Founder stories from CyRise: Adam Laitt and Brad Smorgon from TRAILD
Founders’ reasons for getting started are often fairly personal. Old uni mates Adam Laitt and Brad Smorgon’s motivations for founding TRAILD began with their families.
“Both Adam and I were affected by fraud,” Brad explains. “My uncle received an email requesting a substantial payment to be made to Hong Kong and it went through the business’s full approval process while he was away on holidays.” The payment request was fraudulent, however.
“I was a lawyer working in the family business,” says Adam, “and we’d had a marketing manager defraud the company in the past, so we were already conscious of fraud. In my work, I was looking at 100 payments on the business transaction account on a weekly basis and trying to work out which ones were correct and which weren’t. As the business scaled, that became harder and harder. Meanwhile, my business credit card got stolen, and I got an alert that I’d spent $37 somewhere, but it wasn’t me.
“And I thought, how is it possible that we have this protection on the credit card, but on the main transaction account we have none?
By TRAILD’S estimate, the Australian economy loses well over $1 billion per year to this sort of fraud.
“It’s just pure, deadweight loss,” Adam adds. “There’s no defence against it except diligence.
“So we’re trying to do something digital to protect people.”
The trend driving TRAILD
In a nutshell, Brad and Adam have built a service that patrols a business’s payment workflow to stop people paying invoices they shouldn’t.
“In the next five years, every business payment will have checks going on behind the scenes,” Brad ventures. “It has to happen, because of the levels of fraud that are out there now. But we’re looking to protect the businesses that have the greatest vulnerability: mid-sized manufacturing, agricultural and services businesses.”
These are the kinds of businesses that make unusual payments regularly, which increases the chance that an attempted fraud will succeed. A construction company, for example, will buy different inputs for each project, and that can make it very hard to work out if a payment request is legitimate or not. Compounding the problem is the fact that if banks stopped every seemingly suspicious business payment the way they did with the $37 on Adam’s business credit card, business would grind to a halt.
“There are people that already deal with pieces of this payment problem through automation, but they’re missing the point,” Adam reveals. “There are lots of people creating business rules to automate payment checking, but we’re the only ones asking, how do you do it so that safety is the first goal?”
“We understand the payment problem as one of making sure you only pay the right invoices,” Brad adds. “So we build a profile of what a company does, and what’s normal for them in terms of payments. We work to understand the company’s operations and suppliers using AI.”
“Then, we use that information to identify issues — to find the needle in the haystack,” Adam finishes. “We look for the footprints in the sand that suggest there’s something weird going on.”
The silver lining
TRAILD had been operating for around 18 months before Covid-19 hit. While this business, like many others, found the restrictions made it harder to pull together a complex product between their dispersed team of 8 people, the business gained one key advantage from the conditions.
“While Covid made it harder to get in front of customers, it has accelerated market recognition of the problem,” Brad explains.
“With everyone working remotely, you can’t just call over to the person on the other side of the room to make sure what you’re seeing is a legitimate email. It’s easy when you’re in the same office, but with lockdowns, the rate of fraud has increased substantially.”
As a result, the business has grown over the past 18 months. Today, TRAILD processes millions of payments a week for clients ranging from an oil company to a large agricultural company, as well as a range of smaller businesses.
That strong response at a commercial level has been echoed at a personal level, Brad notes.
“Today I saw someone I’d known for a long time but hadn’t seen for 10 years. As we talked, I explained this problem, and the idea of making sure that your people are paying the right invoices. My friend almost was crying, because someone had ripped off his business, too.
“It was one of the most emotional responses I’ve had to the problem, and our solution,” Brad adds. “A lot of people are embarrassed about this problem. It’s interesting: we’ve got a great product with great integrations that make rollout easy, but the response to the problem itself is really exciting.
“It’s a real problem, and we have a real solution.”