Acquired Season 3 Episode 7: Venmo (live with Andrew Kortina)

[0] Hey, Acquired listeners, we have a big announcement today.

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[13] And with that, on to the main show.

[14] Welcome to Season 3, Episode 7 of Acquired, the show about technology acquisitions and IPOs.

[15] I'm Ben Gilbert.

[16] I'm David Rosenthal.

[17] And we are your hosts.

[18] Today we are doing another oft -requested episode, the Venmo acquisition, first by Braintree, and then shortly thereafter by PayPal.

[19] We've been waiting until just the right circumstances, which we're going to be we finally had.

[20] The show you'll hear on this episode was recorded at our very first live show in San Francisco this week with special guest Andrew Cortina, the co -founder of Venmo.

[21] Now, we had some AV issues at the live show, and very long story short, the only recording that we have of the show is from an iPhone that was placed on the table in front of us.

[22] We sincerely apologize for the audio quality.

[23] We know it's not quite acquired standards of the episode, but we decided that the content in the interview with Cortina was just way too good not to release.

[24] to everyone.

[25] So, who is Andrew Cortina?

[26] Cortina is a consummate entrepreneur.

[27] As you'll hear on this episode, his constant stream of startup ideas and passion for nailing the experience led him to start countless projects from philofunk to Venmo, both of which we will get into today.

[28] To give you a sense of his varied talents, he started his college experience as a CS major at Penn, but after feeling that he could learn more programming outside the classroom than in, he switched majors and ended up graduating with majors in philosophy and creative writing and minors in computer science and logic.

[29] He has since gone on after Venmo to found Finn with Sam Lesson, which we will talk about later on this show.

[30] So get excited to hear Andrew Cortina.

[31] Okay, listeners, now is a great time to thank one of our big partners here at Acquired, ServiceNow.

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[36] I was at NVIDIA's GTC earlier this year, and Jensen brought up ServiceNow and their partnership many times throughout the keynote.

[37] So why is ServiceNow so important to both NVIDIA and Microsoft?

[38] companies we've explored deeply in the last year on the show.

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[45] It's pretty incredible that ServiceNow built AI directly into their platform, so all the integration work to prepare for it that otherwise would have taken you years is already done.

[46] So if you want to learn more about the ServiceNow platform and how it can turbocharge the time to deploy AI for your business, go over to servicenow .com and acquired, and when you get in touch, just tell them Ben and David sent you.

[47] Thanks, ServiceNow.

[48] All right, now on to the live version of David with the history and facts.

[49] So, David, you want take us in?

[50] Yes.

[51] So, Andrew.

[52] You went to Penn for undergrad, and your freshman roommate turned out to be very faithful in your life.

[53] What was your, what was your, the first time you met Pickram when you moved into Penn?

[54] I was at school, like, a week early, because I was, like, one of the IT, like, support desk people.

[55] And there was, like, our training for, you know, that team or whatever.

[56] So I was there a week early and, like, kind of already, like, out drinking and partying every night.

[57] And so when I first met Icrum, I was, like, hung over asleep at, like, 1 p .m. in the afternoon.

[58] And he rolled into our room with his whole family with, like, this van full of people and, like, all this shit.

[59] And there's, like, a tennis racket stringer and just all this crazy stuff.

[60] Like, why would you possibly have this in a 10 -foot -by -10 -foot dorm room?

[61] And just, like, a caravan of people.

[62] and I was there kind of just with my computer and I was like, all right, uh, I'll let you guys kind of like move in and do your thing.

[63] I'm going to go like hang out at the gym or something.

[64] And then I remember we went to Kmart to like get shit for our room, like, you know, supplies and stuff.

[65] And we like, I don't like shopping.

[66] And so like I was like, okay, like I'll get like a refrigerator.

[67] Like you get a microwave or something.

[68] And I remember we were there for like, I don't know, like three hours at Kmart.

[69] I was like, what the fuck are we doing at Kmart for like three hours here?

[70] And that comes towards the end.

[71] I was like, you know, I'll just like take this mini fridge on the subway back.

[72] It'll be fine.

[73] And you're like, no, like it's cool.

[74] Like we're about ready.

[75] You shouldn't have to carry that in the subway.

[76] Yeah, anyway.

[77] So that was like kind of like my...

[78] All right.

[79] Great question, David.

[80] What I'd like to know is when was the first time that you started hacking on stuff together and thought, hey, maybe we could start a company or at least a project together?

[81] I mean, one thing we did was we convinced somebody's, like, dad or something to let us redo their website and just, like, you know, build something, like some sort of, like, CMS with PHP and charged them way too much money for it.

[82] But like nobody really knew how to program and we kind of like scrape something together.

[83] Which wasn't really like a consumer product.

[84] It was more like a swindle.

[85] This was, this wasn't like 1995 when nobody knew what websites were, right?

[86] Like you were actually hustling people because this was the mid -2000s and like you could build a website, right?

[87] Well, I mean, we could kind of build a website.

[88] I mean, one could build a website.

[89] I don't know if we could build a website.

[90] I think it was definitely possible.

[91] But in our senior year, we both loved Craigslist.

[92] I'll tell you a good story about the microphone after tell this story.

[93] So we both love Craigslist, and we wanted to do like a, the first kind of like consumer product we worked on, I think this was our senior year with like three or four friends.

[94] We built this thing called My Campus Post.

[95] And the idea was it was a classified site for college students.

[96] and everybody could, like, verify that they were transacting with somebody else at the college, and so there was this kind of, like, trust layer baked into it that you wouldn't have if you were using Craigslist, and we had, like, a launch party for that, and Nickrum's band played at the launch party, and just, like, all these, like, flyers that we put everywhere, and, like, all of our friends were, like, in all the dorm rooms, like, shoving flyers under, you know, every door that they could, which was, like, totally not kosher with the university.

[97] But I think we heard that like the half .com guys did that.

[98] We actually got a lot of people to sign up for that.

[99] But the problem was the seasonality of it.

[100] Like, you know, it's very hard to retain a set of college users on a classified site.

[101] But so Craigslist.

[102] I can remember I both love Craigslist.

[103] And we wanted to meet Craig Newmark after college.

[104] So we, Ickram sent him an email and told him that we had a podcast, which we didn't.

[105] He was like responded to it.

[106] And so we flew to San Francisco to meet him and, like, did no preparation or homework or anything.

[107] And we were, like, we had no equipment.

[108] We had no equipment.

[109] Boy, that sounds familiar.

[110] And, like, we had these laptops that, like, would just, like, overheat and turn off.

[111] And so we emailed Craig Newark, and we were like, yeah, can we come interview you?

[112] And we met him at some coffee shop on, like, the Twin Peaks, because I guess he lived, over there.

[113] And we showed up and it was like, oh, before we went there too, we were like, we need a microphone.

[114] So we went to like Best Buy and got like, we were looking at microphones.

[115] We saw this USB microphone that said like podcaster microphone.

[116] And we were like, oh, we'll get that one.

[117] It'll look legit.

[118] And we showed up and just like after, you know, like 15 minutes of hardware failures, we were finally getting to the interview and like Craig Newmark is super pissed off at this point, and then Ickram just starts asking these, like, rubbish questions.

[119] They're just, like, not at all researched.

[120] And he was just like, what the fuck is?

[121] It was hilarious.

