No More Hustleporn: Ramp's Eric Glyman on getting to a clean business equation
We pulled out the highlights from Eric Glyman's recent interview at South Park Commons NYC Google's. Transcription and light editing by Anthropic's Claude, curation by Yiren Lu :-)
Highlights:
Aditya Agarwal: Interesting. One of the things that we often talk about at SPC, maybe as almost a forced dichotomy, is this idea of a top down ideation, which is really like, you're starting off with big markets and you're doing market analysis and you're going out and trying to understand broken market structures totally. Then on the flip side, which is very much just like, bottoms up, right? Like, hey, don't think that much about the market. Just start hacking. Just build something and see where it goes. And based on what you're saying, it sounds like you did both, which I think is the right way to do it, which is it sounds like you weren't completely top down, but it also seemed as though you were kind of constantly iterating on a base product. Does that sound right?
Eric Glyman: That's 100% right. And I think the mental model I try to have with this is, as you're discovering the market, you want to be testing all your assumptions to get to a clean business equation. And for us, it was simple. Are we too crazy or is it possible to create a credit card? If you can create a credit card, how do you finance the thing, and can you do it at an effective rate? How do you cover risk, and can you solve a problem? And actually, once you kept distilling and cutting and cutting, it turned out there was about three core things we needed to get right. We needed to be able to issue a credit card that people would want to use that might save people a little bit of money or a little bit of time enough to get them to go forward. And last, could we sell the thing? And if it turned out the answer to these things was correct, your model was sufficiently built out that you knew there would be a business on the other end, and then all your effort starts going bottoms up to, okay, what does it take to sell this thing? What does it take to deliver value? What does it take to make sure that it constrains the problem really nicely? So that's why I think some view of both ends, helps.
Aditya Agarwal: So I'd say that most successful founders that I've worked with tend to either have an intuitive or explicit understanding of their own strengths. So what would you say your biggest kind of superpower is?
Eric Glyman: It's a good question. It's changed and evolved over the years. So I do try to think a lot about how do you simplify assumptions in focus just on a couple of things that matter. There's many different stuff. Maybe a mean way of saying is maybe there's a laziness or an unwillingness to do 100 things. But I'm the kind of person where if there's 100 things to do, there are real people out there that you give them 100 things, they will stay up until three in the morning trying to get 80 things done, 90 things as much as they possibly can do.
My natural state is like, I would rather do three to seven of the most important things, or maybe just the one to two most important things and totally drop the rest. Which made me not a great employee, I think, at times. In other jobs, I was almost fired from my first job for doing stuff like that. But in the context of trying to build a company, the world is very asymmetric and kind of like that. And I think that the job of founders is in a very messy world, that you could literally be doing anything. In the early days, you could do market research, you could go be selling, you could try to raise, you could try to get media, you could try to go meet a co-founder. It's almost too many things that you can do. That art of trying to constrain the problem and simplify down, I think is super important.
Audience Member: So you mentioned low-interest rates being something that was beneficial to the business. What other things out there, whether it's infrastructure, regulatory, whatever it is, made it the right time for companies like Ramp?
Eric Glyman: Totally. So I think there were like four factors that just opened the market for us. And probably two or three of them were sufficient. But I'll talk about it.
The first is something that's very unusual about a lot of financial services is that there's not new competitors. Most of my competitor's founders literally wore top hats. The world went from no phones to flip phones to iPhones. The credit card didn't change. The bank account is basically the same. And a lot of the reason was if you want to offer a credit card and monetize in this way, historically you had to be a bank.
A lot of regulation coming out of the financial crisis was really focused on the too-big-to-fail problem. And there was some regulation. We've written about it on our blog. But this thing called the Durban Amendment where Senator Durbin basically was trying to go after and figure out how do we cut down consumer interchange, but also prop up small banks so that they would make enough so that they could compete. This created this incentive for small community banks. Whether it's Sutton or Celtic or there's lots, thousands all throughout the country where if they could just simply convince people to use their cards, they could make more interchange.
Ohio is wonderful. It's hard to convince people to move there and use your local community credit card, but it actually gave them an incentive where they could actually start to work with infrastructure providers and get people to create cards with them. They had a real economic incentive. You started to see infrastructure. That was the first one. There was a regulatory change.
You started to see infrastructure providers realize this. So Square. Early on stripe, people figured out if I could go create a new credit card or monetize financial products. The banks started to be willing to co-brand or do things together, but also started building standardized infrastructure where I wouldn't have to go and build everything from scratch, but I could actually just go and call an API. And there was infrastructure ready to go.
In a partnership model, cost of capital is a third factor dropping when you think about interchange. In order to make 2 million plus dollars, you might need to cycle through $100 million. It's an expensive business to scale. You need a lot of capital and resources. And historically, if you were a bank, you fund through deposits. But now if rates are low, borrowing is not very expensive. And so that meant, okay, you could work with small banks. There was infrastructure you could call through an API. And last, one of your core costs actually was not super high and big banks wouldn't have a mega advantage.
Last in underwriting, if you want to go and extend $100 million, easy to lend, harder to get paid back. Historically, people would underwrite based on lots of credit factors, and you would need years to figure out if someone has a good or bad credit and lots of data. The proliferation of companies like Plaid or Phoenicity meant you could live link to someone's bank account. And rather than trying to underwrite years of credit history, you could underwrite there's a pile of cash. It's not moving that quickly. What's the chance that at least 5% of it is here in a month's time? Pretty high.
