

No, yeah, totally. We actually deliberately started pretty broad. It's unusual if you think of us as ag tech software. It's not unusual if you think of us as just financial management software. Yeah, yeah.

QuickBooks is not specific to anyone in this world. Exactly.

And we were pretty deliberate in the beginning to make sure that we were working with some ranchers, some row croppers, some more diversified veggie producers to make sure that we weren't accidentally building something for just one vertical of that. And actually, I think the thing that was a really happy accident that was an example of the customers pulling us into a much broader TAM or part of the market was our second customer was a cattle feeder operation in Arizona.

And we drove, this is when our first 10 customers we onboarded by hand. So it was a big deal when we moved to like video onboarding. But no, it was like, and they're about two hours outside of a regional airport. So we drove there and we kind of got them onboarded. And they were like, great, really happy to be onboarded. Now can you help us with our other four entities? And by the way, none of them are farms.

And so you had a trucking entity. You had like a custom service entity, which actually just looks like sort of consulting or invoice heavy business. And so we immediately realized that in order to well-serve agriculture, we actually had to serve and think about a lot of these other industries, which now, right, is enabling us to expand to a lot of these adjacent or other just other types of industries. But in the beginning, we kind of realized that we had built something that could help, you know, a husband and wife couple be able to handle a five entity business.

Like, you know, that's, as you know, pretty complicated. Yeah.

Like for an ERP system, multi-subsidory support is like a pretty advanced feature for something like a NetSuite. And what you're saying is you need that even for, you know, quite small.

Right now we're going, I would say, the main competitive software that folks are switching from us is Intuit software. Eventually that will be something more like a NetSuite. Yes. Right? But I think the thing that we actually realized was that there wasn't something in between. Right. We are building for those businesses that have effectively outgrown QuickBooks. Yes. But don't have the teams or resources to onboard to like a Sage or a NetSuite. Yeah. Are there farms that use NetSuite?

There are farms that use NetSuite. Right, yeah, they're in the north of the 5 million range. That's a big farm, yeah, yeah. It's a big farm. It's when you have teams of people who can afford to implement and then maintain. Right, that type of software.

But that's really getting into kind of agribusiness type.

Yeah, exactly. And so they tend to be much more vertically integrated, right? They'll have a processor component or something like that. You know, you kind of realize that actually I think to go against something like an ERP, because you can't go, you know, it's a huge feature floor. Yeah. If you talk to most of those businesses, even the really complex ones that are using something like an ERP are only using 10 % of the features. And so the game becomes like, what is the 10 %?

And what can you pull down for a different audience type? I think one of the key differentiators we decided to build toward, I think correctly, just in the beginning was instead of building for the financial professional, we built for the business owner.

Yes. When you think about it, it's kind of funny that ERPs became so horizontal because, you know, for context for people, ERP is enterprise resource planning software, which doesn't really tell you anything. But my understanding, tell me if you think this characterization is correct, is it is a combination of financial software where it's the three financial statements and a huge amount of automation around the stuff needed to produce those financial statements. And so if you think about it, if you run a factory, to be able to produce the balance sheet, you have a bunch of inventory.

But to be able to know what should be in that inventory line in the balance sheet, you actually have to know how many widgets you have sitting in bins in the facility in Cleveland. And so it becomes this like all singing, all dancing, multi-tentacled system with very complex implementations and everything like that. And I'd say really grew up in a manufacturing paradigm. And yet, you know, Stripe has an ERP system and lots of regular companies have ERP systems.

And so it feels like it'd be much better suited for them to be vertically specific where there should be farming ERP and there should be manufacturing ERP, which is what's more the traditional design center.

And I think that is what, I think the modularity is what hasn't actually been brought to the S &B level. It does exist at this much larger enterprise level. Yes. And I think, you know, I do think that as software becomes easier to build and that's not just from AI, but it's also from a lot of the embedded infrastructure. There's tons of reasons why it is much easier to build the version of what we're building today than it would have been 20 years ago.

Even cross-platform, like a choice that we made really early on was to build on React Native, which immediately just gives you, it means that we don't, like we have not had actually a full-time mobile engineer on the team because everyone has just learned React Native and you immediately get a cross-platform.

And I presume you have a huge amount of mobile usage because people are talking about it all day.

Yes, actually, so about a third of our customers use exclusively mobile to do all of their bookkeeping and accounting, which is insane for the level of complexity that they're dealing with.

Totally, yeah, yeah. And for doing accounting, it's like that's a laptop kind of activity.

No, totally, totally. And so I think very early on, we built for the type of person who was not necessarily financially, didn't have a lot of financial professional training, who was spending more time in the field than in the office, right? He was dealing with a level of complexity that typically these ERPs were better suited for. And we kind of brought all that into a package that was affordable and accessible. And we also do a ton of like financial literacy training and education.