[122] So from that inauspicious beginning, so I feel like a lot of people, if they don't know you, and they don't, well, we don't know you either, but we've done a lot of research on you.

[123] And they think about Benmo, they're like, okay, two kids from Penn, you guys must have started this, like, around this phase, like, it's easy to imagine you were going out for beer, you were splitting pizza, you had to split expenses from that Kmart trip, but you actually did a bunch of stuff after graduation before Venmo.

[124] One of which was you worked at an early Y Combinator company, both of you.

[125] You guys were like the first two employees at, I think, or the first couple employees at I'm in Like with you, which became OMG Pop, which became draw something, which became Zenga.

[126] How did you guys, you know, two kids from Philly get hooked up with a white combinator company.

[127] Craigslist.

[128] Nick Cram saw a job post on Craigslist and was like, oh, these guys, this sounds like a cool company.

[129] We should move to New York and like try to go work with these guys.

[130] And so we like, you know, took a bus up there and met the two founders, you know, like chatted with them.

[131] There was like not really a form of interview process.

[132] They were just like, yeah, you guys seem smart.

[133] Come work for us.

[134] And they're like, we were totally like not qualified for this job.

[135] for like real software engineering but it was cool we like joined uh learned a ton worked with like i mean that team was incredible it was like some of the smartest people i've ever worked with that original team um it was really it was really awesome but we worked there for a while and it was like this dating website and then they pivoted to do casual games and we were like ah that's not really what we signed up for we're going to go do other stuff so you were at i'm in like with you So Iqram was at ticket leap.

[136] So ticket leap ends up being an important component in the founding of Venmo, or at least as far as I can tell, the initial capital.

[137] Can you tell the story of how all that went down?

[138] Well, so Ikehr and I both had part -time jobs when we started Venmo.

[139] Well, we had full -time jobs.

[140] Then we started working on Venmo in nights and weekends.

[141] And then we kind of transitioned to part -time as we got a little bit further, and we wanted to get some, like, advisors who knew how to build a company involved.

[142] And so one of those advisors was this guy, Chris, who is the CEO of Ticket Leap.

[143] And then there was this guy, Sam Lesson, who was a friend of mine, who had both started companies and were, like, early advisors.

[144] After we had kind of, like, spent many months working part -time, getting progress, getting some of our friends using VEMO, they kind of encourage us.

[145] oh, you guys should go work on this full time.

[146] And then the first kind of investors were Sam and his dad.

[147] And they helped us kind of like find people to put together an early round of financing so we could quit our jobs and go work full time.

[148] And we should say, Sam is your current co -founder at Finn, Sam Lesson, who was, was he running Drop .i .o at that point?

[149] Yeah.

[150] Which ended up being, I think, Facebook's first acquisition.

[151] It was either first or like second or third.

[152] And then that, let's jump ahead into Venmo.

[153] He ends up being super influential to you guys, not just as an investor, but as product feedback and in terms of building the news feed within Venmo, right?

[154] How did that happen?

[155] Well, he actually wasn't really involved in the news feed part of Venmo.

[156] He was more involved in this feature that we had called Trust, which was, it was like friending, but more powerful, where you could, like, if I trust, through on Venmo back in the day, then I could just take money out of your account without you having to be.

[157] It was like, it was awesome and like highly efficient and like a cool relationship, which obviously got, yeah, it was like marriage, but without all the, uh, you know, sort of like legal stuff.

[158] Uh, it was sweet, but obviously got shut down immediately after PayPal acquired us.

[159] Um, but the news feed, the news feed came out of like, Iker when we started Venmo, we had BlackBerry's, and we would use Venmo instead of text messaging.

[160] And BlackBerry, I don't think, even had threaded text messages.

[161] And so, like, our whole text message screen would just be payments that we were making through Venmo.

[162] And it was, like, all this cool shit that we were doing, like, going to bars and restaurants and concerts and things.

[163] And we just thought, like, oh, this looks, like, interesting content.

[164] We should just make this part of our app.

[165] And so one thing that we skipped over a little bit is the initial idea for Venmo.

[166] I take it Venmo wasn't, gosh, you know, it would be great if anybody could transfer money to any of their friends at any time right off the bat.

[167] It feels like there was a little evolution there.

[168] How did it start and how did it get to a social payment app?

[169] Yeah, we worked on a lot of different things.

[170] Like one of the first things that we did was this was before Square had their point -to -sale software.

[171] And so one of our friends was starting this yogurt shop, like a pinkberry.

[172] and it was called Yogorino.

[173] And so like Yogorino needed a point of sales system.

[174] And we felt like we could build a better point of sales system than anything that existed.

[175] So we built this like browser -based POS with a USB credit card swiper.

[176] And we thought maybe we would like do that as a business.

[177] But we didn't really like the idea of having to go like door -to -door to sell point -of -sales systems.

[178] So we decided not to do that.

[179] another thing that we wanted to do was make it so you can like if you go to like a small free concert in a bar they they don't charge for tickets but then they'll do this thing where they pass the hat and when you they pass the hat around everybody kind of like throws in a couple bucks but if you're a musician you know like this is like a super shitty way to make money and if you have a band of like five people you make like maybe 70 bucks and five people have to split that and it's really like peanuts and we thought it would be cool if you could um just like text money to the band to support them while you're at the concert if you're just like feeling a track um so we worked on that for a little while and that's kind of how we got into like okay we should like figure out how to make something we can send text messages and like charge money um that uh we were working on that for a while and then there was this this day when ickram was visiting me in New York and he just didn't have any money on him.

[180] He wrote me a check to pay me back.

[181] And we were like, this is stupid.

[182] We should be, we used like all these other apps to do everything else.

[183] None of our friends like exchange money with PayPal.

[184] It feels like we should be doing that.

[185] But if we're not, something is clearly broken.

[186] So like, why don't we just go solve this problem that we are experiencing right now?

[187] And that was kind of like the initial idea.

[188] So then we went and kind of like went back to like find a computer and like do some research.

[189] And I saw it because you guys sent me this note about obo pay.

[190] And we found this company called obo pay.

[191] Looked them up and we're like, oh man, obo pay has raised $70 million to do like phone payments.

[192] This is like we're too late.

[193] And I mean, then we looked at their website and it was like all these people in suits and a really shitty website that obviously no one was going to use.

[194] And so we're like, yeah, okay, we can compete with OvoPay.

[195] 70 million ain't nothing.

[196] So you guys have this great slide.

[197] You end up raising a seed round for Venmo of $1 .2 million.

[198] And you have this slide in your pitch deck.

[199] I assume you had been pitching the idea with the band payment idea before then.

[200] You cross out.

[201] You had your original mission was Venmo enables musicians to a accept payments for songs, merchandise, and subscriptions via SMS.

[202] And then what you guys did is you crossed out a bunch of words in your mission in the slide deck and you put, instead, Venmo enables anyone to accept payments for anything, anytime.

[203] And I think that's just like such a super cool, like so many startups that I've been involved in and we see is like, Rover is a great example.

[204] In the beginning, Rover was like when you're out of town, when you're on vacation, put your dog with a real family instead of in a camel.

[205] Like great, and that was Rover's first chapter, right?

[206] But then we started talking and we were like, Rover is actually about being the best dog owner that you can be.

[207] And there's so much more than that.

[208] And like, kudos to you guys.

[209] Like you figured it out.