Full Transcript:
Eric Glyman: Yeah, first of all, just thanks for having me here. Hopefully this is interesting. Feel free to dive in with questions if there are parts that we want to unpack. I think before even getting to the first day, negative 100 to 200 days, part of the Ramp story actually came from my predecessor startup. Ramp is my second startup. The first one focused entirely on trying to help consumers save money from things they buy online. Fast growing, a little bit harebrained. The premise was if you buy something online, Amazon, Macy's, Best Buy, whatever, and the price drops, they all have price adjustment policies and you could get the difference back.
We launched that in May 2015. Within a year we had almost a million customers. We had a life-changing offer from Capital One. Originally wanted a partner, then it made sense actually, maybe they should buy this thing. Bought it. We ended up there for the next two and a half years. We got to see up close how to turn data into savings at scale.
We were trying to figure out we were the savings people and we were trying to get customers more value. Most of our colleagues were thinking entirely about how do you get customers to spend more so they could earn more in the meanwhile, devaluing points in the background.
As we started interviewing customers more and more, we'd ask them, did you want points? Did you want cash back? Did you want something different? If we really listened, we'd hear from customers, actually, I'd say, I don't want cash back. I don't want points. I want more in my bank account. I want to be better off financially.
We got obsessed with this idea of what if there was a card and software that was fundamentally designed to help you, the customer, spend less. You could compete on the basis of value and over time break away from price-based competition. But now we're at the negative 100 to 200 days. We're on it. We're obsessed, and we're trying to figure that out.
Aditya Agarwal: And so this obsession starts while you're at Capital One.
Eric Glyman: That's right. Where I think it started to take an interesting turn was starting to think through, okay, we want to help people spend less. What's the right form factor? It's possible we could do a little bit of a Paribis 2.0 and just have savings insights. But we knew, okay, we'd be quite limited in terms of suggestions. We get a glass pane looking in. You could see the savings. But our only vector was send an email and see a response from a store. Monetization was rather limited.
Part of the idea maze, we're trying to figure out what would be a clean and simple solution we could get to market with that would have its own sensible monetization, would be simple enough that you could actually save. What we concluded on more and more over time is we started meeting with, first it was, do we do a consumer card? Do we do a business card? We concluded pretty quickly the gap in the business side was very little innovation, but a lot less regulation. So you could actually move quickly in a space without so much, frankly, proper regulatory concerns that consumers have.
Next. In the credit card business, one of the primary costs or the ways that you can lose and blow up your business is taking risks that you don't understand in a major way. What was very interesting as we were researching was if you look at the loss profiles, you can find this in ten KS and annual reports for consumer cards. You could have single-digit to even low double-digit losses of every dollar you put out. For corporate, Amex was losing 20 basis points, ten basis points per year.
And so actually, if you could extend credit in an efficient way, you wouldn't need to worry quite as much about that loss profile. And actually you could start getting into the pure play. We'd extend a card out, we could uncover where companies are spending too much money. It could be a loop of we try to say we're going to come back with personalized advice of ways that you can actually cut down spending and if you think these are valuable, maybe you'll try out our card.
And so originally it just was a very simple we were simple credit card with one and a half percent cash back. We would try our best to save you money and we would try to help you close your books. And so it was just very much understanding and breaking down barriers of what really is the most simple model that we could start and start chasing down. Does that make sense? Is that kind of all it does.
Aditya Agarwal: So maybe zero in on one part of that kind of like kind of that obsession phase, right? What did that look like? Is it this like, you know, you, you know, you obviously probably had a big role at Capital One. You probably had a bunch of roles and responsibilities. But did you just find yourself coming back to this particular problem, like working like whatever, nights and weekends? Is that really kind of the expression of the latent energy for that particular idea? And maybe to also ask, is there a reason why you didn't feel like you could do it at Capital One?
Eric Glyman: Both super interesting questions. I think I'll take them in order. On the first kind of the obsession part of it, we were really interested in this idea of could you actually help your customers spend less? We were interested in we know interchange is very valuable, but the hard part is historically it's been a lot of price competition, some kind of race to the bottom. And as a smaller, not well capitalized startup, starting out of an apartment, competing on the basis of price wouldn't be our advantage. And so the early obsession was we met with over 100 founders, finance teams. We started to go deeper and we said, look, we've got this idea for a credit card that tries to help you spend less. We can tell you about that, but I'd have loved to understand, are there places in your business you feel you're spending too much money? Is there waste? Are there parts of just your closing process that are taking too much time? And we started to follow and see where things went. And it was all kind of you'd find some things that were very niche, but the more people you talk to, you would actually start to see repeated patterns, some which were very complicated, others which were quite simple.
On the question of why not do this at a big company, some of it had to do with experiences that we had there. It was almost like being on a cruise ship. Like, that thing can carry a lot of weight, but if you want to turn it, it's like a mess. And any new product that you're shipping, the governance would be multi months for anything, whether it was changing the color of a button or shipping a new feature. And our view was, if you really looked at the need sets talking to customers, the problem was not, Can I get a credit card? The problem was not, Can I get expense management software? The problem is like, I can't close my books without using three sets of software. And this is a product issue. And so we identified it was a workflow and product problem that if you could solve that, you could have the monetization and just the rich profit pools accessible to credit cards.
