20VC Ramp's Eric Glyman on Why You Should Never Take The Highest Price, Working With Venture Funds vs Crossover Funds and How To Determine What To Buy vs Build as a Founder Today

In this episode of 20 VC, Harry Stebbings interviews Eric Gliman, founder and CEO of Ramp, a corporate card and spend management platform that recently achieved unicorn status with substantial funding rounds. Eric discusses his unconventional entry into startups through restructuring and bankruptcy, which honed his skills in identifying overlooked value—a skill that propelled his previous venture, Parabis, to success before its acquisition by Capital One. He emphasizes the importance of a clear company narrative and alignment with customer goals, as seen with Ramp's mission to help companies spend less. Eric also touches on strategic fundraising, choosing investors for long-term value rather than the highest price, and the benefits of crossover funds. He highlights the dynamic nature of his role as a leader in a rapidly scaling company and the critical approach to competition, always assuming competitors are at their best. Looking ahead, Eric envisions Ramp becoming a generational company that transforms financial services for CFOs, akin to how Shopify revolutionized e-commerce for sellers.

• Eric Gliman is the founder and CEO of Ramp, a corporate card and spend management platform.
• Ramp achieved a unicorn valuation after two large funding rounds.
• The company has raised over $390 million from notable investors, including Thrive, Stripe, Founders Fund, CO2, and Box Group.
• Before Ramp, Eric founded Parabis, a price tracking app acquired by Capital One in 2016.

"Now, if that doesn't give it away, I don't know what will. But I'm thrilled to welcome Eric Gliman, founder and CEO at Ramp, the only corporate card and spend management platform designed to help you spend less."

The quote introduces Eric Gliman and Ramp, emphasizing the company's unique selling proposition of helping businesses spend less.

• Eric's first job was in restructuring and bankruptcy, providing a unique perspective on business sustainability and value identification.
• He founded Parabis, which capitalized on billions of dollars consumers left on the table with price drops after online purchases.
• Parabis grew to nearly a million customers within a year and was covered by Harry Stebbings early on.
• The experience of founding Parabis and its acquisition by a US bank influenced Eric's views and fueled his passion for startups.

"My first job was actually in restructuring and bankruptcy... that skill set really translated well into what became my last startup... we built an email app that automatically got customers money back."

The quote outlines Eric's unconventional entry into startups and the success of his first company, Parabis, which automated refunds for price drops on online purchases.

• Having a clear strategy or narrative is crucial for a startup's direction and focus.
• Parabis's simplicity in saving customers money shaped its development and growth.
• At Ramp, the core message is being the first corporate card that helps companies spend less, which simplifies brand positioning and aligns the team on goals and priorities.

"With ramp as a company, it's day 788... we say we are the first corporate card that helps companies spend less."

The quote highlights the significance of having a clear, central mission for a startup, using Ramp's dedication to helping companies reduce spending as an example.

• Eric's experiences living in China and facing challenges with Parabis taught him the importance of emotional regulation in stressful situations.
• He emphasizes the value of staying calm and taking a stoic approach to address problems effectively.
• Recognizing that stress can lead to poor decision-making, Eric advocates for slowing down to make more rational choices.

"Whenever we really were truly stressed, that was when a lot of the worst decisions were made."

The quote reflects on Eric's realization that high-stress levels can negatively impact decision-making quality.

• Great decision-making starts with agreeing on the objectives and optimizing towards a common goal.
• Eric benefits from the contrasting perspectives of his co-founder, Kareem Etiya, and the balance they bring to decision-making.
• Decisions should be made with the consideration of their impact on others, such as employees and customers, driving a sense of responsibility and urgency.

"We really try to agree, what is that? Separate ourselves out from the problem and say, like, forget my stuff, forget yours. We're trying to do this. Let's talk about how we get there."

The quote emphasizes the importance of collaborative decision-making focused on shared goals, rather than personal agendas.

• Ramp is known for its rapid execution, as indicated by the day count of the company's age in board decks.
• Eric discusses the balance between moving quickly and taking the time to ensure things are done correctly.
• He implies that certain areas require more deliberation, while others can benefit from swift action.

"I mean, I heard, I love that. I've never heard of that before, but everyone was like, man, these guys just move so fast."

The quote from Harry Stebbings references the unique way Ramp tracks its progress and the company's reputation for speed, which Eric Gliman then elaborates on regarding decision-making velocity.