And we wrap a lot of what would otherwise be like a custom journal entry in these types of workflows, right? It's sort of, exactly. It's like, you can really think of like an ERP or like what, you know, sort of the system is like, get the data in, do something with the data, get the data out. and then get the data in. It's kind of a thankless task. Exactly. Those are all the workflows. Yeah.

And so you rock up to a farm, you're off in Visalia or somewhere, and you are visiting a farm, and they're on QuickBooks or they're on Sage or maybe not Sage, something, and you say you shouldn't be using your existing system. You should instead switch to Ambrook. What is the wow feature? What gets people to switch? What's the point in the demo where they're like, okay, I'm in?

Yeah, totally. So there's a couple of things. There are like, you know, what's in the software? And then there's the advantages we have of just being a startup that can care harder, you know, in the beginning, like you can just care hard about everything. But a couple of the core things that we have built differently, the first is that when you look at the software, it just looks cleaner. It doesn't sound like that's a 10x feature, but it is, we solved a thousand tiny paper cuts so that when someone looks and interacts with Ambrook for the first time, it's a little bit of a breath of relief.

The second thing is that we enable a type of like multi-dimensionality in the software. So QuickBooks has a concept like called classes. We enable essentially a type of multiple tagging system and splitting of every transactions in a way that you can slice and dice your data without having to kick that out to a spreadsheet. and you can do it in your own language. And so we kind of help folks kind of set up, okay, like this is my cattle enterprise, this is my hay enterprise, it's in their own language.

And it's very clean in the interface of how to do that. So again, it's the get the data in. We made a lot simpler and cleaner, but they're actually doing quite complex analysis actually when they're doing that type of work. And the last thing is actually mobile. It's like the number of conversations that we had with producers who would describe an actual shoebox receipts that they would take at the end of the year to their accountant.

and that was their financial management system. We built a lot cleaner workflows around receipts, around paper, basically. Receipts, checks, those types of things so that you can take photos of things, categorize them immediately. We use that. That is actually one place that we're using that folks are really using a lot of like AI features to do a lot of that type of matching and categorization of those things. But those are sort of like the breath of fresh air when you first see the software and then it's these, what it enables you to do.

It's like the simple, you know, the simple but powerful workflows.

What's an example of a kind of analysis that someone might not do on their farm but for this software?

Understanding your cost per acre is extremely challenging to get to in something like a QuickBooks. And so there's a reason why there's a whole category of startups that are funded to do FP &A on top of QuickBooks. You don't have to do that with Ambrook. It's built in. And the reason why those startups exist is because QuickBooks did not actually have the underlying data architecture in a specific way that we chose to do native in the beginning.

And so we can do way more complex unit economic analysis and those types of things in Ambrook. And I think essentially without requiring someone to have financial professional training.

Okay, so I'm running a farm and there's 100 acres for sale across the road. The decision as to whether I should buy that 100 acres really depends on what is my cost per acre right now. So I know what is the outlay until that becomes productive. But I can't work that out unless I know my existing cost per acre. Totally. Which I probably don't know.

Yeah, yeah. So I think, yeah, that's exactly right. And it's can you put together your balance sheet and stuff in time in a professional way so that you can convince your lender, your banker, to be able to give you a loan to buy the 100 acres across the road.

Got it. Okay, so this better accounting is a significant reason people are coming to the product today. What are the other reasons that people come for the product or maybe will come to the product in the future?

I kind of think about startups as you have pre-distribution opportunities and post-distribution opportunities. and the pre-distribution opportunities are what can you do to convince enough nodes to join your network and the post-distribution opportunities are what you can do when you have enough nodes. Ambrook is just now crossing over in some regions because we have enough regional density with some of these nodes to get into a post-distribution world for some of our customers.

But I think in that world of you have enough nodes in the network, it should be instant and free to transact within the Ambrook ecosystem And I think a lot of what we are doing or the vision is to be able to keep more capital in local communities. And I think that has been something that I've become increasingly passionate about, which is, you know, for example, like 90% of payments in U .S. agriculture still go through paper check.

And it's not because they're behind the times. It's because digital payments can be expensive for a lot of these producers. and I think actually something that we're building with because of the Stripe Treasury Network is the ability to do these instant free payments within the deposit sort of ecosystem. And ideally, and those are when they're within sort of the ERP system, they're also, they have the context in both sides of the ERP. So you don't, my invoice is your bill.

You don't have to actually do the ARAP shuffle, right? Everything is like reconciled in both sides, right? You have like, in the future, we could say, okay, this category in your system actually maps to this sort of chart of accounts category in this system, right? Like, you can imagine a lot. What could you do when you actually have like really rich metadata that's going through the network?

