Office Hours at Startup School NY 2014

So next up, all right, Gary Tan and I are going to do onstage office hours. This is most of what happens during Y.C. The partners meet individually with startups, and we give them advice about whatever problems they're facing. It's usually 25 minutes per startup, but we're gonna try to do three startups in 25 minutes and we'll see how that goes. And, yeah, look forward to meeting them. So, Kath, can you send out the first startup?

All right. First startup here is Salary Fairy.

I don't know what they're doing, by the way.

Nice to meet you.

Hi.

Sam.

I'm Garde. Nice to meet you.

Nice to meet you too, Sam.

Great to meet you.

So I guess to start, just tell us what you do.

We are Salary Fairy. We have our users learn their value in the job market and we do that by crowd-sourcing their salary predictions.

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 professionals have that in mind that they might be underpaid. So we have those kinds 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, or they really like saying, "I'm underpaid"?

So far, we have been out for three months. They are using it for curiosity right now.

How many users do you have?

We currently have 9,000 users.

And growing how fast?

Our weekly growth rate is 10%.

So, like, the 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 they're using because they really desperately need this information that are acting on it?

Yes. So our aim is to create an efficient market for the job markets, right, so basically make the job market behave more like the stock market. So this is the first step for our goal 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?

We are creating the other part of the platform that employers will come and they are going to be able to see 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 resource and told that their salary prediction helped us boost their courage to ask for more money.

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 workers and for employers at the same time, that's usually more than one startup can handle. I would just focus entirely on making something that employees really love and that really helps them sort of get their market value. And you should track like how many employees come to your site, find that they're underpaid, and are able to use that to make sure they're getting a fair offer and market comp. And that's like you really can only... You just have to focus on one, one, one tight little thing, 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. And I would try to really find out like try and really find the metric that lets you focus on how many people are not just using you for idle curiosity, where 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 make this big difference. And if you can do that, then you'll have all these high-class problems later like how you get employers into the market and how you make this efficient market. But one of the things that we always tell startups during Y.C. 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 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 your users are telling you like, "I would be so bummed if this product went away. I'm so dependent on this. I'm gonna use this for every future negotiation." Do you have like a retention metric? Do you know how much users come back?

We have a 30% return rate.

How much?

30%.

30? Over what time period?

Over... We just launched three months ago.

So they've... For everyone who's tried the service, 30% kept coming back at least once.

Yes.

And what are they, like, what are they doing that suck in time, you know, they've already checked?

So there are two sets of people. One that check in their results. They want to see if they meet predictions. And the second group is just coming back to make more predictions. Because we have scores, if you have better predictions, you get more scores, and we have users that had made met hundreds of predictions.

How do you know that it's working, like how do you know the predictions are accurate?

We ask users if they find their prediction fair, and 40% says it's fair, about 30% says it's low, and 30% says it's high, or maybe 35 low, 35 high, no, 25 high. Yeah.

What... How will you know when you have found like something that users have really become dependent on? What are you looking for in terms of behavior you'd like to see?

When we first started, everybody in our platform was 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. Wherever you 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 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 titles as you. That's where we want to go.

So... There is no way to validate if you are underpaid, right? You need to find a job that pays you that amount to where there is no other way; even if the statistics, if you look at labor data, you cannot say that you are not underpaid because you are paid as the same, because the market has moved and the landscape changed. So the 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?

We have Hacro News, Reddits, Productant.

Yes, Hacro News, Reddits, Productant, and we are pitching to reporters using Hyper Reporter.

And blogs picked it up.

So the thing to remember is that that is a great... those are great ways you're gonna initial users, but that does not scale forever and it is worth thinking. You know, there are a lot of 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 gonna 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. 'Cause this is not... 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 e-mail saying, "Guess my salary," to a bunch of your friends and they sign up. Building those, like a lot of people think about, "I'm gonna build this product and I'm gonna get my users on Hacro News and then it's just gonna grow." And that's not usually what happens. If you build a sufficiently great product, sometimes that happens. But you don't want to have growth be an afterthought. And if you can build growth into the product at this early stage, that can be really helpful, and I would definitely think really how to do that. What else? We're about to run out of time at this one. OK, well, I'm a believer in crowd prediction, so it sounds cool. Thank you.