[210] And that kind of unlocked the big vision.

[211] How was, uh, so I'm curious, like when you were pitching Venmo before versus after, like, how did that, how did that change reactions from investors?

[212] One thing I remember about pitching was we pitched this guy, and he was like, I only want to invest in home run opportunities.

[213] And Ickram was like, and he was like, it doesn't make sense to invest in anything other than a billion dollar company.

[214] And Ickram said to him, well, we're going to make a trillion dollar company.

[215] And then he just laughed at him, and I was like, man, that's not cool.

[216] So I remember that about funding.

[217] For context, Benmo did $17 billion in transaction volume last quarter.

[218] So, you know, pretty close.

[219] Yeah.

[220] Well, I mean, that's, yeah.

[221] So it's not the market cap, but, yeah.

[222] So raising money for Venmo was just like, it always sucked.

[223] We were always like, you know, there was always like some law changing where we needed tons of money immediately.

[224] or we couldn't pay people or we would be violating some law and ended up in jail if we didn't have enough money which is never a good position to be raising money in.

[225] So basically any time we did any sort of financing our vesting would get reset and we would get horrible terms and it was just like shitty.

[226] And to walk folks through what that looks like at least what the recorded history of Venmo's fundraising is It was about $1 .2 million in sort of an angel seed round that Sam invested in and that some others.

[227] And then your Series A ended up being, I think, $7 million.

[228] And that was led by, was that RRE?

[229] No, Excel.

[230] Excel.

[231] So, you know, big first institutional venture capital firm investing.

[232] And then, you know, at this point, you guys are growing like crazy.

[233] Can you talk about growth as it relates to how are you guys making money and how are you dealing with growing so fast, but from my understanding, not bringing in nearly as much as you were burning on how fast you were growing?

[234] Well, I mean, VEMO never, while I was there, we never made any money.

[235] It was just like we would just be spending a ton of money processing transactions.

[236] But the idea was, you know, you get enough, you get enough people on there.

[237] And then instead of charging people to pay each other, you charge businesses to accept payments from people to have Venmo, which is, it's like the PayPal model.

[238] But we were never making money when we, you know, back when I was there.

[239] So it was, you know, that was like another challenge with that fundraising situation we always found ourselves in.

[240] So Venmo is like inherently viral from the very beginning.

[241] Did you ever try and stop growing so fast because the faster you grew, the more you.

[242] users you've got, the more engagement you've got, the more money you are losing to interchange fees, especially on the credit card side.

[243] Well, if I mean, first of all that stuff was very intentional.

[244] I remember there's this picture of this guy straight out who was their first employee with it, he was holding him like this poster at South by Southwest and said, you're already on Venmo, you just don't know it yet.

[245] I love that.

[246] So the idea of like a dark account is like a great.

[247] thing if you're trying to grow really quickly.

[248] What was the other kind of the question?

[249] So the faster you grow, the actions that happen, the more money you lose.

[250] Yeah, well, there are definitely people that said that.

[251] We were always like, why would you want to grow slower?

[252] But we would definitely try to, like, we did lots of stuff to reduce the spending.

[253] And so we would always want like more user growth, but lower cogs.

[254] And so early on, We had a lot of people that were doing payments to each other with credit cards transactions.

[255] And the fee to us for that was something like 3%.

[256] And users don't have to pay.

[257] No, we were just like subsidizing all of that.

[258] And so it took a bunch of work to like get a bunch of, to get a banking partner, then would list through ACH transactions at the volume that we were doing.

[259] But then that really significantly reduced our unit economics and like the sort of like cost across the same transactions and so there was like this point where we were just like spending like way too much money processing credit cards and one of our board members was like why are we spending all this money we should be doing this through bank payments we're like yeah it's a good idea we'll reduce the costs um so we it took a much work to kind of get everything cut over to bank we killed a bunch of these users that were like from sites such as flyer talk .com which is this like credit card points hustling you know underground network which you know it's probably something like this on running right now.

[260] It's like all these people that are just trying to like max out their credit cards.

[261] And there are some people.

[262] So they were essentially running in points through that.

[263] Yeah.

[264] And there were some people that were like, they thought that it was like, you know, the only users we had were these like credit card users and we're like, no, we'll switch people on the bank, which we did.

[265] But we happened to do that transition like right before we went to raise our series B. And we've had like three, two or three like down months of growth to like get through this transition of like killing all these crappy users and retaining the good users and getting everyone move into the bank payments and had like you know growth was picking back up but it was just like not an opportune time to do this transition so BCs are now looking at you for your series B and they're like you guys aren't making money you're losing money on every transaction and you're not growing yeah which leads into the first acquisition of them but actually before we get to this I genuinely would be very upset with me if I didn't bring this up so I have to and now is the right time can you tell us a little bit about John Graham who joined Venmo I believe he was employee number five yeah John when I met so for those of you I mean I guess everybody knows who John Graham is I definitely didn't before being research yeah John Grant he was on the the Bachelorette But he famously claimed on this season of The Bachelorette to have invented the mobile app for a VEM.

[266] Well, no, he created the VEMO iOS app.

[267] That is true.

[268] So, you know, his lawyers slipped at that one.

[269] We're not recording, so you're actually.

[270] Yeah, no, but so he was on the Magioreen.

[271] But John Graham, we met him through this guy, Matt Hamilton.

[272] And Matt Hamilton is a guy that went to call.

[273] Colombia, who, when I and I were on the street getting a cup of coffee, or coming back to me in a cup of coffee, and we both had our Venmo T -shirts, and this guy Matt Hamilton sees us and was like, oh, Venmo, I love Venmo.

[274] And we're like, yeah, cool, we made Venmo.

[275] He's like, what?

[276] Awesome.

[277] And we were like, yeah, what's your story?

[278] And he was working on this thing called Tour Bee, which was like an Airbnb for tour guides type of thing where you could have local tours, I'm sure you have to do cool stuff.

[279] stuff.

[280] We were like, yo, you should come work at demo.

[281] And if you're a software engineer, he's like, well, I'm working on this sort of thing.

[282] But I have a bunch of friends you shouldn't hire.

[283] And so he introduced us to John Graham and this guy, Jesse Benter, who is John Graham's freshman year roommate in college.

[284] And those two guys ended up working for us.

[285] And he also introduced us to this guy, Julian Connor, who he went to high school with.

[286] We hired that guy.

[287] Then we hired this guy at Damos that Julian went to high school with also.

[288] Then we hired Matt Hamilton himself.

[289] Then we hired Matt Hamilton's co -founder at Torby, David Fasen, just like all these Columbia kids.

[290] And so within a year of - deserves a lot of credit for...

[291] Well, there's no, Matt Hamilton.

[292] This is all Matt Hamilton.

[293] John Graham comes from Matt Hamilton.

[294] So, like, from this random encounter on the street, we hired, like, 10 kids from Columbia.

[295] Just because we were wearing VEMO T -shirts.

[296] I feel like there's a lesson in there.

[297] I don't know what this non -traditional hiring stuff, because nobody would want to, like, nobody knew what that was except for a few people.

[298] It was not like the type of place you go where it's like, all these great engineers you can learn best practices from.

[299] It was like total.

[300] What do you mean?

[301] Yeah.

[302] Yeah, so.

[303] We had to be scrappy.

[304] So, okay, given that, you've been scrappy.