No, we think about this distinction a lot. I think it's very good for startups of, yeah, predistribution versus post-distribution. How do you get people using the product and then how do you make it better when you're using the product? And when we started Stripe, we were very much building Stripe in a single-player mode where, you know, you have your Stripe account and the fact that other people use Stripe is, well, they didn't at the time, you know, when you were small.

Whereas now, a big part of how we can make the products better is the fact that there is so much internet commerce running on Stripe. I mean, a very simple one, but it's really started working as Stripe Radar, where just it is now the case that most credit cards on the internet we've seen before. Yeah, yeah, totally. And so we kind of know it's suspicious if a credit card comes to us from a totally new device and totally new IP address and things like that.

Yeah. But that's the kind of post-distribution thing where you can't build that product initially, but when you have enough scale, it becomes very significant.

I think one of the most rewarding things about building for small businesses is that you are able to build these real relationships with people who are entrusting you with their numbers and their future? And what can we do when we are translating just not just in the individual context of the single-player world, but the multiplayer world as communities? And I've been thinking a lot about that, which is, what does rural resilience mean? What does economic

resilience mean for a lot of people? What does rural resilience mean? Where I think there's a general view that the economics of U .S. agriculture are really hard and it's challenged from a labor point of view. There's all the different challenges. And so maybe you can talk about the landscape and yeah, that rural resilience. I think rural flight, you know, which is I think the opposite

of rural resilience, which is what you're seeing in a lot of places. You're just seeing a brain drain from a lot of rural communities around the world does impact local communities. But I think the thing that is usually under under discussed is how it impacts national or like global communities as well but when it comes to rural resilience what i mean is when you have when you have like nodes of family businesses that um that uh can sustain like multiple generations of of passing down the business for example or people want to stay in local communities basically um And I think that is something that we're really interested in.

And we have seen worked well for some of our customers. They're actually able to make the succession planning work, right? They're able to build a business that can be passed down through multiple generations.

As in, you think we need to be more serious about preserving farming as working as an important part of the U .S. economy?

Yeah, absolutely. I think sometimes the free market optimizes for too small of a unit. And if we instead optimized for a community unit, for example, how would that change the way that we made decisions? And that community unit, I think, actually is what sustains local economies through time. if you are just optimizing for like the very short term sort of like turnaround, which makes total sense actually for like an individual to say, okay, that this is my only sort of retirement is to sell to this developer, right?

And I think that's a world that I would love to be able to build more business resilience so that they don't have to feel like that's their only option.

You're saying farming produces positive externalities. Like if, you know, the cartoon villain private equity, you know, So the slush and burn costs and make the products worse and raise prices, if that's at the full negative externalities end of the spectrum, farming is much more at the positive externalities.

Yeah, I think there's a lot of positive externalities for it that are under-accounted for.

How do you make a medium-sized farm work in the United States? Pick your favorite example, whether it be crops or dairy or beef or what have you. What is required to make, because again, it's a hard business, what's required to make it work?

So I'll take a cattle ranch, for example. For a cattle ranch, I think, to work in the U .S., you have a couple of things. One, it's a lot of farming are these boom-bust cycles, right? So they are subject to commodity markets. They're also subject to input prices, inflation, those types of things. And so you do see this boom-bust cycle throughout the economy. So one, there has to be a resilience and ability to weather that.

That's one piece. I think the second piece is to get access to the inputs perspective. So you can think of inputs as like access to grazing land, access to feed, right? Access to a lot of these other things.

A lot of ranchers ranch on BLM land, right? Yeah, totally. Government leases, which helps get access to the amount of land you need.

Exactly. For context, like ranching requires quite a lot of land. And there's a way to do it in a way that is actually better for grasslands management.

Why is it better for grasslands? Oh, it's fire management?

Yeah, so it can be. There is such a thing as overgrazing, right? But I think a lot of what people talk about with rotational grazing, it's called rotational grazing, just a lot of labor to move the cattle every day to be able to do that. But it actually does build back up the soil in a way where the cattle graze and then they poop and then the poop becomes better soil and you sort of can move throughout.

And there's a lot of interesting virtual fencing to be able to make that easier. But there is a way in which good, healthy livestock management also creates healthier soils. And it is possible. It just is technically you have to be trained and understand how to do it. And there are some capital barriers or labor barriers to be able to do that. So there is access to the type of capital that would incentivize and sort of like create the incentives to be able to make that possible.

And then you have like on the other side access to markets. Historically, if you're just sort of doing wholesale, right, you're going to get wholesale prices. This is where you see the rise of G2C really help. And when you're able to have access to higher margin markets, so a lot of online payments actually has helped that a ton. It just is also you need to be able to manage your books in a way that can actually make that easier to manage.

What I'm talking about is diversification. And whenever you introduce diversification, you also introduce complexity or in-risk.