Aditya Agarwal: Interesting. One of the things that we often talk about at SPC, maybe as almost like forced dichotomy, is this idea of a top down ideation, which is really like, you're kind of starting off with big markets and you're doing market analysis and you're going out and trying to understand broken market structures totally. Then on the flip side, which is very much just like, bottoms up, right? Like, hey, don't think that much about the market. Just start hacking. Just build something, right, and see where it goes. And just like, build one. Build it for a week. Are you more excited? Build some more, right? And based on what you're saying, it sounds like you did both, which I think is the right way to do it, which is it sounds like you weren't completely top down, but it also seemed as though you were kind of constantly iterating on a base product. Does that sound right?
Eric Glyman: That's 100% right. And I think the mental model I try to have with this is as you're discovering the market, you want to be testing all your assumptions to get to a clean business equation. You want to figure out if you design a simple product and you can't design multiple, you might only be able to design one. Of course, you can layer on more of how will you make money? What are the embedded assumptions all the way through? And for us, it was simple. Are we too crazy or is it possible to create a credit card? If you can create a credit card, how do you finance the thing, and can you do it at an effective rate? How do you cover risk, and can you solve a problem? And actually, once you kept distilling and cutting and cutting, it turned out there was about three core things we needed to get right. We needed to be able to issue a credit card that people would want to use that might save people a little bit of money or a little bit of time enough to get them to go forward. And last, could we sell the thing? And if it turned out the answer to these things was correct, your model was sufficiently built out that you knew there would be a business on the other end, and then all your effort starts going bottoms up to, okay, what does it take to sell this thing? What does it take to deliver value? What does it take to make sure that it constrains the problem really nicely? So that's why I think some view of both ends, helps.
Aditya Agarwal: So I'd say that most successful founders that I've worked with tend to either have an intuitive or explicit understanding of their own strengths and kind of like their own superpowers. And again, if they're explicit about it, they start really shaping it and honing it and kind of in some ways like sharpening their own knives, but sometimes it's just intuitive. So what would you say your biggest kind of superpower is?
Eric Glyman: It's a good question. It's changed and evolved over the years. So I think I do try to think a lot about how do you simplify assumptions in focus just on a couple of things that matter. There's many different stuff. Maybe a mean way of saying is maybe there's a laziness or an unwillingness to do 100 things. But I'm the kind of person where if there's 100 things to do, there are real people out there that you give them 100 things, they will stay up until three in the morning trying to get 80 things done, 90 things as much as they possibly can do. My natural state is like, I would rather do three to seven of the most important things, or maybe just the one to two most important things and totally drop the rest. Which made me not a great employee, I think, at times. In other jobs, I was almost fired from my first job for doing stuff like that. But in the context of trying to build a company, the world is very asymmetric and kind of like that. And I think that the job of founders is in a very messy world, that you could literally be doing anything. In the early days, you could do market research, you could go be selling, you could try to raise, you could try to get media, you could try to go meet a co-founder. It's almost too many things that you can do. That art of trying to constrain the problem and simplify down, I think is super important.
The other thing, and I think contrast and very varying skills, so long as you have mutual values, works well. I tend to be more calm. Let's give things kind of in time. Whereas Kareem and jean or some of my co founders have very different spikes. Like, Kareem grew up in Beirut, Lebanon, where there's always something that's going wrong, there's always issues. You need to be thinking ahead, moving extremely rapidly. Gene is one of the people I know who learns faster than basically any other person I've ever met in my life. There was different reasons for why we wanted to work together, but I think people have their own superpowers, but trying to make the space for what is yours and how do you hone in on that? I think is very useful.
Aditya Agarwal: It's good.
Eric Glyman: It's a good exercise.
Aditya Agarwal: So, common trait of great founders, also not great employees. Yes, as well. Yes, but you mentioned this. But I'm going to ask it explicitly because it sounds like you do have a point of view on this. Given this extraordinary ability to kind of like focus and to find clarity in what you want to get done, what do you think are the big? Every great strength also comes with a bunch of associated weakness. So what have you found over the years? What does this superpower lead you to fuck up totally?
Eric Glyman: Look, Kareem has been like, such an incredible contrast for me in it. I tend to be much more trusting of it's going to go the right way, give it time, give it space. And I think that that gets a lot of companies into a lot of trouble really quickly. When you give people, like, large mandates, you make huge assumptions and you don't actually inspect it consistently. Figure out what are the leading indicators and how are you going to be as rapidly as possible understand if you're right, if you're wrong, or how to pivot. I think I can often - I've gotten better over the years - but can very much get caught flat-footed. And I think I'll say it explicitly. I know that's a gap about me, and often I try to find folks who won more and more. My role turns out, maybe you don't need to do the top 100, but the next 50 are very important in finding people who are operationally excellent and also people who explicitly are world-class at making sense of inspecting very deeply. I think one of the things that people say about ramps, culture is we are almost militant about understanding what are the leading indicators they're going to match to the lagging and how do we inspect deeply at multiple levels of the organizations, what's actually happening, and are your assumptions correct. And that comes from leaders of the company who have superpowers that I don't.
Aditya Agarwal: Man, I am a hopeless optimist. When I look at an idea, I'm just like, these are all the ways this is going to be amazing. This is why I work with Mitra, who keeps me in check. Okay, we will intersperse some spicy take questions in between regularly scheduled programming. So what is one technology trend that you hate? Don't say crypto. Too easy. Also too soon.
