FF 015 Y COMBINATOR WEEK Eric Glyman, CoFounder & CEO @ Paribus

Summary Notes


In this episode of the 20 minutes VC, host Harry Stebbings interviews Eric Gliman, the co-founder and CEO of Paribus, a startup that emerged from Y Combinator (YC). Paribus is an innovative service that scans customers' inboxes for receipts and automatically saves them money by securing refunds when purchased items drop in price. Gliman shares his entrepreneurial journey, from his early experiences in retail and restructuring to the "aha" moment that led to Paribus's creation. He discusses the importance of testing hypotheses, the power of referrals, and the nuances of scaling a startup. The conversation also touches on the rigorous YC application process and the accelerator's impact on Paribus's growth. Challenges and breakthroughs are candidly explored, with Gliman emphasizing the value of persistence, understanding customer behavior, and the strategic use of data for consumer benefit.

Summary Notes

Introduction to Y Combinator and Paribus

  • Y Combinator is a world-famous accelerator program.
  • Paribus is a service that scans your inbox for receipts and saves you money on price drops.
  • Paribus automatically gets the money you are owed from price guarantees.
  • Eric Gliman, co-founder and CEO at Paribus, is a Y Combinator alum.
  • The importance of forming a company is highlighted for aspiring YC attendees and startup founders.

"It is, of course, Y Combinator. And with it being founders Friday, what better way to embrace YC week than to have a recent YC alum discuss his experience with YC and growing his startup."

This quote introduces the topic of Y Combinator and sets the stage for the interview with Eric Gliman, highlighting the significance of YC in the startup ecosystem.

Eric Gliman's Background and the Aha Moment for Paribus

  • Eric Gliman was born and raised in Las Vegas, Nevada.
  • He worked at Express and noticed deceptive sales tactics with discounts.
  • Gliman attended Harvard and worked in restructuring, dealing with failing companies.
  • His experience in restructuring gave him insight into the importance of contracts and enforcement of rights.
  • The "aha moment" for Paribus came when Gliman purchased an item that dropped in price the next day.

"The aha. Moment for me came about two years ago when I made a purchase myself. I finally was a consumer and the next day it dropped in price by $100. I was furious."

This quote describes the personal experience that led to the creation of Paribus, emphasizing the frustration consumers feel when missing out on savings due to price drops.

Early Days and Unique Approach of Paribus

  • Gliman and his co-founder wanted to create a system to track purchases and price changes.
  • They aimed to automate the process of claiming price drop refunds.
  • The team tested different methods to efficiently capture transaction information.
  • Email was determined to be the most efficient way to track transactions for their service.

"We knew the experience we wanted to create, but we wanted to figure out what's the most simple, scalable way to actually offer in this service."

This quote explains the early development process of Paribus, where the founders focused on creating a simple and scalable solution for consumers to benefit from price drop policies.## Building the Right Infrastructure

  • The process of testing hypotheses took about a year, allowing for a better understanding of the landscape.
  • The right kind of architecture was established to enable faster growth when scaling became appropriate.

Trying to really test these hypotheses over time, it took a lot of time, and we spent about a year in that stage, but it had allowed us, when we were ready to build the serious infrastructure, to create a more elegant experience, to really know the landscape, build it the right way the first time, the right kind of architecture that would enable faster growth when we were truly ready for it.

This quote emphasizes the importance of thorough testing and understanding the market before building the essential infrastructure for growth.

The Pace of Startup Development

  • Eric Gliman found a year-long period for hypothesis testing to be effective.
  • It is important to recognize the right time to switch from testing to scaling.
  • Consistent weekly goals and experiments throughout the year are crucial.

And do you think it was effective doing it over a much longer period of time? So for you, a year than most startups, diving headfirst into it and trying to conquer it in a few weeks. Or even months, I think for us, I was happy with it. There definitely came a time where we had to switch. We had tested enough hypotheses to really prove it. We knew and we could do it and dive on in and you have to switch. And I would say really pay attention to when that moment comes. But it was effective. And I think that for anyone who's considering, I've got this idea I want to start, or should I make that leap, test the right kind of questions and be really diligent about it? We spent a year, but during that year, every single week we had a goal. We stuck to it, we figured it out and we kept on doing that. So if you're going to spend a year, make sure that it's filled with experiments that you need to run, getting things right and do it that way it can be effective. So don't go slowly, but test things.

Eric Gliman explains that a longer period of careful testing and goal-setting can be more effective for startups than rushing into scaling.

Identifying the Moment to Scale

  • The right time to scale is when the minimum viable product (MVP) is established and ready.
  • Founders should look for signs that their product is ready to grow and invest time accordingly.

Yeah, for us, it was when we realized, all right, we've done it. With enough stores, we can automate this. We're able to automatically send something for myself, for my friend, for my mom. She's excited about it. And we realize, like, whoa, wait a second. It's ready to scale. This is a simple, we've hit that, I guess, in the general way, it's the minimum viable product. You've got it. That I feel like is the moment when you can take something, start to scale and build. And when you know you have that, it's a good basis and you're ready to go, then it's time to really invest, the time to take it and grow it, but really search for that.