Thank you very much.

Thank you very much. [applause]

Nice seeing you, nice meeting you. Good luck.

Alright.

Hey.

Hi, I'm Margaret.

Sam. Nice to meet you.

Jason.

Gary.

Sam.

Hi, Margaret.

Great to see you, guys.

So what are the two of you working on?

So we're working on Pare Up. Pare 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 sell-by. It's stuff that stores can't sell through at the end of the day or that they're throwing way, 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 hours policy. And it's food that doesn't necessarily have a place to go, right? So if you're thinking about, "Oh, well, you know, what I thought growing up, you know, food banks, if your pantries are taking care of this excess, it will go somewhere." We found in our research that that's actually not the case. We talked to Feeding America, we talked to City Harvest. Because of their own budgetary limitations, they're not as nimble in terms of pick up. And so, City Harvest, for example, has a 50-pound minimum when it comes to pick up, and a lot of small to medium-sized businesses in New York City just aren't gonna have that on a daily basis. Um, and so, what they got now is basically like you can throw it away, and you can like pay Action Hauling to pick it up.

Is that mostly what happens? It just gets thrown away?

Yeah.

Yeah. 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 a discount.

So why do use Hotel Tonight as the metaphor?

So Hotel Tonight is basically a kind of what we're doing only in the kind of travel and hospitality industry, right? 'Cause 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, if you peep like the target demographic of kind of what we're looking for, like people like us, or like college students, those types of folks who are interested in kind of early tech adoption, but still, you know, don't have or want to have kind of food at a discount.

And what is the kind of typically like... So they would buy an individual meal for, you know, for them and their roommate or something like...

Right. A croissant or a sandwich or...

Yeah, like a half dozen donuts or, you know, eventually we're hoping like, um, the box to 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 e-mail proof kind of concept about two months ago. Basically, we just wanted to test the hypothesis if people would actually go into the store if they got the information. And so we had our subscriber base of maybe like 350 people who ran with six or seven vendors. And it turned out that they did. So we had open rates at about 48% of our e-mail. 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 get everything that was listed sold?

Um, so it wasn't 100%, but some stores were better than other stores based on the items that they were selling. So...

Or location or timing.

Yes, 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 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 today versus tomorrow versus the next day 'cause they knew that was available always.

Right. And it was also in the more like residential neighborhood. People don't really work around there. Um, they're like all work somewhere else.

So location mattered a lot based on that.

My sense is that this will be one... Is that list still going by the way, or are you still doing that?

No. So we found the list to be fairly restrictive and there are a lot of issues with it. I mean, successful in like what we wanted to test, but it wasn't successful in the sense that users only wanted one e-mail a day, but vendors are all very different, right? So they all had different closing hours and they all had different abilities to estimate their inventory.

So when will you have the mobile app?

So, yeah. So actually I just finished wire framing them this morning, and we're hoping to have it coded and developed in like the next two or three weeks, which, yeah, kind of soon, but...

Yeah. And kind of what the move is is we are building this web app now to kind of test the hypothesis around live listings and kind of location-based searches and food searches. And then the mobile app will hopefully be able to kind that even further with alerts 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 two thoughts would be I'd try to get the mobile app as quickly as possible.

Yeah.

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. And the other thing would be like hyper-focused 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 worked.

The product matters a lot in this case.

Yeah. 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 places that people want to go on a regular basis so that like if there's a discount or like, you can be more incentivized to walk in.

Yeah, but like making sure that everyone that uses it has a good experience and that they find something they like and that there's something nearby. And no matter how much you have to limit it to make this first like thousand users really, really love it, it's almost always worth doing.

Yeah.