Can any farm do D2C? I would have thought maybe it requires some minimum scale to make sense or just reasonably labor-intensive, the packing and shipping of individual shipments to individual customers.

There's actually a whole spectrum of different ways in which you can make it work. You can do it all yourself, but there's also a lot of like co-ops basically in which you can kind of share infrastructure. It just requires a shift in incentive structures, infrastructure, those types of things. And so it requires, and that sometimes can require a lot of public investment.

What are things that people should buy directly from farmers as opposed to in the supermarket? Like there's some things that travel pretty well. Beer travels pretty well actually. And so you don't need to brew your own beer for quality purposes. You may want to just because it's fun. I was surprised. I thought the steak in the supermarket, I assumed, would be pretty good. I would say meat. We have local supermarkets. But yeah, the direct-to-consumer meat was really good.

Veggies as well. Yeah, totally. I think the local stuff will be better than the long supply chain stuff.

I think you'd be surprised. You can just call up a local farmer and most likely they'll figure out a way to sell you half a cow.

Well, to find an easy online payment solution.

Yeah, exactly. No, I think actually the biggest thing people don't really think about is like freezer storage or something.

Yeah, half cow is quite bigger than people expect.

Yeah. And it's like, that feeds like a full family for a while. Actually, there's a lot of things you can buy direct.

But what should you buy direct?

I think meat is a big one that makes way more economic sense to buy direct if you just are willing to like...

Not just economic sense, gastronomic sense. No, totally.

No, it's so much better too. Something I did with my team that one of my teammates found and suggested, which was really awesome, was... Have you ever been to a traditional pig harvest?

I have helped butcher a pig once. That was quite an experience. Okay, yes. But yeah, I think we didn't see all the steps.

So yeah, we saw all the steps. And so that was a really interesting experience of participating in that. Then we ended up butchering the pig at the end and we took home that meat. It was like 50 pounds that we carried on the Amtrak. You're the person that people love to have sitting next to them on Amtrak. That was awesome. It was by far the best pork I've ever had.

Annoyance level one is people playing music without headphones on their phone. Annoyance level eight is carrying half a pig.

Yeah, yeah. No, that farm I went to is a customer now. So it was, yeah. It worked. It worked, yeah.

Yeah, yeah, yeah. Okay, so direct to consumer is a big thing. But sorry, I'm trying to rewind to where we were. We were talking about, oh yeah, the economics of farming in this teenage. Labor seems really hard.

Yes, labor is especially hard right now. But it's hard for a couple of reasons. I think there's a lot of immigration-related issues that a lot of folks are kind of facing right now. But the second actually—

Sorry, and that is tightening of immigration, meaning less labor?

Yeah, so tightening of immigration means that you have less labor. Because a lot of farms rely on seasonal labor. Farms and processing facilities, actually, which people don't think about, which is if you can't sell your product for a lot of livestock, for example, then— And that was the issue in the pandemic, too, because a lot of processing facilities shut down, right? But the other side is actually skilled labor. It's not just seasonal labor, but it's particularly skilled labor has been harder and harder to get, even before the pandemic.

As a real example of some of these kind of specialties.

I think it's just, it's actually quite a lot of skill in knowing how to, like, pick a crop without bruising it, for example, at the speeds that you need. Or, for example, like animal husbandry or a lot of these other types of skills that, again, this goes back to, like, how do we make it so that there isn't so much like rural brain drain and rural flight like a lot of a lot of the labor you know the people who might otherwise be doing that might not actually want to live or work in those areas even if they're not you know sort of seasonal immigrants from

policy perspective if you were in charge if you were running I don't know USDA both your parents worked for USDA yeah what would you be waving your magic wand to do oh interesting I think

One of them is outside the USDA, one of them is within the USDA. I'm really interested in a lot of the stuff that's happening with open banking regulations because I think actually the cost to a lot of what we're seeing or doing is the lack of accounting software is just an attempt. All we are doing is trying to get external data sources in and make them all make sense. What we were talking about with the metadata and all that before, there's so much information that could actually be really helpful for our customers that is not being shared or is really expensive and difficult to get.

And so that is something that I am super interested in, how things are developing there.

