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Caleb Newquist: Hey folks, Caleb here with another bonus episode. As I've mentioned before, we're trying a few new things in the Post Greg [00:00:30] era, and this bonus episode is. With Omri Mor, he's the co-founder and CEO of Rootable. Uh, this is one of the new things. Uh rootable. As you may have noticed, is one of our regular sponsors this year. And David Leary, one of the earmark guys, asked if I'd like to talk to him. And I said, sure. You know, they're they're sponsoring the pod for the entire year. So, you know, why not Now. I've [00:01:00] been in media for a while, and if you've been following me for a while, then you know that I ran a going concern for a long time. And and during the time that I was there, even though I was an editor and writer, and that's what my job was, the publishing side, you know, salespeople, publishers would ask me to meet with potential advertisers all the time. And I wasn't always very excited for these meetings, if I'm being honest. But I wanted the business side to succeed. So I would go up, you know, I'd like [00:01:30] to do favors. Um, and, you know, sometimes I was helpful and sometimes I wasn't. But part of the reason that I wouldn't be very excited is a lot of times you would have meetings with people, sponsors, advertisers and sometimes buyers for the you wouldn't.

Caleb Newquist: Sometimes you wouldn't even be talking to the people who you wouldn't be talking to, somebody who was at the company that wanted to advertise. You'd be talking to a, you know, an advertising buyer. And so they didn't always know what they [00:02:00] were buying. You know going concern was this like specific thing. And they wouldn't really know anything about it. Or they would be very only only vaguely familiar with it. And their expectations would be, you know, I don't know, the basically the same. They just had the same kind of expectations across wherever they were advertising, which was sometimes really unreasonable. And, you know, so they'd run ads on the site for three months and they'd wonder why they got zero leads, or they only got three clicks. And I'd be like, look, ads on websites are not how people buy things. [00:02:30] You know, this is not how the internet works. No one thought about like, brand awareness and and how, you know, how sites like that or a podcast like this, you know, people didn't think about brand awareness really, back then, at least at least the people I were talking to, which says something about, I don't know, maybe the people that we were working with.

Caleb Newquist: Who knows? Anyway, nobody thought about like the effectiveness of their advertising, kind of in that context. They just wanted clicks or leads or. They obviously wanted sales. But [00:03:00] anyway, um, you know, Ratable doesn't really fall into this category at all because they're a great fit for us. And if you listen to the show, you know that bogus invoices are involved in lots of frauds and roundtables. Product has a ton of features to help find suspicious stuff, you know, on invoices that may not be legitimate. So, yeah, I talked to Omri. You know, he's an entrepreneur. He's a very smart guy. He's [00:03:30] his brain moves. Man, I was I felt fortunate that I could even keep up with him. I don't know if I did keep up with him the whole time. Uh, but I enjoyed it. I think he enjoyed it. And so I hope you enjoy it. And yeah, that's kind of it. So here's me and Omri Mor, uh, co-founder and CEO of routable. Thanks for coming on. Um, and, you [00:04:00] know, thanks for, you know, sponsoring the podcast. I don't know if you make those calls or not, but you're paid.

Omri Mor: I luckily have a very good team and, um, do a lot of research. You know what I mean? For what it's worth. And, um, it's just about trying to find something that is authentically relevant.

Caleb Newquist: Yeah.

Omri Mor: Honestly, this is right there.

Caleb Newquist: Where'd you grow up, Omri?

Omri Mor: I grew up in Tel Aviv.

Caleb Newquist: Okay. What was that like?

Omri Mor: I love it, yeah. I mean.

Caleb Newquist: Amazing, I've never been, [00:04:30] but I hear it's an amazing city.

Omri Mor: Loud. Um. Obnoxious. Um. Flamboyant. Delicious. Tumultuous. I think it's like a it's a place to grow up with such a heartbeat, if that makes sense. Um, you know, you grow up as a kid with the good, the bad and the ugly.

Caleb Newquist: Of course.

Omri Mor: Right in your face. But the upside is that the good is so good that it's, uh, you [00:05:00] know, it's a place that I love to call home, and it's a place that I sincerely love to go back to. And it still feels like it was when I was a kid.

Caleb Newquist: Oh, wow. That's. Oh my God. See, I grew up in a small town in the middle of the country, and I only feel anxiety when I go there. It's it's. And it's not in Israel. You know what I mean? It's just like it is a perfectly safe place. But I have lots of anxiety when I go there. But anyway. Well, uh, that's. [00:05:30] What did your folks do?

Omri Mor: Um, my dad grew grew up, um, in a kibbutz, which is a farming community, uh, in the middle of nowhere in Israel. Uh, he taught himself how to write code, wrote code for a bank, and then, uh, started working for Microsoft Israel in the, early mid 90s or even before then. I remember going to Microsoft Israel as a kid all the time, like every day. It's probably not every day, but my recollection [00:06:00] was that I was just hanging out there as they were trying to get it off the ground. And my mom, uh, currently still works at Microsoft, and she worked at MSN Israel, uh, prior to us immigrating to the.