Eric Glyman: Look, to be honest, I'm very much a fan of what's happening in AI. I think it's very revelatory. But I think, as I'll just say, it especially at places, I think with hypersmart people that really deeply understand technology. I think there's a lot of people who take technology and try to go find problems with it. And I think I've basically never seen that work. Well, over the long run, maybe if you're building a new database that works sometimes or fundamentally new breakthroughs, but other than that, I just don't see that working. And so I think one of the traps for most early-stage companies and a trend I hate seeing with founders is fucking brilliant people. Sorry, just actually being like, we've got AI, what industry is this going to revolutionize? And then just go straight into it without validating understanding. I think the world is often very efficient and actually makes sense. Like competitors are smarter than you think, for sure. Processes that look disastrously inefficient or industries that look totally messed up. There's probably a good reason for why they were. It doesn't mean necessarily it will be going forward, but assume people are smart and rather than taking technology, I think in this one, there's a lot of people who are wasting a lot of time with AI in areas that shouldn't work. I also think it's amazing. So I don't hate it's. Probably maybe only a half answer to your question.
Aditya Agarwal: No, it makes sense. I mean, I think the way I tend to think of it is that most people and as somebody who tends to again, see the best side of everything. I've learned over the years that even if you build something that's two or three X better, most people aren't going to switch their workflows because what they have kind of works for them. And it's not just about you, it's about the whole organization or the other organizations that they work with. And it's just really easy to aim for two or three X and it's just really hard to do like a ten X actual better product. Right. And I think AI, like a lot of the applications today, seem to be, hey, I'm going to throw AI at this one thing, but guess what? Your competitors like your incumbents are going to do that faster than you maybe, right? Yeah, that's a good answer. Okay, so maybe going back a little bit more to your personal story, I'm curious, what is the best piece of advice you've ever received and how have you applied it to life and work?
Eric Glyman: It's interesting. I think in the context of company building, I need to think a little bit more about what's the personal one? There are a few that changed my life, but when I think about it, I think Y Combinator gets a lot of it really, right. Of like the one thing that they try to constrain the problem on is once you have a business you're focused on, try to grow a certain percent every single week and hold yourself to that standard.
The reason I'd say that is first, like a lot of people just are restless and want to ten times everything, 100 times stuff and grow things out of proportion. And I think first you want to stop yourself from taking massive swings. You want to figure out every single week how do I grow 7%, 10%, whatever is the number, but do that consistently. And I think when you do it, it just makes the optimization problem very clear. In order to grow by 20 users, maybe if that's your goal you're trying to optimize this week, it becomes much clearer. You can go wait, what is going to get you there and actually focus things.
And you can see problems coming out in front of at some point when that metric is you need to add 150 users. You can see that's coming. That's eight weeks away, whatever how many weeks away it is. And you can start planning for it, but you can focus on the here and now. And I think a lot of the way that we see Ramp and we're known for we just announced say we grew four times year over year. We're the fastest growth in our industry. A lot of that came from 5% improvements, 2% improvements, 10% consistently, constantly. And a lot of that came from trying to really focus on what is the one metric we're trying to move. How do I be consistent on it and how would I constrain what is a completely messy idea maze of stuff and so constrain the problem is probably like the best business advice I've ever heard. I still try to think about it every week.
Aditya Agarwal: Any personal ones?
Eric Glyman: Any personal ones? Look, I think it's I tend to operate in a lot of like pretty hard-charging environments with people who like really are trying to push sometimes like, you know, I tend to be more even keeled. There are people who are restless to get things resolved and I think sometimes that'll break out in very different views and sometimes like fights, friction, all that.
I think for me, I'm trying to think about how to articulate this saying like assume good intent isn't quite enough. I think it's more of like if you have a different view with someone presuming, there's common goals and hopefully within a company or between companies trying to work together, there should be you want to be trying to uplift versus outsmart. I think when people get caught in disagreements or different ways of viewing the world, it's very easy to get stuck in the have ego speak for you like, I'm right, you're missing this. Why aren't we doing this is where things tend to evolve and actually trying to make the space a step back and say what do we agree on? Great, we're trying to solve that. How do we actually get there together and remove and sometimes you got to take it on the face and eat it. I'm wrong sometimes and that's a good thing. It's not about who's right and who's wrong. It's like how do we actually achieve the goal? I think a lot of it has to do with how do you upload versus outsmart is where I found the most useful. Whether it's like work life, or even just like personal life of healthy relationships, you're going to have arguments and different views of the world, and finding that common ground helps.
Aditya Agarwal: It's really good advice, actually. I'd say that? I was just thinking, I have a strong-willed partner, my wife. And kind of the best piece of advice that our couple therapist gives us is you kind of have to instead of doing no, but it's always yes and start everything with yes. And not just for the sake of getting your point across, but actually acknowledge and internalize what they're saying to get to the next, hopefully, plane of the discussion and even your previous point.
Aditya Agarwal: Yeah, give it feedback. San Francisco, New York. Yeah.
Eric Glyman: I think it's an amazing time to be building in New York and it's changed so much. First, growing startups are very bizarre in a few key ways. Most companies are profitable. People forget that sometimes in the startup ecosystem. Secondly, they don't grow that quickly. It's very weird and very unusual and actually like an anomalous experience for anybody to be part of a company that's doubling revenue every six months or a year or three months. For a long time, functionally, San Francisco almost had a monopoly on this. It's hard to explain to people what it feels like to be inside a company growing at scale, doubling every few months, and how it breaks teams. The funding requirements start going up. There's almost an art of constantly reinventing yourself.