• Ramp is focused on creating highly efficient software and financial services to save customers both money and time.
• The goal is for tasks that took an hour to be reduced to five minutes.
• Building the right systems and foundational blocks is critical to achieving this efficiency.

"How can we build software and financial services that are so efficient that they will literally help our customers have a dollar count for a dollar. Five, what used to take an hour could take five minutes."

The quote emphasizes the ambition to significantly reduce the time and cost for customers when using Ramp's services, highlighting the company's commitment to efficiency.

• Speed is considered everything at Ramp, with the focus on the rate of progress and output.
• While foundational elements need to be correct, other aspects of the business can benefit from rapid iteration and growth.
• A balance is struck between getting things right and growing quickly, with different approaches applied to different aspects of the business.

"I do very deeply believe that speed is everything. Like, what is the shape of slope in terms of what you're doing, always is how you should judge teams and their output."

This quote underlines the company's philosophy that the pace of progress is a key metric for success, encouraging fast iteration and quick response to change.

• Ramp holds bi-weekly all-hands meetings and maintains a count of what day it is in the company's life.
• This tracking allows the company to evaluate progress over specific periods, such as growth in revenue or features shipped.
• The approach encourages a focus on immediate output and comparative improvement over time.

"At every company, all hands, we do two weeks. There is the count of what day is it in the company."

The quote explains Ramp's practice of maintaining a continuous awareness of the company's age and progress, fostering a culture of accountability and continuous improvement.

• Ramp's team constantly evaluates whether to build in-house or to use existing solutions.
• The decision-making process involves assessing the speed of development and cost-effectiveness.
• Partnerships with API providers have enabled rapid integration and progress, such as with Marketta, banks, and credit card networks.

"We do this all the time. And actually, I think in terms of a team, I think this is one of the greatest times ever to be building on top of and with the expertise of others."

The quote reflects the strategic approach to leveraging external expertise through APIs to accelerate development, while still making calculated decisions on what to build internally.

• Ramp focuses on building core infrastructure around customer models, growth models, and data-centric models.
• The company aims to understand and manage business expenses, creating a "waze for business expenses" and a "shopify suite for the CFO."
• Decisions on what to build are based on the proprietary value they can provide.

"There's lots of elements that are proprietary about connecting the data, that are very proprietary to ramp."

This quote highlights the strategic focus on developing proprietary systems that provide unique value and are core to Ramp's business model.

• Ramp's business model is designed to align with customer interests, helping them spend less and be more profitable.
• This alignment differentiates Ramp from traditional credit card issuers and drives growth.
• The company prioritizes providing value over maximizing transaction volumes or interchange fees.

"Our view is like, hey, how can we actually help people spend less? And if we can do that, maybe we'll earn the right to earn the interchange."

The quote illustrates Ramp's customer-centric approach, aiming to earn revenue by providing genuine cost savings to customers rather than encouraging higher spending.

• Ramp addresses the challenge of aligning its revenue optimization with the effective use of capital for customers.
• The company's strategy of customer acquisition through genuine helpfulness has proven successful.
• Ramp focuses on creating value through efficient business processes and sharing insights to create a virtuous cycle of growth.

"So first, there's this question of, like, why is an Amex doing this? Why is an Amex going saying, let's go apply like a savings algorithm?"

The quote questions why traditional credit card companies do not adopt a similar customer-aligned approach, suggesting that Ramp's strategy is innovative and beneficial for both the company and its customers.

• Ramp views fundraising rounds as experiments to prove core business hypotheses.
• The company's initial $8 million seed round aimed to validate the business model and set the stage for future growth.
• Fundraising is approached methodically, with clear objectives to demonstrate the viability of the business.

"It's both crazy to kind of start a company and think you're going to take on the world, but yet only have a small amount of dollars."

This quote captures the ambitious yet pragmatic approach to fundraising, where the company sets out to prove its business model with a limited amount of capital.

• The business is generating revenue, has customer usage, and is not losing too much money.
• The company is able to acquire more resources and is planning to use a $20 million tranche for new experiments.
• The approach highlights the importance of constraints in business, which can drive focus and creativity.
• Success is not about trying everything but rather getting a few key things right.

"I have a business that works. It makes revenue, customers are using it. We're not losing too much money. We're able to acquire more. And we've now proven enough things out that with this next call at $20 million tranche, we're going to take on these harder and bigger and different experiments."

