Category: Entrepreneurship
Tags: FinanceGrowthInnovationLeadershipStartup
Entities: American ExpressAP GianiniBank of AmericaCapital OneEric LymanHubSpotJP MorganKareemMasterCardPachy McCormackRampRipplingShopifySquareSteve JobsStripeSynchronyVisa
00:00
Can you build a billion-dollar company in only 18 months? Today's guest, his name is Eric Lyman.
He's a buddy of mine who started a company called Ramp. And him and his co-founder, they asked themselves this question before they started the company.
They wanted to get to a billion dollar valuation in only 18
00:15
months. And they reverse engineered it.
And I'd heard him tell this story before, but he didn't really like give a lot of details on it. And I thought it was amazing.
Uh the fact that they were this bold and then they actually pulled it off. So the company is worth something like $20 billion now and they're only I think six years old.
And
00:32
so give this episode a listen. Let me know what you think.
Again, Eric Alignment of Ramp is on today's episode of My First Million. You said something that was like pretty crazy.
It was I want to get I want to
00:48
build a billion dollar company in 18 months. In 18 months.
Yeah. And that was kind of shocking because that's like cra I mean that's crazy fast.
Is that really what happened? You guys had that conversation?
Yeah, that's a real conversation that you guys didn't have. You and Kareem, were you on the same page?
We we wanted to go fast for sure. You
01:04
know, I think like the world was moving faster than ever. We had already sold our first company and we were definitely neither of us came for a whole lot.
We were comfortable and you know, I think even at the time had already proven a couple things out and you know, in some sense had left like I was I was a 26-year-old you know, senior director of
01:22
Capital One. I think it was like the youngest person at that that age.
like we left very good setups. Um, and so we knew that if we wanted to leave, we wanted to go and make this company big and either make it huge quickly or fail really quickly.
And so, yeah, Kareem really did have that conversation. I think he had it with Calvin who, you
01:38
know, later he cracked me up. I think when we finally did become uh a billion dollar company um and it did occur uh in u in 2021.
Um, and so it was less than two years from uh incorporation of the of the company. No 2 years after
01:54
incorporation. Yeah, that's insane.
Yeah, it was crazy. You know, a lot a lot of magical things happened in 2021, but it it really did happen.
And know Calvin said, you know, look, some is it's best not to know the odds. You know, if I had looked it up and known, I would have seen that there was no company in New York's history ever uh
02:10
that was worth a billion dollars within 18 months or two years or three. Uh but yeah, what was your revenue when you when you did that?
I mean in 2021 uh jeez that was uh you got to remember this was like peak uh excitement in the market. I think we started that year maybe around
02:28
10 million in in revenue probably less. Um which was 6 months into the company you're at 10 million run rate.
So let me let me back it up. We incorporated the company in March of 2019.
We launched it publicly in February uh
02:43
of 2020. The pandemic hit.
things slow down then ramp just started really accelerating. I think that year revenue grew something like 70 times year-over-year.
Uh to the point where a small denominator um but we had hit it was it was approaching 10 million uh a
02:59
year before the company was out for even a year and by the end of 2021 um again I think the multiples really hadn't changed too much but the company ended with an $ 8.1 billion valuation and uh we were coming up to but hadn't yet
03:14
crossed 100 million a year in revenue. Um it was a crazy year.
So, how many years until how many months until a 100 million run rate? We were one of the fastest ever.
Um, I mean, so if you go back to it, we uh I think announced it I want to say in
03:30
March of 2022, I think is when uh Pachy McCormack um uh has covered the company deeply, become a very good friend, I think, wrote wrote the article talking about it as well as the $ 8.1 billion valuation. I believe that was in March of of 22.
Um, we
03:48
launched in Feb of 2020. I think we hit our first, you know, million run rate sometime in the spring, maybe by early summer.
And so, if you look at the traditional charts, there's it's now become a bit of a meme of like time from a million to uh 100 million in revenue.
04:03
Our charts actually wrong. That's from like time from incorporation.
I want to say like 15 to 17 months from a million to 100 million. It was explosive.
That's insane. And like I don't even know I don't know anything about uh the finance industry or or I don't even know
04:18
anything about your business model other than I use it. Like I know everything about personal finance apps.
I'm a huge nerd in that. But I don't even know how like I you you you take a percentage of of spend I imagine but I don't even understand.
Explain to me how that works. You know I didn't know anything about it
04:34
either until I sold my last company to Capital One and and and learn the business model. And so in in in financial services there's es particularly in the the card space there's two basic business models the credit cards there's two basic ways that they that they tend to make money.
Uh
04:49
number one is a transactionbased model where there's this thing called interchange. Every time a card is swiped there's a series of payments.
The merchant um rightfully so gets the the lion share and then folks involved in moving the money take a little bit. A little bit goes to let's say the merchant processor the people who accept
05:05
the cards route it uh and deal with all the example of that company that would be like a Stripe um or Square maybe a Shopify and they take a huge percentage right so they collect it but they don't keep a huge percentage so um you might see headline on some of these sites you know 2.9%
05:21
plus 40 cents or something like that at the very end of the day they might keep you know it varies anywhere from like.1 to.5% is ultimately their net take but the gross is much higher cuz they're collecting they've also paid the networks well they have a few folks
05:37
involved They have the the merchant bank. Um, so you as a customer have banks that's, you know, it's deposited to some bank which maybe you keep it there or you move it to your your business's bank account, they'll keep a little bit, maybe 10 cents.
