From Being Fired to Building a Multi-Million Dollar Fintech Startup

1
From Being Fired to Building a Multi-Million
Dollar Fintech Startup With Yaron Samid,
multi-exit founder and lecturer at Stanford and
Columbia business schools
2
Copyright 2020 by Altario Technologies. All
rights reserved. No part of this publication text
may be uploaded or posted online without the
prior written permission of the publisher. For
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addressed Attention Permissions Request, to
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3

• INDEX
• INTRO 4
• INTERVIEW 6
• Did you always want to be an Entrepreneur? 7
  
• What was your A-ha! moment that made you
  realise you needed to start BillGuard? 9
• What was the market vision that helped you shape
  the company? 11
• How did you validate the original idea for
  BillGuard? 17
• Who was your startups primary
  stakeholder? 21
• How did they deal with the problem before your
  solution? 23
• How did you build a product that would still
  work?
  26
• Which KPIs did you set for the people who were
  using the first version of the product? 27
• How did you coordinate your team to deal with the
  massive pivots your company had? 34
• What were the most important features that you
  included in the MVP? 36
• Do you have any advice for founders on product
  development? 39
• Do you have any advice on raising startup
  capital? 46
• What advice do you have on hiring? 51
• Any other advice for first-time founders?
  
  56
• FINAL THOUGHTS
  
  
  57
• ABOUT ALTAR.IO 59

4
INTRO
5
How can you make a startup successful? That
was our main question when we sat down with Yaron
Samid. Hes a multi-exit founder whose companies
have been acquired by the likes of Microsoft and
Cisco, to name but two. Yaron is a regular
lecturer at Stanford and Columbia business
schools. He is the founder of TechAviv, one of
the largest founder clubs in the world. My true
passion, he told us, is helping the next
generation of entrepreneurs. So he was more than
happy to tell us the story of how he built and
scaled his fintech startup BillGuard. From the
number of actionable tips and insights in this
interview its easy to see why BillGuard became
one of the most popular fintech startups in the
world. But before we get into that, lets go back
to the beginning, starting with how Yaron started
his entrepreneurial journey.
6
THE INTERVIEW
7
Q Did you always want to be an Entrepreneur? A
I always wanted to be a Founder and a CEO. I was
very inspired by my parents who were both very
entrepreneurial. I was fortunate, I knew that I
could have a non-standard career from an early
age. On top of that, I was just a really sucky
employee I was terrible. I got fired four
months into my first job out of university. They
said I was too creative. This was back in 95
when the internet was getting started and I knew
a little bit of HTML. So, instead of doing the
job the way I was supposed to do it I came up
with a web-enabled way of doing it.
8
They werent very impressed and told me go back
to doing it the old way. I was very young and
brash and I didnt take that very well. They
fired me the same day. Which was the best thing
that ever happened to me, because I started
getting into the internet business. I joined a
startup company and learnt from the CEO how to
build companies and thats how it all got started
for me being a bad employee.
9
Q What was your A-ha! moment that made you
realise you needed to start BillGuard? A So
BillGuard was an accident. My wife got our
credit card bill and there was a transaction she
didnt recognise. She came to me and said Honey
what is this charge? And when your wife comes to
you and says What is this charge? youre like
Oh God! But I didnt recognise it either. So I
googled it and saw a lot of people were
complaining about the same charge.
10
That gave rise to what I call a lazy mans idea
What if there was a way to harness all that
collective human knowledge about bad credit card
charges? Then use it to notify other people who
had those same charges? That would be a nice
service that I could benefit from as a person who
doesnt check their credit card bill. I had
already built two companies before BillGuard so I
had some experience with crowdsourcing technology
and data science. So I set out to build a fintech
startup to solve a problem that I had. That was
the genesis of BillGuard.
11
Q What was the market vision that helped you
shape BillGuard? Did it evolve over the years or
has it remained the same since its inception? A
When I started working on BillGuard the vision
was to become a security company. Our tagline was
literally Antivirus for our bills. To advertise
to consumers we said This system will check
your bills for you and notify you if it finds
mistakes or fraud. It was very much set up like
a Fintech security company that was the initial
vision. We were building a Set Forget
security product. This requires a lot of FUD
Marketing Fear, Uncertainty and Doubt.
12
We had to convince consumers that, without our
app to protect them, they would lose money to
fraud.
Its a very expensive process. Big security
companies spend hundreds of millions of dollars a
year to scare people into buying their products.
For a fintech startup, it was too
cost-prohibitive. Early on, we realised our Cost
per Acquisition (CPA) was going to be too high
so we pivoted to a B2B model.
13
Banks approached us because they were interested
in the technology we had built. Banks didnt have
a way to crowdsource knowledge to find bad
charges. So we tried to sell the technology to
the banks. However, the sales cycle for banks is
very very long. Its painful. The kind of pain I
wouldnt wish on anybody.
Simply, we were not set up to just sit there and
wait for the banks to deploy.
14
So, after two years of investing in a B2B
marketing and sales team, with pilots in major
banks, we made one of the hardest decisions we
had to make. To pivot back to a consumer app.
This meant letting go of some amazing talent we
had brought in to sell to banks. They just
werent the right fit for a consumer business
model. It was heartbreaking. This time, instead
of a security company, we built a personal
finance company.
15
We completely redesigned the product. It was no
longer a set forget website. It was now a
mobile app that would help you identify ways to
save money and protect you from fraud. That
worked very very well. It grew very quickly. Our
product team did some strong product development,
UX and design work led by my amazing co-founder
and CTO, Raphael Ouzan. We were able to build one
of the fastest-growing finance apps in history.
Within a year and a half of launch, we grew to
2M active users. We were regularly ranked the top
finance app in both the Google and Apple app
stores.
16
At that point, we were acquired by a 2B unicorn
company while we were still growing rapidly.
We completely redesigned the product. We were
able to build one of the fastest-growing finance
apps in history. Within a year and a half of
launch, we grew to 2M active users. We were
regularly ranked the top finance app in both the
Google Apple app stores.
17
Q Before pivoting, how did you validate the
original idea for BillGuard? A We did a few
things. First of all, to validate the idea
before we had a product or even a team, I went
out and did surveys. I asked people If we build
a free product that would check your bills for
you and notify you if there was a fraudulent
charge that your bank missed would you use it?