Caleb Newquist: She also did she also code?

Omri Mor: No, my mom is, uh, a business and data mastermind. Okay. Um, and I get 99.4% of my work ethic from her. Oh, so she.

Caleb Newquist: Is.

Omri Mor: She still works as many hours as I do today. And, [00:06:30] uh, she is. She's a force. So very amazing woman.

Caleb Newquist: Awesome. Do you have siblings?

Omri Mor: I do, I have a younger brother and a younger sister. Um, my youngest brother is the smartest person in our family by a landslide. However, he, uh, assumes that everyone is dumber than him and makes it obvious. So that one's a fun one. But he's.

Caleb Newquist: I mean, he's brilliant. He sounds very charming.

Omri Mor: You know what? Um, he has a strong attitude. He wears it proudly, and he rocks [00:07:00] with it. And then my sister is much younger than me, and she is, like, the most even keeled person in our family. She's, I think, just exploring life in a good way to learning architecture. I don't think tech is her thing and, uh, very focused on culture. She went to London to learn architecture.

Caleb Newquist: Oh, nice. Yeah. Awesome. So how how did. So then growing up. So [00:07:30] technology was obviously in your life.

Omri Mor: 24.

Caleb Newquist: Seven. Yeah. Early on. And and so did it dawn on you as a kid. You're like, oh, this is something I can do. Or was it just or did it just did it feel abstract even then?

Omri Mor: Um, no. I think the technology was very native. As a kid, my mom said that when I was in kindergarten, she would send me, like, home with [00:08:00] donuts. One of the Jewish holidays you get donuts on? Yep. And that she would send me to kindergarten with donuts. And I would trade them for other people's lunch. So I think that more than anything, I've always had a knack for figuring out a tiny advantage in life, if that makes sense, and exploiting it even as a little kid. Um. The funny thing is that I probably didn't get into hardcore [00:08:30] tech startups until I was 18, where probably like 95% of my interaction was with software, and my level of frustration with software had become so high. And you know, when you're 18, 17, you're, you know, an angsty little teenager and you think you can do everything better. And that was my first, you know, dabble into startup land. And I loved it. Yeah. Um, I it's.

Caleb Newquist: That's when you started your [00:09:00] first business.

Omri Mor: Uh, I wish.

Caleb Newquist: Uh oh. Okay.

Omri Mor: Yeah. No, I started my first business when I was, like, 20, which is not that far away. Um, that said, um, I remember I worked at a startup, um, when I was while I was at school, and I was just shocked by how chill everybody was, how smart everybody was. Um, that I remember our CEO at the time, the founder would be a great like he would tell [00:09:30] the funniest jokes every Friday at all hands. But it was about a community, a culture, a mission, all these things. And. I work hard, I don't want to work without purpose, if that makes sense. And very, very early on, like 18. And I said, wow, I'm the youngest person here by maybe 15 years. However, everybody respects me and they're constantly asking me for help. And that [00:10:00] is a riveting experience as an 18 year old, because otherwise you're just told to learn, learn, learn and do do do right. So I really enjoyed it.

Caleb Newquist: Yeah. Interesting. And what was that? What was that first business like? What was what was the nature of it?

Omri Mor: Uh, it was a, you know, Reddit. Of course. Um, it's not Reddit, but you know how you can upvote things on Reddit and solicit feedback? Yeah, right. That's all we did as a service. Um, so, like, we built it was kind of a Reddit as a service where you can allow any [00:10:30] website to add an upvote. Uh, forum. Um, and one of our first customers was the white House, um, and the white House was using it to solicit feedback from the general population on things that it was considering doing. Um, and that was really cool. I remember Adidas was a customer too. And when you're exposed into solving real problems and giving people voices as a young kid, like, technology [00:11:00] is cool. Yeah. Like, get out of my way. Let me do this. Right.

Caleb Newquist: Right. Yeah. Wow. Okay. What year was this?

Omri Mor: This was 2009.

Caleb Newquist: 2009. Okay. Yeah. Yeah. It is. It seems like. I know the internet was around before the Obama years, but it feels like that's when the internet became part of politics in a real way.

Omri Mor: It was. I remember specifically [00:11:30] good friends of mine being recruited to work on the administration, but. And not just the administration, but the whole campaign. Yeah, right. Like, I think if you really break this down to me, that was the first election in which software became a competitive advantage, right? And, um. Marketing. Marketing? Yeah. Data marketing was no longer about door to door only. Right. And picking up the [00:12:00] phones. It was also about trying to access the person. Represent the person. Uh, link to the ideology. I think now in 2025, we share too much data.

Caleb Newquist: Right? Yeah.

Omri Mor: Now it's almost like, you know, in the age of llms and AI and how much data we've shared with social media graphs over the past 20 years, they can almost tell you what you want to hear.

Caleb Newquist: Yeah.

Omri Mor: So now we're in the opposite spectrum of that. Yeah, those were fun times. Um, [00:12:30] yeah.

Caleb Newquist: Kind of kind of, uh, adorable. Looking back on.