Visa or a master card, they'll keep a little bit
05:52
too. Call it like 0.1 to 4%.
And then the remainder tends to go to the issuer and the issuer processor. That's generally the people that you think of as like people's name is on your card.
It could be like a Chase or it could be like a ramp or something like that or a
06:08
Capital One if you have a Capital One card or Wells Fargo if you have that kind of a card. And so the issuer in interchange is traditionally keeping most of that interchange.
And the reasons actually make sense when you think about it, you know, especially in credit, they're taking on the risk.
06:23
They're saying that merchant, we will pay you, you know, even if our customer doesn't pay us back when you accept this payment, you are getting you are getting paid for it. And if the customer later defaults, that's on us.
And so they're generally taking the credit risk. They have the operational costs of standing
06:39
up the card programs. And actually, classically, if you if you look historically, these rates used to be very high.
A lot of these came from like the old department stores in the early 1900s where you'd have like a bank setup shop uh actually in the department stores and interchange could be as high as 5 or 6%.
06:54
18 months in at 100 million in revenue, how many employees did you have? Somewhere between 100 and 200, maybe 200, dude.
So I don't that just like boggles my mind because my company is I think 2 years old and we're small or it's a bootstrap company. We own the whole thing and so I think we
07:11
have 15 or 18 people. But when you're doing everything yourself as a bootstrap company just like getting one or two hires a month is hard.
I'm sure at Parabus you were feeling the same thing where just like the logistics of getting that many people. Yes.
Just the dayto-day like does everyone
07:27
have a computer? That's incredibly challenging.
So that's 10 people a month that you need to do that. Yeah.
It's kind of challenging to understand how how fast that is. I mean now we're over 1100 people.
There can be single you know two week periods
07:42
when we have 40 to 50 people that start you know. So I I totally agree with you.
You definitely need great software and you know even to the point you'd said earlier of like use ramp but don't don't totally understand exactly how it work how all this stuff works. I think there is in any business
07:59
so much complexity in going and starting a company and operating and scaling it. Uh and I think there's an entire class of tool tools that tend to be great business models and some of the fastest growing companies of the last few years uh have actually been that you know you can look at like a ramp in the card space is what it's doing.
It's allowing
08:15
you to scale up and down with full control, full visibility, all your expenses managed, your accounting managed, done. You don't need to think about it in HR and payroll.
Ripling is a great example where, you know, I think that they're eight years old. I think their last round, you know, in age HR 8 years old.
08:31
They're eight years old. They started That's crazy.
I was one of the first customers. I mean, maybe 2016, maybe nine, but you know, they're they're not that old.
And I think their last round, I want to say, was at 17 billion. That's insane, right?
Yeah. There's a lot of these tools.
HubSpot, you know, you you mentioned them like they're an incredible company
08:46
that takes what used to be there's lots of little paper cuts that generally you need to deal with as a business owner and abstract those away. And so I think kind of these boring business models can actually be uh very good.
I think I've been able to grow into some of like my success a bit because it
09:02
happens a little bit slower. Yeah.
When you're 32 years old or whatever and you have 200 people or you have this valuation or whatever like that. It's a little bit overnight feeling.
Did you have like weird feelings of like a self-actualization of like, oh my god,
09:17
all I what I wanted is actually here this fast and I don't know if I'm actually ready to step into that position of or have this responsibility. There's always like imposttor syndrome and you know, you know, and I would say to so so there are a couple things.
I mean, we from early on designed the
09:34
company explicitly around velocity. Um, if you kind of step back and and sort of look at the the particular industry that we're playing in, not a joke, most of the founders of the companies that we compete with actually wore top hats.
You know, they they you lived in the, you know, 1800s, you know, like James Peront
09:51
Morgan, uh, Henry Wells, like, you know, you you look at the people who started Amax, um, City, Chase, you know, nothing wrong with with these these businesses. In fact, there's a lot to love about them.
They're enormous businesses, but you know, a lot of their fundamental edges were in longtime enduring brands,
10:09
unbelievable distribution, risk and underwriting, the benefits of scale and of time, but all of them move very slowly. I think an analogy I like to use sometimes is like, you know, imagine that um uh you wake up one day and you have to use like the computer or like the cell phone technology or like the
10:25
tools that your parents uh used when they were your age. It'd be very like you couldn't do this podcast.
it'd be very hard to run your business in that way, but if you woke up and you had to use their bank account or their credit card or debit card, you probably could. Um, you know, not too bad.
And and I think it's sort of proof of like not too
10:41
much innovation has happened and the products haven't fundamentally evolved over the past 30, 40 years is, you know, from, you know, no phones to flip phones to computers that can think. Um, and so a lot of our view was early on we needed to count the days, move at incredible velocity, and simply be designed to ship
10:57
things faster. And so today we're 2310 days old.
Um we're 6 years old. Yeah, that's insane by the way that you just said that that you know the day.
I mean that's just like a radical thing. It's uh you know and I remember in the early days when you go back to that
11:13
18month sat you were we were talking about at the beginning you know um we were like hellbent on okay within 45 days uh we want to be approved by the network within 60 we want to be approved by your bank within 70 we want to be you know funding our first transactions we
11:28
want to get this product in front of customers as fast as possible and so a lot of what we were trying to do is just move very quickly we had set goals that we wanted to grow the 10% a week, you know, um once you start to scale, 20% a month burn people out. Uh it's very intense.
11:45
You don't have the typical personality type. Like usually people who succeed as fast as you have are very very high on the disagreeable scale.