That question was a big mistake.
18
Almost 100 of people said I would absolutely
use it, I never check my bills, I know Im losing
money. I would love something to check for me
especially if its free. That kind of question
is a yes question. Everybody will say yes to
that. Youre not validating customer demand. More
specifically youre not validating customer
action. People had the intent, but when we
launched, suddenly nobody stopped what they were
doing to sign-up and use it.
Taking action is not free. People have to make
the decision to go get your product. That
requires a driving force.
19
Like if you have a headache, you will stop what
youre doing and go and buy some medicine.
Unfortunately, we did not have that. People
didnt know or have a fear that they were losing
money. So they didnt take action to get our
product. There was something else we did that
was also, in retrospect, a misleading indicator.
We joined a startup competition called
TechCrunch Disrupt. Its the biggest global
startup competition.
20
We did very well, we came in second place as the
Top Startup of the Year for 2011. We told the
story well and people were excited. We raised
money from the best investors in the world. We
had Bessemer, Khosla Ventures, Peter Thiel from
PayPal and Eric Schmidt from Google, etc. Tier-1
investment funds who all believed in this vision
of outsourcing bad charges. But customers still
werent caring about the problem. When we
launched, the product wasnt converting and the
funnel had massive drop-offs that was the real
data. That was real customer validation. The
results made it very clear that there wasnt
enough demand for our security product. Hence the
decision to pivot.
21

• Q So, before you pivoted who was your startups
  primary stakeholder?
• A We had two categories of consumer that we
  profiled. We called them
• Spotters Someone who is meticulous about
  checking their credit card bills. Line item by
  line item. Theyre very nervous and aware that
  companies make mistakes and they check for them
  religiously.
• Slackers People, like me, who never check their
  credit card bill. They know there might be some
  mistakes on their bill, but they dont care. If
  they do check they skim for big charges and
  ignore the little ones.
• We targeted the Slackers. We said Hey guys
  well check your bills for you well do the work
  and notify you if there is anything that looks
  fishy.