Omri Mor: Uh, you know what? I think that the funny thing is, is that every ten years or so, you are shocked by the state of technology. Yeah, I always talk about it this way. Um, I remember around 2013, I remember e-commerce was big and it wasn't big, but it was big to me. Yeah. And I remember there was Squarespace. [00:13:00] I remember there was BigCommerce. I remember there was this thing called Shopify.

Caleb Newquist: Yes.

Omri Mor: And I don't think that anybody would have picked them back then to be the winner. Does that make sense? It does. Yeah. Yeah. The best thing about the internet is that it's just anybody's game. 24 over seven, if that makes sense. And all we're doing is vying for your time or your money.

Caleb Newquist: Yeah. Things have a tendency to come out of nowhere. Like, it feels like even [00:13:30] though I'm not on the platform, like TikTok feels like something that came out of nowhere, that all of a sudden it went from just kind of a on the fringes of social media to being the biggest website in the, you know, the or the biggest app in the world.

Omri Mor: Yeah. But if you think about it. Chatgpt. Same thing. Yeah. Right. Right. We didn't have it and now we have it.

Caleb Newquist: Yeah.

Omri Mor: And but I think that what's really interesting is that I've seen probably 100 to 200 startups that have tried [00:14:00] to promise you with an assistant digital assistant, that I've failed miserably. And talking about TikTok, you know, that's just a much better version of vine. Yep. Any way you want to slice and dice it?

Caleb Newquist: Right.

Omri Mor: So I think that, you know, whenever things do pop, we overlook the skeletons that are along the way.

Caleb Newquist: Yeah.

Omri Mor: Um, but, you know, I teach a class at the University of Washington on building companies, and I have to remind the kids that there [00:14:30] was an electric company. The electric car company before Tesla that failed. There was a tablet that Microsoft released in 2006 that failed. Now, you can say that surface is actually very successful now, right? But the iPad had to come first. I think the beautiful thing about technology is that. You will likely be displaced. And that's the number one thing you have to [00:15:00] ask yourself. If my product didn't exist tomorrow, what would my customers do? And that's probably the best question for driving any company, period. Right. And I think that, like, even if you want to take that to Coca-Cola, what would happen if Coca-Cola ceased to exist? You can say the brand or the corporate umbrella. People would go elsewhere. You know, it's a really good question when you're running a company. [00:15:30] If my company stopped, what would happen to my customers? And, um, I'm sure Facebook thinks about it. Or now. Meta. I'm sure. Like Instagram is a part of it. Um, think about car companies. You know, think about Ford. What if Ford stopped to exist? A new F-150 would be built within 12 months by someone else, right? Um, it's just really, really interesting. And I think the age of technology [00:16:00] makes it so you're always on the court, and you always have to be aware. Um, but that's a cool thing. What makes it exciting?

Caleb Newquist: Yeah. So, um, how's routable start? What's what's.

Omri Mor: Sure.

Caleb Newquist: I'm asking you to jump ahead a little bit, but what's what's what's kind of the origin story that leads you to that?

Omri Mor: Um, my co-founder, Tom and I meet for hummus to talk, to eat.

Caleb Newquist: Like, like, regularly.

Omri Mor: Uh, [00:16:30] this is a good question. So in Israel, getting hummus with someone, it's like getting coffee.

Caleb Newquist: Okay.

Omri Mor: Got it. Except hummus is very filling. It puts you to sleep. You're very lethargic, and you start sweating. So the opposite of the effects of coffee, right? Um, but it's very common. So my co-founder, Tom and I are, um, are grabbing hummus, and my last company was acquired maybe six months prior. His last company was acquired [00:17:00] six months prior. We had both built marketplaces, and we talked about things that we hated doing at our last company as founders would do, and we both had built so many internal tools for, oh, well, we need to do payments. Let's integrate stripe. Well, we need to log that data in QuickBooks. Let's build a custom integration of QuickBooks. Well we need approvals. Well let's build that internally because neither of those two [00:17:30] systems talk together well enough. And we started kind of going through it and we're like, well, and then there's a migration to NetSuite and then there's a move off of Stripe to Wells Fargo. And we realized that we both had experienced this. We're building a marketplace. And at the same time, because the amount of money we're paying out. Is high and high volume, and the amount of vendors that we're onboarding is high and high volume, we probably spent, I'd say, 30 to 40% of our time building [00:18:00] internal tools and custom things for marketplaces. So we set ourselves. Cool. I wonder if this is just a marketplace problem, or is there a common denominator if if you have to make X business payments a month, whether they're invoice backed or not, is it debilitating? Um, that was in Tel Aviv.

