When Bob Carr, the founder of Heartland Payments, exited his business to Global Payments in 2016, many thought it would be his final curtain call. After all, Bob was 70 years old with tens of millions in the bank.
But entrepreneurs are a crazy bunch.
After his non-compete expired, Bob started Above and Beyond – Business Tools & Services for Entrepreneurs in 2017. Colloquially shortened to Beyond, the company was founded as a cause-based business platform, initially focused in the payments space, and made the non-profit Give Something Back a founding partner. Created by Carr in 2003, Give Something Back is a public charity that provides scholarships and mentoring to disadvantaged students so they can successfully graduate from college in four years, debt-free. So far, Give Something Back has prepaid over 1,000 scholarships for students at partner colleges and universities across the country—an upfront investment of more than $35 million.
How this works in practice is transparently philanthropic. 51% of Beyond has been allocated to its employees, industry friends, and family, with Bob holding the remaining 49%. 100% of any payout to Bob’s ownership goes to Give Something Back. So if Beyond makes $10 in profit and pays it all out in dividends, $4.90 is allocated to the non-profit. Simple!
Warm fuzzies aside, we wanted to learn more about what Beyond was cooking up. It’s no secret that many former and loyal Heartland employees emigrated to Beyond since its founding. With close to 500 W2 employees at year-end 2017, Beyond is shaking up the industry.
Beyond is offering business operators month-to-month payment processing services. So long as clients give Beyond 30 days’ notice, they can switch to another provider and there’s no early termination fee or other penalty involved for cancelling any of its recurring revenue products. If prospective clients want guaranteed pricing, Beyond can offer long-term contracts with no early termination fees as well.
The foundation for Beyond’s POS – called Tend – came from their purchase of a a small POS company that has served both the retail and restaurant verticals since 2006. Beyond then made upgrades to modernize the already software. Currently, Tend will be applicable for all restaurant segments and about 90% of retail. Its limitations are that it cannot currently support retailers that have pay-by-ticket or charge-by-time operations, such as salons and service businesses. Tend also comes with robust features for multi-location use that most legacy solutions either don’t have or charge extra for.
Bob Carr wants Beyond wants to be as transparent in its POS pricing as it is for payment processing. Hardware and implementation costs will not be subsidized by processing, so line items will have show true cost plus Beyond’s markup. Beyond actually has no problem with its sales reps – known as Business Advocates – showing prospective buyers precisely what it paid for hardware. Beyond is also offering a 7-year warranty on POS hardware for all new Tend clients, which is more than double industry standard. The caveat, of course, is that clients must purchase their hardware from Beyond since Beyond will not support a bring-your-own-device model.
Beyond will offer its Tend POS software in a SaaS model, which includes remote support, software updates, warranties, cloud backup, and cellular internet backup in the monthly pricing. Any field support that is not under warranty will be billable. Naturally Tend will include basic POS modules – like gift cards, loyalty, reporting, remote menu edits, and alerts. Beyond has considered a POS as a Service model, but given that hardware improves every year they don’t think it’s best to lock buyers into a perpetual rental situation, as this can drastically increase the total cost of ownership versus the outright purchase of hardware.
If prospective buyers cannot afford the upfront cost of a new POS system, Beyond may provide the capital through their Beyond Lending program. Buyers have to meet certain criteria, and rates are higher than bank rates (though local merchants can’t get bank loans after the Fed’s interventions in 2008). Interestingly, buyers do not need to be using Beyond’s processing to take advantage of the lending opportunities.
On the technology front, Tend includes cloud-based back office management capabilities and local SQL database that’s also backed up to the cloud at the end of every day. Tend also has local redundancy so the POS can work without internet. Nobody expects to be without internet for more than a few hours sans natural disaster, but the loss of most or all POS functions can cost an operator plenty. Like many other cloud systems, Tend will use distributed computing so if one terminal crashes, it doesn’t kill the client’s operations.
A very thoughtful addition is Tend’s ability to import historical data from many other POS solutions. We always thought this was a massive market opportunity since accessing data from legacy POS systems is a nightmare and nobody with a brain should want to lose their historical transaction data. Now that Tend offers this tool, switching to Tend POS will be much easier than switching to other POS systems.
Beyond doesn’t yet have a fully developed API for Tend but recognizes the enormous upside in having one. In the long run, they’re not trying to block clients from using applications developed by other ISVs, or even charge for their API. In fact Beyond believes certain apps, like online reporting and dashboards, are now table stakes and should be made available as part of the base product. Beyond will follow what we believe is best practice for their API strategy:
Beyond will have an open API and documentation page that anyone can access without cost. Additionally, Beyond will strategically pursue integrations based upon referrals from their customers, dealers, or internal interest.
In the interim Beyond might use a third party API conduit, but we’re not a fan of these approaches because they drastically increase the cost of apps to the end customer. Considering the average merchant app is $30/mo, these integration providers can literally double the cost. In our view, POS companies who refuse to invest a trivial $2,500 in their own API must admit they’re pushing inflated costs of a third party API onto their customers. To be fair, Beyond doesn’t hold this view, as this is just a short term measure.
To move Tend POS, Beyond wants to establish a reseller network. Beyond believes resellers should get more of the revenue share on deals than other ISVs have traditionally offered, and they’re building their channel program accordingly. Beyond resellers who are worried about the small amount of money available in selling cloud POS should note that Beyond can offer upfront signing bonuses with smaller residuals if resellers prefer that route. Beyond will provide Level 1 tech support to all users and will offer implementation services through a national provider if needed as well.
Beyond exists in a sharp contrast with Toast, who’s raised gobs of venture capital with no apparent path to profitability absent aggressive payment terms. Granted Beyond is pushing processing without POS, so it has a little more flexibility. But the company is growing organically and without VC infusions. And pretty damn fast.