Yeah. You seem pretty easy to get along and you're very calm.
I don't understand like how that personality type has like
12:01
been able to grow this. My view is like I I don't uh I'm not trying to find folks who are, you know, low cost, you know, um push them to an extreme, burn them out.
I would rather find people who like just find extreme joy in their craft. Uh and just set them up where
12:17
they can be doing just that as much as possible all the time. But I think that you have to if you want to move quickly, you can't do everything.
There's only one or two things you can pick and you try to have like extreme focus as a company on that. uh and just having an everyday trying to just ask like what are the things we can do to optimize
12:33
just this one function. All right, so I've built a few companies that have made a few million dollars a year and I've built two companies that have made tens of millions of dollars a year.
And so I have a little bit of experience launching, building, creating new things. And I actually don't come up
12:50
with a lot of original ideas. Instead, what I'm really, really good at, what my skill set is, is researching different ideas, different gaps in the market, and reverse engineering companies.
And I didn't invent this, by the way. We had this guy, Brad Jacobs.
We talked about him on the podcast. He started like four
13:06
or five different publicly traded companies worth tens of billions of dollars each. He actually is the one who I learned how to do this from.
And so with the team at HubSpot, we put together all of my research tactics, frameworks, techniques on spotting different opportunities in the market, reverse engineering companies, and
13:22
figuring out exactly where opportunities are versus just coming up with a random silly idea and throwing it against the wall and hoping that it sticks. And so if you want to see my framework, you can check it out.
The link is below in the YouTube description. What businesses were you going to start instead of ramp?
So you had just sold
13:39
parab is it parabus? Yeah.
Have you ever said how much money did you make off that? Uh we haven't I mean talked about it publicly but it was mid eight figures.
You each walked away with that? No, that was the total deal.
The total. But we hadn't raised very much.
I mean we had there's three of y'all. Uh yeah it was really Kareem and I um
13:55
you know then and but we had raised something like $2 million at the time and so there was some investors but most of it went to founders and employees. So it was enough that you're like I'm good potentially good for forever depending on how I live but I have enough.
So, you're sitting around and you're like at Capital One doing your
14:11
thing. What was your list of ideas that you guys were like scheming on?
Were you like, "It could be this, it could be this. What if it was this and this angle?" Like, what was that list?
So, um I think everyone has a list. You go Exactly.
You go through all these different phases. So, the first year we were just dead set on these people just
14:27
changed their lives. Um we want to make sure that they feel incredibly good uh actually about this deal.
So, the first year we actually didn't spend too much time at all. Um, you know, we wanted to go and make sure there wasn't failure to launch, like we didn't get crushed kind of by the weight of joining this 50,000 person company and that that
14:43
Yeah. So, you're just being a good seller.
Yeah. Um, which I think is good, but but sort of like underrated kind of the value of like integrity, relationships, you know, you know, that was important to me when I sold too.
I was like I remember thinking I think they got the better of the deal this or that, but I
14:58
was like, you know, I'm happy, but I'm also I kind of want to have a reputation as someone who Yeah. It was a We all won.
We all win. Exactly.
Right. And I I I more flag it like for folks who are like young and you know the value of like a great reference um of people saying like
15:14
the world's small man. It's so small.
And so that was that was the first year. I I think the second we started saying okay this is interesting but you know I miss the speed.
Um you know I feel like I'm at a cruise ship versus a small speedboat of of kind of going and starting a company. And so I I
15:29
think I did what a lot of entrepreneurs do which is I started trying to come up with you know ideas in the abstract and you know they I I think we went on a journey of like bad ideas until eventually it was um you know came back to good ones and so I think at the time you know I was looking at um I think
15:46
similar to our talk before this we were you know looking at places in New York and they're all kind of bad and we're wondering why are they bad and like wow we should you know cars are manufactured planes are manufactured all these products that are lowcost affordable but wondrous that anyone can afford are manufactured. Why aren't homes manufactured?
So, you're going to you're you're
16:02
interested in manufactured like like when I was a kid like a bunch of my poor friends like and my grandparents, they lived in uh we just call it like mobile homes like like just I guess that's what they're called. I mean the nice way is manufactured houses.
They're manufactured house. I mean there
16:18
is also um you know like one of the places that like is extremely populous. um it's the like biggest city in the world and yet housing isn't so crazy unaffordable is like Tokyo or you go to Japan and it's because they actually most of the home builders are home manufacturers um and things are very
16:35
standard the cost of a new home build is like not that expensive um and uh you know I think there's all sorts of issues in the states related to this and we thought wow we should look in into like manufacturing homes and I still buy and I think that there's I've invested in a few of them they're
16:51
um they're very hard it was very popular right around when you were starting ramp and I invested in two or three uh that space interested me. None of them have like completely taken off in uh ultimately decided not to do this for a couple of reasons.
One, I actually
17:08
had no business in doing it. You know, I rented an apartment in New York.
I never owned a home. I manufactured anything.
Um and um you know, there was no connecting story to it. But then the more you read about it, um the constraint and the bottleneck was not around manufacturing at all.
Uh it was
17:23
all the zoning. Um and it was that you could manufacture a house that was zoned to go nowhere.
Um uh unless you could go and see to there was a lot of complex problems and and by I hope someone solves a lot of this. I think that there's uh you think that's still interesting.
I think it's still interesting. My view
17:39
is it's like the the manufacturing is part of it, but the zoning question is very real. It's how do you actually go?
And it can show up in all these funny ways of like which way does the house face, you know, how far back does it have to be set? What are the proportions?