Omri Mor: We're getting hummus. We flew back to Seattle and began nine months of research. We interviewed over 300. [00:18:30] Office of the CFO personnel across about 450 conversations in nine months. And we basically had enough confirmation that there is a threshold that if. You send over a thousand invoices a month, or sorry, if you receive over a. Thousand invoices a month on the AP side and or if you need to make over a. Thousand business payments a month, whether it's to a contractor or supplier. There will be an extreme amount of inefficiency [00:19:00] and I think at the time too. When we did the market research, we were like, well, stripe is an amazing platform for moving money. Coupa was a market leader for enterprise, Bill.com was a market leader for SMB, and we really wanted to build something for a mid-size company that was expecting to, I'd say double or triple its money movement in the next five years. Um, and that's where we saw our space to [00:19:30] to come in. We applied to Y Combinator. We got in. Um, we moved to the Bay area. We started writing code. We got our first customer within ten weeks of starting to write code, which was really fun. Um, Caleb, I remember actually going to their office and licking envelopes for checks. So we built an API to send checks because we didn't want to, like, envelope anymore. And, um, yeah, but then fast [00:20:00] forward, it's been almost eight years now.

Caleb Newquist: And so. And you still have that first customer.

Omri Mor: Um, we do actually.

Caleb Newquist: Yeah. Okay. Yeah.

Omri Mor: See, that's and and and their CEO is one of our. What is our CEO right now?

Caleb Newquist: Oh, wow. Look at that.

Omri Mor: Yeah. Like I it's fun. Yeah.

Caleb Newquist: Yeah. That's cool. Okay, so. So you finding your spot. The timing is right. What is it about? Is there anything this. [00:20:30] We do a show about fraud. And so? So what is it about? Like you talked about inefficiencies. To say that fraud is an inefficiency is probably a gross understatement. But like when you think about that, what is what? What problem were you did you did you identify an obvious problem or was it or was it is it just kind of a collection of inefficiencies? Like what? [00:21:00] What were you trying to set out to do when when you were trying to solve those problems?

Omri Mor: Oh, so I want to break it down. So a couple things. One, I think that this is a resourcing problem like from a priority perspective.

Caleb Newquist: Yep.

Omri Mor: And an inefficiency problem. And you always have to think about it as invoice fraud, vendor fraud, and internal fraud. That's the way I like to break it down.

Caleb Newquist: Yep.

Omri Mor: Sure. Um, I remember when we were interviewing, uh, the [00:21:30] office of the CFO, individuals for accountants, comptroller, CFOs. We met with a CFO who was tweeting that they're going on vacation because they were so excited. And there was some hacker that was following them when they were on vacation. The hacker impersonated them.

Caleb Newquist: Yep.

Omri Mor: Sent in invoices, said that they were priority. And I believe they lost $6 million in a week. [00:22:00] Yeah.

Caleb Newquist: So.

Omri Mor: Um, I think that the really interesting thing. So let's go talk about where we are in 2025. It is easier and easier and easier to want efficiency in the office of the CFO. You want to process invoice faster. You want to pay faster. You want to settle faster? You want to reconcile faster? I think that we're in a really weird thing where we're saying, well, we have technology. Then let's cut the resources from the office of the CFO. Let's cut budgets. You should be able to do [00:22:30] more with less. The funny thing is, though, I don't know. And I've interviewed many of fortune 5000 companies of many companies that have an internal forensic accountant. What I'm trying to get to is the fact that fraud prevention is a reactive, measured companies after the fraud happens rather than prior to um, and we talked about this [00:23:00] recently. Um, think of the process of um, recon and closing your books. So imagine that every month. So you're in your house, right? Imagine that that every month you had to take inventory of everything that was in your house and where it was placed. And that was your whole, whole whole job. And that's all you got paid to do. The probability that you would be paying attention to the security of [00:23:30] your house would be very low. If you think about the month end close in the audit process. We do not give the accounting team or the finance team a lot of time to think about their processes, augment their processes, or bolster them for security.

Omri Mor: We try to cut time. We try to cut resources. We try to cut budget. So I do think that we need to start, first of all, having the conversation [00:24:00] of the reason we got into the fraud. Part of it is because we said, well, we're okay. We can read your invoice in about 15 seconds or less with extremely high accuracy, See like at some point going to one second, it's going to plateau. Plateau. The effects of efficiency. Right. Um, we are using AI to learn how you coded all of your previous invoices so you don't have to code anymore. Um, what I'm trying to get [00:24:30] to Caleb is let's assume that you have 5 to 15,000 invoices per month as a company. At some point, you will get really efficient or not with processing your invoices. But for every new thousand invoices you increase, the probability of fraud also increases. And for some reason we hire more people to do data entry. We spend more money on more expensive software, [00:25:00] like old legacy software. That doesn't give you any efficiency. Yet we never spend money on training people. We never spend money on buying insurance for this thing, And we don't, um, like we don't. Part of our audit isn't we say, are you SOC one or SOC two? Soc three compliant? We don't say, are you good at fighting fraud? Show us your fraud prevention measures.

Caleb Newquist: Right.

Omri Mor: And that's a it's a really weird thing for me. Think about a board mandate. We [00:25:30] know and I think we'll talk about this in a second. Many beautiful, large, successful companies, they'll lose millions of dollars due to fraud because the investment isn't there. So you asked why, though. I remember one of our clients came to us and said, hey, can you help us figure out if this invoice is fraudulent? And I think it was for about $1 million. We were able to validate within a split second that it was fraudulent. And we gave them like line by line, like, here's all the things that are wrong [00:26:00] with it. Um, and then we kind of kind of like, started smiling because it was fun, right?