Eric Gliman discusses the pivotal moment when a product is proven to work and is ready for scaling, indicating the transition from testing to growth.

Testing Hypotheses

  • The goal was to simplify the process of saving money for customers without needing extensive data.
  • It was important to determine the minimum required information and the most efficient way to return savings to customers.
  • The testing led to the creation of a simple product that required minimal customer effort.

Yeah, I mean, for us, we wanted to figure out. So to start out with, it's an incredibly murky world that parabis operates in, where some of these stores have very clear policies, but they don't want you to know about them or they know about it, but they don't make the process actually clear. And so we wanted to figure out, if we wanted to get you, Harry, $20 back, what did we need to actually be able to have? Did we need to know every price in the world? No, we just needed to know what you bought. Okay, so we don't need to know that one. Do we need to check and compare against everything? It's like, actually, we don't. We just need to check and compare it against where you bought it from. And then when we actually know what you bought, we see the price drop. We would ask, all right, well, how do we efficiently get it back? How much information do I need to list, at minimum, to get that money back? And can I do it over phone? Can I do it over email? Do I have to take it back into the store to really ask those questions, to figure out at a most basic level, if it just is two of us, the world doesn't know, doesn't care, and we have very little resources. How can we get the most leverage and really just collect to make it simple as possible for us? What that led to, once we figured out, okay, we just need a note to collect a receipt from that. We only need a few items from that. It needs to go only to a few places. We were able to take what we knew, the map of the world as we knew it, and condense it down to a simple product where we realized if we could just get you to click one button, link it to email, we could pull Everything that we needed to take care of the rest. And so once those pieces and hypotheses were tested, we could make the right system. That was so easy for a consumer or someone to sign up, it took under 10 seconds.

Eric Gliman describes the hypothesis testing process that led to the creation of a user-friendly product by identifying the essential information needed to save customers money.

Initial Testing Approach

  • The initial testing was niche and focused on proving the concept could work.
  • Personal experiences and close networks were used for initial tests before expanding to broader platforms.
  • The speed of testing hypotheses was deemed more important than the scale of testing.

Yeah, niche niche for sure, at the very beginning, because we knew if I could get you money out of nowhere, that's pretty attractive. The harder thing was, could, could we make it work? And so it was a ton of dog fooding. I would just go and figure out what did I need? Or what was my friend asking to buy? And I said, could I buy it for you or could I use this on my account? Right. And we would go and we'd buy it from all these different stores, from 20 stores. We would test against a store's policy, a CredIt card policy. A lot of it is if I could do this for myself and I like it, and if I could do it for a couple of other people, that was a big part of the testing. And then later on, once we would starting to get the communications that came with it, I would do it on my friend and they'd say, all right, is this weird? Is this not? Then you would try it on Reddit, kind of simple forms where almost overnight you could in real time test these hypotheses. So my thinking there is Mass or Niche. The bigger piece is how quickly can you do it? If you can do it fast, go for that.

Eric Gliman shares insights on the initial niche testing process, emphasizing the importance of a quick testing cycle to validate the concept.

Y Combinator (YC) Admission Process

  • Many applicants do not get into YC on their first attempt.
  • The application and interview process can be daunting but is a valuable experience.

Yeah, that's great. I think that what a lot of people don't know about applying to YC is most people do not get in on the first time. We didn't. The first time we applied, we had ten people. So we tried it right away. That was great and it was a good process. Applying didn't even get an interview.

Eric Gliman reflects on the YC application process, noting the commonality of not being accepted on the first try and the learning experience it provides.## Clarity of Communication in Business Applications

  • Emphasize the importance of clear and direct answers in business applications.
  • Short, concise responses indicate clarity of thought and understanding of the business.
  • The ability to condense information is crucial during the rapid-fire interview process.

"Our answers were much shorter. Rather than having essays and all the things and possibilities we could do is very simple. It's like we do this. This is how it works."

This quote highlights the shift from lengthy, detailed answers to short, straightforward responses, reflecting a clearer understanding of the business.

Intensity of the Interview Process

  • The interview process can be incredibly fast-paced and intense.
  • Interviewees should be prepared to answer questions quickly and accurately.
  • The ability to rapidly address numerous aspects of the business is tested.

"It's a ten minute, incredibly rapid fire question. I think we must have gone through 50 to 100 in under ten minutes where they ask you something, you respond in 5 seconds."

The quote describes the high-pressure environment of the interview, emphasizing the need for quick, concise responses.

Selecting Y Combinator (YC)

  • The energy and focus of YC were major factors in choosing the accelerator.
  • YC is known for concentrating on a few critical aspects that provide maximum leverage in the early stages of a business.
  • The interview process at YC was a convincing factor due to the serious and thoughtful approach to business growth.

"Yeah, the biggest thing for why we chose them is you could just feel the energy. It was real, it was raw, and ultimately it was incredibly focused."

This quote explains the decision to join YC based on the tangible energy and focus perceived during the interview process.

Why YC Chose Them

  • Persistence and vision were key reasons YC was interested in their business.
  • Demonstrating progress and scalability was crucial.
  • The ability to weave a simple concept into a larger business narrative resonated with YC.

