Innovating Where Banks Won’t: Talking with Rich Aberman About WePay’s Vision for Group Payments
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400 companies go through Y Combinator , and the pattern recognition, the ability to give tangible advice based on very little data on the way in, was pretty important.
X: What did Paul Graham help you with, specifically?
RA: I think first and foremost is that he is really good at messaging. We did a really poor job describing our product to normal people, and the entrepreneur’s dilemma is that you want to talk about all of these features, but at the end of the day, if you can’t get it across as a simple message, you are lost. He helped boil down the product to our core value proposition. In terms of the product itself, he is very good at understanding general usability stuff. He is really good at tearing a product apart and telling you what’s wrong with it. We also spent a lot of time talking about customer acquisition, and what are the early-stage, non-scalable things we can do to get our first 1,000 or first 10,000 users, and after that, what are the strategies for scalably accruing users. Paul has an enormous amount of experience there.
X: Did you have a working product by the time you finished Y Combinator?
RA: About halfway through, we processed our first real, non-founder transaction. Our first 30 beta testers were all Y Combinator founders. So we were still in beta at the end. We were one of the last companies [in the Summer 2009 batch] to launch because there were a lot of important things we had to do that a lot of other companies don’t need to worry about. Transactional integrity, penetration testing, customer data security, that kind of stuff. So we were still under a closed, invite-only beta at the end of Y Combinator, and we only officially launched and allowed the public to join at the end of March 2010.
X: You’ve got some pretty interesting angel investors, like Max Levchin. Was it being in Y Combinator that gave you access to those folks? Did Paul call up Max?
RA: During Y Combinator we ran out of money again. $20,000 goes pretty quickly when there are hard costs associated with building a payment app. We ended up raising a small angel round from some of our advisors that we had met along the way. So we came out of Y Combinator with several names attached to the company and a little cash in the bank, and we ended up closing our institutional seed round in December of 2009, for $1.65 million.
Y Combinator definitely facilitates introductions. They do a really good job of launching your startup out of a bazooka, in terms of hype and PR and general excitement around the team and the company and the product. But what really helped us raise our round was the fact that they plugged us into that network. Paul might not have sent an e-mail saying ‘Meet the WePay team,’ but he put us in a position to know the right people and to reach out directly. But the vast majority of them reached out to us. We had a lot of inbound interest that we capitalized on.
X: You mentioned that when you were collecting money for your brother’s bachelor party, you started getting questions about where the money was going. Did you design WePay to make it harder to defraud people?
RA: We made a decision that we don’t want to fundamentally change the way people do things. We just wanted to make it easier and reduce the friction. Whenever a person is collecting money, whether it’s for a bachelor’s party or a ski house or fantasy football or paying the landlord, you are always going to run into the problem of that person spending the money unscrupulously. We don’t offer any kind of recourse if the money is not spent appropriately. That’s not the problem we are trying to solve. We just want to give people a specific place to keep the money, besides their personal account, so they can escape the liability, and if they want to they can share the information about how they are spending the money. So now you can make sure that your roommate sent the check to the landlord or that the fraternity treasurer spent the dues money appropriately. Everyone is already doing that, except that … Next Page »