How are you gonna get all of the sort of people that have this excess food 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, talking to every coffee shop we can find, every sandwich shop. We have some advisers who we have been working with, who are food waste consultants, so they work with restaurant chains in New York City, and they've actually started to recommend us as a potential option. People also e-mailed us saying, "Hey, we work with like Safeway or Kroger or whatever. If and when you're ready, you know, we'd love to introduce you." But mostly right now, it's really just us like having really high-touch relationships with stores.

And what is the plan to get those first thousand users, the end users, the buyers?

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 350 to about 2500 now.

That's a good sign.

Yeah. And so just people who are kind of like interested in what we're doing. And then in terms of moving forward, what we're thinking about is basically thinking about the target populations that we want, and a lot of those are on college campuses. So working with college caterers, folks that have those kinds of connections, and then working with students to be student representatives on campus and things like that 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 serve there.

What is... When you describe the product to just someone who finds out about, you know, the app, how do you think about describing it? Is it around waste? Is it around really great food near you that's low cost, or you know, what has worked and how do you think about it?

Yeah, I think it's primarily like really great food at low cost, and then secondary to that, it's like what is your social impact, your environmental impact, right? For every dollar of food that's wasted, there's like five and a half dollars of inputs behind that are also then wasted in terms of like land use, water use, labor, etcetera. So we're also hoping to be able to play that back to both vendors and users in the future, right? So with vendors, it's how much have you saved when it comes to trash hauling? How much have you made on stuff that you otherwise would have, you know, kind of lost on?

What's the normal discount rate that stuff sells for?

So our average right now is about 50%. Our range that we're allowing vendors to discount is about 25 to 75, right? It's like lower than 25, customers don't really have an incentive to walk in, and that higher than 75, it's just like a total loss for business. So that's kind of what we're playing with right now.

And the highest that someone has actually listed for was 60% and the lowest, I think, was 30%.

Yeah.

That feels about right like the range. Unfortunately, we're out of time. But this sounds cool and I would like to try that out. Thank you.

Thanks a lot.

Thanks.

Thank you so much. [applause]

Hey, guys.

Hey, how is it going?

Hey, I'm Sam.

Nice to meet you, Sam.

Good to see you.

You guys come with fans.

All right.

What are you guys doing?

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 through a feed and just easily, just split expenses that way.

How do you know people need something new for this kind of service?

So it's actually a problem that I'm personally very familiar with. [laughter] I've been splitting expenses with my fiancé for eight years now. Over the years, we tried lots of different things. Um, initially, you know, we tried to keep a mental tab, figure out who should pay next. That sort of quickly broke down because as soon as they go out of sync, this creates awkward moments and it's prone to conflict. Sure you all know. Um, we tried spreadsheets, but they were a pain to manage, you know. We tried Venmo, but sort of fun of the moment, and you know, exchanging 50 bucks back and forth free time the same day, it just seems silly.

But what about something like Splitwise? Like what's the specific difference or the need here for couples?

Right, exactly. So Splitwise basically, you can enter IOUs, right, on the fly, basically enter what it's for, what is the amount, with whom. The nice thing about linking with your card or debit... credit card transactions, basically it's all there. All you have to do is tap it, so that made the big difference for us.

That's cool. Could you explain so how it works and how just sort of the whole user experience?

Yeah, sure. So basically you sync your credit and debit card transactions the same way you sync with in dot com. All your choices come into a feed and then whichever you want to share, you just tap them, and that's it.

And then it says at the end of the month or whatever to settle out things?

Right. 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 users that even just knowing what the tab and having always been synced already provides a lot of value.

Yeah, that's cool. And certainly, couples would be going to sort of share just the full transaction stream in a way that you might not with the Groupons, Splitwise or something.

Right.

Is this live? Is it up and running?

Yeah, we're currently... One thing about what you just said is you don't get my personal transactions. In your feed, you just get the transactions I've shared.

So just whatever you clicked, shared?