[305] The series that could be fundraising isn't going well.

[306] Samir from Excel is on your board, right?

[307] Yeah.

[308] Excel is also the main VC in a Chicago -based payments company called Braintry that is, in a lot of ways, the other side of the coin of what you're doing, where Benmo is working with consumers that are used.

[309] Braintree is up and coming, this is pre -striped days, or strike had just been found it.

[310] Braintree is the payment process of her merchants on the internet, so it's still to the same.

[311] Uber, Airbnb, a whole bunch of other, you know, companies we all know would use, process all the community.

[312] And for anybody who was using, who's building web apps or, yeah, I guess web apps would be the thing, and trying to accept payments before Scribe, before Braintree, you'd use companies like authorized .net, you'd like try and cobble together some kind of payment gateway.

[313] It was like an unbelievably difficult problem to accept credit cards on the web, let alone in mobile apps.

[314] And so Braintreeksrieg comes along and it's freaking revolutionary.

[315] and now we've been a strike.

[316] It's no wonder it's a $40 billion company, but...

[317] So how did the...

[318] I'm assuming Braintree was not one of your guys' radar.

[319] No, we do Great Trade.

[320] We...

[321] So actually, we were pressing credit card payments through first data on the Yogorino account because we took it over from the yoga shop.

[322] Nobody would give us a credit card processing account.

[323] So we used that.

[324] But then we were using that.

[325] brain tree to process ACH payments.

[326] And you're using for people who were getting to pay out, to pay out of Venmo.

[327] You're using the Yogorino.

[328] No, no, we were using the Yogorino account to accept credit card payments.

[329] And then we used Braintree to distribute money back out via ACH.

[330] And BrainTree did that a little bit early on and they kind of shut down.

[331] And we were like the last customer and we would get calls every month.

[332] But like, you guys really to like get off this ACH thing, we're sun setting this product, and we're like, we're working on a bank deal, just like give us like one more month to like figure something out.

[333] And so like, probably like a year, we're just like...

[334] So they're basically your creditor.

[335] Yeah, and they were just like doing all this ACH process thing for us.

[336] And it was like, you know, so we knew them well.

[337] And like they did like a lot of like nice favors for us to not kill that product while we were like relying on it.

[338] So how did the acquisition talks go?

[339] I mean, my understanding is that Bill, the CEO of Braintree, was like a huge tamper for you guys and bought into the vision.

[340] Yeah, I mean, the Samir just introed us and was like, you should go talk to the Braintree guys.

[341] I think, you know, it would be a good conversation.

[342] And we kind of like just missed the first meeting and we're like, well, we have first date of the process credit cards.

[343] What are we going to talk to Braintree about?

[344] And after we missed that meeting, Samir was like, no, just go talk to Bill.

[345] So we went and met him and he was talking about how they had all these merchants, but we're interested in like a consumer wallet type of thing.

[346] And we had all these customers and wanted to start making money by allowing the customers to pay merchants.

[347] And just kind of got into this conversation where it was like, oh, we have this kind of, we're both trying to get to the same place from different sides.

[348] Maybe we should try to do it together.

[349] And this was right around the same time when also the same time.

[350] So we had been trying for like many months to raise a series B with no success.

[351] We're just like running out of money.

[352] You know, there was the point where there was like the only money left that we had had to be kept in escrow in order to like meet, comply with some law in California.

[353] And so we're like totally out of money and then no, there was no investment that I wanted to do anything.

[354] So it was even like shut down the company or sell it.

[355] And we had an offer from Groupon for like a million bucks or something with shitty like that.

[356] Wow.

[357] We talked to the guys at Square, and they were like, nobody here is actually an engineer.

[358] Why would we acquire you guys?

[359] I see you talk to Facebook, given the same connection to that one.

[360] Same story of Facebook.

[361] Nobody, well, I mean, the Columbia guys all passed the engineering.

[362] But not to have any folks.

[363] slimmed down.

[364] Yeah, so, and then Bill was like, yeah, like, you know, how much you guys want to sell the company for?

[365] Let's do it.

[366] And he, it was even to the point where, like, we were missing payroll, and he just, like, wired us a bunch of money.

[367] Before that, before the deal was closed, the main payroll, because there was, like, their CFO was trying to, like, get the Venmo books to balance.

[368] That didn't even happen before PayPal acquired them.

[369] This is so funny, this is kind of what I assume the story was, but like, this is crazy when you think about it, taking a step back.

[370] Like, Bill is basically, Bill, and he's not the COO of PayPal, is basically the only person in the entire startup adventure ecosystem that sees the potential for when Benmo is today, despite all the warts, right?

[371] Yeah, yeah, yeah, yeah, yeah.

[372] Bill Garland, he's an amazing dude, I mean, there'd be no Memo without Bill for sure.

[373] It's great.

[374] So I feel like...

[375] Wait, I got one question.

[376] How did you land on the purchase price of $26 .2 million?

[377] This is a good one.

[378] You never be the first person to throw a number out there.

[379] It's just a stupid thing.

[380] But we were talking to these guys from Braintree, and they were like, well, how much money are you guys going to raise in your Series B?

[381] And I think somebody was like, well, we'll probably go raise like $10 million.

[382] and then they just don't like napkined it and we're like, well, if you're going to raise $10 million, this would be like the post money at kind of standards of terms and I think that's not they got to.

[383] Back to why Bill was a believer, we alluded to this earlier, but I think it's worth reiterating for, you know, as Ben and I were researching this episode, we aren't deep in fintech and I think probably most of you aren't deep in fintech and you guys are the only I don't want you to get rid of this anyway, but there really is only one business model that makes sense in the long term, right?

[384] And that is PayPal's business model, which is you have...

[385] That's pretty bold.

[386] Well, in the long term, it's Visa's business model, which is also PayPal's business model.

[387] Now PayPal started the same way Fedmo did with a consumer wallet essentially, but you can't make money by charging consumers.

[388] You have to make money by charge the merchants, and so thus you need a two -sided network effect.

[389] You need a lot of consumers, you need a lot of merchants who are willing to accept this payment, and then you can charge the merchants a fee for using the system.

[390] And it's crazy that you guys had one half of the equation, they had the other half the equation, and actually, I guess there were only, getting to the next acquisition of Venmo, there were only two people in the whole ecosystem that's all this.

[391] There was Bill, and then there was PayPal, right?

[392] Because it was less than a year later that the combined entity gets acquired by Pidnau, right?

[393] Yeah, and PAB will be the only company smart enough to acquire VENM for sure.

[394] I mean, they get the business model, right?

[395] And like, understand what it takes to kind of get to the point where you can commit merchants to adopt your network.

[396] And it is worth pointing out, like, it sounds, you know, when you're just hearing it for the first time, like, oh, they're the only one smart enough to do this, or, like, they were the only company that could.

[397] But there was almost a revolt inside of Braintree when they were like, oh, yeah, we're going to buy Venmo.

[398] I mean, a lot of employees at Braintree and just sort of came out in research were like, wait, that thing is hemorrhaging cash.

[399] It's not even like a real company, you know, like they're growing so fast.

[400] They can't, that there's no plan in the future to start making money.

[401] Like, we are a payment processor.

[402] We make a little bit of money on every transaction.

[403] We have a sound business.

[404] Like Bill took a huge chance with his internal team and internal culture in the direction.

