Exec Seat: Q&A With NETbilling's Mitch Farber
In the ultra-competitive adult billing space, companies come and go. Many billing companies that were doing well — or at least appeared to be doing well — 10 or 15 years ago have since gone out of business. But NETbilling.com, which was founded in 1998, has endured, grown and prospered.
And after 15 years, the California-based payment gateway remains a leader in the billing space. NETbilling, staying faithful to its longtime vision, has continued to provide merchant accounts and refrained from becoming a third-party processor.
During an in-depth interview with XBIZ, NETbilling’s CEO and founder Mitch Farber discussed everything from the company’s longevity to its marketing goals to changes he has observed in the adult entertainment industry.
XBIZ: What are some of the most valuable lessons you have learned about adult billing during your time in the billing space?
FARBER: NETbilling not only bills for adult — we also do a lot of mainstream and a lot of other high-risk industries — and we’ve learned a lot over the last 15 years. One of the things I’ve always prided myself on is attending a lot of trade shows. Networking events are extremely important. We rely heavily on the XBIZ shows and AVN and the European shows too — not necessarily to attract new business, but to really solidify relationships with our current merchants. We don’t typically have an ROI from these shows because a lot of it is really solidifying relationships that we’ve already made — meeting with banks and things like that. The relationship part of this business is extremely important for us. I really try to teach my employees, especially the ones that attend shows, that this industry is all about relationships.
XBIZ: Does having a combination of mainstream and adult clients illustrate the differences between the two and serve as a reminder of the specific needs of adult companies?
FARBER: Absolutely. I’m a very hands-on owner, which is important. I’ve seen a lot of companies where the owners were present in the beginning when the company was getting started but kind of stepped out of the spotlight and moved on to other things. But I feel like it’s very important for an owner to continuously be involved, especially if you want your company to thrive and innovate.
XBIZ: As president and CEO of NETbilling, what are some of the biggest challenges that you face in a typical week?
FARBER: Balancing my extremely busy schedule while working hard to keep our 50 employees and thousands of merchants happy is really my primary focus throughout the week. I’m also involved in NETbilling’s marketing strategy; that’s a big part of what I do. And I also work with our merchant relationship specialists. So I have a pretty heavy workload both inside and outside the office.
XBIZ: That would explain why you typically put in a 15-hour day or more.
FARBER: I used to put in 15 to 18 hours a day, but I don’t know if I do that so much anymore. I would say I still put in a good 12 hours a day between email, calls, office time and meetings, especially with new projects that we’re working on.
XBIZ: It’s a careful balance to delegate and at the same time, maintain a hands-on approach.
FARBER: That’s right. I’m kind of a control freak, so it’s hard for me to delegate things. But I have learned over the years that you just can’t do everything yourself, and having a great staff that you can rely on is extremely important.
XBIZ: Maintaining a staff of 50 employees is certainly a positive given all the financial upheaval of recent years.
FARBER: Yeah, we’ve been solid since we started. It started with just two of us. Then it expanded to three, and we just blew up from there. As a lot of our merchants started growing, we grew as well. We’ve been profitable since we started, which is great since we were part of the whole Internet boom and bust. And we’ve really stuck to our core. We’ve never deviated from merchant processing. We never became a third-party processor because we didn’t want to take that risk. We’ve seen so many third-party processors come and go over the years, and we decided that there was a big void to be filled as far as gateway processing with merchants.
XBIZ: So you’ve found that staying out of third-party processing altogether has been advantageous for NETbilling?
FARBER: Oh, absolutely. It was pretty hard back in the day when it was harder to get merchant accounts, but now, it’s a level playing field between third-party processors and acquiring merchant accounts. There is a lot of benefit when merchants want merchant accounts, and the merchants who have been in this business for a long time know that. Because we’ve concentrated on that now for 15 years, we’re really at the forefront.
XBIZ: There’s something to be said for finding your niche and sticking to it.
FARBER: Absolutely. And it was a risk for us back in the day because we didn’t know how it was going to be as far as being able to acquire merchant accounts. But luckily, merchants have done well — and Visa and MasterCard understand that merchants want that control that they get with a merchant account. As long as they can keep their chargeback rates down just like with a third-party processor and follow the same rules, they can enjoy that control and ultimately, the money that they save from having a merchant account.
XBIZ: Adult billing is a field with a lot of competition. What are some of the things that make NETbilling stand out in such a competitive field?
