Office Hours at Startup School NY 2014

Key Takeaways

So, next up, uh, Gary Tan and I are going to do onstage office hours. This is most of what happens during YC. Uh, the partners meet individually with startups and we give them advice about whatever problems they're facing. Uh, it's usually 25 minutes per startup. Um, but we're going to try and do three startups in 25 minutes and we'll see how that goes. Uh, and uh, yeah, look forward to meeting them. So, Cat, can you send out the first startup? All right, first startup salary fairy. Nice to meet you. Hi Sam. I'm I'm G. Nice to meet you. Nice to meet you, Sam. Great to meet you. So, I guess to start, you should just tell us what you do. Uh we are seller. We help our users learn their value in the job market and we do that by crowdsourcing their seller predictions. And do users mostly look at this when they're changing jobs? They don't necessarily have to be changing or looking for jobs, but they um according to surveys, 40% of American uh professionals have doubted in mind that they might be underpaid. So we have those kind of users, too. So are users using this just to find out if they're underpaid or because they're using it in salary negotiations? Is it just for curiosity? Are they really like saying I'm I'm underpaid and so far we have been out for 3 months. Uh they are using it for curiosity right now. How many users do you have? We currently have 9,000 users and growing how fast? Uh our weekly growth rate is 10%. So like these services tend to be most valuable when you actually give people something not just for their curiosity but this like this critical thing they need to have for something they really care about. So how can you make this something that people are not using just for curiosity but but they're using because they really desperately need this information. They're acting on it. Yes. So our aim is to create an efficient market for for the job market. Right. So basically make the job market behave more like the stock market. So this is the first step for our goal uh to price salaries accurately and then get one step closer to that stock market for jobs. So you have 9,000 users already. Yes. What's the most surprising thing? Surely you found people who are radically underpaid. Can you get them better jobs? Uh we are creating the other part of the platform where employers will come and they are going to able to see uh professional profiles along with predicted salaries and they will be able to make salary offers based on that information. And before that, before we even built that, we have users who have reached us and told that their accelerated prediction helped us boost their courage to ask for more money. It it it's really hard to try to do multiple things at once as a startup. And if you're trying to sort of make this great for for workers and for employers at the same time, uh that's that's usually more than than one startup can handle. I would just focus entirely on making something that that employees really love and that really helps them sort of get their market value. And and you should track like how many employees come to your site, find that they're underpaid, and are able to use that to to make sure they're getting a fair offer uh and market comp. and and that's like you you really can only you have to just focus on one one one tight little thing uh and then you can expand from there. But until you know until you have users that are telling you like this is the best thing ever. You know I got a 20% raise and I told all my friends to sign up for the service you definitely shouldn't expand to other areas. Um, and and I would try to really find out like try and really find a metric that lets you focus on how many people are not just using you for idle curiosity where they'll use one time, forget about it five minutes later, not tell their friends, not come back, but how many people you can actually sort of like make this big difference. Um, and if you can do that, then you'll have all these other high class problems later, like how you get employers into the market and how you make this efficient market. But um one of the things that we always tell startups during YC is that it's way more important to build something a small number of users really love than something that a lot of users find a little bit interesting. What you'd like to do is make something that a lot of people really love, but a startup can never do that. Like Google gets to do that. And so you you end up having to choose one of those two and a narrow focus on something that users become really dependent on. You want to get to the place where where your users are telling you like, um, I would be so bummed if this product went away. I'm so dependent on this. I'm going to use this for every future negotiate negotiation. Do you have a like a retention metric? Do you know how much users come back? Uh, we have 30% return rate. How much? 30%. 