[405] that company was going.

[406] And I think it's just worth underscoring, like, now that everyone uses Venmo and that it's inside a big safe company like PayPal and they're doubling down in Venmo in a huge way, it seems like, you know, it was so logical.

[407] But in retrospect, in that time, it really, it really didn't seem like it.

[408] I mean, it's a huge investment, too.

[409] I mean, it's probably been like a billion dollars spent on transaction processing fees.

[410] It's a big investment, but, I mean, PayPal's a killer business.

[411] And it's, you know, Venmo has the same sort of...

[412] That was anonymous, yeah, it's worth it.

[413] So I'm curious, when the, probably within a few months after the acquisition Braintree, diligence starts by PayPal for the second acquisition.

[414] How much time did they spend with you guys?

[415] I mean, what's been reported at least and seems in our research is that, like, Braintree is a very nice business within PayPal, and that's nice.

[416] But their biggest worry was that millennials were not using PayPal.

[417] on the consumer side.

[418] And so I imagine there was a pretty big lens trained on you guys.

[419] They kept those pretty, you know, as far as they could from the...

[420] The bridge, you guys.

[421] Yeah.

[422] Yeah, they didn't want to screw up that deal.

[423] Do you know if they were representing, like when...

[424] So, branch, it's over $800 million.

[425] Like, are they pitching Venmo, do you think, to PayPal?

[426] I don't know if they're actively pitching.

[427] I'm sure they're, like, you know, talking about...

[428] I wasn't involved in the kind of like acquisition talks.

[429] I'm sure they talked about like the growth rate.

[430] But even like even on the PayPal side, like David Marcus, I'm sure got it.

[431] But I'm sure a lot of the rest of PayPal was also similar to like, like we should just shut down demo.

[432] You know, like why we already have this?

[433] What like we have a product like this, right?

[434] So I don't think there was like a ton of talk on either side about the importance of demo.

[435] So the acquisition does happen.

[436] Two things I want to cover before we get to acquisition category.

[437] One, the acquisition happens.

[438] PayPal also leaves you guys kind of alone.

[439] And the best example of this is that some people may be familiar with this.

[440] You guys run an ad campaign in early 2014 right after the acquisition in New York called Lucas Uses Venmo.

[441] That was during the acquisition.

[442] During the acquisition?

[443] Oh, wow.

[444] Tell us a little bit about Lucas and his use of a memo.

[445] Yeah, so at that time, Braintree was working with this like hot shot creative agency to do a big rebranding of the company as like super developer focus, the operating system for payments and kind of like up their credibility.

[446] Because Stripe is on.

[447] Yeah, because Stripe is on the scene.

[448] And so they were doing that, and then they're like, well, you know, we can have this agency, like, do some, like, paid advertising for the holidays for Venmo.

[449] And, you know, their idea was to, like, put some ads on the Best Buy and said, like, split the gift with Venmo or something like that.

[450] And I remember just being in our office in New York with Iqram and our creative director, Neil, I'm just being, everyone was like, man, this is like, we've never spent money on advertising.

[451] and like the thing that we're going to do is put ads on Best Buy.

[452] Like that's just really boring.

[453] I mean, I can't mention there are many of them users who actively shop at Best Buy these days.

[454] Well, maybe that was part of the point to get people if you're not.

[455] Yeah.

[456] Anyway, so if we're going to spend all this money on ads, we should at least do something fun, like some sort of like out of funnel, like, billboard type of thing.

[457] And we're like, yeah, that'd be cool.

[458] And these like, like, just keep it really simple, like, like, look at, you know, Lucas, he's, like, drinking coffee, Lucas uses Femmo, and we were like that.

[459] Lucas is a software engineer then, right?

[460] Yeah, he was like a DevOps engineer.

[461] And he was literally drinking coffee in the kitchen.

[462] And we're like, yeah, that's cool.

[463] And so Neil, he photo, he got Lucas's picture off of the, and this is all, like, it's real time we're doing this.

[464] So, like, we're sitting there, it's like one GM, then Neil gets Lucas's photo off at the team page, and he puts a Santa hat on.

[465] with Photoshop for some reason, and then, like, puts this little banner on there that says Lucas uses Venmo, and, like, that's it.

[466] It's just, like, pure white background.

[467] That's, like, all it is.

[468] And then, like, an hour later, we're in the street, like, just showing it to people, and they're all like, what the fuck is Venmo?

[469] And we're like, oh, yeah, that's awesome.

[470] Good.

[471] And then so we're, like, you know, we have to get Bill U approved with this, and then Bill has to get PayPal approved it because it's an expense over $100 ,000.

[472] So we send it to PayPal and we're like, where's the rest of this, like, did you forget to, like, attack some assets?

[473] And I'm like, no, that's all that.

[474] So Bill, like, Bill is talking to me is like, maybe we should like explain what the MO is on here.

[475] And I was like, no, man, you have to do it.

[476] Like, this is what it is.

[477] I'm telling you it's going to be awesome.

[478] Like, I'll put it on my credit card and you guys are not going to do it.

[479] But we have to do it like this because it's going to be awesome.

[480] Dude, you are not missed.

[481] And so he was like, ah, this is our awesome part of, he's like, no, you know, I don't get it, but I trust you guys, like, let's do it.

[482] And so one of our people called the subway folks on Black Friday and had inventory during the holidays.

[483] And then we did this photo shoot with Lucas.

[484] He's wearing a Santa hat and has, like, his Movember mustache that's like not a very full mustache.

[485] And he's holding a watering tan, and it's just weird.

[486] And there's all these ads that said, like, there was, like, when he goes to the subway, there was this, like, huge staircase where there was a big sign of him and just said, Lucas takes the stairs, and, like, that's it.

[487] And, like, that's it.

[488] And, like, there was, like, people like, what is, like, who the fuck is Lucas?

[489] What's killed up?

[490] And there would be, like, news articles, like, reviled Venmo ads, explains.

[491] Also, eBay is, right?

[492] Maybe that's part of email at this point.

[493] So, like, jump down at you, Big Women's successor at eBay is probably seeing this.

[494] Guys, I can't decide if this is, like, so brilliant or if this is, like, perfect product market fit lets you mess up everything else.

[495] No, well, this ad campaign was, like, this ad campaign was, like, really successful.

[496] I mean, there were tons of people, like, the amount of earned media that we got with this in terms of, like, Twitter, Facebook shares, Reddit threads, There were, like, people making meme generators where you can make your own Lucas ads and share them on their friends.

[497] It was, like, crazy.

[498] There was this guy he, one of our team was down in Puerto Rico for the holidays, and he came back and was like, yeah, people in my pool in Puerto Rico were talking about Lucas.

[499] And it was just, like, it was insane, like the number of people talking about it.

[500] It definitely, we looked at the lift in sign -ups in New York versus, like, other cities, and definitely, like, helped.

[501] quite a bit actually.

[502] So it worked, I mean, we had a feeling like maybe something like this would have a kind of far exceeded expectations, but the main reason we did it was just because we thought it was funny.

[503] And we catch your attention, you know, we'd get you out and like saying like, okay, like I need to go research this thing, but actually what you would do is you would ask a friend, like what is Venmo.

[504] Do you know what this thing is?

[505] And that's kind of what I worked.

[506] Well, I think that's part of my own, because it's a great story.

