FF 015: Y COMBINATOR WEEK: Eric Glyman, Co-Founder & CEO @ Paribus

Eric Glyman, Co-Founder and CEO @ Paribus (Y Combinator S15), the service which scans your inbox for receipts and automatically saves you money when the items you bought drop in price. Stores often guarantee that you will get the lowest prices. But they don’t follow through unless you work for it. Paribus does the work for you. In Today's Episode You Will Learn: 1.) What was Eric's career before Paribus and what was his a-ha moment was for the idea? 2.) How did Eric do things differently from the typical startup? Was this effective or would it have been more productive to go full in? 3.) What were Paribus' testing hypotheses like? Does Eric prefer mass market testing or niche 100 person testing? 4.) How was the admissions process for YC, why did Eric choose YC and why were YC attracted to Paribus? 5.) What would Eric advise founders looking to get into YC? Is there anything they can do or know that will increase their chances of getting into YC? 6.) What were the breakthrough moments for Paribus? What were the most challenging elements and how did Eric overcome them? Items Mentioned In Today's Show: Eric's Fave Book: I, Robot Eric's Fave Blog: AppSumo by Noah Kagan As always you can follow Harry, The Twenty Minute VC, Eric and Paribus on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, follow Harry on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Hello and welcome to the 20 Minute VC with this very special week featuring the world's most famous accelerator. It is of course Y Combinator. And with it being Founder's Friday, what better way to embrace YC week than to have a recent YC alum discuss his experience with YC and growing his startup? Therefore, I'm delighted to welcome to you Eric Glyman, co-founder and CEO at Paribus, the service which scans your inbox for receipts and automatically saves you money when the items you bought drop in price. Stores often guarantee that you'll get the lowest prices, but they don't actually follow through unless you work for it. Paribus does this work for you, so when you're owed money, Paribus automatically gets it for you.

• 0:45Harry Stebbings?

  Great idea, right? Well, YC certainly thought so. But before we get immersed in the world of YC, from the startup perspective that is, for anyone out there who dreams of attending YC or any other prestigious accelerator or having your own startup, the most important step is actually forming the company itself. You have an idea, now what? Well, head over to Vidar Law. With decades of experience assisting startups, they will handle all entity formation and establish the foundations for your new business. YC, here we come. So to get the ball rolling with your idea, drop Chris a line at C W E R N E R at vidarlaw.com.

• 1:25Harry Stebbings?

  That's C Verner at vidarlaw.com or go to www.vidarlaw.com. Similarly, if you're loving investing and would love to hear more from Investing Podcasts, we'd love to hear what you think of our sister show, Angel Insights, which delves inside the world of angel investing to discover their tips, tactics and strategies. And you can find this on iTunes by searching for Angel Insights. But you've heard enough from me now, so it's time to get immersed in the world of Y Combinator. Therefore, I'm delighted to introduce to you Eric Glyman, co-founder and CEO at Paribus.

• 2:08Speaker 01

  You have now arrived at your destination.

• 2:11Harry Stebbings?

  Welcome to Founders Friday. It's an absolute pleasure to have you on the show. Thank you so much for joining us.

• 2:17Speaker 02

  Sure. Thank you, Harry.

• 2:18Harry Stebbings?

  Now, can you kick us off by giving us a little background on yourself and an insight into your career before Paribus? And what your aha moment was for the idea?

• 2:28Speaker 02

  Yeah, absolutely. It's a bit about me. I was born and raised in Las Vegas, Nevada, grew up there for 18 years. And I guess there was three stages to what actually drove the aha moment. The first, my first job, I was 18 years old. I worked at a store called Express and I was selling jeans and shirts and all that kind of stuff. And what stuck with me over the years was every, every weekend, there'd be these super sales for 20% off. Families would come in, spend thousands of dollars. And what was weird was every Monday, things would be 40% off. And it was rinse and repeat, rinse and repeat. You would, you would push people through at these deals. They thought they were getting a good deal, but it turned out they weren't. And it was strange the way that, on a lack of knowledge, a lot of retail was driven.