Joe Debia is doing something in this space. I think if people crack this, I think it
17:56
is an enormous opportunity, but it is like a big slog and like this is one of those businesses where you're not going to 10x for a while. You're going to be 10% 20% compound, but there's a great business I do think to be built there.
It's just too expensive. So that was on the list.
So like tractor trailer or I don't know what you call
18:12
it. Uh, dude, like my friends like their home or like my grandparents, they lived in a place where like their home was delivered on like a truck.
Yeah. Yeah.
And so, okay, so that's the interesting space. What else was on the list?
So, that was on the list. Um, we there was various like random crypto things we
18:29
were, you know, we crim and I had been interested in the stuff probably going back to like 2012 and routine. So, we spent a little bit of time around that space.
Um, uh, you know, we spent some time um, you know, helping out different friends, starting businesses. uh we were close with Z at Rogue who started the the direct to consumer kind of um
18:47
healthcare business folks at Candid and so we spent some time on that kind of world and then I I think where it got interesting again is we came back to the things that we actually knew and a bit of our our roots and so there was almost two variants of what eventually became ramp variant number one is what turned
19:03
into ramp and we can come back to that at some point the other was this view of you know in the in the card space um which is it feels almost voodoo from outside it's unclear how you start these things how the business model worked but we we knew this because we had spent a bunch of years inside of Capital One
19:18
studied the the models really deeply um knew the history well and and had some credibility in the space um we're also very interested in the partnership business um and the co-brand business so let's say that you were um you go to Best Buy and at the very end someone says would you like to open a a Best Buy
19:34
credit card um someone is doing that um there's people powering those businesses who who are they big um you know uh Synchrony um uh is a is is a really um big name in it. Capital One, you know, had a large co-brand business.
AMX, I mean, all the large
19:50
banks and those are huge tens of billions of dollars company. Barclays uh synchron uh tens tens of billions of dollars.
I haven't looked up their their in revenue, you know, that is as well certainly in market cap. Sure.
Huge businesses. And the basic premise of that is like look is we had a side of
20:07
our business at Parabis where we worked very closely with retailers. um you know, all of these these um stores have um uh strong customer loyalty and the and credit cards are great products, but they're very hard to sell.
And so the basic business model was if you could as
20:24
a at a you know, if you're a store, you had customer loyalty, if you could convert even a tiny percentage uh of these customers to just take on a new credit card and um that was it. you would make a little bit of interchange.
You would kind of lower your costs when they were shopping with you, but also
20:39
you could make a little bit back at all the other places that customers went and shopped. And so the whole question was, could you build a product that was standard enough, simple, modifiable enough that you could convince lots of different stores?
And as this was going on, the online boom was happening.
20:55
Shopify was, you know, opening up new retailers and stores everywhere. Creators were getting big.
um you know and we thought there was a chance to have a modern um card for uh businesses and creators and you know MBNA was a big company. I mean they they figured out um
21:11
when you look at university credit cards that's like a huge business. Uh Dara Murphy he's here in New York.
Um his business is doing really really well. Imprint I've heard of them.
Imprint they're doing very well. These take a long time even in the cases where
21:27
like they're the fastest ever. you're going to be building these businesses for many, many years.
And you have to ask yourself, it's like, do I want to be working on this for decades? I thought that it was crazy that the largest credit card companies on the planet were working really hard to get customers spend a little bit more than they
21:43
thought. And then once they do, they would work really hard to convince people that the points they got were worth a lot and then devalue them in the background.
It was pretty funny. You said, I I read so many books on the baking industry.
Yeah. and you're like, "I spent weeks doing it." I'm like, "Oh, I would have
21:59
thought you would have spent like five years." Like, you must have read a shitload of books in a very short amount of time. Did you learn about any of the weird or shady stuff that the banking industry does for consumers or like the history of credit cards and things like that?
Like I I remember reading about um I
22:16
think it was Bank of America. Was that the first credit card?
Yeah. and how I believe what they did well first of all like one of them started as like a dining club card but then another one what they did was I think they just handed out credit cards to farmers in central California something crazy like
22:32
that right so the history so it started by a guy named AP Gianini um I think it was bank uh bank the America the Italia it was basically bank of Italy started by a very poor uh Italian immigrant uh is functionally how it got started and
22:48
his first big opport opportunity um really was in like the I think it was like the earthquake of 1906 in San Francisco were effectively you know he was working and kind of supporting and lending to like grocerers, immigrants,
23:03
farmers, folks who would come into SF and and trade. After the earthquake there were fires everywhere.
or a huge portion of San Francisco burned down and he was one of the only people that supposedly the the story goes he set up a table um out in the middle on Market Street and he started making loans then
23:18
and there on the spot and he went from this like tiny bank to effectively like started going everywhere and and his history is pretty interesting. He he uh so was was kind of this um bank to to merchants and then eventually to consumers in I think in the early 1900s.
23:34
Uh Woodra Wilson was trying to supposedly encourage lots of different banks to go and lend to small businesses and the emerging middle class. Right?
This is the things you hear about of like the Americans are buying their first car, their first washing machine, all that kind of stuff. And um he were very big on it.
And so he he was he I
23:51
think was famous for setting up franchise banking where there was like little branches and bank branch bankings in all sorts of little cities and they sort of took over what used to be like um and this is relevant when you get into the history of of credit cards. Um one of the the most common places that
24:07
people would take loans would be in a department store. So if you wanted to buy, you know, um you may know that Sears was the parent company to discover or um Bank of America would actually go instead of branches in like the top, you know, somewhere in like a Macy's.