Caleb Newquist: Yeah.

Omri Mor: Like, I don't know, at the end of the day, it's like trying to solve a puzzle. And we said to ourselves, okay, cool. What if we weren't not only the most efficient way to move money at scale, the most accurate way to sync data to your ERP. But what if we're the safest way to move money? And and I think safe is one. [00:26:30] You don't want to send money to the wrong place, right? That's the obvious one. Yeah. Two. You don't want to experience fraud. Three safe could be compliance. You don't want to mess up your 1099. Um, I think safety and compliance is a very broad spectrum, but it gave us the opportunity to get excited about a problem that you can't solve with technology. And it was challenging, right?

Caleb Newquist: It's one of those things where I think [00:27:00] about I think about I think about it a lot where. Because of human nature. Her fraud is something that is as old as time or as old as man, I suppose. The, you know, the our ancestors, they were probably defrauding each other in some way. Huh?

Omri Mor: For sure.

Caleb Newquist: For sure.

Omri Mor: But, like, that's not a real goat, you know.

Caleb Newquist: Yeah. That's not a real goat. That's right. But but you. And so part of me thought, oh, [00:27:30] is this just the cost of doing business for humans? And I don't know, maybe it doesn't have to be. I mean, there's there's always the chance that we were just talking about this example earlier. And I'm going to ask you for an example in a minute, but we were talking about an example of, um, where you've got a situation where, like you say, if it's a big company and management is the ones and you know it, maybe we're talking about something slightly different if we're talking about, you know, financial reporting [00:28:00] fraud versus invoicing fraud or whatever. But, you know, the human nature element is something that. Is always present. Right. And so then you have, you know, safeguards put in place to prevent the human element from, uh, you know, not outthinking itself, but going against its better nature, let's say. But then you might have circumstances [00:28:30] where someone with power within an organization says, I want you to do that anyway, or I'm going to do that anyway. And so it's a multifaceted problem. And you're right that I think that's part of it. What makes it extremely interesting. And I don't necessarily know where I'm going with this, but you it this is something that it sounds like. And correct me if I'm wrong, but it sounds like the, the, the accuracy or the safety in the compliance. [00:29:00] It's almost that this it wasn't an afterthought, but you kind of stumbled on it later and then you're like, oh, that's exciting. That's a new problem to solve that we can do. And and then you had you, you kind of had your proof of concept with your customer and, and you did it so quickly. And. Yeah, that must have been, that must have been exciting.

Omri Mor: Yeah. I mean, we've always thought about it, but, you know, as you build a platform, you got to build the basics first and then you specialize second. And this was just a really fun opportunity [00:29:30] to say we could do more for our customers. And we do have customers that come to us with a lot of money movement. Right? It's not uncommon for someone to come to us with, hey, I need a push anywhere from 10 to $100 million a month. Um, so the way I'm thinking about it is, okay. Well, you know, um, going back to our initial conversation is, what would our customers do if we no longer existed? Yep. And part of that question is, [00:30:00] how can we be a more reliable sticky piece of software. And if you could tell your executive team that didn't give you budget for any fraud resources, that now your accounts payable platform has it natively and you don't have to pay extra for it? That sounds cool. Yeah. Right. Um, I, um, you know, I just moved into a new house, and I just installed cameras. You know, ring is a [00:30:30] very like. I think the ring. The ring doorbell is very much what this industry is missing. And that's what we're trying to provide. The ring doorbell at a very, very base level was let me see who's at my front door. But at the same time it gave you safety. It gives you recording, you know, um, another example today, new cars have built in 360 cameras.

Caleb Newquist: Yep.

Omri Mor: If someone dings your car, you can feel good [00:31:00] about being able to prove the insurance. What I'm trying to say is that sometimes solving for safety is a nice little novel thing, right? That all of a sudden reboots how you think. So if you have a car from before 2001, you're probably not convinced that you can prove your innocence in a car crash. Or if someone just scratched [00:31:30] your car while you were shopping for groceries. Post 2001. It's almost a guarantee that the new car that you will buy will have 360 camera vision, right? And will actively record it. Um, I do wonder what percentage of the American households now have a ring camera. Yeah, right. Someone approaches your house. You have it. You have their audio, too. Yeah. Um, I think what I'm trying to say is that we stumbled into [00:32:00] it, and the more we spend time working on it, the more it's funny that we didn't build it five years ago. Yeah. Um, and for what it's worth, I think technology is easier right now to implement overall as well.

Caleb Newquist: Yeah. So you said you had and you said you had an example that you wanted to share. So what is what's the example?

Omri Mor: It's the it was a $6 million one.

Caleb Newquist: Oh okay. You did. Yeah.

Omri Mor: Great. Yeah. The tweet you know what I mean.