30. Yeah. Over what time period? Oh, we just launched three months ago. So, so they've for every everyone who's tried the service 30% have come back at least once. And what are they like what are they doing that second time? You know, they've already checked. So, there are two sets of people. One, they are checking their results. They they want to see if they have new new predictions. And the second group is just coming back to make more predictions. Uh because we have scores. If you have better predictions, you get more scores. And we have uh users that had made hundreds of predictions. How do you know that it's working? Like how do you know the predictions are accurate? Uh we ask users if they find uh their prediction fair and uh 40% says it's fair. Uh about 30% says uh it's low and 30% says it's high. Or maybe 35 low, 25 high. No, 25 high. Yeah. What uh how will you know when you have found like something that users have become really dependent on? What are you looking for in terms of behavior you'd like to see? When when we first started uh everybody in our platform were able to predict each other's salaries anywhere in the world and then we got enough users we were able to divide into countries and then we got enough users so that we were able to divide into cities and then industries. Right now, for instance, my salary predictors will be technology folks in New York City. Where we want to go from here is even further than that. We want to be able to divide people into companies, divide people into years of experience. For instance, say that you have got a job offer from Microsoft and you want to evaluate an offer, then you will be able to crowdsource your prediction from folks who have worked at Microsoft as the same title as you. That's where we want to go. So and uh there is no way to w it if you are underpaid right you need to find a job that pays you that amount to wed there is no other way uh even if the statistics if you look at the labor labor data you cannot say that you are you are not underpaid because you are pay paid as the same because the market has moved and the the landscape changed. So only way to validate these predictions that we give back is to find them a job at that price point. How are you getting users now? How are new users coming to you? Uh Hacker News, Reddit, uh Product Hunt. Yes, Hacker News, Reddit, Product Hunt, and we are pitching to reporters using help reporter and blogs picked it up. So, so the the thing to remember is that that is a great th those are great ways to get initial users, but that that does not scale forever. And it is worth thinking. Um, you know, there are a lot of different sites where people can come to get salary information and you guys need to be like 10 times better than any of these other sites and it's worth thinking about a what you're going to do to make yourself so much better that people will tell their friends use salary fairy and not any of these other salary sites and b if there's some way you can build growth into the product. Uh because this is not there there's not any like inherent viral piece in this but you could probably build something really cool where you know you send out like an email saying guess my salary to a bunch of your friends and then they sign up and um building those like a lot of people think about I'm going to build this product and I'm going to get my users on hacker news and then it's just going to grow and that's not usually what happens if you build a sufficiently great product sometimes that happens but uh you don't want to have growth be an afterthought and if you can build growth into the product at this early stage. Um, that can be really helpful and I would definitely think early about how to do that. What else? We're about to run out of time on this one. Um, okay. Well, I'm a believer in crowd markets, crowd prediction, so it sounds cool. Thank you. Thank you. Thank you very much. Nice meeting you. Good luck. All right. Hey. Hi. I'm Margaret. Sam. Nice to meet you. Jason. Gary. Sam. Hi, Margaret. Nice to meet you. Great to see you guys. So, what are the two of you working on? So, we're working on Pair Up. Um, Pair Up is basically the hotel tonight for excess food inventory. What is excess food inventory? So excess food inventory is often, you know, stuff that stores will pull from shelves two to three days in advance of sellby. It's stuff that stores can't sell through at the end of the day or that they're throwing away turning over every four to six hours because they have a like fresh daily policy or like a fresh, you know, every four to six hour policy. And it's food that doesn't necessarily have a place to go, right? So, um, if you're thinking about, oh, well, you know, what I thought growing up, you know, food banks and food pantries are taking care of this excess. It all goes somewhere. Um, we found in our research that that's actually not the case. We talked to Feeding America. We talked to City Harvest. Um, because of their own budgetary limitations, they're not as nimble um, in terms of pickup. And so, City Harvest, for example, has a 50 pound minimum when it comes to pickup. And a lot of small to mediumsiz businesses in New York City just aren't going to have that on a daily basis. Um, and so what they've got now is basically like you can throw it away and you can like pay action hauling to pick it up or is that mostly what happens? It just gets thrown away. Yeah. Yeah. And and so we found that to be highly inefficient, very wasteful. And so what we're actually building is a marketplace that allows vendors to sell through that excess inventory at a discount to users who are willing to buy that excess inventory at discount. And why do you why do you use Hotel Tonight as the metaphor? Well, so Hotel Tonight is is basically uh kind of what we're doing only in the kind of travel and hospitality industry, right? because they sell excess hotel rooms, hotel rooms that the hotels themselves can't sell through kind of whatever services they use. Who's buying? I'm sorry. Who's buying at this point? Uh, so so it would be PE like the target demographic of kind of what we're looking at are like people like us or like college students, those types of folks who are interested in kind of early tech adoption but still um, you know, don't have or want to have kind