The Exchanges

Q Do you remember it? What was your, what were your monthly expenses? Do you mind sharing your monthly expenses personally back then? What would you keep them under?

A Oh, it was almost nothing. We were, um, we, when we lived in Boston, we shared an apartment with two other people and we were probably spending a total between the two of us of about a thousand dollars a month in rent. And, you know, we'd buy like frozen burgers from Costco and we'd eat those every night and ramen and you know, all that. And then when we moved out to Silicon Valley, we lived in kind of Southeast San Jose, and, you know, in a house that we rented for 2000 dollars a month, and we had three other roommates, and just really kept that burn rate as low as we could, um, because we were self-financing in the early days, and it just gives you options. It lets you stay alive for longer.

AI assessment note: “spending a total between the two of us of about a thousand dollars a month”

Q Um, personally, what kinds of stuff are you doing on the side?

A Yeah. Um, so I, I like to tinker. Uh, so I, one of the things that's just fascinating to me is all the, you know, all the technologies around Raspberry Pi and Arduino and kind of how you can build these really interesting, um, you know, things out of hardware now that just weren't possible a couple of years ago. And so, um, you know, love kind of just building a little, you know, internet of things, projects and, and, and all that. Um, love to ski, love spending time with family. Um, and I also, uh, one of the things I really love doing is advising other startups and entrepreneurs. So I, I, um, spend some time with folks at Y Combinator and helping them, um, advise companies.

AI assessment note: “advising other startups and entrepreneurs. So I, I, um, spend some time with folks at Y Combinator”

Q That's great. Okay. Let's get more of the backstory here. So there's other 23 year olds listening to this show going, okay, this bill guy's a killer. I want to be like bill. What, where was your head at when you were 23? What were you coming from? How, where were you thinking?

A Yeah. So I, uh, I always grew up around Computers and technology and kind of tinkered and programmed since a really young age. Um, went to Boston college, studied computer science. Um, and, uh, you know, I think really got fascinated with the business of technology. Like I could, you know, I could see even in college had just how transformational technology had been to the economy and kind of what was left to go. And I said, Hey, that's like, if you're going to bet your career on a sector over the next 50 years, seems like technology is the place to be. Um, but I was really interested in the way technology shapes business. And so Uh, went to and became a technology investment banker after college and got to work with some really awesome entrepreneurs, kind of selling companies, taking them public, advising them on all this stuff.

AI assessment note: “went to Boston college, studied computer science... became a technology investment banker after college”

Q are they big, and they work, and the app is so easy to use. Get started today at getsigneasy.com forward slash podcast. When you were going through Y Combinator, and right when you're were raising that first round of funding, were you being encouraged to figure out a revenue model at that point, or were you just trying to raise to buy more time until you figured out the model?

A Yeah, I, I think we always needed, and when you're anytime you're raising money, you need to have thoughts on how, what your business model is going to look like at scale and how you're ultimately going to make money as a business. Um, but the focus then was really on traction. It was just about how do we grow? How do we demonstrate that people want the service that we're creating? Um, and then if there's, you know, good ideas about how to make money in the future, then, um, you know, I think investors at that stage will give you a little bit of a pass on, on revenue. It's always best You know, the best case scenario is to be profitable. Next best is generate revenue. You know, traction is sort of a nice number three. So, um, that's why, uh, we, we really were focused on traction at that point.

AI assessment note: “the focus then was really on traction. It was just about how do we grow?”

Q Interesting. And how did you kind of, you know, this space I imagine gets competitive if people try and undercut that single rate. So it's your job to kind of grow volume so you can support lower and lower rates. Where did you feel competitive pressures from and how did you manage that?