Practically speaking, for a long time, if you really wanted to start a venture-funded, fast-growing company, San Francisco was the place to go. You could find people to hire. Over the past 10-15 years, though, New York started seeing extraordinary tech companies built here, from DoubleClick to MongoDB to Datadog. Extraordinary engineering-led companies built huge offices here, like Amazon, Google, Meta, and Stripe. Even before the pandemic, you started getting a critical mass of extraordinary people across functions here. But there hadn't been truly large breakout companies built yet.
Part of the vision for Ramp early on was creating a destination in New York for fast-growing engineering and product design companies in finance. New York is the center of finance, so it made sense. The ecosystem has benefited hugely from the pandemic. New York is an amazing place to build a company now. Culturally, New York used to default to distrust, but communities have developed to help each other. It's not quite like San Francisco, but communities are changing the ecosystem for the better. New York will be an important center of startups over the next decade.
Aditya Agarwal: Amazing.
Eric Glyman: Yeah.
Aditya Agarwal: It almost feels as though that there might be some just level, the next level of scale in terms of maybe density of talent. Kind of like a shared, almost knowledge base, a shared, almost cultural kind of base that seems to be emerging. If you could give one piece of advice to kind of like somebody moving out from the Bay Area to kind of try their luck in this big New York City, what would you tell them that is specific to New York? Maybe something about shop, elbows, I don't know. Yeah.
Eric Glyman: I'd want to know the person and know why are they moving here, what are they into? I've been in New York for eleven years. Part of what I love about it is there are so many different ecosystems. It's not a monoculture and you want to meet the people working in fashion or banking or hipsters out in Crown Heights. There's many different types of people and things that makes people tick. I often think startups and starting the company is trying to find some deeply weird and specific niche and giving yourself the space to actually explore because it's a funky city, there's interesting stuff going on and do that explore around even neighborhoods. You cross over a few blocks and it's completely different. Feel don't settle too quickly. I think there's other cities that you can really wrap your arms around what's going on in a few months? Not here. I feel like even I've been here for over a decade, I don't totally get all the things that are going on here. So give yourself some space to enjoy it and explore it's.
Aditya Agarwal: Interesting. I think that all the kids out here who haven't been in San Francisco back when, back in 2004 and five when I moved out to San Francisco, the place was super weird. Right? Like people forget that San Francisco only became the way it is now, which is frankly pretty loud as a monoculture over the last six or seven years. But prior to that the city was like all of the shit that they say about San Francisco. It's been there since 2004. It's kind of just like a slightly grimy it's not the most well run city. It's kind of got its pockets of crime and stuff, but it always had this under belly of people doing funky things, which I found really inspiring because you could go and get your point about a startup kind of being almost like a contrarian counterculture to what exists in the world is very right. That's kind of what when people talk about the camaraderie of like a startup, it's like, hey, we believe something that most of the world thinks is pretty dumb and we are kind of at the vanguard of believing this stupid thing, but at least we're in it together. That's kind of the camaraderie. So you can find that when you go to these subcultures. And I do find that San Francisco has lost that now, which is a shame, but maybe he'll come back in some way.
Eric Glyman: That's the contrarian bet.
Aditya Agarwal: Yeah, that is the contrarian bet. I'm still there.
Aditya Agarwal: Okay, so let's see, we'll do a few more questions and I think we'll have plenty of stuff from the crowd. Any advice? I mean, maybe this is an easy maybe this is not a particularly relevant one for you, but I'm going to go for it. Sounds like you knew your co founders for a while, so the question really was for people out there, what advice would you give to people who are really kind of like trying to figure out optimize or think about who to start a company with? Should you prioritize people that you have known for a while? So you kind of have that in build trust? Should you try to find people who spike at different things that you do? What advice would you give?
Eric Glyman: Yeah, look, even though I've known my cofounders for a long time, you don't really get to know somebody until you go through it with people and actually try to build stuff. So Krim and I had started Paribis, the last company, years before together and we were probably a little bit more risk-averse. He was on a visa, had to manage and make sure we were really careful about when we started and when needed happen. We worked on nights and weekends for many, many months and you often can tell if you can figure out, do I actually agree with someone? Can we actually have a simple view of like, what are we trying to optimize? When you work together, do you get stuff done? Do you call them up for advice? And it's going to sound trite, but I think one of the most important things you can do with someone if you think there's a chance and we figured out Spikes and I learned a lot about him and he learned a lot about me over years and we were at different times at each other's throats. You figure things out by actually like going into the arena, actually, like trying, like trying things together. Like, I think it's exceedingly rare that there's like, you know, early on, you know, someone has a brilliant idea and once you've shared it out of the bag and you've ruined it because you've, you've worked with some other person and they stole your idea practically, it's cool for Hollywood.
Aditya Agarwal: Never happened.
Eric Glyman: I don't really know that ever happening. Usually, people are too busy, have too many other things, and startups are too hard, ridiculously hard. They don't work most of the time, they just don't. So, it's very rare that you're going to meet the exact right person who's going to crush you at it. They're way better and they're going to be fierce rivals. More likely than not, you're going to figure out like, actually, do you want to go make this crazy bet for years together and form this strange marriage where you can't really divorce the other person without getting into a legal I.
Aditya Agarwal: Don't know, there's a lot of trouble.