So instead of Macy's giving you a loan, so
24:24
if you wanted to buy a washing machine for, you know, a dollar, you know, um you would walk out of it um after making a 10-cent down payment and you pay them back. They said, "We'll take over that.
Macy's, you don't need to underwrite each customer. We as the bank can do that for you." And that was the start of
24:40
it. What would they do if you didn't pay?
Um, you know, it was a loan. Uh, and so it was whatever banks normally do.
Um, you know, maybe they could go and take the good, but it just was a loan. Did credit bureaus exist then?
Uh, this was before credit bureaus. Um, so what do you do if someone didn't pay?
I think that was why they had the local
24:55
bankers. You know, they would go and work.
I think they would try to collect for a lot of years, but that was like this is like early 1900s banking. Um the the part where you're getting to was by the time I think Bank of America was the biggest certainly the biggest bank in
25:10
the US it might have been the biggest bank in the world. Um it was just enormous enormous scale and I think the town I want to say it was Fremont.
Um yeah um and so this was in the ' 50s and I think that it was something like 60%
25:25
or 70% of everybody who lived in this town were customers of Bank of America. And you know, if you were going to a department store, they had this this branch that you could go and go to, but you know, if you were going to like um you know, any random, you know, hard
25:41
goods store, uh you couldn't get a loan for it. And so they took this bet and they said, "Let's just get the rest of the town.
Let's get everybody and we're going to send you cards." And I think they mailed everybody in the town. I It was like a four or five digit card and uh you could go use this and you could say, "Put it on my card." Um and you
25:57
would go and pay the bank back later. Um and it just exploded.
Um suddenly, you know, they almost everyone in the town became customers and people were using it all the time. People once they got access to credit started being able to afford more things.
And it was good for merchants, too. You know, merchants who
26:14
couldn't access and couldn't get a branch to come in could start to compete with the the you know, large department stores that could. And it it gave rise to you know, the Bank of America card.
And so the initial credit card was Bank America card once they showed it successful went to their competitor
26:30
banks or regional banks and saying I will run this program for you. We can issue Bank of America cards for the Commerce Bank of Seattle.
You know you can issue it to your your customers and uh we will deal with the operations paying you know collecting from the stores paying you know doing the
26:45
underwriting all that kind of stuff. So it was a franchise model.
It wasn't the model that it was today. Was that is credit like a uniquely American thing?
it, you know, I think there's a good argument to say yes. Um, you know, and some of it comes back to that early 1900s kind of lineage where
27:01
as this was going on, you saw the birth of the American consumer where you have department stores, cars, automobiles and um you saw financing for the emerging middle class. I would say in Europe um even to this day um you see this very
27:17
different behavior where yeah like for example they don't they put way more down when they buy a home and this is exactly it Americans are very accepting of borrowing in debt you know and I think that's the uh that's the perverse way to say it. I think the non-polite way to say it is
27:33
like you know in Europe if you're rich you can borrow and if you're not paying cash that's all you can do. Uh, and I think it's actually much harder for people who aren't in the middle class, who are poor, you know, to borrow in the US.
People, you know, it's this view of
27:48
you can kind of pick pick yourself up by your own bootstrings. Um, you know, you can go and, you know, borrow for that car or for that farm equipment, um, or that laundry machine so you can go and build your business and go into it.
And so I think there's a lot of good that comes with it. Obviously, sometimes
28:04
there's there's some bad. People can get into credit issues.
Um, but I think on net, you know, most businesses it takes it's the startup costs are real, but once you get going, you can build an extraordinary business. I listen to founders all the time and like I was listening to the Lazotica episode and I'm really fascinated with
28:22
building a company that can last for 50, 100, 200 years. Like something where, God willing, I hope this is true, but my children want to get involved in some capacity.
Uh, and it could last beyond me. typically those I think those businesses that do
28:38
that are not the fastest growing companies. So So one um I I I actually agree is like the basic physics of what I think David and the founders podcast studies and and and what you're getting at too of of like I think if you to get down to
28:55
the core of what makes great businesses, it's not like who grew 100% or 200 or whatever this year. It's that which businesses can grow 30% for 30 years and if you do that you will be a giant business.
That's not what you did. Our our view is that we can um and like
29:12
the crazy part is like we have grown extraordinarily quickly. We're still just about doubling each year um uh at enormous scale.
I think we are 1 and a half%ish of the corporate and small business card market in the US. And so if you just
29:28
look at the physics of it, even if we were to massively decelerate and start growing 30% for decades, it's physically possible. The market is so big.
You're sort of like hanging out with like the Illuminati a little bit where it's like these old money families
29:44
cuz that's what a lot of the banking industry is made up of. Yeah.
Because they've been around for 200 years. They've been dealing with money forever.
Have you noticed or found anything that you are shocked by where you're like if the consumer knew that this is how this setup is, they would be
30:00
infuriated. It's a there's a lot there in in in what you're asking.
So So one, these families like I think that they're focused on doing simple things well and doing it for a very very very long time and consistently. And uh a lot of these
30:15
families just like don't sell, don't fight or interrupt the power of compounding. You want to find a business where you can just compound for a long time.
Uh and so I I would say when you're just starting out or if you're
30:31
building like you're terrified of like losing money or things going sideways, you have real costs, families, friends, things to take care of. And so you don't interrupt the debt.