22
The problem with those Slackers is they dont
take action to solve the problem in the first
place. They arent aware of how big a problem it
is. The Spotters are aware of the problem but
they take care of it themselves. What we were
able to do through our marketing was to find a
sub-segment of slackers. They were aware of the
problem, wanted a system to take care of it and
were willing to take action. But, as I mentioned
already, it was too expensive to market to them.
23
Q Did the Slackers deal with the problem before
your original solution or did they just not
bother? A Most of them would only find out after
the fact if they had some big charge on their
bill they didnt recognise. In that case, they
would call the bank. That leads me to another
aspect. When youre launching a product you have
to assess How big of a pain-point is the
problem? How easy is the solution they currently
have at addressing that pain-point and is that
good enough? In the case of bank fraud, the
consumer has zero liability. They pick up the
phone, call the bank and say Look I have this
big charge here I dont recognise, its not mine
please remove it.
24
The bank replies Ok no problem. and they
remove it. The bank does all the work. So we had
Low Pain Easy Solution. On top of that here was
one more deadly sin low frequency. 99 of the
transactions on your credit card are absolutely
fine. Someone rarely has fraud on their credit
card. Even if there are hidden charges or
mistakes, once you find them and get them fixed
they dont reoccur. The problem is solved.
25
We were left with low pain, low frequency, and an
easy solution . If you analyse it that way you
wouldve never started that fintech company you
wouldve been dead on arrival. Thats the kind
of teaching I do now for other companies its a
very important lesson
You have to carefully, and quantifiably, address
how big is the pain, how frequently does it occur
and what are the existing solutions for
addressing that pain.
26
Q With that analysis in mind, how did you build
a product that would still work? A We didnt! We
built a product that was good enough for the
subset of Slackers. The problem exists. At a
macro level, its huge. We quantified it, it
worked out to about 14B of unwanted charges per
year in the US alone. So the macro problem was
big. But each individual wasnt aware of how big
a problem it was for them. Even though we
couldnt afford the marketing 50,000 people were
using the first version of our product. They
werent paying us anything but it was growing. We
had built a product that fulfilled our vision and
worked well. But the market didnt have a demand
for a personal finance security product it just
wasnt there.
27
Q Which KPIs did you set for the people who were
using the first version of the product? A So
obviously Cost per Acquisition (CPA) is the
number one quantifiable way to know whether
people will take action. In our case, there was a
high-friction registration process. Youd have to
connect your credit cards to allow our system to
monitor them this process caused a huge drop-off
in our onboarding funnel because we needed to ask
our users to enter their login information for
their online bank or card accounts. Even though
we did not store this information, it was a very
scary ask. That was one of the key KPIs. We
analysed, very granularly, our onboarding funnel.
We knew we had to get our funnel to convert
enough for us to support a freemium model.
28
Meaning, you got to use the system for free for
your first two cards. To add a third you would
have to upgrade to the premium model. In our
case, to get that to work, we needed to achieve a
CPA of 10 or less. We initially had 50 dropoff
in our onboarding funnel. It was almost always
when we asked them to connect their credit card
so we could monitor their transactions. Think
about that for a moment People who care about
fraud on their credit card are risk-averse.
29
The last thing they want to do is give the
password for their bank statements to a fintech
startup. Looking back this seems obvious! The
problem is
As an entrepreneur, youre so excited about
everything that you get too emotionally tied to
your product. Youre not intellectually honest
enough to be true to the data.
30
And the data showed that we had a 150 CPA it
was way off, the economics didnt work! We looked
at the KPIs and our funnels conversion rate. We
worked hard to build trust with our users and
brought our conversion rate up to 75. Once we
had that, we knew we were on the right track.
The other KPIs for us were engagement and
retention. It is critical for any consumer app to
get people engaged with the product and to retain
them.
31
If people use your product regularly, its top of
mind, and if its top of mind, theyll tell a
friend. If they dont, forget about organic
growth.But let me give you an example. Nobody
in the history of mankind has ever told their
friendI love my McAfee Antivirus!! Oh my god,
its SO GOOD! Youve got to get McAfee!
Nobody is excited about their security products.
32
You dont engage with it on purpose! Youre not
supposed to. What youre buying into is peace of
mind. I set up McAfee and I know Im safe I
dont need to think about it anymore. So we
needed to change the discussion from security to
saving money Do you want to pay full price for
that coffee? Or do you want to get a notification
on your phone that gives you a 25 promo code as
you walk into the coffee shop?. Everybody wants
that product! And it drives action. If you see
someone standing in front of you in line getting
25 off their coffee the first thing you do is
say Hey, whats that? and they say Its my
BillGuard savings alert. It shows me that there
is a coupon here I can use and automatically
downloads it to my phone.
33
Boom! Everybody standing in line is suddenly
downloading the app for the coffee they are about
to buy. That drives massive organic adoption and
growth. When we did this and made other UX tweaks
to the mobile app, it brought down our CPA to
less than 2 per newly registered user.
We needed to change the discussion from security
to saving money. When we did that it drove
massive organic adoption and growth. Our CPA was
less than 2 per user.
34
Q So you pivoted to B2B with banks, then back
again to B2C with the personal finance management
app. How did you coordinate your team to deal
with this tectonic shift? A First of all we had
the painful decision to let go of the team we had
when we were selling to banks. They didnt fit
with what we were trying to do on the consumer
front. Luckily, the core team were all B2C,
personal finance, data science and UX experts who
knew how to build great apps for consumers. Which
was also my background as a product-centric
founder and CEO. Thats another big lesson for
founders you want to stay true to your DNA.
Dont try to be something youre not.
35
Im not the guy who puts on a suit and tie and
tries to sell to banks. Its not what I love and
its not what Im best at. It wasnt my
passion. So, when we pivoted back to consumers,
it was almost like Fantastic, now we are back
home, doing what we love. In the end, we just
needed to figure out how to do it right, because
we were doing it wrong at the beginning.
36