So you're saying concretely that in many countries, it is mandated that banks provide structured access to financial data for their customers because they say it's the customer's own data. Banks have to give it on request and in API formats and things like this. It's actually a very live topic in the US, right? now and there's lots of debates over this rule 1033 and things like this but you're saying it'd be very useful for ambrook to have some open banking mandates where you guys can reliably

get data in a sensible format yeah it's not just used for ambrook it's useful i mean for our customers like that is ultimately who we're trying to serve yeah it's their data it's their data and so and all we're trying to do is get the data from someone else yeah and give it back to them actually which is kind of a crazy thing that we have to fight for that but yeah no i think that would be that is something that if I could wave a magic wand honestly I think that would actually help um more than people think and I know that you asked the question about the USDA but I actually think that that would be that's your

top that would be my top yeah um but I think on the USDA side there's a lot of hoops that people have to go through in order to be able to um get access to like funding or programs that might be useful for the type of incentive structure alignment that I was talking through and I think a simplification of a lot of that which I think a lot of people

want but we have our thumb to scale but we could at least do it in a more efficient way yeah yeah would you tweak farm subsidies up or down

to be honest like i think farm subsidies are so sticky that what i would do instead of tweaking up and down is i would just be extremely deliberate yeah about when we choose to introduce a farm subsidy like what are we doing and and if this was still around 100 years from now? Would we be okay with it? When you're designing these incentive structures, there's whole livelihoods and politics that are built around them and they last.

And they're going to be sticky. And they're going to be extremely sticky. So it's more like, be careful what you wish for, is I think actually the response I have to that. Yeah.

Ambrook is a window into one of the most underappreciated stories in the internet economy, vertical SaaS. As Max is explaining, the finances of a modern farm, their complex and generic accounting software just doesn't work. So Ambrook is building SaaS from the ground up to solve deep industry-specific problems that generic tools can't solve, like crop-specific profitability or specialized agricultural lending. And Stripe, then, is the platform for these platforms. Stripe powers tens of thousands of these, from Ambrook for farming to MindBody for gyms.

And collectively, those platforms power millions of small businesses. The best vertical SaaS platforms become an all-around system of record for their customers. They offer payments and loans and spend management and subscriptions and invoicing and tax automation reporting, all of which you can get from Stripe. There's now 95 platforms on Stripe with more than $1 billion in GMV. So if you're building that indispensable system of record for your industry, come talk to us straight. Are carbon credits a big revenue line for a lot of your customers?

They're not the biggest revenue line.

No, but it's a relevant revenue line for a lot of your customers. Yeah. You get into forestry stuff or a lot of land management.

So for many of our customers, they do participate in carbon credit programs, but it's not as many as you might think. It still is a relatively small part of U .S. agriculture, despite, I think, them being kind of really big in the public sort of consciousness. Carbon payments are on very long time frames, and they require you to maintain the same behavior over about a 10-year period. Otherwise, you get clawback provisions. And so actually, I think it kind of locks you into a plan when you might actually want to be kind of adaptive or versatile in that.

And I think actually went to a sustainability and ag conference last year. And something that one of the producers there said really struck me, which was, you know, it's not enough to have a 1x payback. You have to prove that these programs can have a 3 to 4x payback. Otherwise, like, why would they do it? they should just do something else that is going to be able to better improve their bottom line. And I think that that just goes back to a lot of our thesis, which is this idea of like pragmatic environmentalism.

Like you just cannot, you are not going to see the level of change that you might want to see or need unless it makes sense for the bottom line.

Climate is a very politically charged topic in the US. You studied climate security at Stanford. Most of your customers are in red states or the red part of blue states, such as in California. But I also think that people's views on these topics tend to be pretty nuanced. I bet San Franciscans couldn't effectively steelman the views of your customers on such climate topics. So what do your customers think on climate topics?

It's a great question. Our customers think a bunch of different things. So I wouldn't be able to summarize with just one statement, though I will say that one of my favorite articles that Off Range, which is our editorial independent media publication published, was an article titled, Where Soil is Holy, But Climate is Seldom Mentioned. and I think that it's kind of like talking about climate sometimes feels like talking about politics or money and yet these producers that that this article talks about and a lot of the producers that we work with or just around the U .S.

are actually doing the type of things that you would put under like a climate umbrella yeah um just not branding it as such it's just not branding it as such and I think a lot of actually what I've learned from our customers is that a lot of people want the same things. They just aren't talking about it in a way that might feel familiar to someone who grew up in, you know, around like San Francisco, for example.

We're talking a lot here

about the insights into business that Ambrook allows. One of my favorite books about accounting is The End of Accounting, which talks about how Gap is basically poorly suited to this day and age. One of the things it points out is that accounting is trying to do many jobs, right? Like if you're an equity holder, it's trying to help you figure out what the future returns on your equity might be. If you're a debt holder, it's helping you figure out will you lose all your money or will you get paid back.

If you're the IRS, it's helping you figure out how much taxes this business owes. And then there's kind of management accounting, which is helping you understand, like you're saying, the kind of P &L view of hay or, you know, the dairy side of the operation or something like that. And so it's kind of helping management make better decisions. But in particular, people tend to have a view that there is this God-given truth of just, you know, what the business is.

Whereas in fact, accounting is a tool for a job. And the job you might want to do with accounting actually really varies. And so I'm curious how you think about that, where which are the jobs that you want to help firms do? Like are you helping them pay their taxes? Is it all about making different decisions? And yeah, just that idea that accounting is a bit overloaded these days. Yeah, totally.