• 3:12Speaker 02

  Later on, so I went, graduated from Harvard, spent a lot of time abroad, lived in China for a year, all this kind of stuff, and worked in an industry called restructuring. In a nutshell, you were dealing with these companies that were about to go bankrupt or were in it. Companies like AIG, US Airways, and American Airlines merger. Now the firm I work for is advising Greece, all that kind of stuff. And my job was to go through the finances and the legal contracts that dictated what happened when things went wrong. In a nutshell, I read a ton of contracts. I saw the meanest people in the world, hedge funds, going, going to bat to try to read these contracts and take advantage of each other.

• 3:50Speaker 02

  And just trying to gain an appreciation for, look, in, in the world, there are these contracts that dictate what rights you have.

• 4:00Speaker 02

  It is up to people to enforce it. And often, if you do things, you're entitled to things. And things should go a certain way if only you read it and were able to enforce it. The aha moment for me came um about two years ago. When I made a purchase myself, I finally was a consumer. And the next day it dropped in price by a hundred dollars. I was curious.

• 4:21Harry Stebbings?

  Um. Hate it when that happens.

• 4:23Speaker 02

  That's it. It happens. It happens all the time. And then all of a sudden I I realized there um like like wait a second like one. Uh these sales cycles are happening all the time. Two, um I was mad. Is there something I could do? And I started digging around through all these policies. And I realized there was a policy. It was protected. Then spent another couple hours on the phone. I could get it back. And just a little bit of work, I was able to recover. And I was like, look, if this is my job, I do this all day for other people. Um and I didn't know about it. Um what's everyone else doing? And can we automate it? And so I just, that was from that one moment, the pieces of knowing that sales are happening all the time. If only you knew and had some way to alert it and and get that recover that money, you could do quite a bit. Um and so that formed uh the first moment to start working on Paribus.

• 5:07Harry Stebbings?

  And in the very early days, you did do things differently from the typical startup. So how did you act differently? And what exactly did you do?

• 5:16Speaker 02

  Yeah, so from that moment, um I went spoke with my co-founder that day. And we were like, look, we could have a simple system where one. Was it possible where we could just see a purchase happen and then track the price over time? Like, that seems like we could do that. Uh next, was it possible to track the price and then send a simple claim, um automate that element? We're like, maybe we can do that. And so we started spending quite a bit of time to to test all these different hypotheses. Um we knew the experience we wanted to create, but we wanted to figure out what's the most simple um scalable way. Um to to actually offer in this service. It was a long period of discovery um and really mapping it out.

• 5:55Speaker 02

  We realized to get this transaction information, um the most efficient way wasn't scanning a receipt. That was too much work. It wasn't um a credit card statement. There wasn't enough information there. We could do this in a big way just by email. Um and then we wanted to figure out, well, does it work at this store? Does it work at that store? Trying to really test these hypotheses over time. It spent, it took a lot of time and we spent about a year in that stage. Um but it allowed us, when we were ready to build the serious infrastructure, to create a more elegant experience, to really know the landscape. Build it the right way the first time, the right kind of architecture, um that would enable um faster growth when we were truly ready for it.

• 6:36Harry Stebbings?

  And do you think it was effective doing it over a much longer period of time, so for you a year, than than most startups diving headfirst into it and trying to conquer it in a few weeks or even months?

• 6:48Speaker 02

  I think for us, I was uh, I was happy with it. There definitely came a time where we had to switch. We had tested enough hypotheses to really prove it. We knew and we could do it and dive on in. And you have to switch. I would say like, really pay attention to when that moment comes. But it was effective. And I I think that for anyone who's considering, I've got this idea, I wanna start, or should I make that leap? Test the right kind of questions and be really diligent about it. I I, we spent a year, but during that year, every single week, we had a goal, we stuck to it, we figured it out. And we kept on doing that. So don't let, if you're gonna spend a year, make sure that it's filled with experiments that you need to run, getting things right and do it.