You you want to when things get risky, you sell. Um but I think a lot of these families just
30:46
stayed in for a long time. Uh when there was huge I mean classically you'd see a significant recession in the US every 7 to 11 years uh consistently.
Uh a lot of people will sell out at the bottom um uh because they can't take any more pain uh
31:03
or they can't take the risk of it going even further. And I think the difference to a lot of these families is they would figure out how could you avoid it?
How could you go and stay in? You know, obviously I've never none of my family had anything like this.
And so I I uh also too, I think as a kid was very skeptical of people who grew up with a
31:19
lot of money. And one of my favorite biographies is uh Titan by John Rock or about John Rockefeller.
Yeah. And David Chernau, who's the author, he wrote one on JP Morgan, which I'm going to get to.
Yeah. And it's fun.
It's fun reading about these old banking families because they're full stories and they're
31:34
typically nutty. Yeah.
you are going to be an old baking family in that, you know, that's kind of like crazy to think about. It's um you know, does that mess with you?
I think that a lot of the families of the past have done a great job of being like involved civically. I I think that
31:51
a lot of them have been uh more upstanding. I wouldn't say all of them h have been, but I I do think that, you know, look, I'm in my mid30s.
I I I don't know that I've thought so far ahead in on like a legacy perspective, but yes, RAMP as a company is getting
32:06
very valuable, but like all my stock is in ramp. It's just a certificate.
Um, and it's only become valuable because we've built something that makes a lot of people a lot better off. My whole obsession is like how do we keep doing that for a very long time?
And you know,
32:22
uh, maybe the money comes with it, but like that's not why I do it. What What was the reason why you did it?
So the the first company we started was definitely around like you know I remember when our we we're down to like one month of or like a few weeks of savings and like that's it. And the worst, dude.
32:38
It's the worst. Like a lot of it is Well, you usually you probably felt that way the whole time.
Yeah. Like that burden.
I I remember I felt that burden for four years. And you're just working your ass off the worst every weekend and like it's hard to relate to other people cuz you're terrified.
It's like I remember in college I had this uh girlfriend who
32:54
cheated on me and I remember like hearing like my Yeah. I remember like and then she's like go to like I knew it was horrible and like she would go out and I'm like I had this like anxiety all the time like this like bothers me.
And then when I like started a business I would
33:09
remember like checking the bank account all the time and I'm like that same anxiety like I don't want to look I don't want to go I just want to bury my head. I don't want to know.
I don't want to be part of this. I felt that way for 4 years.
I'm curious if it changed for you too, but like after the sale, like suddenly you have
33:25
security, right? Like your your bank account looks a little more more flush.
You move it out of the student checking account to something more secure. You you know, you're good.
And then at some point, you know, it's uh I don't know, hydonic ad adaptation. You get used to it.
Um it's just like a number and
33:41
account and then you have like your same anxieties, your same you have the same the same stuff, all that kind of stuff. It's better though.
It's better. It's better.
It's better, but you have a similar anxieties, but it's not existential. It is sort of existential, but it's not
33:57
like the baseline happiness of knowing that you're not going to be on the street is makes like you incre the baseline goes up. I agree with all this.
Half the time I listen to founders and I'm like, well, every time I listen to founders, I think I'm going to I'm going to own this for
34:12
50 or 100 years. Yeah.
And then during the day when I'm having a pain in the ass like issue come up, I'm like, "We're going to set this up so we could flip this thing." Like it always changes, right? Like your mood Yeah.
your em emotions are powerful. And do
34:29
you think you'll run this or have equity in it 50 years from now or would you sell in 5 or 10 years if it um was like a no-brainer deal? I hope this is the last company that I ever work on.
You know, I want Yeah. Really?
You know,
34:47
I uh Your partners feel that way? Yes.
Yeah. You know, and it's it's one of these things too where like, you know, I remember even in the early days of of going through like there was deep pain, right?
If you're if you're growing this quickly, you know what certainly got you here won't get you there. And I
35:02
I think that some of what Kareem is saying is like, look, if I'm going to go through all this pain, like he has it doesn't seem like he went through that much pain. If I'm like looking at you guys from the outside, of course, it's always more challen way more harder than it looks.
But like when I'm like I don't know 100 million in revenue in in
35:17
18 months like that like like even though it's hard you're still winning and that momentum like that it's really all about dopamine that makes you feel good. I I agree with you.
So some of it was like not planning for downside and not solving problems until they hit us in our first business. So in our first
35:33
business, we had a day when uh we lost 75% of our revenue overnight, vaporized. There were risks that we knew about that we didn't properly manage.
Um and one of the things in RAMP that we resolved to do is like Kareem and I and and others are just going to beat the out of
35:49
each other all the time. Uh worrying about problems um that are 3 to 6 months to a year out in the future.
And so it's true if you look at kind of RAMP's trajectory, it has been kind of non-stop growth fairly consistently up and to the right in terms of like the the revenue,
36:06
the cash flow, profitability, all those kind of metrics has been consistently good. But it's because inside of it um there is so much like agony that we spend over like this metric that's going to affect how we perform uh in 3 months from now is not going the wrong way, is
36:22
not going the right way. What are we doing about it?
And so it's a lot of internally um beating each other up like I often you know when you look at like like a I think the analogy is like an athlete um you know you look at like uh it was just Wimbledon over the weekend
36:37
um and you know center and Alcarz like each of them look like they're playing effortlessly can pull off these shots you don't imagine. It's because there's been years and years and years of when you're not looking um they're just obsessing practicing trying these shots so when it counts they're able to do it.