• Q The technology for your startups MVP mustve
  been complex. What were the most important
  features that you included in that MVP?
• A So the very first MVP was a very simple
  website.
• You would go on and register the cards you wanted
  us to monitor. We would scan it for you and send
  you a weekly email saying
• Transactions 1-20 Ok
• Transaction 21 We dont recognise this charge in
  our system. Please check this charge and let us
  know whether its ok.

37

• The way we got the analytics for knowing whether
  or not a charge looked ok to us was through
• A database of merchants that we knew were
  legitimate.
• Scanning the web and message boards for scam
  charge reports.
• Asking the few spotters we had using our
  platform to click every transaction. We gave them
  a tool so they could go through checking yes or
  no on everything.
• About 2 of our network were Spotters.That was
  it.

38
To put it in perspective thats the same
percentage of users as content contributors on
Wikipedia. And in their case, 2 of users
contributing equals the most accurate
encyclopedia in the world. So we leveraged the
spotter reviews, this gave us early analytics.
We then used that information to provide the
other 98 of our users with reports once a week
Set Forget.
39
Q Looking back on your experience, do you have
any advice for founders on product
development? A The absolute most important thing
when it comes to product development?
Dont infer that there will be a demand for the
product youre going to build. You have to
quantify customer action not the intent.
40
Before you decide to build an MVP, write a line
of code, onboard your team or reach out to
investors you should Create a landing page for
your product that describes the value
proposition. Run some ads, drive some traffic to
that page. See how well it converts to whatever
your Call to Action (CTA) is Register, give us
your email whatever it might be. Get your
target users to sign up before you build the
product. Then follow-up with Thank you for
signing up, were working on the product now.
Youre going to be among the very first to hear
about it when we go live.
41

• That will give you a rough idea of how much it
  costs to acquire a customer based on the value
  proposition that you think is so wonderful.
• What you will most likely find out is that your
  value proposition isnt that wonderful and that
  its far more expensive to acquire a customer
  than you thought.
• But that data will enable you to iterate on your
  value proposition
• The product
• The positioning
• Who youre targeting.
• Your optimal marketing channels

42
Youll be able to keep tweaking this until you
get to a point where you will have a much better
handle on your ability to acquire a customer that
takes the action that you want them to take, and
cost that works for your business. You will have
an informed, quantified answer to the question
Will customers want my product enough to take
action at a cost that would enable me to run a
sustainable business?
43
You still wont have metrics around engagement
and retention, but youll have a sound starting
point and a good indication of whether or not
your product idea will be dead on arrival. There
are great tools for doing this. One of which is
QuickMVP. You can create placeholder landing
pages, run advertisements and get quantified
results on your onboarding funnel. How much it
costs, where people drop-off etc. It allows you
to constantly iterate and A/B test.
44

• If you go to angel investors, for example, with
  that kind of quantified data, they are going to
  know you are a serious entrepreneur.
• Theyre going to see that you
• Are responsible and credible
• Have done your homework
• Know the initial foundation of your growth
  economics.
• Before building anything youve quantified that
  people will take action on your value proposition.

