Building A $2 Billion SaaS Company: Lessons From A Two Time Founder

I was a first time founder. Right? I I dropped out of school. Like, I cared a lot about what others thought, what my team thought, what leaders thought. Right? Like, oh, well, people quit because this person, the story executive comes in and then leaves. I cared what our investors really thought. Right?

Like, oh, like, how is the board meeting gonna go? Like, how do we, like, paint a positive picture about the business and press and all this other stuff? You care about a lot of these things. And then the second time you really are like, you know what? It's my time. I just wanna build something that people want that like really works. I'm here with my friend Rajul, the founder of Zip.

And we're gonna talk today about what he's learned as a two time founder, as well as employee of Airbnb, as well as visiting partner at Y Combinator. So to get us started, what is Zip? What do you guys do? What's your two line description? Tell us about it. Yeah.

So Zip is a procurement software company, and so we provide one front door for any employee in an organization to request a purchase, and we route it for approval across, you know, budget and legal and IT and security and all the different teams before connecting into the ERP or financial system. You guys have done really well.

You were just you were in the summer twenty batch, and now you're a pretty legit company. I mean, I I don't know what the public numbers you can disclose are around valuation or money raised or revenue or employees. Whatever you can share, I'd love to hear. Yeah. So the company is about 350 ish people. We've raised about $370,000,000 now.

And, the most recent round was our series d at 2,200,000,000. 0 post, last month. I love to hear the story of Flight let's set the stage. You were very young Yep. And you started a startup. So so take it away. Like, how did Flight Car get started? Yeah.

So this was back in, like, late twenty twelve, early '13. I dropped out of college. And, I remember so this was technically still in high school, really. So my co founder You dropped out of freshman year? I dropped out of just before freshman year, actually. So and, you know, I remember I I called up, Kevin, my co founder, and was like, hey. Maybe we should like, let's do a company together.

And, you know, he was like, okay. Like, I'm free this weekend. Like, let's chat through ideas. And he was like, I've gotta go somewhere, but let's meet up at, you know I grew up in New Jersey. The local hangout spot, of course, was Panera Bread, right in in Princeton, right near where I grew up.

And so we agreed on a Sunday to meet up at Panera Bread for an hour, before Kevin had to go run somewhere. And we were like, let's just think about the best idea. Let's try to come up with the best idea we can in the hour, and then, like, let's just do it. And he's like, hey, know, have you heard of this thing? It's called Airbnb. And I was like, no. I've I've never heard of that. No.

And he's like, well, people are sharing their homes with other people. And I was like, no way. Like, really? And and, you know, we kinda just started talking. We're like, well, if people are you know, what's the most expensive thing you own? Your home. And if people are sharing that, well, the second most expensive thing people own is generally their car. When are they not using their car?

When they're traveling. And this is you have to remember, like, pre Uber and Lyft, like, really, you know I mean, they must have been early stage companies at best. And, and so we were like, yeah. Car you know, we would we would potentially do car sharing, at the airport when people are not using their cars, they're traveling, and other people are coming in and and, you know, they can rent the car.

And so that's how FlightCar was born. Free airport parking by renting out your car fully insured. That was the one liner. That one hour led to five years of doing that company. And and so the second time around, I took a very different approach.

But but I would really encourage that, like, you you know, if you're thinking about doing a company, like, you really put the right level of thought into the idea. More than an hour at least. Yeah. At least more than an hour. Yeah. Yeah. And so you have all these funny anecdotes. You guys did such a great job of doing things that don't scale.

Can you just share some of the anecdotes for how you got your first customers and how you got it off the ground? We actually had a bunch of crazy stories. So I remember we we were in the winter twenty thirteen y c batch, and we hadn't launched yet. And so this is like I remember doing office hours distinctly with p g, like, two weeks into the batch.

And p g is like, oh, so, like, how many customers do you have? And I remember we were like, well, we haven't launched, so we have no customers. And he was like, well, why don't you why haven't you launched? And we're like, well, we don't have a parking lot to park people's cars. And he's like, well, that doesn't like, that sounds like a thing you guys can figure out.

Like, you need to launch, like, tomorrow. And we really took it to heart. We're like, we need to launch. And and looking back, like, that was the right advice, you know, for for us because that's how you get feedback. And so we were like, okay, well, where would we park the cars? And we were like, well, there's a BART, which is the the local Bay Area, like, transit system.