And so I think there's a lot of similarities there. Um, and what I would
36:54
say is like as as you know, for Kareem, it was amplified. He he had um, you know, he's three kids now.
He he got started earlier than than I did. And he's like, "Look, these are some of the most valuable, you know, hours I'll ever have.
And if we're going to go through this, like it's going to be because we're going to the the ambition is going
37:10
to be real. And if we have a problem, we're going to confront it right away." What do you like to read?
I I like to read um it's part of why maybe why I like the founders podcast so much, like biographies of other founders. I like um reading about like um you know, design.
What are you a designer? Uh I really like it.
So the the first
37:26
company uh Parabus I had design and product reported to me and so I I had to spend a lot of years kind of like thinking about like you know um the principles of it, what makes products great and and so I I uh I love it. I would probably get booted off of our design team.
Uh I don't think I have quite the level of uh of of talent in
37:43
crafting but I I definitely spend a lot of time thinking about it. What biographies in terms of favorites or what am I reading now?
Um, I mean, my, you know, it's uh I think I probably read, you know, 15 biographies of of Steve Jobs. You know, it's uh uh I I think as as great as people think he is, I think
37:59
he's still underrated um for what he was able to do and how consistently he was able to to do it. And um I also think that he changed a lot over the years.
I think he gets kind of typ casted this like brilliant which like I think he was at the start of his career, but I think he got much more
38:16
interesting. um uh cared about people um in a much deeper way than I think comes across um uh and some of that is like I think people like conflict and people like controversy but kind of forget um to look at his career as he softened over the years and I think ultimately I
38:32
think that's when he built Apple into the the powerhouse that it is today. I've been struggling to find biographies where I admired their whole life.
Yeah. Have you read um I mean uh just on Steve Jobs, have you read Becoming Steve Jobs?
I don't remember. I've read about two or three of them.
I forget the titles. I
38:48
did the Walter Isacson one. That one is good, but I think that one is more kind of like pop culture Steve Jobs.
It was not when I remember reading that and I'm like I don't want to be this person. I don't like him.
He was very unlikable. Yeah.
In that book, but what what was becoming Steve Jobs?
39:04
It so the central question of it was exam examining like who he was over the course of his life. And so effectively these were journalists people who covered him for like 40 years and knew him from when he was like the 20-year-old kind of wonder to you know
39:21
kind of like end of his life. It came out around the time I think a few months after the Isacson and I think that they felt similarly that so much of who he was portrayed out was was like this brilliant jur instead we're trying to focus of like how did he change over the course of his life.
Um, and I think it's
39:36
an amazing amazing read because I think it focuses much more on like him, what were the lessons, what were the things that shaped and changed his style. And I I would say like I super I really highly recommend that book.
There's other great um great ones too on other aspects like
39:52
I love Insanely Simple. Um I love uh um Insanely Great Steve Levy.
That's like a a lesser read but wonderful book just about just like there 15 of them. Yeah.
Wow. Yeah.
So chat GBT has become my life coach. Yeah.
40:07
And there's like a prompt where it's like I forget exactly what it was, but it was like everything you know about me, boil it down to one word. Okay.
Uh and I think I phrased it where I'm like tell me like my issue or my flaw. So it was like it's going to be negative.
And it I think I said two words and the
40:24
first one was jealousy and the second one was fear. Yeah.
Which are very similar um emotions actually I think. But it was like rooted in like comparing yourself to other people.
Yeah. in New York City, it's like so easy to do that and it's like dialed up to a 10.
You're strange to me because you seem like such a you are so
40:41
successful at such a young age and also you seem emotionally stable. Those things typically aren't the same.
You know what I mean? A little a little out there.
Yeah. You know what I mean?
And I find that unique and interesting about you. Look, I I I'll like compete very
40:56
aggressively in in things that I believe believe in. Don't don't be wrong, but like you look back and you're having like a day and you're like, "All right, I had a bad morning.
What does this affect my afternoon at all?" Um, you know, I've got a half a day left. Do I want to make it count or not?
And I
41:12
just think the ability to just like stop, catch yourself, and reset. Um, is really important and is increasingly hard as you kind of get older, but is super important.
I think some of it was like early experiences. Like, you know, my older brother growing up would have like these really strong mood swings and
41:27
all kinds of things would go on and he had different kind of like, you know, learning difficulties and stuff and, you know, he would take medicine and it would like radically change his mood. And I was like I I remember as a kid like that was so jarring and and weird.
41:43
Someone could be like, you know, feel a certain way and then suddenly, you know, feel differently. Was strange to see.
And then, you know, I I think as a kid, I I don't think I'd fully process the thought, but I remember, you know, I I'd get really mad, too. Um or be going to sleep and I was angry about something.
I
41:58
was like, "Oh, my why am I mad? Maybe I could not be mad." Um uh does being mad help me uh or not?
That's a that's an interesting very very introspective philosophical question to ask like, well, why do I feel this way and do I have to? Yeah.
Yeah. you know, and I, you know, I
42:15
think um, you know, my brother and I would get in all sorts of fights. You, you know, I remember when he like threw like a fork and it went into my leg and stuff like that.
And, you know, when you have three boys in in a house, like they're they're probably not as fun as as as little girls, they they do more interesting
42:31
things. And I think my our parents would.
Uh, my mom was really good. It's like, "All right, like uh I'm going to sit both of you down and you're going to have to go and explain like um you're going to listen to your brother as he says why he was mad and you get like pissed and and you'd want to go whatever
42:46
and you'd be like you have to go say and you have to say it back to him and then you're going to say your side and then he's going to say it back to you. It's a super intentional thing to do.