45
If we had done that at BillGuard, we wouldve
saved about four years worth of time. Perhaps we
wouldve jumped straight to the personal finance
value proposition rather than a security or
bank product. Thats a simple exercise to do and
its my top recommendation for product
development.
46
Q Do you have any advice on raising startup
capital based on your experiences with
BillGuard? A BillGuard was my third company. So,
when it came to raising money, you have to take
into account I was a repeat entrepreneur and a
well-known entity. Investors were happy to back
anything I was doing because I had a good
reputation and track record.
As a seasoned entrepreneur, its a lot easier to
raise money.
47
My main advice to first-time founders is to
create a network with investors early. Reach out
and build relationships with investors before you
ask them for money. Tell them what you are
thinking of building. Ask them if, based on your
KPI goals, they would be interested in investing
in the future. Find out what KPIs they would like
to see based on your vision. And they will tell
you. Theyve seen hundreds of companies and
thousands of pitches. They can see the signs of a
company that is going to have compelling growth.
Collect this information from a few investors.
Then go out and execute those KPIs by scraping
together some friends and family money.
48
If you succeed you can go back to the investor
with facts and figures rather than just a story.
Then you can start talking about a proper
early-stage venture round. Firstly, that puts
them in a position where they have to take you
seriously. Theyre going to look bad not
investing in your startup if you did what they
said they needed to give you some capital.
Second, it makes you look exactly like the kind
of founder they want to back. It makes you look
credible and your business predictable. They
dont know you their biggest fear is youre just
somebody whos selling them smoke mirrors.
49
So, when you tell them you are going to do A, B,
C they may doubt you. But, six months later when
you have proof you did A, B, C you tick a box
in their brain. You show them youre a
responsible, credible entrepreneur they can trust
who has a good grasp on the growth levers of your
business. You mitigate the number one risk for
an early-stage startup investor the founder
Early-stage investors back great founders. They
know that everything else is going to change. The
product, the market, the competitive landscape
will all change, but theyre betting on you.
50
In short, developing the relationship and backing
it up with credibility will get you a check.
51
Q Last question, what advice do you have on
hiring for a startup based on your experience? A
The most important decision is your co-founder. I
cant stress this enough it is literally the
most important decision you will make as a
founder. Most startups fail because of some sort
of HR dynamic. The vision might be good, the
market might be good but if your team cant
execute against it then youre already one foot
in the grave. You should find a co-founder who
you feel absolutely confident to go to battle
with for the next decade.
52
When it comes to looking for both your co-founder
and your first hires, your ideal situation is to
work with people you already have a relationship
with. Those first 2-4 startup employees are
almost going to be co-founders. They are taking a
huge risk betting on you. So, hopefully, you can
pick from a group of people that you know.
The most important decision is your co-founder. I
cant stress this enough it is literally the
most important decision you will make as a
founder.
53
The same advice goes with startup talent as it
does with investors. You should be developing
relationships with talent well before you launch
your company. You should be hanging out at
universities, meetups, online communities and
conferences. Say you are passionate about
sustainable food tech and you want to start a
company in that sector. Months before you should
be a part of that community. You should be having
conversations and contributing content to that
community before asking anybody to join you.
If you are in communities relevant to your
startup, youll not only find talent, youll find
customers and maybe even investors.
54
When you hire your team you must focus on startup
people. People who can take volatility and work
for lower salaries than the market. They need to
understand the value of the startup equity that
theyre going to be getting. And you should be
generous with your equity on your first few
employees. When hiring for a startup, I would
optimise on intelligence and learning fast on the
job over fancy degrees from fancy universities.
In the startup world, you need people who are
street smart, creative, agile, adaptable.
55
If youre building a consumer product and you
suddenly decide to pivot to a B2B model you need
to have software engineers who can pivot with
you. That requires a certain personality and
skillset. Ideally, with developers, you want
full-stack engineers. You dont want someone who
just knows how to do Javascript or a consumer web
app. You want broad people. Over time youll hire
specialists but in the beginning, you want to
hire very brilliant generalists.
56
Q Is there any other advice you have for
first-time founders that we havent covered
yet? A Find a seasoned entrepreneur who can
mentor you on the basics. Like how not to fall
into term sheet traps from predatory investors.
Add these mentors to your startups advisory
board. Give them equity at least 0.25.
57
Final Thoughts As usual, theres no handbook, no
top-secret formula to startup success. In short,
it comes down to a lot of hard work, learning
from your mistakes, perseverance, good timing and
taking the right advice. We hope you liked this
interview, and most of all, found value and
inspiration for your own journey.
58
Additional resources you might like
Interview with Paul OBrien, CEO of MediaTech
Ventures, to take a closer look at the hidden
details behind startup funding.
Interview with Jan-Philipp Kruip, founder of
FitSense, a B2B health and fitness fintech
startup that is being used by some of the biggest
multinational insurance companies in the world.
And by the way, if you dont want to miss any new
content we put out, simply click here and join
hundreds of other entrepreneurs already receiving
our newsletter.
59
About Altar.io Altar.io is an award winning
product software development company based in
Lisbon, London Milan. We help entrepreneurs
and business leaders from all over the world
create innovative products that are beautiful,
reliable, and easy to use. Our DNA is made of
ex-startup founders and the top talent in
Product, UX/UI, Software development and Machine
Deep Learning. We came together from various
backgrounds with one vision to bring a lean,
user-centric approach to product innovation and
software development. Learn more by visiting our
website _at_ https//altar.io/ and connecting on
social
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