[507] But me, like, I think as we were doing research on this episode, one thing we kept hearing from people is that, you know, yes, you guys had product market fit, right?

[508] But like, it wasn't like, even though with all of the twists and turns along the way, it wasn't like overnight, like Venmo just blew up, like, you guys actually were really scrappy, like, you were out, like, when you came up with the Lucascus's Vembo campaign, you guys actually went out on the street and tested that with people.

[509] Yeah, we tested everything on the street.

[510] And you were always out telling people to use them, though.

[511] I think it's just such a good story, right?

[512] Like, same thing happened with Airbnb, right?

[513] Like, a year and a half in Airbnb, Brian Chesky decided to live for a year in Airbnb's.

[514] That had a big impact on the company.

[515] He came to my apartment in New York and photographed it to put the pictures on Airbnb, actually.

[516] Wait, you were an Airbnb host in New York during that.

[517] Yeah, he came and took photos to, because he didn't like the photos on my list.

[518] wait this is like two pieces of startup floor like intersecting like everybody knows the story of like Brian go to New York like living with some of the early hosts taking pictures of their apartments for you were one of the early hosts yeah oh my god yeah yeah I think I'm still like come surfing was cool too it's like cool you meet cool people for you know the only question is why are you not an venture investor you know but we'll get back to that later.

[519] Okay, so the last thing to cover with before you move on you from history of fax is Venmo just basically has continued growing at like 20 % month every month period indefinitely.

[520] Do you remember when the acquisition happened, when the PayPal acquisition happened, what gross transaction volume and run rate you guys were at?

[521] Probably something like a billion annually.

[522] That's what I thought it was, but I couldn't get down on that for a bank.

[523] Yeah, I mean, PayPal just reported earnings last week, and the first slide of their earnings stack was Bemmo's growth turn.

[524] And as I alluded to earlier, PEPAVMOT did $17 million in gross transaction volume last quarter, which is incredible.

[525] And I believe about 10 % of PayPal's entire as a whole corporate entity transaction volume, which is incredible.

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[545] All right.

[546] Let's move on the acquisition category.

[547] So, as you all probably know, I guess we don't even mean to say how it works because you guys all.

[548] No, no. I think there's a decent number of people here are brought by a friend or something.

[549] Well, go for it.

[550] All right.

[551] So, uh, In the next section of this show, that was like the first section, anyway, we, these go faster, we categorize the acquisition, so we basically decide, you know, why, and this is sort of obvious by the time we get to this point in the episode, but sometimes it's forestrating.

[552] And we decide whether this acquisition was people, technology, product, business line, asset, consolidation, or other.

[553] And for people who have been listening for a long time, you know that that list just continues to grow.

[554] All right, so to me, The differentiation that we make between product and business line is that products get integrated into an existing business and run as a single business.

[555] So the same sort of, like you could imagine that a product gets bought by Microsoft and then Microsoft Salesforce goes out and continues to pound the pavement and sell that product.

[556] A business line on its own is something that completely operates its own engineering to product.

[557] to sales, to marketing, kind of as a business unit.

[558] And that to me is what this is, because while we're seeing some really amazing, sort of like, PayPal is sort of saying, like, yeah, PayPal's the old thing, and they're starting to replace a lot of the PayPal stuff with Venmo.

[559] I mean, it's been five years, and PayPal's operated completely as an independent thing, albeit subsidized by PayPal's balance sheet, but I'm going business line for Benmo.

[560] Yes.

[561] I'm actually not going to be a tax.

[562] We're doing a lot of firsts today.

[563] My member is not good enough to remember how we classify an Instagram.

[564] But to me, that's the analogy here, right?

[565] Like, this is, Venmo is PayPal's Instagram, right?

[566] Like, there's a, is essentially the same business model.

[567] On the merchant side, I would assume at this point the same merchant sales force that is selling to merchants.

[568] It is just a different consumer audience that plugs into that on the merchant side.

[569] the front.

[570] So module rise in the back end from the front side.

[571] Yeah, so like the merchant side, I would assume it's integrated at this point, but the consumer side is completely separate to me just like Instagram and Facebook.

[572] But fortunately, you have the expert here.

[573] Yeah, we'll let me see the categories.

[574] Yeah, the business line thing is interesting because Venmo didn't have any business without PayPal if he did the merchant network.

[575] and the reason it kind of like took off was by the just like some of the product tweaks like the because it was designed for people that used with their friends you could reduce a lot of friction that PayPal had because it was designed to transact with people you don't know and so like the product was actually suddenly different in a way that made it grow faster so I think it's a product That's an important nuance.

[576] And I think one worth thinking about for anyone doing a consumer startup is that you're, you can have a higher viral coefficient if it's between like slightly more distant, distantly trusted parties rather than people who already have to know each other intimately because you only know so many people super, super intimately.

[577] Okay, what would it happen otherwise?

[578] I think the most interesting question for me in terms of of an alternate history year.

[579] I think we asked you earlier.

[580] Did you guys talk to strength at all during the acquisition of Marriott?

[581] No, we should have.

[582] There's better to have two people trying to buy a company.

[583] And they lesson number one.

[584] Yeah, that's a good, you know, should have.

[585] No, we didn't talk to strip.

[586] So if we didn't get acquired by brain tree, we would just, there would be no memo and you'd probably use some, like, you know, or something like that, or like, you know, square cash or something like that.

[587] But what's interesting, so if you, it's interesting to imagine the world where if Stripe did acquire you, because I think, my sense of Braintree was pretty focused on becoming part of PayPal or at least be able to this.

[588] Obviously Stripe was very focused on being a independent company.

[589] But imagine if Stripe had been, that would be a very powerful combination right now, right?

[590] Or were there things, was, was, Do you think Stripe was too developer -focused, like, to build out a real merchant network to be kind of pretty demo?

[591] I think it would have been, in terms of, like, the products that could match.

[592] I don't know if the finance series would have had the stomach to spend, like, a billion dollars getting Vembo to the point where there was a big enough network of consumers to be interesting to the merchants, but, like, in terms of, like, the sort of, like, the match of the products that would probably be similar to brain tree.

[593] All right, so going into tech themes, I want to use the beginning of this section to do something we haven't done yet in this episode, which is you mentioned Square Cash.

[594] We haven't talked a lot about Square.

[595] We talked a lot about Venmo, but we haven't talked that much about what each of those companies are doing today.

[596] And David alluded to something that PayPal has the only business model that wins in the space, the same as Visa.

[597] I want to spend a little bit of time sort of unpacking that and trying to talk about what each company is doing.

[598] and what the strategy is and trying to pattern match what's succeeded and failed across each.

[599] So Square Cash launches.

[600] So let's take a step back.

[601] I think we all know Square.

[602] Square is how we're selling T -shirts in the back.

[603] It's how any merchant, actually internationally in the world, can easily accept payments and use a point of sales business with their business.

[604] So they see that Venmo taking off and saying, oh, we need to be in the peer -to -peer transaction business too.

[605] They launch Square Cash, which is now rebranded as the Cash app.

[606] they had a value proposition around you're going to be able to instantly transfer something to someone else, which is extremely expensive because you're then paying to deposit quickly in other people's banks instead of the very cheap ACH or the free strategy of just transferring something to somebody's Venmo and letting it sit in their Venmo account.