• 7:35Speaker 02

  That way it can be effective. So don't go slowly, but test things.

• 7:38Harry Stebbings?

  And how do you think founders can know when it's the right time to take the jump? Is there any tells that maybe they can't carry on with their day job with the current growth that they're experiencing? Or what would you suggest?

• 7:50Speaker 02

  Yeah, it's when uh, for us, it was when we realized, all right, we've done it with enough stores. We can automate this. We're able to automatically send something for myself, for my friend, for my mom, she's excited about it. And we realized like, whoa, wait a second, like,

• 8:10Speaker 02

  it's ready to scale. This is a simple, we've we've hit that, I I guess in the in the general way, it's the minimum viable product. You've got it. That I feel like is the moment, when you can take something, start to scale and build. And when you know you have that, it's a good basis and you're ready to go, then it's time to really invest the time to take it and grow it. But really search for that.

• 8:33Harry Stebbings?

  And you mentioned about your testing hypotheses there. So what were the testing hypotheses like, for example?

• 8:40Speaker 02

  Yeah, I mean, for us, we wanted to figure out is uh,

• 8:45Speaker 02

  So to start out with, it's an incredibly murky world that we're dealing, that Paribus operates in, where some of these stores have very clear policies, but they don't want you to know about them. Or they know about it, but they don't make the process actually clear. And so we wanted to figure out, if we wanted to get you, Harry, twenty dollars back, what did we need to actually be able to have? Did we need to know every price in the world? No, we just needed to know what you bought. Okay, so you don't need to know that. One, do we need to check and compare against everything? It's like, actually, we don't. We just need to check and compare it against where you bought it from. And then when we actually know what you bought, we see the price drop. We would ask, alright, well, how do we efficiently get it back? How much information do I need to list at minimum to get that money back?

• 9:30Speaker 02

  And can I do it over phone? Can I do it over email? Do I have to take it back into the store? To really ask those questions, to figure out at a most basic level, if it just is two of us, the world doesn't know, doesn't care. We have very little resources. How can we get the most leverage? And really just collect to make it as simple as possible. For us, what that led to, once we figured out, okay, we just need to know to collect a receipt. From that, we only need a few items. From that, it needs to go only to a few places. We were able to take those, what we knew, the map of the world as we knew it, and condense it down to a simple product where we realized, if we could just get you to click one button, link it to email,

• 10:12Speaker 02

  we could pull everything that we needed to take care of the rest. And so, once those pieces and hypotheses were tested, we could make the right system that was so easy for a consumer or someone to sign up. It took under ten seconds.

• 10:25Harry Stebbings?

  And talking of testing there, in the initial days, how did you go about your testing process? Did you try and get it to as many people as possible and get as much feedback as possible? Or did you do quite targeted niche testing with, say, a hundred people?

• 10:38Speaker 02

  Yeah, niche, niche for sure, um, at the very beginning. Cause we knew if, if I couldn't, if I could get you, uh, money out of nowhere, that, that's pretty attractive. The, the harder thing was, um, could we make it work? And so it was a ton of dog food. Um, I would just go and, uh, figure out, uh, what did I need? Or what was my friend asking to buy? And I said, uh, could I buy it for you? Or could you, could, could I use this like on my account, right? And we would go and we'd buy it from all these different stores, from twenty stores. Um, we would test against, um, you know, a store's policy, a credit card policy. Um, a lot of it is if I could do this for myself and I like it, and if I could do it for a couple of other people, um, that was a big part of the testing. And then later on, once we would, um, starting to get the communications that came with it, I would do it on my friend and they'd say, all right, is this weird or is this not?

• 11:24Speaker 02

  Then he would try it on Reddit. Kind of simple forums were almost overnight. Um, you could in real time test these hypotheses. So my, my, my thinking there is, um, mass or niche? The bigger piece is how quickly can you do it? If you can do it fast, go for that.

• 11:41Harry Stebbings?

  Absolutely. So it's all about timing?

• 11:44Speaker 02

  Yep.