It was really my parents never would they would have been like you guys just shut up. Yeah, it drove me off the goddamn wall.
But after long enough
43:01
is your mom like a Was she like a hippie? Like that's strange.
Like that that stuff was like that stuff's popular now with with that's probably how that's how I'm going to parent my kid. Yeah.
But that's like some gentle parenting like hippie- dippy which I buy into. I mean it was she what was her job?
Teacher therapist
43:16
or something. No, I she sold like telecommunicate like that's interesting.
Telecom very forward way to parent. Good parenting I guess.
But it teaches you to consider the other side a little bit um and to to calm down. you see the complexity of things and then you know later on when you see something
43:33
chemically change other people it's hard to do it but you know it forces you to sort of wonder like is it me or is it the you know something going on in my head that's making me feel this way and and look like I I think sometimes stress is good other times it's not and I I think you know RAMP is a big company
43:49
there's a lot of pressures and and stuff that are natural and you know I think if you step back and you're like all right um how I act uh and how I how you feel can really impact how you think about things. Um you know I I think I now it's
44:07
it's much more trained but you spend a lot of time just meditate what is the head space I I don't regularly um how are you this well balanced you read different books too I mean it's now a little more more trit but like it was funny I like Ryan Holidayiday stuff when he wrote kind of trust me I'm
44:23
lying but then you got very into stoic kind of philosophy you read like meditations and stuff like that and so I think you picked some of that up um I try to have a day where I just like hang out just I don't know go on a and two different things to clear my head. Yeah.
What day? Uh usually Saturday.
44:38
Yeah. Usually then and then Sunday I'll pick stuff back up.
But I also think too during your week like I think especially with other founders as life goes on. You were probably really good at something um and you did it a lot and that's what allowed you to build this company then suddenly you're
44:54
running the company and you don't have time to do the thing that you really liked anymore. Yeah.
Uh, and I think that a lot of people lose control over their own week and they don't actually audit like am I spending the time on things that I'm good at um or not or or want to be spending the time on. And so, and I
45:09
pretty regularly try to go and like blow up my calendar and be like, all right, I actually love doing this thing. Am I spending any time on it?
No. And because I promise if you spend your too many weeks in a row doing some thing you hate, um, you're going to be miserable.
You're going to be stressed out. Uh, and so I just redesign my weeks or months
45:27
pretty regularly. I, uh, it helps.
A question I've been asking myself a lot is like, where's my weakness now? Yeah.
And like, what do I need to like really work on? It's actually whenever I do reference checks when people, one of my little tricks is I'll be like, what's this person one out of 10?
And they're
45:42
always going to say like eight or nine. Yeah.
Everyone says that. And I'm like, cool.
What makes them nine or whatever. Okay.
Now, to get that extra point, what do they need to work on? I like this question.
That's where you hear like weaknesses. That's the only polite way I've been able to get someone to like talk on someone, which is
46:00
important. I knew like and then like a lot of those weaknesses that they have, I'm like, I could put up with that.
Yeah, whatever. Um like if someone's like, well, they're really not patient.
I'm like, okay, that sounds good to me. Whatever.
Uh what flaws or weaknesses do you have now that
46:15
you think you have to overcome to get to where you want to be in a decade or two? So I I'll slightly critique the the question um which is like if you're like a oneperson company this is exactly the right question of like how can I change uh in
46:33
order to get better but if you're like a 10 person or a thousand person uh company um or whatever uh you are in it you're on a team you can change or you can change how the team is constructed um is I think the
46:48
more interesting thing way to think about it and what I'll tell you like one of my big flaws which is probably very surprising for um you know ramp scale is like I don't know if there's like a hundred things to do uh that are very important to get done um the way my mind
47:04
works is like I'll start with a blank sheet of paper and I'll be like what are the top five or 10 things and I'll like write them down and then I like forget about the rest and don't do them and like that's fine early on when things there's like one or two things that matter but like we'll blow up the company um if you're is consistently not
47:19
dealing with 90% of issues. And one of the things that I do in order to cope with that and compensate for that is I surround myself with people who are operationally unbelievable, who are incredibly good at triaging, cascading, getting things done, and making things
47:35
move. Um, and um, what I would say is like it's actually totally fine to have huge flaws and you could decide to fix them or you can say I'm actually going to design, you know, my life or the company or whatever to be performant in that context.
Um, and so I think that's
47:52
okay. Um and and and I I I guess what I what I would say is like a lot of the way that we've built um RAMP and you know I think about building companies is a lot of folks kind of look for you know what are the things they're good at, what are the things they're bad at and how do I you know identify all the
48:07
problems. Um and it's good to know about them.
I I agree with Well, what I'm referring to is like um like for example um I'm a very emotional person. Yeah.
And like I like a trick that I've been learning is like don't make it's like don't go to the grocery store when
48:23
you're hungry. Don't make a big decision when I'm feeling pissed off about something or you know or really happy about something like don't make decisions there.
So I got I have to wait or when someone tells me something I don't like don't react. Yeah.
Just say okay let me think about it. And so my big thing is just like it's
48:40
all about emotional regulation and impulse control. That's like that's what I have to that's my big flaw.
And I think I h you I have to improve that to be a better person. Yeah.
And I'm not even referring to just um business. Yeah.
But that will impact it positively as
48:56
well. Yeah.
I totally agree with you. Thanks, dude.
That's the pod. Thanks a lot.