Eric Glyman: Yeah, I honestly think just try it and if you're into it, it feels right. Go for it. And I think next I think back to the question that you're really getting at is what are your spikes? I mean, when you get past the functional, does someone have a particular skill set do you think is weird but relevant to it? I think one of the best analogies for early stage startups is they're kind of like an F1 car. They look totally bizarre. They don't really last all that long. They require a lot of maintenance. But it does one thing and one thing well, and it goes for this short race as fast as possible and it's ready to just break apart and explode at the end of it. That's kind of more what you want if you're thinking that versus Toyota Corolla. Ready for all situations, good mileage, like go with the razor and hopefully, the next founder of funding whatever you need to your premier hypotheses. And it's fine to have totally deficient warped company, warped vehicles, warped companies, that's fine.
Aditya Agarwal: Take turns at 200 miles an hour. Yeah. Whenever anybody asks me like, hey, how do I know if this is the right person? And I kind of say this in jest, but I'm just like, you should find the most stressful situation that you can manufacture safely.
Eric Glyman: Love that.
Aditya Agarwal: And then put yourself in it. Like go diving with sharks, go skydiving. Because what you I mean, everything is fine. You can get along until shit gets really stressful. And then the question is, like, are we compatible under moments of super high stress? Will somebody provide the calm? Will somebody provide kind of the bias for action? And that's hard to kind of understand until you're really in some crazy situation. So I don't have necessarily safe ideas to try this out, but I think that it's worth thinking about. We have about ten to 15 minutes, maybe. Let's get some questions going.
Eric Glyman: Victor, first draw, thanks again for doing this.
Audience Member: Ramp has an incredible reputation for the talent that works there. And one of the questions I've always had for any company of that stature is what were the things that worked very early on for recruiting your 1st 10-30 employees and retaining them. What worked for identifying that talent and bringing them in, especially before there was a strong reputation around the success of the company itself?
Aditya Agarwal: It's a super good question. I guess folks listening in. The question was, how do you think about building strong talent in the first ten to 30 and making it somewhat self fulfilling? Is that a fair characterization?
Eric Glyman: Yeah. So I think I would go back and think about the psychology of even when you've looked at different companies or employers of probably one of the first things you might do is go on their LinkedIn and see who else is working there. And I'm sure sometimes you had the effect of like, whoa, this is interesting, these people are fantastic, or there's been other times you go and you look and you're like, this person's not that impressive. Or I don't get the spike. And it's not to say just look for people with credentials or a certain way, but I think sort of know that there's a lot of self-perpetuation in terms of what you hire for and how it looks can often dictate and drive results down the line. And I think in that context, thinking about how do we back to our F, one specific Spiky, people who have particular skills that can help us get down to the Leanest MVP to get this product out. But how do you find people with a really extraordinary ability in certain ways or really strong spikes, maybe on their own? It first helps you get there and get traction and growth tends to solve a lot of evils in a business, tends to solve a lot of problems, but it actually makes recruiting, I think a lot of people want to work with and be a part of amazing communities, work with amazing people. And so designing explicitly for that early on, I think can go a very long way. I think the next one, and this is a little bit dangerous advice, I would say use it sparingly. Yeah.
Aditya Agarwal: Now, I'm settling in.
Eric Glyman: Okay? With first startups, most people's intuition, and I think it's actually very warranted in many cases, is like, it's going to be about scarcity, making every dollar count, and it could go out the door. So do not waste a single dollar and make it up in time. Right. You're playing like eight roles, you're doing customer service, all this kind of stuff. Early on, we started to see this was going to work in some sense. Let's face it, we know people use credit cards. The industry wasn't that advanced. It was like if you have a cash-back card or points program, you could spin it up pretty fast. You were easy, and the market was easy enough. Okay. We could sell it. It was a working business, and it was going to be competitive. And the way we were going to compete was really on extraordinary talent.
So one of the first things, I think our 9th hire, maybe our 10th, was actually on talent.
Eric Glyman: If we said one of our core inputs was actually going to be on the people that we have, we've recruited some great people who others would want to work with. Some of them are here in the audience. We now are going to have someone who all they're seeing is accessing is how do I find the best people in the world? Sometimes they're looking, but most times they're not. And how do you go find them? Spearfish and bring in and so I think the counterintuitive part and often you'll see this in second-time companies is they'll invest much earlier on in just like recruiting, hiring, thinking about it. And so it's a little dangerous in that I think some companies can overhire and spend money way too quickly. So I wouldn't apply it in all instances. But if you know you have strong product market fit, you understand it. And it's really about people. I think at the end of the day, all a startup is, is a collection of people. You're in a human capital race against the biggest companies in the world too, whether you like it or not. Thinking a lot about how do you identify talent and bring people in and make people want to work for you. And last, we gave much more than recommended in typical equity ownerships to early people and I think that was your best employees. What feels like your most expensive hires often in hindsight are your cheapest because they simply create so much value. So hope that's helpful.
Aditya Agarwal: It's a great answer. If I can add one more thing. The whole hiring for spikes is so important, but I think a lot of people pay it lip service, because the way it ends up going is that you do an interview loop and you'll find a couple of spikes, but then everyone will start talking about the shit that they didn't like, and then eventually the candidate gets vetoed on the stuff. That small niggle here, small niggle there, and you kind of end up almost ignoring the spike. So often when we are talking to SPC, you only get two votes. You are either pounding the table and if you're doing an investment that means you are willing to be their partner or you veto, right? Like you literally veto. You get nothing in between there's like weak yes, weak no. Maybe you have one of those two choices and if you veto a lot, then that's okay, well, what's going on there? But that really is like the only two opinions that matter. You found something that is so bad that you're like, we cannot hire this person into the company versus like, wow, this is something that is world class, we want this. Or maybe you had a no signal interview, in which case you should actually recuse yourself from the decision. But that I think is tangibly what I tell people to kind of do.