Actually, I think the way that we talk about it internally is there's four types of accounting. The first layer is just cash. You know, it's sort of like if you did a snapshot, like what was happening? And actually most many businesses in the U .S. file cash basis. The second layer, which I think which a lot of like startups are kind of subjected to because they just like they meet the threshold requirement for this is filing accrual, which is we suddenly introduced the idea of time into accounting.

So the idea of accounts receivable, accounts payable, ARIP, et cetera. The next layer is enterprise accounting, which is, you know, that idea of like your entire business line, basically. So hay, cattle, you know, et cetera. And then the final layer is managerial accounting, which is truly like unit economics. It's like, what is my cost per acre? How much should it cost me for a dairy to produce a pound of milk? Like that type of accounting. And the way that we think about it is we have customers who come in at every layer.

And I think actually the beauty of building accounting software is that it can scale. Like, yes, Gap might be sort of overloaded, but at least it is standardized and it scales. And so we have folks who come in who are coming off of actual pen and paper and a shoebox of receipts who are interested in adopting software for the first time to do their accounting, to just get tax prep to be done easier or maybe go from cash to accrual.

And then we have folks who are at sort of the, they're at the, you know, the cruel or the enterprise layer who are interested in actually getting to the unit economic analysis. I mean, I've seen, so dairies are extremely complicated businesses. They're like a, they're like a cow-calf operation, which is your typical cattle ranch. And then some, they're like a very complex cow-calf. And I've seen dairies hire ex-bankers to get to that level of the managerial analysis.

Yes, yes. And I think that that is what we are building for Ambrook is we have customers who are able to get to all four layers of accounting because of the way that we just like architected the data structure in the beginning and the way that we are trying to wrap and de-jargon, you know, a lot of the complexities of doing your books correctly.

You want to walk people up the inside curve. Yes. And take wherever they're currently operating and just make it easy for them to reach the next level.

And it's okay. We consider customers to be successful in Ambrook if they just hop one level up.

Yeah, that makes sense. People might think you of as a software business, but I got a sense that you identify in a significant way as a fintech business. Is that a fair characterization? And maybe you can expand on that.

Yeah, for sure. I typically think of fintech businesses in two different ways. The first way is just are you sort of facilitating payments? And so there's a sense of like, are you in the payments flow? The second way that folks typically talk about fintech businesses is like, do you hold deposits? Do you lend basically deposits and lending? Maybe also cards, I think would be part of that. And so for us, we actually, from the very beginning, saw them as inseparable.

Like we were just interested in solving our customers' problems. And in order to be able to get more accurate data into the ERP, like being in the payments flow was just made it a lot easier to be able to do that. and I think building with a lot of the fintech optionality enables us to have a lot more of the options to solve more of the problems with capital that we were kind of talking about earlier.

So yeah, I think about that as inseparable. I think that the choice that we did make though is, and we are just now getting into credit, we decided actually early on not to give away free money. So that was a - Controversial in startup land. and I think I actually was controversial at the time it was uh and we grew slower in the beginning because of it um and I think that the thought that I had was that it was and we and we had raised and you know in the very you know beginning it started during um during Zurb and so and so the thought that I had was I basically what I did it was I just I

did all these like financial models and I was like I just don't see how this makes sense actually if I'm trying to get to like a healthy merchant business. Like, I don't see how the - The free money part makes it challenging. I don't see how this works if interest rates change even a little bit. A piece of advice that I got that I thought was really, really helpful and kind of helped me shape this, which is I wanted to actually get the hard parts right first, which I think is the SaaS side of the FinTech side.

And I wanted people to be adopting us because they like the software. Yeah. And we got the workflows right, not because we were giving away free money. Because we can always give away free money. We can turn that on when we want and when we have enough of the partners to be able to do that. And I think because we actually did the slog of build accounting software that has a high NPS that people actually like using, we now have way more optionality to be able to leverage the fintech side of the business.

And when you say free money, do you mean below market loans? Do you mean free payments? Do you have a specific free money, you mean?

Oh, yeah. I mean, below market anything. So, blow market anything, right? I think that, you know, you can give away free payments that actually cost you money. So, it's anything that requires you to have a negative unit.

It is how a lot of founders fool themselves that they have product market fit when they don't. Are users coming for the product or are they coming from the subsidy? You can build movie pass and, you know, movie aficionados love unlimited free movies. Yeah, totally. But the economics make it challenging.

Yeah, and I think maybe it would have all worked out if I was willing to do that. I just, I just.

You're old fashioned in that way.

It's old fashioned. I was like, I thought we were supposed to be building for like 70 % gross margins. And so that's sort of like what I was doing. That was what we ended up building the business around.