• 11:44Harry Stebbings?

  Okay. And I'd love to talk a little bit about Y C now. It is Y C feature week. So

• 11:50Speaker 02

  Awesome.

• 11:50Harry Stebbings?

  How was, you firstly, your admissions process for, for Y C? And how was the interview? It's often quite a daunting thing we hear, but how was yours?

• 11:59Speaker 02

  Yeah, no, it's great. I, I think that what a lot of people don't know about applying to Y C is most people do not get in on the first time. Um, we didn't. Um, the first time we applied, we had, uh, ten people. So we, we tried it right away. That was great. Uh, I mean, it was a good process applying, um, didn't even get an interview. Um, the next time, um, things changed. What we, we had, um, you know, a hundred times more people using it. We had, um, real traction. Our answers were much shorter, um, rather than having essays and all the things and possibilities we could do. It was very simple. It's like, we do this, this is how it works. Um, so try to keep it short, direct. Because often when you're condensing in your application, it shows clarity of thought, um, and understanding what you're already doing. So I would definitely emphasize on that.

• 12:44Speaker 02

  Uh, the actual interview itself, um, when you get there and you're in front of it, Is so rapid fire and intense. My my co-founder after the end of his interview took a took it was so tense afterwards, so fired up. He took a cup and he just crushed it in the sand after he walked out of the room. And it's it's like that. It's a ten minute incredibly rapid fire question. I think we must have gone through fifty to one hundred and under ten minutes where they ask you something, you respond in five seconds, ask you something, respond in five seconds. And they nail every piece of the business. So be quick, snappy, know your business, but go for it. And it's awesome.

• 13:16Harry Stebbings?

  And who who interviewed you at Y C? Which of the partners?

• 13:20Speaker 02

  Yeah, so it was Jeff Ralston, Justin Khan and Jessica Livingston.

• 13:25Harry Stebbings?

  Mm hmm. Absolutely. And then, why did you choose Y C? It's obviously, you know, one of the world's most prestigious accelerators and probably the most successful. Why did you choose them? And why do you think they chose you?

• 13:39Speaker 02

  Yeah, the biggest thing for why we chose them is you could just feel the energy. It was real, it was raw. And ultimately, it was incredibly focused. And I think that's the specialty of Y C as I know it is. They know that only one really, it's just a couple of important things. If you can get it right in the early days, it will give you the maximum leverage. And that interview, in my mind, was the biggest convincing point. I could just feel it. They knew the right questions to ask. They forced you to be serious and thoughtful about how you were going to grow, to test it, to iterate on it. And from what I had heard from others who had gone through it, it was clear that those three months were going to be a bender, but very much focused on the right kind of things. So

• 14:24Speaker 02

  for that, we chose Y C. I think for us, the big reason why I believe they liked it is, one, we kept at it. It was the second time coming through, stuck to the vision, iterated on it and didn't stop. We continued to work and make progress, whether or not they were involved. And I think that anywhere as a business, you need to have that grit and determination. The second piece is that we had something that was working. It was clear it could scale. And we could tell the, not only could tell the story of why, but could just create a really magical experience out of something small.

• 15:03Speaker 02

  And they could see, I think Jeff Ralston, like I said, had a great piece talking about it, but the magic thread where you could start out with one very simple type of transaction, put in an email. Get money back whenever prices drop, that's simple. But you could see it evolving and we could articulate that over time. And that um from going to a simple thread to weaving a larger story and picture in business is really, I think, a lot of what Y C looks for.

• 15:31Harry Stebbings?

  And when you look back now at the Paribus journey so far, what were the breakthrough moments for you? What were the real highlights? And then what were the biggest challenges or even lowlights for you? And how did you overcome them?