Eric Glyman: Yeah, I love that. We definitely would say if there wasn't someone saying like, "Hell yes, I'm going to hire this person," or "I, as the manager, are going to commit to make this person successful and if not, hold me accountable," we wouldn't hire.
Aditya Agarwal: Exactly.
Eric Glyman: Yeah.
Aditya Agarwal: Got a question. What's the attitude you go in with as a founder when you're pitching to enterprise clients? It almost feels like you're this scrappy startup with a new credit card.
Eric Glyman: It's a super good question. And I'll caveat this was saying is we do now have tens of companies with thousands to 10,000 plus employees using Ramp. And so we've done it. That was not how we started at the beginning. Actually, we found this strange disconnect where once you got the hole in the market we found was like once you started getting above 25, 30 people, the needs of customers changed from like I want cashback points, not paying myself enough, I want lounge access and all that to like my business works, I'm just wasting a lot. And so we designed almost for these larger SMBs, small mid market who, one, had this different need and also they spent multiples times more and actually were willing to upgrade off other stuff. And so we found this whole there was a much more revenue and we didn't need as many customers but we needed to make them feel like the most important customers of the world and we could do that and the LTVs was enough to justify it to us.
Aditya Agarwal: I'd also say that a lot of founders, you should find the edge here. You shouldn't lie, but you should really make this up as you go along. Because I find that too many startups psych themselves out about like, we are clearly not enterprise-ready or we can't really promise this thing, but we don't know how to do it. But I think when you do it more like say B, two B enterprise stuff, most enterprises are pitching things to other enterprises that they don't actually know how to build yet. So the whole system is a little bit like vaporware based, I think. So as a startup, you're just like, actually I can tell them that stuff that I will build in the next six months will exist.
Eric Glyman: I love that point. I think one of the biggest advantages that startups can have in selling to customers is like, look, there may be other solutions out there, maybe they've sold all that. But I guarantee you when this other company, engineers, product design, sales team, when they wake up in the morning, I guarantee they might think about you a little bit, not that much. I'm going to go to sleep and I'm going to wake up in the morning and I'll be thinking about how do I make you the happiest customer in the world? How do I solve your problem? And if there's any issues, like, I'm going to be up until three in the morning and I'm going to make up and over deliver in spades and you're going to get someone highly skilled. The team that cares and is going to do everything in our power to deliver for you. And that is an incredibly effective and powerful pitch.
Aditya Agarwal: Look at Microsoft right now. They just announced a bunch of copilot for everything and I'm just like, I'm pretty sure all that doesn't work Microsoft, but it's great. They're just out there doing it, right? And what they're doing is they're psyching out a lot of people from not building that themselves. And I think as a startup you're just like, actually no, I'm going to build one thing and build it much better than they can build and I'm going to be like, that's what I can provide. Did you have a question earlier?
Audience Member: You took my first one. I think you addressed the question, your previous comment, but how has the way you think about competition changed since the early days to Ramp? Especially as corporate fund management really fix it?
Eric Glyman: We get asked all the time if we are years late to this. It's true American Express did start in 1850. The market was never "winner takes all." It was super profitable. The big issue was no new competition. Even today, as much as we've grown, the largest startup's market share is probably closer to 0% than 1%. It is a giant market. Most of it is in incumbents' hands. At the end of the day, when I talk to customers, it's just them and their problems. The question is, can we actually solve their problem or not? Sometimes it's not us. Often we think it is us. For customers who use us, they recommend us strongly. But it comes down to whether we can actually solve their problem.
Aditya Agarwal: When I talk to startups and they say there are three other early stage companies that got funded, I say they all have a low probability of not working out, just like you. 90% of Series A companies fail. You should be beating public companies. If you're not building a better product than them, you shouldn't exist. It's easy to psych yourself out. I struggled with this building Cove. I would think about a funding announcement or startup and eventually realized it doesn't matter. Everybody's either too early or too late, so you might as well do your own thing.
Audience Member: My question is related to sales and go-to-market.
Eric Glyman: Sure.
Audience Member: When you guys were thinking about what kind of customer segment to go after and then also relates to, I think, the incremental growth thing. How much do unit economics factor into those decisions where I'm sure a larger client is worth a lot more but harder to close, something like interchange with our inflection points where the unit economics started to make more sense.
Eric Glyman: Yeah. There are a few questions wrapped into it. I think it's a good one. First, just given we move ramp now moving more than a billion dollars a month for customers, and this is not one of those businesses where you can make it up with volume. Unit economics are bad. They're bad and you don't want to scale the thing because you're just going to run out of funds really quickly. And so early on, we want to make sure we really deeply understood and even within months, like weeks of being out, our assumptions about unit economics we could validate and verify because there's some cost drivers in there. Cash back is maybe one that you set and once you change that, but you actually start to drive it. So we want to make sure our unit economics was always positive from day one.
Next back to how do you pick the right customers? In some sense, I like the 10% per week kind of algorithm of like you're trying to grow that and so you're figuring out path of least resistance coupled with probability to close. You might have a massive account. And we had one before we launched. There was one account spending a million dollars a month, 10% chance of close. But if we do it, it was great probability weighted, maybe that's worth 100,000 a month in terms. Of spend. There are other customers where if you spent some time, 50% chance of close, a lot smaller line drives. And our job was not to again ten X or 50 x, whatever it was, to get it done this week.