[607] That's got to be the dream scenario where David and I both have Venmo, I'm going to Venmo you, you're going to say, I'm not going to transfer that to my bank, and so it doesn't cause Venmo anything.

[608] And so if there's a way to monetize me when I'm, it's a closed loop where all the money is just staying in the, in between the two of us, that's great.

[609] Now, I want to add a little bit of color to why, David, you were saying the only business is sort of the Visa one, the PayPal one, and also why you were saying that Stripe and Venmo could be a powerful combination.

[610] Imagine you have what Venmo has, which is two different parties that are transferring money to each other and do so often enough that they're willing to leave money in Venmo.

[611] So it doesn't cause Venmo anything to have that dream scenario where people are moving money around to each other.

[612] And most of the time, if they are moving to their bank account, they're doing so in a relatively cheap way with ECH.

[613] If you also had all the merchants on that same ecosystem where you didn't have to ever have costs of goods sold to transfer money to a bank, then you could really have a business on your hands because what businesses are willing to do is pay the interchange for that transaction.

[614] So that's sort of where Venmo is today is where, when you see pay with...

[615] You are both Chase or Wells Fargo or what have you and Visa.

[616] Like, you're credit card and your bang.

[617] So you're not paying fees to anybody.

[618] You're just charging 100 % of gross margin of fees of portions.

[619] Right.

[620] I mean, imagine the high velocity, like, I use Venmo five, the average, I think, from their earnings is that people use Venmo on average five times a week who use it.

[621] So when all those payments are free, there's a 2 .9 % same as a credit card transaction fee plus 30 cents when you go and pay at a merchant.

[622] Now, that's all sort of free money for Venmo because they don't have to pay anything to the bank until they decide to settle up once a week or once every two weeks or whenever merchants actually move money out of Venmo and into their bank account.

[623] So they're not paying per transaction just in one lump sum.

[624] So kind of an amazing, like if Venmo can take advantage of having this pay to pay, and really building it out into a merchant network too.

[625] That's an unbelievable business model.

[626] Yeah, PayPal's a business model.

[627] Yeah.

[628] I don't talk a lot, but one other point I want to make here is that it's interesting how three times in a row there have been businesses that try to start in peer -to -peer transactions and then don't find a great business there and then pivot to...

[629] The multi -sided.

[630] Yeah, peer to commerce, like paying for things.

[631] And so if you look way back at PayPal when they started, that's why it's called PayPal, it's for people to transfer money to other people.

[632] But like, really their business model is you buying stuff online and then taking a cut of you buying stuff online.

[633] You look at Square's first business model, they're just taking a cut of every transaction.

[634] They try and start a second business.

[635] That is Square Cash.

[636] Square Cash kind of ends up pivoting too where they're really changing to be a bank rather than, hey, you should transfer money to your friends with this cash app.

[637] They're really a bank for the underbent.

[638] And we haven't talked a lot about this yet.

[639] And there's a whole, and probably follow -up to Square episode coming at some point.

[640] But if anybody's using the Square Cash app, you'll notice, like, they're pushing this debit card on you.

[641] Well, they get a cut of every transaction in the debit card.

[642] And so Square and Venmo are sort of taking very different strategies at this point, where Square already has the merchant network.

[643] They're now with the cash app trying to start a business where they're able to make money on the debit card side of every time one of their users makes a transaction, they make that, that interchange.

[644] And when you look at Venmo, what we're seeing after all these years now is lining up the merchant network, which is funny because it's sort of like one of the ideas that you guys had originally, but really, you know, really going to that.

[645] Pay off has two million merchants already on there.

[646] Right.

[647] So to the extent that, I mean, there's real consolidative power there, real, what's the terrible word, synergistic power there.

[648] Including Uber, which is now accepting that now.

[649] I mean, that was always the idea for the business.

[650] Like, we knew there was no business of P2P transaction.

[651] Like, you don't want to, because you're competing with tech, like, literally, like, you know, hard physical cash.

[652] And there's no fees on that unless you may be considered an ATM fee.

[653] And so we never had a plan to, like, monetize the P -to -P business.

[654] It was all just the grow less than the network.

[655] And then once you have leverage, go get the merchants onto the network to actually start making money.

[656] makes sense which I think brings us to great let's bring home so for me I mean I've already made the analogy I think it's the same here like this is to me this is an A for PayPal with a caveat of the future A plus that I think is likely which is this is the fan technology in the standpoint like it's PayPal understands this business model better than anyone in the world.

[657] It's a fantastic business model with incredible network effects.

[658] It's a two -sided network.

[659] And they had a major problem, which was that people who were, you know, mobile natives, quote -to -quote, or didn't grow up using PayPal, weren't using PayPal to transfer money.

[660] And Venmo became the way to do that.

[661] And so now it's all under one roof.

[662] But PayPal has the merchant network on the other side of the transaction plug into me. So I think this is like, without going into depth on the finances here, I don't bring minimum A and my caveat on the A plus is just further proving out monetization of VEMO over the coming years, which I have no doubt in a whole.

[663] What's funny, I'm just looking at Visa is effectively three PayPal's in market cap.

[664] Visa should probably be the one to be scared.

[665] Visa should probably try and make a go for PayPal.

[666] Anyway, that's not grading, but...

[667] Yeah, David, I'm with you.

[668] I mean, I think the thing to consider it here is, like, it's still very speculative.

[669] Like, we're still in the early days because we just now are starting to see a serious effort in the last two quarters of...

[670] I think the last three quarters of PayPal deciding to push pay with Venmo to a lot of the merchants on their network.

[671] we saw, I think that in the earnings report, that 17 % of people on Venmo have now participated in a transaction where they were a monetized user, which for the majority of people means they're paying at a merchant.

[672] Some others are paying the fee for instant cash out, but I think the majority of that is probably paying merchants.

[673] So, you know, there's reason to be hopeful, but, you know, I think I'm in the same camp as you now, A, with a future A plus, but I think the variance is high because it's definitely predicated on, you know, right now, still losing a lot of money, still responsible for a super small percentage of revenue relative to all of PayPal's revenue, and it's, you know, it's not totally clear yet whether we're going to be paying with, with Venmo at Eberts and sell up the place.

[674] So, Cortina, you're probably biased, but you want to weigh in?

[675] Yeah, I mean, I like that, um, when there's that, like, pay with Venmo integration with Uber, where there's, like, the button in the app, but there's also, like, I think it's cool that they did the demo card, um, because then that wires up any merchant that the one accepts like credit card payment also as a merchant, which is like far greater than the PayPal merchant network.

[676] I don't know if people will use the memo card, but there's another way to kind of like instantly cash out so I can get the appeal of it, and it's certainly like a good way to make all that balance that's thin around pretty liquid.

[677] So that's a cool thing that would have been tough to do if them was independent and PayPal may happen.

[678] Cool.

[679] Great chances, too.

[680] You are no longer at demo, of course.

[681] As we alluded to, you have not started to fit in with original angel investor, Sam, lesson.

[682] Tell us a little bit about how that came together.

[683] Yeah, so after Venmo, I was kind of doing nothing.

[684] Sam, who sold his company with Facebook many years ago and was a VP of product in Facebook for a long time, had left and was also doing nothing.

[685] And when we kind of realized neither of us was working on this thing, we thought, like, maybe we should work on something together, if we can get excited about something.