You seem unusually passionate about instant money movement compared to most people I know.

99th percentile on instant money movement.

Is it a reflection of what you're hearing from your customers or?

Yeah, I think it's also a first principle. I kind of the idea of like a like if I'm actually thinking about solving the problem for what we're trying to solve. Like it seems like actually a lot of the issue is that money movement is slow and expensive and context less. I think that so it's instant money movement and high context money movement. And I think there's just a lot of dead money sitting in the economy. That's just for some reason in transit between middlemen.

Or too accepting of that.

Yeah, and I think it's something that people are used to, right? But if you think of a check sitting in the mail for like 10, 14 days, I guess maybe it's like it's kind of floating someone's, you know, sort of ability to get that. And so it's cash flow management. I think that's a legit thing that I think you have to solve for. If you're saying, you know, not everyone actually wants, not every business wants instant money movement.

but I think but I do think that there's also a sense of like having to go through any set of ACH helps doesn't make sense yeah I was joking I was joking with Jackson on our podcast that I that the takeaway I had from Stripe Sessions was like instant money moon I was like alright that's gonna be a solved problem what's the next problem we can we can solve and I was talking to some Stripes afterwards and they're like no it's actually still really hard I was like like I'm thinking five years in the future sure you guys have got this.

Yeah, yeah. No, I think we will make a lot of progress there.

It feels like many things are coming together. I'm curious, well, maybe you can explain briefly how you guys use Stripe to set up my actual question, which is, if you were running Stripe,

what would you do differently? I think you guys are doing a great job running Stripe. No, no, no, but actually. I read a whole document. I know, I read it. My sense is that Stripe's strategy in the long run is to figure out how to transcend the transcend the constraints of traditional money movement. Like how much do you participate in the traditional financial institutions that have been set up and how much do you transcend that and build something novel?

I think a lot of what actually Stripe is doing with building its own payments network, somehow building its own deposits network, which I think you still need to partner with banking institutions on. So you still are kind of anchored with that. But I think that's actually where stable coins becomes quite interesting. because it's permissionless. And so it's like, who does Stripe need to... I think the way that I would kind of think about it is, who does Stripe need to get permission from today in order to exist in the way that Stripe wants to exist?

Yeah, I think the thing that we think is interesting about financial infrastructure is it's by its nature multiplayer. You know, you look at old e-commerce systems and, you know, ones that even might have been on-prem or just the software is very outdated. and Shopify came along and built an amazing product and said here's a much better way to manage your e-commerce store and manage your inventory and build a nice storefront and everything and they were able to really clean up a significant part of that market because you could replace your old e-commerce system with Shopify.

What's interesting about what we're doing is payments and to a large degree financial services are by their nature multiplayer where every payment is with some counterparty, right? And even if it's not, even if it's something like, you know, where do you store your money or how do you do AP or something like that? Like there are lots of banks out there that people have their deposits with or, you know, people wave their hands and say, oh, crypto will obviate this.

But, you know, when people have money in crypto, they will store it in Coinbase or in Binance or what have you. And so our view is that for whatever job is being done, there will be a whole bunch of other counterparties that we're going to integrate with and work with. And so an interesting part of running a business like Stripe is that you're working with all these partners and you can actually pull things along and make them way more modern.

We've done that in a bunch of areas, but it's much more of you're the captain of a sports team as opposed to your Alex Honnold doing solo rock climbing. It's a different kind of sport.

Totally. But there are players that Stripe will just be deeply competitive with who will not want to play on your sports team. I think there's a difference between who do you partner with and who do you generally have to run through in order to be able to build a better version of financial infrastructure that is open, does actually move on modern rails, is actually ultimately net better for everyone, is not incentivized by value capture. But I think there's a lot of sense of how can you get more of the ecosystem cheering you on.

Sort of it's the transcendence from like Stripe as like the upstart startup to Stripe as the champion that's pulling everyone into the future.

So maybe what you're saying is Stripe previously provided easy access to the existing financial system. And now we've gotten to a point where Stripe can actually have some voice in shaping the, and that's kind of the scale, where you can have some voice in shaping the future financial system. and you're saying that we have to take that seriously, that that is now where we are as opposed to being a passive participant in, I guess, this industry exists.

Totally, yeah. I think this is the thing that like, I mean, we're at a very different scale of Stripe than Stripe, but the thing that I have been talking about with my team is like, the company changes under our feet. It's like, when do you wake up and like, oh, it's like the rules are different actually. Like people are caring about different things than they did before and like the voice that we have in the ecosystem and it's different and these types of things.

And I think, I do actually think that like Stripe is pretty clearly a leader on some, on a lot of these axes. But I haven't heard as much of the voice in terms of like what is the vision in which we want to build. I see a future in which like, like there is a vision of the world that I want to exist. And Stripe is, is uniquely in a position to be able to make that vision true.