This quote explains the current stable state of the business and the intent to use new funding to explore more ambitious projects. The speaker emphasizes the business's solid foundation and readiness for further growth through experimentation.

• Constraints are seen as a positive force that enforces creativity within a business.
• The speaker suggests that having limited resources can lead to more innovative solutions.
• The discussion revolves around the transition from a constrained environment to one where the company has more financial freedom.

"Constraints enforce creativity. They're brilliant."

The speaker acknowledges the value of constraints in fostering creativity within an organization. This quote underscores the belief that limitations can be a catalyst for innovative thinking.

• Despite raising significant funding, the company's burn rate remains similar to the previous year.
• There is a focus on maintaining the operational rigor and the company's core values even with more financial resources.
• The company is cautious about not becoming wasteful with the newfound wealth.
• The conversation touches on the challenge of preserving a disciplined approach to business operations in the face of increased capital.

"Our burn rate is not far from what it was even like a year ago."

This quote indicates that the company has not significantly increased its spending rate despite having more funds, suggesting a disciplined approach to financial management.

• The company plans to use the new capital to accelerate hiring and marketing efforts.
• There is a strategic approach to spending, focusing on growth and shipping products efficiently.
• The company has grown quietly in the past and sees the current period as an opportunity to be more aggressive in marketing and potentially acquisitions.

"We now have a lot of cash on the balance sheet. How do we not go and get crazy wasteful about it?"

The speaker is considering how to use the company's substantial cash reserves strategically, without falling into wasteful spending habits. This quote reflects a commitment to prudent financial management despite the influx of capital.

• The company recently closed significant equity and debt rounds.
• There is a strategic approach to pricing rounds and not simply taking the highest offer.
• The speaker emphasizes the importance of long-term enterprise value over short-term gains.
• The discussion covers how the company's financing strategy is aimed at maximizing long-term success, not just immediate financial gains.

"It's not on the single round price, it's on total enterprise value."

This quote highlights the speaker's focus on the overall value of the company rather than just the amount raised in a single financing round, indicating a long-term strategic perspective.

• Investors are seen as potentially valuable beyond the capital they provide, especially in B2B settings.
• Investors can contribute through their networks, expertise, and introductions to potential customers.
• The company strategically selects investors who can add value in specific areas of the business.

"The number of customers are called it in the four figures with ramp. And one of the most valuable currencies for going and getting a B2B customer can be like, who is the introduction from?"

The speaker illustrates the importance of investor networks in acquiring B2B customers, suggesting that the right introductions from trusted sources can be a significant asset.

• Crossover funds have become prominent in the fundraising landscape.
• The speaker discusses the benefits of crossover funds for capital-intensive businesses.
• Crossover funds can provide continuity of capital across different stages of growth.
• The conversation explores how crossover funds offer a unique advantage by providing a long-term capital solution that was not available in the past.

"Crossover funds were this really interesting, compelling answer that didn't quite exist years ago."

This quote reflects on the emergence of crossover funds as a new and effective means of financing, especially for businesses that require substantial capital investment.

• Different types of investors, such as traditional venture funds and crossover funds, have distinct interaction styles and focus areas.
• The speaker contrasts the approaches of seed investors with those of crossover funds, noting that each brings valuable perspectives to the table.
• The discussion highlights how varying investor types can contribute to different aspects of a company's growth.

"Keith Raboy and the team at Founders Fund, amazing seed investors, right? A lot of for them is like, you're going to build this thing that compounds."

This quote exemplifies how seed investors like Founders Fund focus on foundational growth and compounding, while crossover funds may bring a different set of insights and questions to the company.

• The concept of signaling is discussed in the context of multistage funds and crossover funds.
• The speaker is not overly concerned about negative signaling if a crossover fund does not participate in subsequent rounds.
• The belief is that strong company performance will outweigh any potential signaling issues.

"I don't very heavily. I think the biggest thing is one, if you've got great performance and things are working, no one can really hurt you."

The speaker downplays the concern about signaling, suggesting that the company's performance is the most critical factor in its success and reputation among investors.

• Early-stage VCs often acquire large, dominant shares in companies, which can create pressure and possess significant signaling power.
• Smaller equity positions by multiple investors can reduce signaling issues and increase competitiveness in later funding rounds.
• A distributed cap table can be an accelerant for company momentum if performance is strong, due to many investors wanting to increase their share.