There's like a huge, like, basically subway parking lot at BART, is like five minutes from the SFO Airport. We can just park there. And so we literally launched, like, within a couple of days, and we we basically would meet our customer at BART, get in the car, drop them off at the airport, and then come back. And then we told them we would park the car, but we would just park it at BART.

And I remember it was $2 a day, so it was pretty cheap. And what happened was that then turned into like 200 cars parked at BART over the course of like three weeks. And it got like we had increased so much parking there that it got reported to the BART police, which they have their own police force, so turns out. And we basically like, the cops called us.

They were like, you need to get these cars out. And we had nowhere to put these hundreds of cars. So we then switched to an undercover operation where we would not wear flight card uniform or anything else, and meet people, like, you know, get their cars and park it. And then eventually, you know, we we got another parking lot.

But, like, that was like an example of, like, just, you know, we had to be so scrappy. I mean, there's so many other, I mean, I remember early on, we were like, in a marketplace, right, you need supply and you need demand. And so you have to solve for the supply. You have to fake it initially. Yep.

And so we one compounding challenge was that we were three cofounders, one of whom not me, but one of whom did not have a license, who couldn't drive. And then you guys were old enough to rent a car, were you? And, yeah, we were all, I think, 18. And so, you know, like, a lot of car rental agencies do not rent to, like, 18 year old kids, for good reason.

And so we found this, company called, like, Super Cheap Car Rental in San Jose or something. And this dude was like, yeah, I'll rent you guys, like, thirty, forty, you know, crappy base model Corollas. And so we're like, great.

And so we actually just me and my one of my cofounders, we literally took the Caltrain down to San Jose and drove up a car one at a time, like, 15 times each, which is terrible, and then parked it at the same Bart lot. And that's what we initially started That's you got supply. That's how we got supply.

And so, you know, you you realize, like, doing such an operationally intensive business like like Flight Car, when you have to, like, do something scrappy, it's like at a it's like almost at a comical extreme, you know, compared to, like, running a b to b SaaS company today. You spent an hour thinking about the idea. You spent five years working on it. And as I recall, you got some real scale.

You guys raised a fair amount of money. Like, what's the what was, like, the summary or the postmortem on what happened with FlyCar? At our peak, we had 17 different airport locations. It was a very we didn't take like, we took a very of asset heavy sort of approach. Right? We had, like, leases for at 17 different airport facilities. We had shuttle services to and from the airport.

We were washing and gassing up hundreds of cars every day. It was a very, very operationally intensive business. I sort of equate it to, if you think about making money in a business, is like, kinda like, you know, if you have a lemon, it's like squeezing the juice out of the lemon. And like, what's left is like the money you make.

Flight car was the type of business where, you know, it's the last drop out of the lemon. That's the money you keep. And so if you screw up squeezing the lemon earlier, you don't need to squeeze the rest of it to understand that you are not making any money. Right? And it was a very, very, very sort of poor gross margin business because you have all this fixed expenditure.

And so one very key thing is start a business that is a higher margin business. Right? And that's why the idea matters. It's almost like instead of going to college, you went to, like, the hardest boot camp I can ever imagine, which is here's a really low margin asset heavy business. Yeah. Good luck. Best bet. At the airport.

And you spent five years on that. That was your early twenties. You learn so much about, what to not do, I feel, you know, in an experience like that. The problem with margins, by way, because it's like, oh, well, why are low margins bad? Well, if it weren't obvious, like, it's they're bad because of a couple of things. One, it means your multiple as a company is lower.

You're less likely to be able to raise money because you have a lower margin business, so it's harder. You have a lower multiple. Yet, and this is key, you need the money more desperately because you have a low margin business. And so you have this really negative feedback loop. And and I mean, FlyCar, I mean, we almost ran out of money so many times. I mean, I I even remember our series a.

I pitched I got to know a lot of people because I pitched, like, 80 different firms, nearly all of whom, except for one, said no. And I remember at a point where we had, like, two weeks of cash left, and we were like, you know, payroll cycles are every two weeks. So we had just done executed the cycle. We're like, we can't even make the next one.