"We continued to work and make progress, whether or not they were involved. And I think that anywhere as a business, you need to have that grit and determination."

The quote underscores the importance of perseverance and progress in business, which contributed to YC's interest in their company.

Business Growth and Customer Trust

  • Understanding what drives business growth is essential.
  • Trust is a significant factor when operating within personal spaces like email inboxes.
  • Growth is often driven by word-of-mouth or public endorsements.

"We realized that for us, a few things about our business that are weird. Puribus operates in your email inbox. It requires a lot of trust..."

This quote reflects the realization that trust and the unique operation of their business in personal spaces are critical to growth.

Referral Program Optimization

  • Referral programs can significantly impact business growth.
  • Simplifying the referral process and making rewards immediate can improve participation.
  • Listening to customer conversations about the service can guide improvements in the referral program.

"We had a referral program before. Around 15% of people would share a parabis after they signed up for it. Good, not amazing."

The quote speaks to the initial state of their referral program and the subsequent realization that improvements were necessary for better growth.## Pricing Strategy and Growth

  • Eric Gliman discusses the importance of pricing strategy in customer acquisition and growth.
  • The company tweaked its referral system to incentivize both referrer and referee, resulting in increased shares and growth.
  • Adjusting the business model to address customer hesitations led to a significant increase in growth rate.

"Sometimes they wanted to use it, but weren't sure if 25% was too much. And so we're like, all right, let's tweak it slightly. And the conversation became, just heard about this great service. It's amazing. I wish I thought of it. It saves you money when prices drop. And you got to sign up for it right now, because if you sign up, I cut my fee by 5%, and you'll cut your fee by 5%, too."

This quote explains how modifying the referral incentive structure to benefit both parties helped overcome pricing objections and stimulated growth.

Personal Preferences and Inspirations

  • Eric Gliman shares his favorite book, "Irobot" by Isaac Asimov, and draws parallels between the progression of robots in the book and the journey of a startup.
  • The book's theme of iteration and complexity resonates with Eric's experience in startup development.

"Irobot Isaac Asmov incredible book progression over time of different... You solve a simple problem, you encounter weird outcomes over time, you fix it, you iterate, you get better and it grows into something more and complex."

The quote highlights Eric's appreciation for the book's depiction of problem-solving and growth, which mirrors his own startup's evolution.

Daily Routine at YC

  • Eric Gliman outlines his structured day at YC, emphasizing focus on the most pressing issues, product development, outreach, and maintaining a disciplined schedule.
  • The routine involves avoiding early distractions, prioritizing tasks, and engaging with partners and other companies.

"Wake up at 09:00 a.m... Two to four would be outreach, four to six it could be talking to the partner, talking with another company in the batch, pushing iterating, rinse and repeat, keep the structure, focus on the core goals."

This quote describes the disciplined daily schedule that Eric followed at YC, focusing on key areas of the business.

YC Tuesday Night Dinners

  • Eric Gliman recalls the range of guests at YC Tuesday night dinners, including past founders and influential figures like Peter Thiel.
  • These dinners provided opportunities to learn from experienced individuals in the startup ecosystem.

"Speaking great range. Some from past founders... Peter Thiel was a highlight to, I would say different founders and people who'd gone the long way, whether they were three years, in five years, in ten years into the startups, a lot of great people that you'd expect."

The quote reflects on the diversity and caliber of guests at YC dinners, which served as a valuable learning experience.

Impactful Purchase

  • Eric Gliman shares an anecdote about how a simple purchase of toilet paper on subscribe and save led to the realization of a consumer problem and inspired further development of his company.
  • The experience highlighted the issue of price fluctuations and consumer unawareness, motivating Eric to address these challenges.

"I bought this thing on subscribe and save... Then finally we got parabis turned on and working and I realized that every two months I'd be stuck in the cycle where I'd buy this thing... And then after the subscribe and save wave was over, about two days later, it would drop in price by like $3."

The quote illustrates how a personal experience with a mundane purchase led to the identification of a consumer problem and the inspiration to improve his service.

Favorite Newsletter or Blog

  • Eric Gliman praises the appsumo blog by Noah Kagan for its focus on speed and testing for demand.
  • He values the lessons on selling quickly and validating product demand.

"As of lately, appsumo. It's blog put on by Noah Kagan... I love great, great ways and good focuses on really being fast selling something before you make it. Try to test for demand and go from there."

This quote conveys Eric's endorsement of the appsumo blog for its practical advice on entrepreneurship and product validation.

Future Plans for Parabis

  • Eric Gliman outlines the growth plans for parabis, focusing on leveraging data for consumer benefit, expanding services to include credit card protections, and assisting consumers in claiming what they're owed.
  • The upcoming year is crucial for ecommerce, with a focus on Black Friday and beyond.

"This next year is about growth... Not only will we be getting you money back from stores, but from credit cards... We want to help you fight whenever you're owed something and things are not going your way."

The quote details the future direction of parabis, aiming to enhance consumer benefits through data and expanded services.

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