• 15:43Speaker 02

  Oh, yeah, I so that's a really good question. So there's it's always like a roller coaster. I I think in all this, where there are weeks that are phenomenal, you're on top of this world. The next week um down in the dumps and terrible. And I I would say for us, one that is very memorable came in about two months ago of this year, where we had had a huge month in May, um grown, added ten thousand um plus people grew a thousand percent in a month. And then all of a sudden, we were growing very slowly again. We didn't know how to fix the business, um how to actually grow and didn't have a realization on a day to day, what actually drove the business. And it was driving us nuts. Um we're working twenty hours a day, um with very little to show for it.

• 16:25Speaker 02

  Um and then we sat down and really trying to figure out why are why are we growing? And we realized that um for us, a few things about our business that are weird. Um Paribus operates in your email inbox. It requires a lot of trust. Um and people have to feel comfortable that um it's gonna work, that um when it goes in your inbox, it's not doing anything strange, um that it actually can get you money about it, because people just don't know you can get this money back. Um and we found that we grew the most when it was either they were, people were hearing about us from a publication or from a friend. And so we optimized for two things during that really tough time. One, um can we get reviews or thoughts or people to to write about us?

• 17:08Speaker 02

  But the bigger one was can we get you to tell your friend about it? Um we had a referral program um before around fifteen percent of people would share a Paribus after they signed up for it. Good, not amazing. Um and it was confusing. You could, there was two referral programs, you could choose one, and it was economically great, refer a friend, you get five dollars, we pay you money. Um but it wasn't it wasn't obvious. And ultimately, people are kind of um. Making money off their friend, but we made a switch to do a couple of things. One, we wanted to make it immediate where if you took one action, you could immediately get a better deal on what people were solving for. So we made it, if you share it with a

• 17:53Speaker 02

  friend, you're going to get 5% off for the rest of the year. Economically, I'm not as sure if it's good. It depends on the older referral program, but it was instant and you can control it. The second piece is part of the conversation. We listened a lot to how our customers were talking about it. And often what they'd say, the conversation would play out like this, is I just heard about this new service. I wish I thought of it. It tracks the prices of what you bought and when they fall, it gets you money back. You make money back. They charge, they keep 25% of it. It's a little steep, but it's a good deal. You should definitely do it. And that was fine. But what we realized is the pressure point and people's hesitation was around the pricing sometimes. They wanted to use it, but weren't sure if 25% was to you my action. So we're

• 18:38Speaker 02

  like, alright, let's tweak it slightly. And the conversation became, just heard about this great service. It's amazing. I wish I thought of it. It saves you money when prices drop. And you got to sign up for it right now because if you sign up, I cut my fee by 5% and you'll cut your fee by 5% too. And that two-sided element that could combat people's biggest hesitation and get them saying yes and wanting to share it transformed it. And now over 50% of people share it. And that took our growth from 5% a week to 20 plus for weeks and weeks and weeks on end. And so I think that really paying attention to why are people coming in? Why are people sharing it? What are the biggest problems?

• 19:21Speaker 02

  And how can you adjust your model to that to really find that distribution was a big, big, big breakthrough moment for us.

• 19:29Harry Stebbings?

  And if it's okay with you, we're going to move into a quickfire round now.

• 19:33Speaker 02

  Okay.

• 19:33Harry Stebbings?

  So your favorite book and why?

• 19:37Speaker 02

  Yeah.

• 19:39Speaker 02

  I, Robot, Isaac Asimov, incredible book, progression over time of different, like so one small snippets, you can read ten pages, fifteen pages, be done, learn a lot, think, go to sleep. And you're seeing over time progressions of different kind of robots and how they solve simple problems for people, think in different ways, and then grow into a much, you know, more advanced and elaborate robot over time. I think, for me, why I love it, is it's similar to, I would say, the journey we've gone through as a startup. You solve a simple problem, you encounter weird outcomes over time, you fix it, you iterate, you get better, and it grows into something more and complex.

• 20:23Speaker 02

  And I think that it's an incredible telling, super fascinating to read, highly recommend it.

• 20:28Harry Stebbings?

  And then a day in the life at Y C.