Caleb Newquist: That's right. Yeah. [00:32:30]

Omri Mor: How like, think about being a CFO and saying, dang, I can't tweet. I can't post on LinkedIn. I can't communicate my intentions. Right. Because I'm a walking target, right? And I don't think that the average CFO thinks about that.

Caleb Newquist: Right, right, right.

Omri Mor: But it's true. I think at the end of the day, it is true. Um, for what it's worth, we get my coworkers get a million text messages every month from Fake Omri. We have [00:33:00] an emoji in slack. A fake Omri. It's evil. Omri. Oh, nice. Um. And it's almost like one of those things that everybody shares their evil Omri, um, fraud, text and fraud emails that we get sent in all the time. Right. Um, I think, like, as a culture, we make it fun to find fraudulent activity. Yeah. At our company. Um, yeah. And the fact that the team has a picture of me with horns in [00:33:30] beaming red eyes really says everything you need to know about that, too.

Caleb Newquist: Yeah. All right. Um. All right, so we I don't know, we have a few examples from past episodes that maybe we can talk about, and maybe you can say. Yeah, I mean, my my hunch is that Rootable would be able to stop most of these, but I don't know. So I guess.

Omri Mor: Let's find.

Caleb Newquist: Out. Let's find out. Okay. Um, so here's a quick [00:34:00] recap. This is, uh, there's a small town in Dixon, Illinois. There's a small town in Illinois. Dixon, Illinois. This is a municipal fraud of like, 50, $53 million. And over many years, like, over the course of, like, 20 years. And what she did was she siphoned funds from the municipality's accounts into a secret account that she had, uh, established at the same bank, but she just created an account that nobody else knew about. [00:34:30] And then she started issuing invoices like they were like, mostly like sewer projects and things like that. Um, and it was they could make it payable to, um, this, this, this secret account that she knew about. And then from there, she could move it to her personal account. And there she, you know, spent millions of dollars on Quarter Horses and, you know, all kinds of crazy stuff. Fancy clothes to wear while she's showing Quarter Horses, things like that. [00:35:00] Um, so anyway, so that's a really broad. That's a really broad, high level version of the story. I'm just curious if anything is jumping out at you.

Omri Mor: Well, first of all, you wouldn't have fake invoices. Even though they were fake in nature. They wouldn't be modified. Does that make sense? So yeah, when you and I think of a fraudulent invoice, we think of an invoice that was doctored with new information, kind of like digital whiteout, if that makes sense.

Caleb Newquist: Yeah.

Omri Mor: Yeah, that's what we think about. But what you're describing, she was making [00:35:30] real invoices for a fake company.

Caleb Newquist: Yep.

Omri Mor: Now there's two things on how you solve that there. One is approval rules. Right. And this is nothing that's unique to radical right. You just make sure that there's a proper approval hierarchy and controls of how we pay and why we pay each vendor. Right. Maybe she was. Maybe these invoices were flying under the radar because they were, like under $1,000 and so forth. Yep. The other thing that we recently launched was the ability to [00:36:00] verify bank account ownership. And that's where we would have probably flagged it.

Caleb Newquist: Ah.

Omri Mor: Um, we now can say, hey, the legal name on this w-9, for example, we can collect a w-9 and then in real time talk to the IRS and say, is this a real company and owner?

Caleb Newquist: Yep.

Omri Mor: Now we can also say, does that legal name that was verified by the IRS own this bank account?

Caleb Newquist: Yep.

Omri Mor: I think that's where we would have started finding it, if that makes sense.

Caleb Newquist: It does. Yeah. Right. Okay. [00:36:30] Very very interesting.

Omri Mor: But it sounds I mean bank account to bank account. I mean, she's creative. You gotta give her props.

Caleb Newquist: Yeah. I mean, she carried it on for 20 years, and it's amazing. Yeah. And the only way it was found was that her Assistant was preparing for like a city council, um, presentation. And she called the bank and said, I need I need all of our I need the I need the statements for [00:37:00] all our accounts. And so the bank, not knowing that she didn't know that there was this secret account where all that money was going, sent her this account. She picks up the statement of account she doesn't recognize, and it's got these huge numbers on it. And then she goes to the mayor and says, I've never seen this bank account before. And there's lots of money moving through it. And that's how they found it.

Omri Mor: On that note, since we're on a podcast, I'm currently listening to a podcast called God's Banker. [00:37:30] I don't know if you've heard it.

Caleb Newquist: I have heard of it.

Omri Mor: It's fantastic. And it's about fraud and the Vatican Bank in the 1970s and 80s. And, um, as someone who thinks about this all the time. It's a fascinating story. Yeah. It's what you just described. But across eight, I think, podcast episodes. Oh, wow. At a much grander scale. Yeah, right. With the mob and [00:38:00] government agencies and everyone involved. It's like the Hairiest mob story. I wouldn't say mob story. Maybe fraud story. There is. And, Caleb, I'm just waiting for an HBO series on this.

Caleb Newquist: Yeah. Okay. Now we're talking. Okay.

Omri Mor: You know. Yeah. Let's make let's make this a fun conversation topic. Right?