of food at a discount. And what's the kind of typical like so they would buy an individual meal or you know for them and their roommate or something like a croissant or a sandwich or Yeah. or like a half dozen donuts or you know eventually we're hoping like um the box to from Trader Joe's or something from the prepared foods counter at Whole Foods. Do you have this running yet? Um so we launched a kind of email proof of concept about two months ago. Uh basically we just wanted to test the hypothesis of if people would actually go into the store if they got that information. And so we had a subscriber base of maybe like 350 people. We ran it with six or seven vendors. Um and it turned out that they did. Um so we had open rates of about 48% on our email. Uh people actually went into the store per listing was maybe like four or five people per listing. So that's actually pretty decent given that the quantities were fairly low anyway. Um did you did you get everything that was listed sold? Um So it wasn't entire it wasn't 100%. Uh but some stores were better than other stores based on the items that they were selling. So there was location or timing. Exactly. What were the things that sold well and what didn't? Yeah. So the things that sold well were like sandwiches and croissants and those types of things. The things that didn't sell well was kind of like um there was this one bakery that had kind of an evergreen bread deal. So they knew people knew that this was kind of running every single day. So, they weren't kind of incentivized to go in um today versus tomorrow versus the next day because they knew that was available always, right? And it was also in a more like residential neighborhood. People don't really work around there. Um they're like all at work somewhere else. So, location mattered a lot, right? Based on that, my sense is that this will be one of Is that list still going by the way? Are you still doing that? No. So, we found the list to be fairly restrictive and there were a lot of issues with it basic. I mean, so it was success successful in kind of like what we wanted to test, but it wasn't successful in the sense that users only wanted one email a day, but vendors are all very different, right? So, they all had different closing hours and they all had um different abilities to estimate their inventory. So, when will you have the mobile app? So, yeah. So, actually, I just finished wireframing them this morning. Um, and we're hoping to have it coded and developed in like the next two or three weeks, which, yeah, it's kind of soon, but yeah. Um and and kind of what the the the move is is we are building this web app now to kind of test the hypotheses around live listings and kind of location based searches and food searches. And then the mobile app will hopefully be able to kind of take that even further. Yeah. With alerts and and being able to kind of do location based searches kind of like when you're out and about in the city and stuff like that. Right. My my two two thoughts would be uh I'd try to get the mobile app as quickly as possible that when people try to test these things on the web, if it's really the sort of a thing people want to use on mobile, it never works as well and you often end up with bad data. Um and the other thing would be like hyperfocused when you start like not even a whole specific city but very specific areas and like the specific verticals like croissants and sandwiches that you learned work. Uh the product matters a lot in this case. Product matters and density definitely matters as well. Yeah. And also like the types of vendors that we're working with, we want to make sure they're place that people want to go on a regular basis so that like if there is a discount, they're like even more incentivized to walk in. Yeah. But but like making sure that everyone that uses it has a good experience and that they find something that they like and that there's something nearby and no matter how much you have to limit it to make sure that those first like thousand users really really love it is almost always worth doing. Yeah. Um, how are you going to get all of the sort of people that have this excess food to to sign up? Are you just going around and like banging on the doors? Yeah. So, currently it's literally the two of us walking around um talking to every coffee shop we walk we can find, every sandwich shop. Um, we have some adviserss who we've been working with who are um food waste consultants. So, they work with restaurant chains in New York City. Um, and they've actually started to recommend us as a potential option. Um, people have also emailed us saying like, "Hey, I work really closely with like Safeway or Kroger or whatever. um if and when you're ready, you know, I'd love to introduce you. Um but mostly right now it's really just us like having a really high touch relationship and and what is the plan to get those first thousand users, the end users, the buyers? Yeah. So for on the user side, we got a little bit of press and just kind of through word of mouth, we were able to grow from about the 350 to about 200 now. That's a good sign. Yeah. And so just people who are kind of like interested in what we're doing. Um, and then in terms of moving forward, what we're thinking about is is basically thinking about the target populations that we want and a lot of those are on college campuses. So, working with um like college caterers, folks that have those kind of connections and then working with students to to be student representatives on campus and things like that to to kind of get the word out. And we think that because