"And so one, you don't see this very dominant equity positions in the same way you might see for an early valley vc that before has like a quarter of your company and they're like I don't want to invest anymore in it."

This quote explains the contrast between traditional early-stage VC investments, which often involve large equity stakes, and a situation where an investor holds a smaller, non-dominant position, which can have less impact on company signaling.

• Board meetings are often viewed by founders as a chore or a performance review rather than a strategic tool.
• Effective board meetings should involve deep evaluation of business performance, strategy, and clear asks.
• Board meetings should serve as a device for communicating strategy and performance to the entire company.
• The preparation for board meetings can also serve as a method for scaling clarity and communication within a company.

"The meeting itself really is maybe a 90 minutes, two hour kind of thing where you get together, you talk about some issues, and you move on, but actually, it's what you do. The following week, we actually go back to the company. All 100 people at ramp can see what was in the board meeting, and it's a chance to actually distill down the strategy itself."

This quote illustrates how board meetings are not just a momentary event but part of a larger process that includes disseminating the discussed strategies and decisions throughout the company, thereby enhancing overall communication and alignment.

• Leadership effectiveness can be transient, with strategies that worked in the past becoming obsolete as the company grows.
• Rapid company growth requires leaders to constantly adapt and avoid settling into repetitive patterns.
• The challenge lies in maintaining clarity and communication as the headcount and complexity of the company increase.

"What's really hard is, like, the job is schizophrenic, and that what made you good two months ago probably would be holding you back."

This quote captures the dynamic and sometimes counterintuitive nature of leadership in a fast-growing company, emphasizing the need for adaptability and continuous evolution in management practices.

• Mentors and influential figures can provide guidance on leadership and management.
• John Wooden, a successful basketball coach, is cited as an inspiration for his calm demeanor and ability to extract peak performance from his team.
• Other influential figures mentioned include Z at rowe and co-founder Kareem for their energy and strategic minds.

"I think one of my favorite books, and I think someone that I find to go back to when I'm very deeply stressed about stuff would be like, john Wooden."

This quote highlights the importance of having role models or mentors, like John Wooden, who exemplify the values and strategies that a leader aspires to emulate, especially during challenging times.

• The venture industry is criticized for being too focused on gossip and what others are working on.
• The speaker suggests that the industry should be more forward-looking and less preoccupied with the activities of others.

"It's so gossipy. For all this talk about being focused on the future, I feel like half the industry is wondering, what are the other people working on or thinking about at this very moment?"

This quote is a critique of the venture capital industry's preoccupation with the actions and thoughts of peers, which can detract from a focus on innovation and future-oriented strategies.

• Zach Frankel is praised for his mix of investor mindset and operational experience, as well as his intelligence and academic achievements.
• Good board members are valued for their ability to contribute to building great businesses and their understanding of both investment and operational challenges.

"Zach is someone incredible. He was involved with parabis. He was involved with ramp better, a number of other great companies."

This quote highlights the value of board members like Zach Frankel who have a diverse set of skills and experiences that contribute to the success of multiple companies.

• Despite the popularity of other locations like Miami, the speaker believes that New York still has a strong and vibrant startup ecosystem.
• The speaker disagrees with the notion that the center of the startup world has shifted away from New York.

"Has still got it, the entire founders fund. And all these people are talking about Miami. I love Miami, but I think New York's great."

This quote expresses a contrarian belief in the ongoing vitality and relevance of New York's startup ecosystem, despite the rise of other tech hubs.

• Companies should respect their competition and consider them at their best to avoid arrogance.
• It is important to prepare for the smartest decisions that competitors could make and how they might execute on them.

"I think you need to worry about what could be the smartest decisions that they make and how do they execute at that level and be ready for it."

This quote encourages a respectful and strategic approach to competition, where companies prepare for the best possible moves by their rivals, rather than underestimating them.

• The speaker envisions Ramp having a generational impact and becoming a significant player in the financial industry.
• The goal is to create differentiated value in a traditionally sleepy space and to improve the operations of the CFO suite, similar to how Shopify has done for e-commerce.

"Could we build something similar for the CFO suite? And look, I think that there are many hundred billion dollar plus companies in this space."

This quote outlines the speaker's ambitious vision for Ramp, aiming to revolutionize the CFO suite with impactful and innovative solutions.