You know, when do you tell the team that you don't have enough money to run the payroll? Right? Like, that was I remember distinctly having that conversation, and we got lucky, and we we had somebody lead the a. But we went through a lot of moments like that. And, and so one key thing was just, yeah, you wanna set yourself up with a positive feedback loop, not a negative.

So you ended up, I think, selling the company, and I think you ended up joining Airbnb as an employee. Can you just kinda set up the the context there? And then I'd love to hear what it was like working at Airbnb, during that time period. So what happened, was, you know, I knew after Flight Car, that I wanted to do another company. I knew I was gonna do another startup.

But I felt like, in reflecting, I had never worked anywhere. Like, I'd never worked at a real company. And so what you miss when you don't work at a real company is like, I think a lot of the basic stuff, like, how do companies even generally work at scale? And what is the best in class? What do great engineers and designers and what do those people look like? How do they work? Right?

And actually, I remember one of the reasons I reflected and realized I needed to learn this was we hired a marketing leader at Flight Car. And I remember she starts, and then one week into the job, she in my one on one with her, she's like, you know, Rajul, like, it kinda feels like you went to a bus stop and just picked up everybody from the bus stop, and like, that's who works at your company.

And it's like, wow. Like, that's that's tough feedback. But, like, looking back, like, you know, there was there was some truth to that, if I'm being honest. And and so I was like, you know what? This is not acceptable. Like, I need to, you know, I need to learn this. And so, of course, a company that I always had a tremendous amount of affinity for was Airbnb. Yeah.

Makes sense. And so I ended up joining as a product manager at Airbnb. Certainly learned not just a lot about what you know, how best in class products are built. So I worked early on on the experiences team, which is where I met my co founder, Lou. And we actually a lot of our early team actually comes from that experiences team at Okay. Airbnb.

But it was great to see Brian Chesky, the CEO, be so involved in all the details of the experiences product. And I mean, just at such a critical level of quality that, like, I I definitely learned a lot from from sort of seeing that. And so that was one of the things that I'd set up for. But I also, I think, learned at Airbnb at the time, the company had grown a lot.

I think I was the if I remember, I was like the thirtieth or something product manager. And then when I left, almost three years later, two and half years later, there were like a hundred something product managers. And that's just product managers. And then you look at engineers. It's thousands and thousands of people. Hundreds and hundreds of designers.

And you sort of realize, like, it's so important to have the right incentives for your team members. Because you don't want to create situations where you have a lot of people that, were hired because maybe some people wanted to, you know, build up their functions or teams, and there wasn't maybe the best justification for them.

And then, of course, you can't blame a certain designer for wanting to build something because they were literally hired, and so they have to produce something. You don't want, as a company, to have that much self inflicted pain. Like, you already get enough pain from external sources. Right?

Like, how do you make sure that, like, most of the pain you're experiencing as a company is externally inflicted, not self inflicted? You were at the retreat we had, where the founder mode it was not called that at the time. It was just Brian Chesky talking. Turned, he coined the phrase founder mode. But you were there, and, again, you worked at Airbnb in the years where they were growing so fast.

Do you have any thoughts on the whole thing? It absolutely resonated with me. And I also, at the same time, I love Airbnb. Like, I could not be more happy that, you know, that, like, there's so much change that was executed and delivered within within the, you know, within the company. But certainly, I can totally see how, you know, there was there was, like, there was a need for change. Right?

And, like, a need for, like, creating conflict within the company to actually ask the hard questions and say, hey, do we need these folks? Or or or, you know, are we are we actually doing this project because somebody actually needs to execute this project so that they can get promoted versus, like, the comp this is the right thing for the company.

You've had a a unique experience as a founder where you've actually worked at Y Combinator as a visiting partner. That was after you left Airbnb. I I remember we recruited you, and you and I worked directly together Yeah. Working on a batch. And so you we set in interviews together. We set in office hours. We set in group office hours. And so you've seen it from the other side at YC.

So I just wanted to, like, reflect on that. What do you remember from from that batch? It was winter twenty that you and I worked directly together. What are your big memories from that? Yeah. I mean, I remember, that was well, first, that was the, like, half remote unplanned batch because it was right at the Just like the last three weeks. Yeah. Right.

Yeah. It was like the the Last three weeks. The lockdowns happened chaotically, and we had to make some stuff up. That's correct. Three it was, two or three weeks before demo day. Right at the tail end. Exactly. Just reflecting, we've had some great companies just from our our group that batch.