there is that density of population on college campuses, it makes a lot of sense to get there. uh when you describe the product to just someone who finds out about you know the app um how do you think about like describing it is it around waste is it around really great food near you that's low cost or you know what's what has worked and how do you think about it yeah I think it's primarily like really great food at a low cost and then secondary to that it's like what is your social impact or like your environmental impact right for every dollar of food that's wasted there's like five and a half dollars of inputs behind that that are also then wasted in terms of like land use, water use, labor, etc. Um, so we're also hoping to be able to play that back to both vendors and users um in the future, right? So with vendors, it's how much have you saved when it comes to trash hauling or how much have you made on stuff that you otherwise would have, you know, cut a loss on? What's the normal discount rate that stuff sells for? So our average right now is about 50%. Um, our range that we're allowing vendors um to discount is around 25 to 75, right? It's like lower than 25. customers probably don't really have an incentive to walk in. And then higher than 35, it's just like total loss for the business. So, that's kind of what we're playing with now. And the highest that someone has actually listed for was 60%. Um, and the lowest, I think, was 30%. Yeah. Yeah, that feels about right, like the range. Um, unfortunately, we're out of time, but this sounds cool and I would like to try it out. Thank you. Thanks a lot. Thank you so much. Hey guys. Hey. How's it going? What's the deal? Hey, I'm Sam. Nice to meet you, Sam. Great to see you. You guys come with fans. All right. So, what are you guys doing? Yeah. So, we're building an app that makes it way less painful for couples to share expenses. We sync with your credit or debit card transactions. You can go through a feed and just easily split expenses that way. How do you know people need something new for this other than existing services? So, it's actually a problem that I'm personally very familiar with. Um, I've been splitting expenses with my fiance for uh eight years now and over the years we tried lots of different things. Um, initially, you know, we try to keep a mental tab to figure out who should pay next. That sort of quickly broke down because as soon as they go out of sync, just creates awkward moments and it's prone to conflict. Um, I'm sure you all know. Um, we tried spreadsheets, but they were a pain to manage. You know, we tried Venmo, but sort of took the fun of the moment and, you know, exchanging 50 bucks back and forth three times the same day just seems silly. But what about something like splitwise? Like what what what's the specific difference or the need here for for Right. Exactly. So So Splitwise basically you can you can enter IUS right on the fly. Basically enter what it's for, what the amount is, and with whom. The the nice thing about linking with your uh card or debit credit card transactions is basically it's all there. All you have to do is tap it. And so that made a big difference for us. That's cool. Could you explain how it works and just sort of the whole sort of user experience. Yeah, sure. So basically you sync your credit debit card transactions the same way you sync with mint.com. All your charities come in into a feed and then whichever ones are shared just tap them and that's it. And then it says at the end of the month or whatever settle up and basically it gets added to a tab where you can easily see sort of who owes what. You can even settle through the app. But the interesting thing that we learned from our users is that even just knowing what the tab is and having it always be in sync already provides a lot of value. Yeah, that's cool. And I and certainly couples would be willing to sort of share just the full transaction stream in a way that you might not with a group on Splitwise or something, right? Uh is this live? Is it up and running? Uh so yeah, we're currently one thing about what you just said is you don't you don't get my personal transactions in your feed. You just get the transactions shared. So you would you wouldn't see like my personal you know what I bought at domain read whatever you click shared trend. Exactly. So we're currently in private beta but we're going to submit to the app store in the next few weeks. Um we started working on it in January and one thing that we you sort of made a mistake early on was that we wanted to accommodate oh like this this could work for roommates this could work for groups that are traveling and what quickly happened was we had all these different ways of using the app and we didn't have e any one way that was very very good. So you made a comment to I think the salary fairy team about focusing on something very small that a lot of users would actually like. So about a month ago we made a decision to sort of just simplify the product and focus just on couples. And so we feel like we're ready now to kind of push it out there to a lot of people. It's good to focus the the the downside of focusing on couples is which I just curious what you're planning to do is that um you there's no inherent virality in there either. you know, like it's you use it with your partner and that's that and then like it's not like something where you're sharing it with friends or roommates and bringing it. Exactly. Exactly. That's actually something that we've been, you know, going back and forth on um during those months. You know, our initial strategy is