And I want to sign up for that vision.

Yeah, I think maybe also, you've probably picked up on this, dispositionally, we're just not naturally drawn to pre-announcing products before they're anywhere close to, we like to do a thing and hopefully we get it right. Totally. And our view is you can't meme your way to a product being good. You put out a version of it that's imperfect and then you gradually iterate on it over time. And so maybe also we've just been a bit too leery of what we think are grandiose statements as a product development methodology.

Yeah, I think that's the piece of what feels missing is a sense of painting the picture of what the world could look like if Stripe wins.

What is your answer to this question?

What does it look like if we win? I just, I want more people to believe in the American dream. My grandfather believed in it when he immigrated from India to the U .S. And he built up his own, he was an entrepreneur, built his own engineering practice. And that was sort of what put, you know, his five kids through school. My mom believed a version of it when, you know, she immigrated when she was eight here with her family and with my grandfather and went into public service because she wanted to, you know, She told me a couple years ago it was because she wanted to give back to a country that had served her, had given so much to

her. And I'm doing a version of it, right, that because I think I went to a school that got me involved in tech and then I moved to San Francisco and I became familiar with capital markets and I have access now to a version of that. But I see so many of our customers that are trying to live a version of that and are struggling. And I want that to be, I want there to be many different types of American dreams that are possible.

When you say making the American dream accessible, you're in particular talking about where Ambrook can help is making entrepreneurship and wealth building broadly accessible.

Yeah, broadly accessible. Not just to folks who know how to raise venture capital.

Right, for tech businesses. Who have you learned from as you've built this business?

I think two of the people who come to mind are, one of them is Josh. That's right. Yeah, Josh Kushner at Thrive, who took a really early big bet on me and the vision that we were building for the team. And I think the thing that I really have always really admired about Josh is he's so precise. Have you ever talked to Josh? He's so thoughtful in all of his words, but he's enormously ambitious. There's a level of quiet ambition in what he does.

And he has, over the course of even the past couple of years, become much more widely recognized in terms of his ability to put his finger on the macro, I think.

Yeah, I mean, he came from, you know, Trivalus founded how long ago? And now they're one of the leading multi-stage venture firms.

Yeah, exactly. So I think the thing that I've learned from him is the sense of, like, you can be quietly ambitious. and that fits my style much better I think. I think the second person actually that I've learned a lot from is Dylan Field who just led a big investment in Ambrook and Dylan is so he's so able to like if you ever you know having conversation with Dylan you know is one where he can connect the strategic to the tactical and back up in the same thread.

He can go from 40 ,000 feet to five feet and back up to 40 ,000 in the same sentence in a way that doesn't create any whiplash. And that, I think, I've actually found that to be extremely rare in both investors and operators to be able to do that.

People are either in the weeds or they're at the 50 ,000 view.

They're either in the weeds or at the 50 ,000 view that it's not very helpful. And Dylan is able to go back and forth between the two in a way that I've learned a lot from and I think I've gotten a lot better at.

Is that dispositional by him or because he's running a public SaaS?

skilled company? It's a good question. I've met a lot of founders and operators who can't do it. So I think that probably Figma, his ability to build Figma has probably taught him a lot in that. But I also think that there must be something more dispositional about it.

Yeah. Last question. Why are you building Offrange, your media property?

Offrange started out as an experiment called Ambrook Research. It was before we had built anything that we could really show people. And so I wanted a way for two reasons. One, I wanted a way to kind of talk about our brand and put something valuable out there that would be useful. And so we started out by just doing some, we actually published a couple of like very in the early days research articles with academics using some of our early like anonymized data from a lot of the work we were doing.

And then it turned into actually this editorial independent media publication that has become wildly popular in its own right. I've always wanted to build some sort of my own version of like a research or academic journal. Like a lot of the research I did when I was in grad school on climate security actually in particular was looking at the co-production. It was called the co-production of actionable science. And it's how do you build, how do you create knowledge in a way that involves all the stakeholders and gets them all on board and sort of the knowledge that is created.

And so it's not just creating these ivory towers. And I always thought that if I could, I wanted to build something that would evoke that type of ethos. And Off Range was my attempt at doing that. And it now is sort of stewarded by a really wonderful editor, Jesse, and has its sort of own life in that. But in the early days, it was really this idea of like, I wanted to create actionable science that would be useful for people.

to be able to make better decisions.

What piece are you most proud of? If people want to check it out, why should they go Google?

Well, I already said, I really love the piece that we wrote. Eve Andrews is the author, where soil is holy, but climate is seldom mentioned. I love that piece. Yeah, that's an old, but good one. It's one of my favorites.

Well, Mackenzie, thank you.

Yes, thank you.