Exactly. So we're currently in private beta, but we're going to submit it to the app store in the next few weeks. We started working out in January. And one thing that we, you know, sort of made a mistake early on was that we wanted to accommodate, "Oh, like this could work for roommates. This could work for groups that are traveling." And what quickly happened was we had all these ways of using the app and we didn't have 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 will 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 to a lot of people.

It's good to focus. The downside of folks on couples is... Which I have to just be curious what you're planning to do is that there's no inherent reality in there either, you know. It's like 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 and roommates and bringing with that group.

Exactly. That's actually something that we've been, you know, going back and forth on during those months, you know. Our initial side is just basically, you know, try to accommodate every use case, sort of see what our beta testers just do, judge on that data, and then like focus. However, I think, our beta testing we're just too small, and you know, we built a product with a lack of focus. But, you know, to answer your question, um, so couple, the app, we were really interested to learn from them 'cause they seem to grow pretty--

So they were a Y.C. Or they are a Y.C. company?

Right. Right.

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...

It's not inherently viral.

viral nature. Did you have couples using it during your beta period?

Yes.

Were those like the best users that that's why you decided to focus on this?

Yeah. Basically, most of them that used it tend to be couples. You know, that was actually an interesting thing to me 'cause initially, I always thought that maybe I was a little unique maybe, or crazy in the way that I dealt with my finances with my fiancé now, and um... So we did early on was like we went out and talked to a lot of people. And so, you know, while expenses may not be something that you flaunt in front of your friends usually, when you ask them, a lot of people go through various different, very painful manual ways to deal with it.

Yeah. No, like the hyper focus, it's 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 really important to keep yourselves disciplined to why do people need this product and what are they gonna do with this that they haven't with others. There's sort of like the, you know, split bills with friends or roommates or whatever is one of the sort of canonical startup ideas. I would bet Y.C. gets a hundred applications a year for some version of splitting bills, splitting expenses.

We funded a bunch.

And we funded a bunch. And I think it's... it's really important to just be very disciplined about what, you know, like what is, what's new about this and 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 I have not heard myself before this idea of just pulling your transaction stream. And I think that sounds really cool. Um, I would...

It might be... it might be that 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. This is kind of like your initial step, your initial beachhead into this and then you figure out, "Well, in order to support the roommate scenario then this." It's so hard, you know, and then they... For all of these scenarios though you still have this inherent kind of viral distribution problem or, you know, how do you acquire users. This isn't one of those things where you can necessarily charge a lot upfront so you can't pay for it. And so you do need some sort of freeway whether it's P.R. 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 just get users like that, 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, 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, you know, then like if you were in my suit, we would tell you like go off and get your first hundred users and then we can actually give you real advice. But in the meantime, it's gonna be a lot of guesswork on often this very promising idea. And it's really hard to sort of decide what to do about that, but I'm sure you learned a lot from the beta. And just from your friends, like if you can't get enough users just from your friends... Your friends are generally pretty obligated to use your products. Then like... So if you can't do that in the first few weeks, right, then you know you have a problem. But my expectation is you'll definitely be able to. And then don't feel bad about calling them every week and saying, "How is it going? What are you using? You know, what can we do differently?" That is the way that these things kind of work in.

So would you say, you know, right now, should we get on the app stores that can distribute it 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 it into their lives of those 40?

Let's say probably about like 25.

Oh, that's a pretty high rate actually.

Every how often?

Regularly, like every few days.

That's great. That's a good sign. High activity rate, so one of those promising things for early-stage startups. It's not clear to me that the app store is the most important thing to do right now 'cause like, you know, you can get a small number of users without it, but it would... It does revolve around the margins to make the whole process a little smoother. So I would probably do it 'cause it shouldn't be that much harder, but don't expect that you will get a lot of traction. OK, we are unfortunately out of time. Sorry if it is short.

Thanks, guys.

Thanks very much.

It's really cool.

Thanks.

Thank you so much. [applause]