Yeah. Like, what we had, yeah, like, 50 or 60 companies, and I think the the success rate is astronomical. Whatnot is a multibillion dollar company. Airbyte is a unicorn. There's a number of other well known companies that were in our group, Posthog, BuildBuddy, ninety nine Manutos, Yasser, Stark Bank in Brazil, Poly. So it was Wow. Yeah. Phenomenal talent that was in our group.

At least my reflection from this was that, like, how formidable the founder really is and, like, how how much they really want to make something work. Maybe not that specific thing. Maybe something else, but, like, make something work in the world, like, is such a critical thing. That was just a really special group of people.

And they were all doing very different ideas, very different verticals, very different types of founders. There wasn't a lot of overlap, I would argue, between who we had in that group. So, yeah, we set in office hours together. We set in group office hours together. We saw all these companies at the most nascent stages. And then, you know, I guess you're a bit of a masochist.

When you I remember you saying, oh, you know what? I'm just, I got another company and be I'm gonna go I'm gonna do a do over. Maybe yeah. What what was your thinking on deciding to do another start up? Yeah. No. I mean, wasn't a decision I feel like I had to make. You know?

I knew I was, after FlyCar. I knew I was gonna do it again. And, you know, but this time, we'll get to that. But I was you know, we were gonna be much more thoughtful about it. And and I had spent a lot of time working with Lou and getting to know Lou when my co founder, when we were at Airbnb. He was my engineering counterpart at the company.

And we were working on We had been noodling on ideas and stuff for pretty much two years, really, until we ended up starting Zip. So just kind of on the side. And we both committed to both quitting basically and and kinda going full time literally March 2020. So that was right after Isn't that funny timing? Yeah. It's like a week. A few weeks after the lockdowns. After the lockdown.

And for Lou, it was quite a change because I think Airbnb revenue dropped like 95% the week he left, which was quite a change for for the company. Indeed. Yeah. And so but we were forced to, you know, be we were alone and and kind of in lockdown just trying to figure out what we wanted to to do. It is such a humbling experience. Right?

Because you literally, working at YC as a visiting partner, you know, you're meeting all these founders, and you you know, helping people think through pivots. And and yet you realize, like, you don't know yourself what your idea is and what you're gonna do. And candidly, Zip for us was a mid y c batch pivot. We actually were working on a series of different ideas.

And I remember, you know, we had a really, really helpful, come to Jesus office hours with you, Dalton, where you were like, guys, what are you doing? And and, you know, your advice was like, you guys know you wanna start something with execution risk, but you don't so much wanna take on market risk as a as a second time founder.

So why don't you find an old software company, that exists in the world that hasn't, like, hasn't changed much, in in a long time. And and sort of figure out, like, what what's changed in that space in the world and, like and try to solve a new problem. And, and so we did that, and that led us to procurement.

But I have to say, like, you know, it was just like that I mean, that changed my the trajectory of of my wife and the created the company. And that was as a second time YC founder after working at YC. Right? And, like, it's so helpful. I would love if you could help demystify enterprise sales. There's a lot of founders that have a lot of questions about enterprise sales that haven't done it before.

And you're someone that is really good at enterprise sales, that has immense scale doing it, and you went zero to one on it. It's certainly been a learning experience for me and still is. Right? Because we literally had never worked at a company before before, before Zip that had a sales team in it. But one, to your point actually about your time is the most valuable thing.

You wanna prove to yourself really that this is the right thing to even be investing your time into. Had decided, Lou and I had decided, that the first ten customers that we closed, we were gonna try to sell them completely cold. Like, through cold LinkedIn outreach or whatever, but not referrals, not friends, not anyone we know.

Because if you can get 10 different people and 10 different companies in the world to take out their proverbial credit cards and buy your thing when they don't owe you anything in the world, that means, like, you're more likely to have market fit. And that's what we wanted to prove, or disprove. And and so that's how we, like, we started out.

And and we built the muscle for outbound, which even today, we're a significant majority outbound driven business today, not inbound. And so we literally reached out. We would max out our LinkedIn connections diligently every morning, and then we would message people that add us back because it doesn't cost you in mails. So it's free. And we would just we would just reach out.