FARBER: Being around for 15 years shows our reliability. While many companies come and go, we’ve been able to hold our own and do very well for our merchants. Many of our merchants have been with us since we started and are still in business today. Plus, the flexibility that you get with our system and having your own merchant account makes us stand out—that, and having value-added options such as our call center, which will handle customer service and phone orders and do outgoing campaigns, risk management and order verification. We do all of that in our call center on behalf of our merchants. The call center service has set us apart from many of our competitors.
XBIZ: The call center is another way in which NETbilling has been very hands-on.
FARBER: Sure. And the call center is hard work. It’s a lot of employees. We service so many different types of merchants. We aren’t just handling calls for one specific company or only one product or service — we’re handling calls for many, many merchants that all want things done a little bit different and offer different products and services. Our call center staff has to be well-versed in handling all these different products and services.
XBIZ: And you’ve maintained a U.S.-based call center instead of outsourcing and using a call center in India.
FARBER: That’s right. We’ve had some merchants who, because of the cost factor, explored using offshore call centers. We’ve even had a couple that actually set up their own call center as they grew, and every time that’s happened, they’ve come back. We feel that we do our job very well. While we might charge a little bit more than a call center in India, the sales are greater, the retention is greater, and the control is much greater using our U.S. call center — which is in-house as well.
XBIZ: It’s certainly easier to maintain a hands-on approach with a call center in California than with a call center in Mumbai.
FARBER: That’s true. The problem with a lot of offshore call centers is that while many of the reps speak English, they don’t have a full grasp of the language. There’s a lot involved in dealing with a customer who may be angry or is confused, and just reading off a script without having a full grasp of the language is not really a viable solution for most businesses. And that’s where we thrive: even with the multi-lingual ones, English is their primary language. You can’t be a problem solver when you’re not fully understanding what the customer is looking for.
XBIZ: Many people in the adult industry are predicting substantial growth in the mobile sector. From a billing standpoint, what steps must webmasters take to be as mobile-friendly as possible?
FARBER: Mobile payment forms are a must. One-click payment options, compressed graphics — NETbilling has many mobile tools.
XBIZ: What are some of the worst mistakes that American webmasters typically make when it comes to billing in foreign markets? Please discuss Europe, Asia and Latin America.
FARBER: For any webmaster, ignoring worldwide sales is a mistake. Offering currency conversion in your payment forms using geo-location, translating languages and offering alternative payment methods are all key to capitalizing foreign markets.
XBIZ: On the whole, how knowledgeable do you find American webmasters to be when it comes to billing in foreign markets? How great is their understanding of non-U.S. billing needs, and what steps do you take to educate them?
FARBER: Merchants and webmasters who have been around a long time know how important foreign markets are, but many don’t know how to go about setting up these things without going overboard. So we try our best here at NETbilling to lay out the viable options that are available with currency conversions and alternative payments without the merchant going crazy, offering too much and confusing people. I do believe that keeping it simple and just offering a few options is really key, especially when you’re talking about mobile — where the screen is so small. You have to keep those choices simple. You can’t offer 50 different methods of payment. All you’re going to do is confuse people.
XBIZ: In what ways do you see NETbilling evolving in the coming years? What changes in the adult billing space do you foresee, and what steps will NETbilling take to address them?
FARBER: NETbilling will continue to expand our mobile offerings as well as our partnerships with banks, both domestic and offshore. We’re also very big on fraud and chargeback reductions. We’ll continue to develop our tools in order to help our merchants reduce fraud and chargebacks. We give our merchants extreme flexibility with the call center as to how they want their customer service handled, and we’ll continue to expand that. As far as billing goes, I don’t think billing itself will change much aside from better adaptation of mobile.
XBIZ: If you were hiring a new employee at NETbilling today, what are some of the things you would look for? What things would it take for them to be effective at NETbilling?
FARBER: Many of our employees have been with us for over five years. We’re very family-oriented here. That being said, I do expect hard work and dedication from our employees — and I try to take care of them well. When we hire new employees, we look for people who have the will to learn and want to be here long-term — not people who are just happy to work part-time while they’re working their way through college.
XBIZ: What are some of the things that make the adult billing field exciting for you?
FARBER: For me, the constant ideas for development that I see from our fellow vendors and our partners and especially, our merchants, are very exciting. We experience that regularly because we’re at the forefront of their financial assets. This industry never gets boring, and I feel that the Internet and e-commerce as a whole are still in their infancy. So there’s so much more room for growth.