Below is the application that Dan and I sent in to YC. Our business model has changed a ton since then and I'm not particularly worried about folks beating us on our combination of technology, relationships, execution and payments/banking knowledge.
Also see my post from Tuesday on our story of applying to YC and my post from yesterday on application advice. Next week I'll share some of the highlights of the summer from getting in to demo day.
Your YC username:
bedrock (we're working on it)
Company url, if any:
Please enter the url of a 1 minute unlisted (not private) YouTube video introducing the founders. (Instructions.)
YC usernames of all founders, including you, zt, separated by spaces. (That's usernames, not given names: "bksmith," not "Bob Smith." If there are 3 founders, there should be 3 tokens in this answer.)
YC usernames of all founders, including you, zt, who will live in the Bay Area June through August if we fund you. (Again, that's usernames, not given names.)
What is your company going to make?
We are building APIs for commercial banking services by building on top of multiple large banks.
If someone needs advice they can call Goldman. If they just need to transact then they can use one of our APIs. We will build commercial banking middleware that will sit on top of banks just like Twilio sits on top of multiple phone carriers. It is much easier because we'll have (mostly) RESTful APIs with good documentation, etc, and (if we choose) cheaper because of bulks rates.
1) Delivered programmatically, using good APIs - Anything transactional shouldn't involved a human being. Most banks suck at technology and admit that. They're excited to have us resell their services.
2) Narrow to start, but ultimately broad services - We want to abstract away the pain of dealing with banks for transactional services like ACH, F/X, wires, factoring, short-term loans, etc, just as Stripe, Braintree, and others have done for getting a Merchant ID. We are starting with ACH and F/X as foundational products.
3) Multiple banking partners - We're willing to endure the pain of setting up commercial contracts with many banks and then offering the transactional services (via API) in an intelligently routed way. We've gotten verbal agreement from Wells Fargo, and are pretty far along with JPMorgan and Capital One. Will start with other banks shortly.
For each founder, please list: YC username; name; age; year of graduation, school, degree and subject for each degree; email address; personal url, github url, facebook id, twitter id; employer and title (if any) at last job before this startup. Put unfinished degrees in parens. List the main contact first. Separate founders with blank lines. Put an asterisk before the name of anyone not able to move to the Bay Area.
2009, Brown, AB, Applied Math, Economics
I work at Stripe, mostly on Risk
2008, UChicago, AB Political Science, AM International Relations, (Also half-way through UChicago Booth MBA)
Please tell us in one or two sentences about the most impressive thing other than this startup that each founder has built or achieved.
ZT reorganized child welfare investigations in New York City. He got tons and tons of data, wrote R code to analyze it, set up ethnographic research conducted by his team, etc. He sniffed out details, wrote a report, and then helped implement the changes to a staff of 2000, and a budget in the tens of millions.
Dan built Giftly, particular the proprietary stored value product, from a regulatory, legal, risk, etc, perspective.
Please tell us about the time you, zt, most successfully hacked some (non-computer) system to your advantage.
When I started in Newark, I didn't have a computer or an email, and City Hall didn't have wireless. So I tracked down one of the wireless networks I could find - owned by a bails bondsman close to the court, and negotiated with them for their wireless password.
I once spent hours looking at floorplans and historic housing lottery data so that my roommate and I could pick a HUGE double with our own bathroom despite having a terrible pick at Brown.
Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.
We raised the money, we have made investments. We have been to YC demo days and invested in Keychain Logistics.
How long have the founders known one another and how did you meet? Have any of the founders not met in person?
We've known each other since we were 16, when met at Harvard summer school.
Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making?
We started by thinking about ACH, which is a problem that Dan actually had in his work. Zac sees how hard it is for even Stripe to deal with Wells Fargo on F/X, wires, etc.
Dan knows a ton about payments. Zac won finance prizes @ Brown. We both want to disrupt banking and have been talking about it for years.
What's new about what you're making? What substitutes do people resort to because it doesn't exist yet (or they don't know about it)?
When most businesses wants to do something financial they have to call their bank and talk to a person - except for getting a MID. That doesn't make sense. Getting a wire, as an example, often involves twenty minutes, a painful conversation, and $30. Even non-quant hedge funds needing to convert EURO to GBP have to pick up the phone and talk to a bank's trading desk.
No one has built developer friendly bank back-end processing, so you have to deal with banks, which overcharge, are slow, and are not developer friendly. Wells Fargo, for example, does offers an API which costs more than their other options and, well, is not very good.
Who are your competitors, and who might become competitors? Who do you fear most?
Possible competitors: Square, Stripe, Braintree, Wells Fargo, JP Morgan, Bloomberg, Intuit, PayPal
Banks cannot innovate on technology. A senior exec at JPMC told us that even if building good APIs was a Jamie Dimon priority it couldn't get done before 2017.