Caleb Newquist: Yeah. Yeah. Well, it is, I think the thing that I was thinking about this, I think I was thinking about this today. I think [00:38:30] fraud like, the more and more I read about these stories and research these stories and talk about these stories is that fraud is such a human thing. And like one of our, one of our interviews from ages ago was a fraud professor and she. Ironically enough, she made a documentary about this case in Dixon, Illinois. Her name is Kelly Richmond Pope, and she said to Greg and I at the time, she said, everybody's got their number. And I was [00:39:00] I was skeptical of that for the longest time. And I thought, no, there's no there are people out there who can resist, can can resist, you know, doing the wrong thing because they know it's wrong. It there are there are people out there. And I thought and I, I remember thinking it's like, no, I think I would say a lot of people are that way. But if you put somebody, somebody in the right circumstances, circumstances of their job, circumstances of their life, circumstances of opportunity, all [00:39:30] that fraud triangle bullshit. I mean, it's not bull. It's not it's not total bullshit. But the point is, what I'm saying is, if you put me in a situation and I'm desperate for money, but I have an opportunity and I can rationalize it to myself like, yeah, I'm probably capable of it given the circumstances. I also just read a I just read a book, Dark Matter, about a it was about the multiverse. And so that's one of those other things I'm like, oh, there's definitely versions of me in other dimensions [00:40:00] that aren't probably doing fraud or doing fraud podcasts, but are maybe committing fraud. I don't know.

Omri Mor: There you go. Um, I mean, but Catch Me If You Can is a beautiful movie just on this, right?

Caleb Newquist: Yeah.

Omri Mor: Um, I do think that what's interesting is that as a, um, work culture, we've gotten better at people operations, trainings, uh, compliance, stuff like that. Um, but, yeah, it's what's really still interesting to me is that [00:40:30] in 2025, I do still think that the resourcing and the conversation isn't there. Right? If that makes sense.

Caleb Newquist: I think you are. I think I agree with you. Yeah.

Omri Mor: It's like it's almost like I do love that we have the SOC standards and the ISO standards and so forth. It almost feels like if you're moving X amount of millions of dollars per month, you should be able to show exactly how you're tracking auditing your money. We don't really have a standard [00:41:00] for anti-fraud.

Caleb Newquist: Internal, right?

Omri Mor: Or here's my best effort to it. That makes sense.

Caleb Newquist: Yeah. Okay. Here's another one. Um, so here's the story. We just this is a recent episode we did is about a finance director at the Yale emergency, uh, uh, emergency school of medicine. Or how would you say that? School of medicine within, I don't know. Yeah, something something like that. Anyway. [00:41:30] Is that Yale medical School? This finance director was buying, uh, mostly tablet computers. And she I mean, this this is this is a good one. She embezzled more that. Well, she didn't really embezzle, but she she fraudulently acquired, like $40 million of equipment, mostly technology equipment. Um, and, and then, you know, selling it on the black market and then keeping the money for herself. Right. Okay. Um, [00:42:00] in that case, there was a purchase. She was subject to a purchase threshold. It was like 10,000 bucks, let's say. And so she deliberately kept she she broke up her purchases so nothing would break the threshold. And that's how she was able to avoid, uh, at least another step, a higher level review. So given those circumstances, what jumps out at you? Like what [00:42:30] what what could, what could? I'm surprised.

Omri Mor: Like, Yale doesn't have a procurement process. Like that's the first thing I heard about it. Yeah, because think about it. She would have to say, I'm ordering this many things and that's approved. Get, you know, let's go get the invoice. So you know what? As we keep talking about this, I'm just surprised at a lot of companies do finance like the Wild West.

Caleb Newquist: Yeah.

Omri Mor: And you just said that I mean, Yale might have a procurement process, but maybe that department or that school [00:43:00] doesn't. Right. And because they didn't institute it, there was no way to track budget. There was a way to track approvals per invoice, but not budget across vendors. Right, right. Um, and there was no, um, I mean, she was buying the right things. So there again, there was no fake invoice and there wasn't even a fake vendors that she was paying.

Caleb Newquist: Nope. Not a fake vendor. Nope.

Omri Mor: I think my biggest question is what platform was she [00:43:30] using to do this? And in theory. Uh, you know, for what it's worth, I just don't understand the recon side of it. It's one of those things that if you're doing your recon and you're closing your books and you're doing a quarterly audit, you would know very quickly where you're spending the money. Um, but, you know, Caleb, it's really funny. I would say, hey, before you even think about thinking about implementing a procurement process, that would have been solved really quickly, [00:44:00] right. Uh, and and here's the thing, though. A procurement process is more work. Like straight up any way you want to slice and dice it. So you might be actually be able to make a very convincing case that you don't want to add procurement process. That said, I think software is getting good enough where procurement process is not that bad. Yeah. Um, yeah. But gee. And was she also she was the person paying for it too, right?

Caleb Newquist: She was, [00:44:30] to the best of my recollection, she was, um, approving. Like, she could, she could, she could make those purchases and without without a without.

Omri Mor: Approval.

