Welcome to the SMB Tech Innovators podcast, powered by Gusto. We explore the intersection of embedded finance services and vertical SaaS strategy and discuss how software combats the rising complexity of running a business. We aim to share stories, advice, and best practices from the leaders and investors behind today’s cutting-edge platforms.
In this episode, we speak to Victoria Li, CTO and Co-Founder of Heard. Heard integrates smart software with real humans to handle bookkeeping, taxes, and payroll for therapists, whose demand is currently at an all-time high.
Embedded finance topics include:
- What is changing in mental health that you’re probably unaware of?
- Why therapists need a vertical solution.
- How therapists use Heard daily to run their practices
- What makes a good API?
- Figuring out which fintech products to build first.
- How to highlight fintech product features to customers.
- Specific embedded finance features that Heard is considering.
(The following was transcribed and edited for clarity)
How did your background lead you to build the financial back office for therapists?
I originally went to MIT to become a neuroscientist but fell in love with coding. After moving to the Bay Area and working at smaller software engineering startups, I met my co-founder, Andrew, through a mutual friend. We bonded over our journeys with mental health.
In my experience, my household did not talk about mental health, and it wasn’t until I saw my first therapist that I could verbalize some of the things I felt. Soon, Andrew and I decided to join forces and start something in this space and start Heard, a financial service provider whose mission is to support therapists. I wanted to give back to therapists who had once helped me, and this inspired me to build a financial back office for them.
What changes have you seen in the mental health industry that have led therapists to need a purpose-built back-office solution?
As a founder of Heard, I can tell you that therapists today need a purpose-built back-office solution.
A significant gap exists between the number of people that need mental healthcare and the number of therapists available to provide it. This gap has only widened due to the pandemic, highlighting the importance of mental health and the need for accessible care. Also, therapists’ work has changed significantly with the introduction of telehealth, allowing them to work from home, serve clients in new ways, and offer a better customer experience. As a result, therapists are more likely to experiment and find what works for them rather than simply jumping into a job or practice.
I sometimes compare mental health practices to the creator economy. As a creator today, you can work on YouTube on your own time, write a blog, or do anything else you want to create. Therapists also see a wealth of opportunity for themselves, not just in being a therapist but also through other means as someone with mental health expertise and increasing their profitability through various revenue streams.
That’s where Heard comes in – we provide therapists with an embedded finance solution that helps them manage their finances and bank account, including invoicing, payroll, payments, checkouts, and insurance billing. Taking care of these tasks allows therapists to fulfill their mission – helping people improve their mental health.
How do vertical SaaS solutions for a specific customer segment give more advantages to therapists not trained in business?
Our customers repeatedly tell us, “I know how to be a therapist. What I need help with is all of the business side. How do I think about paying myself? How do I think about taxes? What is bookkeeping? Do I need bookkeeping?… I don’t even know what I don’t know. “
Many therapists have shared their frustration with the complications of handling their practice’s financial and administrative side. They went to grad school to become therapists, not business owners, and need help navigating the complex world of bookkeeping, taxes, banking services, and payroll. This inspired the creation of Heard – we wanted to offer a platform specifically designed for therapists to streamline these processes and free up more time for them to focus on their clients.
Building a vertical SaaS solution for a specific customer segment has several advantages. It allows us to understand our customers’ pain points and tailor our financial products to meet their needs. We have a deep knowledge of a therapist’s business and can create a more opinionated and effective solution. Also, we can leverage technology to automate common workflows and eliminate unnecessary features, creating a more efficient and user-friendly platform.
This focus on streamlining and productizing a therapist-specific flow is not something a horizontal solution would prioritize or build. Ultimately, by building a vertical solution, we can provide a more targeted and effective solution for our customers, increasing customer acquisition and retention.
“When you build a solution for a specific customer segment, you can really streamline, automate and dial in into all of the common workflows.”
Victoria Li
How do therapists use Heard’s real-time insights to run a better practice in their day to days?
Heard provides an always accessible live platform for therapists to interact with. Weekly, the platform consolidates their information from disparate sources, providing forecasts and live real-time views of their business performance. On a quarterly or yearly basis, therapists interact with Heard to affirm compliance and that everything works well. A vertical platform like Heard provides the clarity and ease of use that therapists lose when compiling information from different software services.
A great example is how Heard optimized its product through Gusto’s Embedded Payroll. Previously, Heard referred customers to Gusto to set up their payroll, which tripped up many users due to the nuances and questions involved. By embedding the Gusto payroll experience into Heard, we have eliminated unnecessary options and provided a more user-friendly experience for onboarding to payroll. When done right, embedding fintech solutions can optimize the user experience and simplify complex customer processes through automation and a strong team.
What are your main factors when evaluating a potential embedded finance partner and their APIs?
For competency, I look through the API documentation and double-check the payload responses as I start building to make sure the responses match what’s expected from the documentation. Bug resolution speed is important since a team’s ability to execute affects their partner’s success. Additionally, direct support and communication from the team are essential during the partnership’s development.
My team generally starts with a low-level partnership before committing to building a fully embedded finance product together. This enables our team to evaluate the potential partner’s competency and support team. I want to emphasize the challenges to determine if the team can deliver what they have promised in the build. Ask for use cases and conduct reference calls with others using the platform to assess the team’s ability to deliver what they promise.
How do you think about which products from fintech companies are relevant to your customers, and which ones do you add to your product ecosystem first?
Our investors love talking about this topic. They call it the “second act.” First, we must consider our customers’ pain points and business goals before adding additional product offerings. We primarily focus on making the core experience better rather than trying to get fancy and add more products from financial institutions on top of each other. Also, we identify points in the customer journey where offering new products and services makes sense.
Conducting user discovery and generative research through customer conversations leads to significant insights into what customers want. Most importantly, deep and active listening, prototyping, sharing, and getting customer feedback. We also consider our customer’s income and expenses to understand better which solutions add value to their core experience.
When launching a new embedded product, I’d advise the listeners to consider the potential for long-term growth and how it adds more value to the core experience. If the new product can increase the value of the existing product line, it becomes more compelling. Companies should also confirm their hypotheses before investing a ton of resources.
“When you launch a new product, you also have to think about what the success of that product might look like 5-10 years from now.”
Victoria Li
Listen to the entire podcast with Heard co-founder and CTO, Victoria Li, available on Spotify and Apple.