[686] And the sort of like frustration that we ended up sort of like thinking about a lot was your phone, you know, like a lot of times when you're on your phone, you're just like, you end up looking at something that you had no intention of spending time doing it because there's all these like badges and buzzes and alerts and it's designed like a slot machine to like get your attention on some screen where, you know, you don't look back at the end of your life and think, like, I wish I looked at more cat photos when I was, you know, under, like, not, your phone just, like, doesn't feel like it's aligned with your goals.

[687] So we wanted to build something, like, kind of, like, realize the potential of the phone, which is very high, because it's connected to all human knowledge and allows you to communicate with any other person in the world at any time.

[688] So the sort of delta there is pretty big.

[689] And we decided we wanted to build this, like, idea from science fiction, where you have an assistant that's, like, an AI, you know, kind of like, it's tapped into your stream of consciousness, always listening, augmenting your sort of knowledge of the world, helping you with whatever you need, but realize that today the best is like Google Assistant or Alexa, probably Google, and it's like not anywhere near as good as having a real assistant.

[690] And so we said, like, when we build something like feels like this software from science fiction, but it's actually powered by a combination of people and machines and software on the back end and it feels like the kind of like AI assistant and so that's kind of what we set up the bill it's um it's called fin and people people kind of use it like you would use a full -time VA or personal assistant but the sort of advantage is it's it's variable cost you don't have to spend you don't have to pay for 40 hours of work every week you probably don't have a workload that's 40 hours every week so you pay incrementally by the task um we can kind of you know help you out with whatever you need help with, so you can focus on what's important.

[691] Cool.

[692] So Cortina, I know a lot of us are anxious to get our hands on Finn play around with it.

[693] You have a...

[694] It's going to be a good turnaround, but...

[695] Oh, you are?

[696] Go for it.

[697] Sorry.

[698] So Cortina was generous enough and the whole Finn team to create a really cool custom deal for us tonight if anybody wants to try it out, so I'll give that to turn that over to him.

[699] Yeah, if you go to fin .com slash acquired, there's an intellectual.

[700] like get you a promo code where there's no monthly minimum and you get $100 credit to try it out.

[701] So just go to fin .com slash quarter.

[702] And in relation to that, did you, do you have karma?

[703] Oh, yeah, yeah, yeah, carve out.

[704] I was doing this event at Berkeley last night for some of serious there, and I mentioned this book, that's one of my favorite books.

[705] it's Camus and it's a treatise on why the meaningless of life does not merit suicide as it's called the myth of Sisyphus and it's a really good inspirational book that I recommend you know you know listen to my notes I was a French literature for Maineer in college and I was very close to my heart yeah Yeah.

[706] On the next, I also have a book that I wanted to do today.

[707] I wasn't going to do this originally, but given all the problems.

[708] It really would be a book called Startup by Jared Kaplan.

[709] It's about building a startup in the I -Ease, the Go Corporation, which was the original pen -computing company, even before the Apple Do, but this actually was a recommendation to build really recommended this on Twitter and I read it recently.

[710] And it's like such a good read.

[711] Jerry, I believe was also a philosophy major under command I want to say.

[712] Anyway, very, very well written.

[713] And it's about just like the disaster that was building was Penn Computing Company 20 years too early.

[714] And the wreckage that gets left.

[715] But really, really fun to read and get along the way.

[716] And also just like, broke back to how far we have come in the cards of building startups like not at least they're going to be at the US but like funding rounds are like giving up like 40 % of the company for only a million bucks in the beginning and like it's crazy so yeah David you know what the difference is between being early and being wrong nothing yeah yeah that's a that's a haunting all right um um um um um um um um um um um um um um um um um um um um um um Keeping my brief, I'm super into computational photography.

[717] really difficult to see on film.

[718] And I think that, you know, just with the newest iPhone and the newest Google Pixel 3 are just, like, fascinating playgrounds for developers.

[719] And one of those developers is Hallide.

[720] And Sebastian DeWith is one of the folks that works there.

[721] And he wrote an article on halide .com called the iPhone XS, or iPhone Tennis, why it's a whole new camera.

[722] And their app includes a thing called SmartRaw, Which, if you're a nerd about this kind of stuff, like, you should definitely go read this.

[723] There's fascinating side -by -side comparisons of, like, hey, I took this in raw with the new iPhone, and then we augmented the raw in this way, and, you know, you can bring out these things and this photograph that you otherwise wouldn't have been able to bring out.

[724] And I think the wave that we're in is so interesting, and I think this article is written in such a way that it's both appeals to, like, the nervious of us that are interested in this stuff, but is also written in a way that anybody who's interested in exploring this area is totally, totally digestible.

[725] So I highly recommend that article.

[726] Our sponsor for this episode is a brand new one for us.

[727] Statsig.

[728] So many of you reached out to them after hearing their CEO, Vijay, on ACQ2, that we are partnering with them as a sponsor of Acquired.

[729] Yeah, for those of you who haven't listened, Vijay's story is amazing.

[730] Before founding Statsig, Vijay spent 10 years at Facebook where he led the developer, of their mobile app ad product, which, as you all know, went on to become a huge part of their business.

[731] He also had a front row seat to all of the incredible product engineering tools that let Facebook continuously experiment and roll out product features to billions of users around the world.

[732] Yep.

[733] So now Statsig is the modern version of that promise and available to all companies building great products.

[734] Statsig is a feature management and experimentation platform that helps product teams ship faster, automate AB testing, and see the impact every feature is having on the core business metrics.

[735] The tool gives visualizations backed by a powerful stats engine unlocking real -time product observability.

[736] So what does that actually mean?

[737] It lets you tie a new feature that you just shipped to a core metric in your business and then instantly know if it made a difference or not in how your customers use your product.

[738] It's super cool.

[739] Statsig lets you make actual data -driven decisions about product changes, test them with different user groups around the world, and get statistically accurate reporting on the impact.

[740] Customers include Notion, Brex, OpenAI, FlipCart, Figma, Microsoft, and Cruise Automation.

[741] There are, like, so many more that we could name.

[742] I mean, I'm looking at the list, Plex and Versel, friends of the show at Rec Room, Vanta.

[743] They, like, literally have hundreds of customers now.

[744] Also, Statsig is a great platform for rolling out and taking.

[745] testing AI product features.

[746] So for anyone who's used Notion's awesome generative AI features and watched how fast that product has evolved, all of that was managed with Statsig.

[747] Yep.

[748] If you're experimenting with new AI features for your product and you want to know if it's really making a difference for your KPI's Statsig is awesome for that.

[749] They can now ingest data from data warehouses.

[750] So it works with your company's data wherever it's stored.

[751] So you can quickly get started no matter how your feature flagging is set up today.

[752] You don't even have to migrate from any current solution you might have.

[753] We're pumped to be working with them.

[754] You can click the link in the show notes or go on over to stat sig .com to get started.

[755] And when you do, just tell them that you heard about them from Ben and David here on Acquired.

[756] All right, Acquired listeners, we will see you again in a couple weeks, or I guess you'll hear us again in a couple weeks.

[757] For those of you who have already joined the LP program, the first episode is waiting for you on the bonus show.

[758] And for those who want to join, you can click the link in the show notes or go to Kimberlite .fm -A -M -Aquired.

[759] That's K -I -M -B -E -L -I -T -E dot -M -S -Aquired.

[760] Thanks.