• 20:30Speaker 02

  Sure. My days were much more, very different than my co-founders. But for me, wake up at nine AM, think, try not to respond to emails, get to the most pressing problem, challenge of the day. After that, make a cup of coffee, get through all the emails, feedback that we needed to get through, and focus. For us, a big part of it was outreach, was press and product. So work is, would do, put times in my calendar for each ten AM to two, product, twelve, or

• 21:09Speaker 02

  so two to four would be outreach, four to six, it could be talking to the partner, talking with a, another company in the batch, pushing, iterating, rinse and repeat. Keep the structure, focus on the core goals, two, three things that matter, say no to everything else.

• 21:27Harry Stebbings?

  And for the Tuesday night dinners, when you were there, what guests did you have speaking?

• 21:31Speaker 02

  Great range, some from past founders, the founders of Airbnb were there, to, you know, totally different, Peter, Peter Thiel was a highlight, to, I would say, different founders and people who'd gone, gone the long way, whether they were, you know, three years in, five years in, ten years into the startups, a lot of great people that you'd expect.

• 21:55Harry Stebbings?

  And then what purchase under a hundred dollars has made the biggest impact on your life?

• 22:01Speaker 02

  You know what? It was it was one of the early ones on a journey that just kind of just snapped for us. It was it was a roll of toilet paper. Which was super goofy, but we I I bought this thing on subscribe and save. I I thought it was awesome. And it had been running for months, then finally we got Paribus turned turned on and working. And I realized that every two months I would I'd be stuck in the cycle where I'd buy this thing for like, I don't know, like twelve dollars. And then after the subscribe and save wave was there, about two days later, it would drop in price by like three bucks. And I just was like furious. I was like, wait a second, like, this is what is going on? Like, I I thought I'm supposed to be saving, getting everything off, but what you didn't know was it was moving.

• 22:44Speaker 02

  And then I realized there there is a problem. Consumers are in the dark. Let's build more. So that that pushed me a lot.

• 22:51Harry Stebbings?

  And then your favorite newsletter or blog?

• 22:53Speaker 02

  As of lately, AppSumo. It's a it's blogged on I know. Yeah, Noah Kagan. Awesome. I I love it. Great, great ways and good focuses on really being fast, selling something before you make it, try to test for demand and go from there. I I love the the lessons they do every week.

• 23:14Harry Stebbings?

  And then finally, what do the next five years for you and for Paribus hold?

• 23:19Speaker 02

  Yeah, I mean, this next year is about is about growth. The biggest time of the year for e-commerce, forty percent of everything sold is going to happen in the in the next quarter. So really making sure that we're there and big for Black Friday that you hear and you know about us. Beyond it, there is it is all about leveraging data for consumers on their behalf to make life better. Not only can we will we be getting you money back from from stores, but from credit cards often will protect you for sixty to ninety days. We want to be getting that back for you too. We want to help you fight whenever you're owed something and things are not going your way.

• 24:00Speaker 02

  And then and then as we grow beyond, to use your data, leverage it for you to make life better.

• 24:06Harry Stebbings?

  Well Eric, thank you so much for joining us and for concluding this very special episode of YC and the feature week of YC Week. Thank you so much for joining us. Thank you Harry, this is great. What an incredible episode with Eric revealing the amazing growth and future ahead for Paribus. And if you have a great idea for a new startup, why wait? There's no time like the present. So head over to www.vidalaw.com and speak to my good friend, Chris, who will happily jump on a call with you, discuss your idea and get the ball rolling in making your dream startup a reality. Whether it be for entity formation itself

• 24:44Harry Stebbings?

  or employment contracts, he's the man, an absolute legend. Give him a ring on 312 895 4993 or email him at c w e r n e r at vidalaw.com. That's [email protected]. Likewise, if you cannot get enough of the 20 Minute VC, check out our sister show, Angel Insights on iTunes, which delves inside the world of the greatest angel investors. We would love to hear your thoughts. And as always, thanks so much for listening. And all the items mentioned in today's show can be found on the blog at www.thetwintiminetc.com. Thank you so much and we look forward to seeing you all in the next episode.