A Yeah. And the really interesting thing is that our space is that the kind of base interchange rates are set by Visa and MasterCard. So that sort of sets a floor for competition. Most folks think that, oh, we, we pay makes three percent. Actually, we make kind of a tiny fraction of that. The vast majority goes to, um, your credit card company that issues your card, uh, as kind of sanctioned by Visa and MasterCard. Um, so really where we see competition is really in attracting software platforms to our, uh, to our solution. And so, um, you know, we're, we're competing on the quality of our APIs, uh, the quality of the end user experience, uh, Speed of payments, uh, quality of customer support. Those are all things that people think about when they choose, uh, a payment provider. Um, and typically the rate, you know, is competitive with everyone else, but there's kind of a, you know, there's actually isn't a lot of variability in those rates overall in the industry.

AI assessment note: “we're competing on the quality of our APIs, the quality of the end user experience”

Q Litecoin just overtook, uh, sorry, not Litecoin. Ripple just overtook Litecoin in terms of market cap. Obviously I'm talking blockchain stuff. I assume you're probably keeping your ear to the ground on this kind of stuff. How are you thinking about blockchain at WePay?

A Yeah. I mean, we, uh, we as a company are just trying to stay super focused on our customers and our customers are these software platforms that serve small businesses. You know, when those folks start calling us and asking us to support Bitcoin or blockchain or these other solutions, we'll add it. But I think what we found is that in this part of the market, there really hasn't been a killer application of those technologies yet. So I'm personally super interested and I own some Bitcoin and Ethereum and Uh, you know, I think there's a lot of exciting momentum there. Um, and there's going to enable some cool stuff, but you know, for small businesses and small business software platforms, I think it's still super early.

AI assessment note: “when those folks start calling us and asking us to support Bitcoin or blockchain”

Q What was your, what was your payment volume in year one?

A Oh, uh, maybe 15 dollars, 20 dollars, whatever we sent to each other. Um, and, uh, and then I think in year two, it was probably 20 or 30,000 dollars. Just, it was our, whatever our close friends were using, because it was not a good product at the time. Um, But, you know, we started over time, it took us about two years, but we started to learn more and more about, about payments. And we got a bank to work with us and we figured out fraud and we figured out regulatory issues around moving money around and all that. Um, but in the meantime, you know, we realized that person to person payments is actually a super tough business. We had some great competitors there, uh, that were all offering the service for free. And we realized that the value that we created was actually in figuring out all that payment stuff, not in the kind of user experience around person to person payments. And so A couple of years in, we, we said, Hey, let's actually expose all this via API. Let other entrepreneurs come build on top of us so they don't have to figure out all this other stuff. Um, and that was kind of the Genesis for what we pay ultimately became. Um, you know, what today we're not a group payments company. You can't use this to collect money from friends, but if you want to build an application that makes that easy, um, we have a great set of APIs that make that awesome.

AI assessment note: “maybe 15 dollars, 20 dollars, whatever we sent to each other.”

Q the same time, touching Y Combinator, backed by Andreessen. They just kind of wallowed around for a little bit, and I know most, most of those guys, they had a very soft Kind of landing pad at Airbnb recently. I mean, what did you do different than them? Why did you get a 400, you know, million dollar exit and they kind of floundered trying to figure out the way.

A Yeah. I have a ton of respect for the team at tilt. Uh, and I think they built a great company. It's really, you know, from, in my opinion, that market is just a super tough market. You know, the, the company that was ultimately successful in person to person payments was Venmo. Um, and Venmo ended up selling to Braintree for a pretty small amount, you know, way back in, I think, 2012 or 20 13. Um, and so really because there's no business model, it's about, you know, people expect that to be free and it's very hard to make money on that. So It makes a lot of sense as part of a bigger platform. And, you know, now most people don't know this, but Venmo is owned by PayPal. Uh, and, um, you know, it makes sense as part of PayPal's business, but it's not a moneymaker for PayPal. And it's not, it's not a great standalone business. I think that's what we ran into and why we had to pivot out of that space. That's what tilt ran into. And it's what Venmo ran into. Um, Venmo was just able to kind of join forces with a larger player earlier in their life cycle and ultimately solve that problem.

AI assessment note: “why we had to pivot out of that space. That's what tilt ran into.”