basically, you know, try to accommodate every use case, sort of see what our beta testers do, judge from that data and then like focus. However, I think our just beta testing was just too small and you know, we built a part that lacked focus. But um you know to answer your question um so couple um the app we were really interested to learn from them because they seem to manage to grow pretty big. So they were a YC or they are a YC company uh and they have certainly I mean they have managed to grow but they've had to do it in spite of this huge drag which is this sort of lack of any nature. Um did you have couples using it during your beta period? Yes. Were those like the best users? Is that why you decided to focus on this? Yeah, bas basically mo most of them that used it tend to be couples. Um, you know, that was actually an interesting thing to me because initially I always thought that maybe I was a little unique maybe or a little crazy in the way that I dealt with my finances finances with my with my fiance now. And um so what we did early on was like we went out and we talked to lots of people. And so, you know, while expense sharing may not be something that you flaunt in front of your friends usually, when you ask them, a lot of people go through uh various different very painful manual ways to deal with it. Yeah. Uh no, I I like the hyperfocus is definitely good. And if you can if you can figure out a way that this is way better for couples than any other solution and you know, I believe you ought to be able to figure out some way to grow this down the line. Um, I think it's just it's it's really important to keep yourselves disciplined to why why do people need this product and what are they going to do with this that they haven't with others. The the sort of like the, you know, split bills with friends or roommates or whatever is one of these sort of canonical startup ideas. Um, I would bet YC gets a hundred applications a year for some version of of splitting bills and splitting expenses. And we funded a bunch. and we funded a bunch. Um, and I think it's it's really important to just be very disciplined about what you know like what is what what's new about this and why why is this going to work when so many others have failed. I love the idea though of making things as simple as possible. And I think I'm actually I don't use a lot of these products but uh I have not heard myself before this idea of just pulling your transaction stream. And I think that's that sounds really cool. Um it might be it might be that uh you've built this great initial tool to be able to you know split bills and then you end up kind of adapting it you know back and you know you this is kind of like your initial stab your initial beach head into this and then you figure out well in order to support the roommate scenario then this um it's so hard you know at the end of the day for all of these scenarios though you still have this inherent kind of um viral distrib distribution problem or you know how do you acquire users? Um this isn't one of those things where you can necessarily charge a lot upfront so you can't pay for it. Um and so you need you do need some sort of free way whether it's PR or some invite flow or you know it's just you know almost too difficult to talk just about this when in eight minutes. It's a much longer topic, but but just get users like the the mistake, you know, you could sort of like there's so many different things you could do here and until you get like the first few hundred or thousand users that really love this. Um, you you end up shooting in the dark and when you get people that are really using this like for their daily lives all the time, uh, you know, then like if you were in YC, we would tell you like go off and get your first few hundred users and then we can actually give you real advice. But in the meantime, it's it's going to be a lot of guesswork off of this very promising idea. And it's really hard to sort of decide what to do about that. But I I'm sure you learned a lot from the beta. And I'm just from your friends. Like if you can't get enough users just from your friends, your friends are generally like pretty obligated to use your products then like so if you can't do that in the first just like a poor few weeks, right? Then then you know you have a problem. But my my my expectation is you'll definitely be able to. And then don't feel bad about like calling them every week and saying how's it going? What are you using? What you know what can we do differently? And um that is the way that these things end up working. So so would you say you know right now should we should we get it on the app store so that we can distribute more easily or should we how many users right now again? So we have about like 40 beta testers and then do they use it daily or weekly? Like what percentage are using it just incorporated into their lives of those 40? I'd say probably about like 25. That's a pretty high rate actually. You do every how often? Regular like every few days. Every few days. That's a good sign. High activity rates are one of the most promising things for early stage startups. How um it's not clear to me that the app store is the most important thing to do right now. Uh because like you know you can get a small number of users without it, but it would it does around the margins make the whole process a little smoother. So, I would probably do it because it shouldn't be that much harder, but don't expect that it'll get you a lot of traction. Okay, we are unfortunately out of time. Sorry. Thank you so much. It's really cool. Thanks. Thank you so much.