And so I think to avoid giving one size fits all, I think coming back to that, like, how do we optimize? Once you have a working model growing a little bit on it and constraining the problem will lead you to what is the right place. So kind of bottoms up, follow that and then couple with again, top down of does this model make sense? These core assumptions that I'm making, if I check them a few weeks later, are they right or are they wrong? And do I need to revisit? And it's kind of that simple. Iterative loop I think will help get you to where you need to go.
Audience Member: And so I'm curious, at what point was it obvious from the first expense report you saw that there was actually a ton of waste you could help cut down and meaningful ROI that would actually result in mass traction?
Eric Glyman: Totally. Anyone who's ever worked at a big company knows these things are inefficient. There's a lot of waste. It was about convincing someone to trust you to find savings for them. Early startups, if you'll go try to solve this problem for us, have at it. We started to see it at a certain scale. Almost certainly if they sent over a card statement, we were going to find savings next.
Part of the Ramp model is interchange. We're free but can pay you to use us. Instead of boiling the whole market, how do I convince you, the customer, you'll get value from Ramp and grow from there? The more data we had, the more savings insights we could find. The more friction we removed, the more useful software we could build to automate expense reports, accounting, etc.
Our early algorithm was: we knew the business model would work. We just needed to figure out how to sell it by showing savings or value. We started with a few companies until we built simple software and a brand so people would say, "There are 100 other companies using this. My friend told me about it. I sent them my financials and they saved me $10,000. I'll trust them."
It wasn't about one trick to save everything or one software to solve the market. It was about finding customers we could help, who trusted us enough to take a shot so we could get to the next stage.
Aditya Agarwal: Maybe one last question and we'll go to the gentleman and white.
Eric Glyman: Thanks, Aditya.
Audience Member: So you mentioned low-interest rates being something that was beneficial to the business. What other things out there, whether it's infrastructure, regulatory, whatever it is, made it the right time for companies like Ramp?
Eric Glyman: Totally. So I think there were like four factors that just opened the market for us. And probably two or three of them were sufficient. But I'll talk about it.
The first is something that's very unusual about a lot of financial services is that there's not new competitors. Most of my competitor's founders literally wore top hats. The world went from no phones to flip phones to iPhones. The credit card didn't change. The bank account is basically the same. And a lot of the reason was if you want to offer a credit card and monetize in this way, historically you had to be a bank.
A lot of regulation coming out of the financial crisis was really focused on the too-big-to-fail problem. And there was some regulation. We've written about it on our blog. But this thing called the Durban Amendment where Senator Durbin basically was trying to go after and figure out how do we cut down consumer interchange, but also prop up small banks so that they would make enough so that they could compete. This created this incentive for small community banks. Whether it's Sutton or Celtic or there's lots, thousands all throughout the country where if they could just simply convince people to use their cards, they could make more interchange.
Ohio is wonderful. It's hard to convince people to move there and use your local community credit card, but it actually gave them an incentive where they could actually start to work with infrastructure providers and get people to create cards with them. They had a real economic incentive. You started to see infrastructure. That was the first one. There was a regulatory change.
You started to see infrastructure providers realize this. So Square. Early on stripe, people figured out if I could go create a new credit card or monetize financial products. The banks started to be willing to co-brand or do things together, but also started building standardized infrastructure where I wouldn't have to go and build everything from scratch, but I could actually just go and call an API. And there was infrastructure ready to go.
In a partnership model, cost of capital is a third factor dropping when you think about interchange. In order to make 2 million plus dollars, you might need to cycle through $100 million. It's an expensive business to scale. You need a lot of capital and resources. And historically, if you were a bank, you fund through deposits. But now if rates are low, borrowing is not very expensive. And so that meant, okay, you could work with small banks. There was infrastructure you could call through an API. And last, one of your core costs actually was not super high and big banks wouldn't have a mega advantage.
Last in underwriting, if you want to go and extend $100 million, easy to lend, harder to get paid back. Historically, people would underwrite based on lots of credit factors, and you would need years to figure out if someone has a good or bad credit and lots of data. The proliferation of companies like Plaid or Phoenicity meant you could live link to someone's bank account. And rather than trying to underwrite years of credit history, you could underwrite there's a pile of cash. It's not moving that quickly. What's the chance that at least 5% of it is here in a month's time? Pretty high.
And so suddenly you had all the ingredients fall into place. And we saw that unlike Capital One, which had to give away almost the vast majority of the company took 10,000 people you had to spin it out of a bank in order to start it. You could with four years ago, a few people starting a company out of an apartment ten blocks from here actually have a product that was just as good and in some ways a lot better and a lot more useful to companies in a few months time.
And so I think when you get close enough, in some ways by being at a credit card company, I was able to start to see that and think through what were the changes? Knew a lot about savings and tried to apply it. But there's interesting things happening in lots of different industries. And I think there's still a mega opportunity in financial services. It is still an industry that has seen so little innovation compared to the rest of the world that it's shocking. Some good reasons for it, others not. Really. There's just a lot of inertia, and I think there's an opportunity to open up, but I think there's lots of other industries where changes like this happen.
Aditya Agarwal: Okay, I think we'll take that as a wrap. Thank you so much, Eric.
Eric Glyman: Yeah. Thank you. Thank you.