Commercial banking broadly - including every service we're imagining other than ACH (F/X, Wires, Factoring, Lending, Account Creation/Deletion, etc) - is not something that the innovative payments companies plan to provide to others, although they're all services they, themselves, need. Stripe, for example, is trying to make payments work on the web. We're trying to make commercial banking work in the world. They're both trillion dollar problems, but they're different.
So, who do I fear most? I fear regulators the most. Banks can't beat us on technology but we might be so successful they beat us with the law.
What do you understand about your business that other companies in it just don't get?
People who run banks don't care about providing high quality technology services, and the people who care about technology don't want to work with (or buy) a bank. Schlep blindness, as it were.
Also, there is great power in abstracting away thinking about your particular bank. Take ACH: since we are willing to suffer through forming eight banking relationships, we can provide next-day payouts to 80% of checking accounts in the US. Everyone else can only do next-day payouts on their one bank.
How do or will you make money? How much could you make? (We realize you can't know precisely, but give your best estimate.)
We make money on transactions.
For a (very, very) rough guide, profits at ten biggest banks last year were $120b. Let's call 50% of that transactional/FICC/pure commercial banking as we define it.
As for TAM, SAM, SOM, using big-O:
Total addressable market:
O(100s of billions)
Serviceable available market through APIs:
O(10s of billions)
Share of market:
O(10s of billions)
If you've already started working on it, how long have you been working and how many lines of code (if applicable) have you written?
Pre-development. We've incorporated. I'm still at Stripe. Dan's still
at Giftly. It didn't make sense to start until one of the banks signalled a willingness to sign a commercial agreement as their was nothing to integrate with. Ready to start now. Raising money because of non-trivial commercial and regulatory costs. Far along with recruiting the rest of the early team and considering raising a seed round.
How far along are you? Do you have a beta yet? If not, when will you? Are you launched? If so, how many users do you have? Do you have revenue? If so, how much? If you're launched, what is your monthly growth rate (in users or revenue or both)?
We're far along on regulatory/commercial contract/legal stuff.
Once we have that settled, there is a lot of backend, unsexy stuff to do to make it as pretty/smooth as we'd like: settlement files over SFTP, testing required by the banking partner, automatic underwriting built on Microbilt/LexusNexus/Iovation, etc, and then launch.
If you have an online demo, what's the url? (Please don't password protect it; just use an obscure url.)
No online demo yet. It might be awhile before we have a dashboard and mocking up a fake API for you doesn't seem worth it.
How will you get users? If your idea is the type that faces a chicken-and-egg problem in the sense that it won't be attractive to users till it has a lot of users (e.g. a marketplace, a dating site, an ad network), how will you overcome that?
Working the network, undercutting others on price and (especially) ease, directly reaching out to every startup that needs banking services beyond payments that exists or is founded for traction.
We've focused our user research on three customer segments: (a) Corporate treasury departments (a heretofore undisrupted part of most enterprises) (b) hedge, private equity, and venture funds (minus quants/HF) and their back offices (c) technically inclined SMEs and startups who aren't served well by big banks.
If you're already incorporated, when were you? Who are the shareholders and what percent does each own? If you've had funding, how much, at what valuation(s)?
If you're not incorporated yet, please list the percent of the company you plan to give each founder, and anyone else you plan to give stock to. (This question is as much for you as us.)
If we fund you, which of the founders will commit to working exclusively (no school, no other jobs) on this project for the next year?
(we've envisioning this being a, uh, five-ten year project at least)
For founders who can't, why not? What level of commitment are they willing to make?
Do any founders have other commitments between June and August 2014 inclusive?
Do any founders have commitments in the future (e.g. finishing college, going to grad school), and if so what?
Where do you live now, and where would the company be based after YC?
Are any of the founders covered by noncompetes or intellectual property agreements that overlap with your project? Will any be working as employees or consultants for anyone else?
We both have CIIAA's that could cover this work.
Dan's company is pretty far away.
Zac declared this idea when he signed his at Stripe. He's asked Stripe for an IP waiver letter, or whatever it's called.
(I also described this entire idea in a youtube video I sent to you in December before we didn't accept a late interview, so...there is a lot of documentary evidence that I had this IP before Stripe).
Was any of your code written by someone who is not one of your founders? If so, how can you safely use it? (Open source is ok of course.)
If you had any other ideas you considered applying with, please list them. One may be something we've been waiting for. Often when we fund people it's to do something they list here and not in the main application.
Please tell us something surprising or amusing that one of you has discovered. (The answer need not be related to your project.)
"The failure, if it was one, lay in the fact that, having too much to hold on to, they slowly lost what they had. On the whole, it was those who had least who were able to move most freely to the new world which was coming into existence." --That reading The Making of the Middle Ages can make you think of everything from startups to the state of America in the world (this happened in December)