And we would ask truthfully initially for advice because we wanted to learn more about the space and what their problems were. And that was helpful. I mean, in two or three weeks, we have a we have a document that has a hundred and seven pages of notes in it Wow. From all these conversations.

And that helped us sort of cement the idea that we were gonna work on, which is exactly what Zip still does today. But it helped us then convert that into sales because we learned from these folks. We took all these notes, and then we were like, oh, we should do this. And we'd go back and say, hey, remember that conversation we had? Your feedback was so helpful to us that we, in fact, we built it.

Can we show it to you? And then they were like, wow, that's really cool. No one ever does that for me. And that's how we ended up getting people excited and closing our first set of customers. But we wanted to do it totally cold, and step by step. And how did you price for these first customers? That's a really common question, I get. Well, one, it is important to charge.

Because I've also seen founders that, like, wanna do a design partner thing, or, you know, it's free for some reason because they're just as a founder, right, you're like, I have no customers or, like, a few customers. I don't have confidence in my product. Like, how can I possibly charge money for it?

And the truth is, like, if there's enough of a pain and promise of a solution, like, people should and will pay for it, and it's a test. And you want the people to pay because you want feedback that actually helps your product. You don't want feedback from people who that who would never have otherwise bought it potentially. And so it's really important to charge.

I don't think you need to think too much about how much you charge. You charge maybe $10 or $20 a year or whatever. Something rational that like, there's no company out there that's a reasonably sized company that can't afford like a $1,020,000 dollar a year purchase. What if someone's thinking, wait, but I can never charge that much. My product is bad, or I haven't built much.

Like, how do you overcome that? What I would say is you'd be surprised how much enterprise software is bad. And it's not they're not charging 20 k. They're charging like, you know, millions first. And second of all, like, in the big picture, like, 20 k a year, like, just doesn't matter to a company. That's you know, that has a 200 employees in it. Like, it really doesn't matter.

And if they're not willing to pay that, that is telling you something that you should be realizing, which is maybe you should work on something else, or you need to tweak what you're building. That's the honest answer. And over time, can as you get more confident, you can you have more referenceable customers, you have happy customers, you can charge more over time.

But initially, just charge enough to know that, like, it's something rational, there's pain, they're willing to pay, and then just prove that you have something. My big theme that I feel like I've learned working with you and that I understand in your whole story is that you're a founder that kinda got to do a do over where you had a start up. Yeah. Totally. You did the full thing.

You learned a lot. You you made incredible progress. Then you had time to go be an employee, to be a PM. Then you had time to work at YC Yep. And see what it's like to to to be a YC visiting partner.

And then you got from First Principles to do a start up again, and you got to be very intentional at every decision you made about what things you wanted to keep from your experiences and what things you wanted to do differently. And so to me, that's that's the big theme here.

I so I'd love your thoughts on, you know, this overall decision making framework and sort of what what are the things that you chose to take from your first startup that you brought to your second one? And what are the things you're like, nope. Don't wanna do that again. Absolutely.

I think if I had to really distill it in my personal reflections, it's like, you know the first time as a I was a first time founder. Right? I I dropped out of school. Like, I cared a lot about what others thought. Like, I cared what my to the point I was just making, like, what my team thought, the leaders thought. Right?

Like, oh, well, people quit because this person, the storied executive, comes in and then leaves. I cared what our investors really thought. Right? Like, oh, like, how is the board meeting gonna go? Like, how do we, like, paint a positive picture about the business? And press and all this other stuff. Not that I care about press, but, you know, you care about, like, you don't want negative press.

Right? And so you you care about a lot of these things. And then the second time you really are like, you know what? It's my time. I just wanna build something that people want that, like, really works. And so actually, now what I'm gonna do is, like, try to disprove things. Like, the first set of customers, like, yeah, I want them to buy coal. Like, I don't just want revenue.

Like, I don't care. Like, I wanna know that this thing is real. You know? And like and like, yeah. Like, if we have a board meeting, which obviously we have board meetings, like, I'd rather we just focus on what's broken in the business. Because ultimately, that's how we get better. Like, I don't want us to spend a lot of time talking about what's going well, because that's not gonna help us.

And like, it's just such a liberating way to think about things, to just seek truth. Right? Whether it's your team, your investors. Ultimately, it has to come from you. That's awesome. Well, thank you so much for joining us today. I really appreciate it. No.

Thanks for having me, Dylan.