Caleb Newquist: Without an additional approval because she was keeping it below the threshold.

Omri Mor: We would have found out that the frequency in which you're paying this vendor is too common. Does it make sense?

Caleb Newquist: Yep.

Omri Mor: Um, like, I think we would have been able to say that typically [00:45:00] other vendors in this category, you pay every 70 days, and this vendor you're paying every other day. Yeah, right. Something like that. I think that we would be able to start sniffing in the right area, if that makes sense. Yep. And we would also be able to just really understand that funds are going there. I think the real big question though is and this is more of going back to like month end, close [00:45:30] and so forth, She was making real purchases. Yep. I wish. This is almost where I wish now. I have to build a feature about the delivery of goods. Like, I wonder where she was shipping the goods. If she sent them back to Yale and just didn't. Into a warehouse that nobody knew about. That is fascinating. And again, Caleb, you say everybody has a number, right? Um, but at least we would be able to see some anomaly in frequency of [00:46:00] invoices compared to the mean, if that makes sense. Caleb. Yep yep yep. Um, and I wonder if we would also be able to detect. That these are the only consistent payments that are going unchecked with them, like, without approval. Like, what I'm trying to say is, let's say you needed an approval over $10,000, but you're making $400,000 of spend.

Caleb Newquist: Yep.

Omri Mor: In [00:46:30] total.

Caleb Newquist: Right?

Omri Mor: That's where it's a very interesting by a single person. That's where it becomes really, really intriguing. Yeah, right.

Caleb Newquist: Like, you could spend you could have invoices for 7000, 8000, 9000. But over the course of 60 days, if it adds up to over a half $1 million, is that a second threshold trigger?

Omri Mor: Yeah, I think so. Right. And I think that, um, like, we have, um, one of our features is that if you [00:47:00] onboard a vendor, we can enroll them in monthly compliance monitoring, meaning that it will check their tin and their watch list every month, just all the time. And if they update their w-9, we'll it will we will let you know if anything is wrong. If they came on a watch list, we will pause transactions and so forth. Uh, so in theory, we're we're literally keeping track of the business entity and saying, is there anything weird? We'll pause your transactions, please manually review read and so forth. I think the same thing [00:47:30] is for bank accounts. They add a new bank account. Yep. Did they own this legal name? Maybe it's a subsidiary of theirs and it's good to go, but please review it.

Caleb Newquist: Right.

Omri Mor: Um, and yeah, we are thinking about is the address on this invoice different than last time? Is the frequency of payment and so forth. But what you're describing is really interesting because, God, you guys should come over and we should build features together. I want to learn the more stories, the better, because in theory it is very [00:48:00] easy to track that.

Caleb Newquist: Yeah, right.

Omri Mor: You can say that vendors in this um, GL account category should not have a spend, because you might not catch it if you set up rules for specific vendors. If you have 10,000 vendors, you might never catch it. But if from a booking perspective, it's booked to a specific department or GL category, that might be the easiest way to do it. And Caleb, this is where we need to have a forensic accountant with us on this phone call. Yes. About how we would do it, but [00:48:30] I'm just trying to think about. I'm trying to think about the ways I would get around my vendor and the way I would get around my amount. But in theory, the cool thing about ERP is that you have to book it to something.

Caleb Newquist: Yep.

Omri Mor: And that's where the irregularities start showing up. For example, if I'm booking it instead of an office expense to employee travel. Right. That that is obvious. That it's weird to the user. So, um, you've [00:49:00] piqued my interest. That's all I want to say.

Caleb Newquist: All right. Is that the perfect place to end?

Omri Mor: Um, I think that the office of the CFO should request more budget for training and software for fighting fraud. I think that it is the easiest thing to ask for. You know, um, there's enough data that businesses lose millions of dollars a year, and I think we've done a very good job supporting [00:49:30] many departments that work with the office of the CFO. And I think the 2020s are really the time to to start spending time and money on empowering the office of the CFO, the finance, accounting. Um, you know, FinOps, any department. Um, I mean, too many businesses that have a great business have great customers and deprioritize other people in finance who I think are just amazing firefighters. [00:50:00] They literally put out fires every single day.

Caleb Newquist: Thanks, Omri. Okay. That was Omri Moore, co-founder and CEO of routable. Uh, maybe we'll talk again someday, I don't know. I think, like I said, I mean, we kind of at the end there, we really got rolling. But he had to go and you know, I had to go. I had, you know, I had I had jury duty the next morning. And so I had to, you know, I needed some shut eye. I had to get up early for that [00:50:30] anyway. Yeah. So if you are, if you are maybe in the market for a product like Rootable, if those features sound good, the stuff that Omri was talking about sound good? Check them out. It, uh, you know, might work for you. I hope it does. Anyway, uh, let us know what you think of this episode. Like I said, it's a bonus. We interviewed, uh, the CEO of a sponsor, which we've never done before, [00:51:00] but we thought we'd try it. And we hope you enjoyed it. And if you got feedback, email us. Oh, my. Fraud at earmarks. Com and that's it. We'll see you soon.