Joshua Browder, DoNotPay | Saving Consumers $100M+ & Investing in Thiel Fellows

0:00the best consumer companies monetize and tap into core human emotions. So with Robinhood or Polymarket these days, it's greed, dating apps, it's lust. Some apps are loneliness, maybe character AI is loneliness. But with Do Not Pay, it's really about anger. Statistically, I'm fortunate to be in the most Teal Fellows out of anyone. Just before this interview, I was actually counting and I only got through to 2024 to 2019 and that already got me to 33. three and then in the class of 2023 so last year i was in 45 of the fellows so nine out of 20. um i've deployed about 30 million um just in teal fellows alone um and also other great entrepreneurs having the russia mafia after your family really puts everything into perspective and so it taught me the value of courage and standing up for what you believe in and always never giving up.

1:03Welcome to Sorcery. I'm your host, Molly O'Shea. Today, we have Joshua Browder, founder and CEO of Do Not Pay. Do Not Pay is an AI built to help fight big corporations, protect your privacy, find hidden money, and beat bureaucracy. Joshua started Do Not Pay back in 2015 after dropping out of Stanford to pursue a Teal Fellowship. Now, Do Not Pay has raised$23 million in total funding and is valued at over$200 million. Their cap table includes, honestly, every big name out there, including Andreessen Horowitz, Founders Fund, KOTU, Index, Lux Capital, Tribe Capital, Day One Ventures, DST Global, The Chainsmokers, and more.

1:46Unlike some, if not most, SaaS companies, Do Not Pay is actually profitable and was one of the first VC-backed companies to issue dividends back to their investors. This is highly unconventional and very impressive. Joshua is a really fun person to learn from. I hope you enjoy. Do Not Pay's mission is quite strong. You've built software to fight big corporations and beat bureaucracy. This is kind of a big deal and a big task. Yeah, so I think of Do Not Pay as an AI version of David in David versus Goliath. It helps people in hundreds of different areas fight big companies and governments. And the very first use case almost nine years ago was parking tickets.

2:26As you can tell from my accent, I'm originally from England. And when I moved to study at Stanford, I got a huge number of tickets. And I learned if you know the right things to say, you can actually save a lot of money with these tickets. And I just built Do Not Pay just to help a few friends. I never counted on one of those friends writing about her experience on Reddit. And it went on the front page. And I went from about 10 cases in the first week to 50 ,000 cases. And it made me realize that this idea of helping people fight back is bigger than just tickets. And so fast forward to today and Do Not Pay has over 200 different features that help people get refunds, negotiate their bills, cancel subscriptions.

3:06All of the areas where no one has time to fight back. And what's interesting is it started as a template company, but now there's literally like AI robots logging into people's Comcast accounts, chatting with Comcast to fight their bills. And Comcast is using AI and Do Not Pay is using AI. So sometimes even two AIs are negotiating against each other. So that's kind of a high level of what we do. Would you equate this to like an AI agent? Yes, well, I don't like the word agent, because it implies that the AI is connecting all the APIs. Really, the AI is just the language. And we've actually manually built the connections with all of the different services.

3:47Interestingly, sometimes the AI has to fax documents. So it's like connecting with the Stone Ages, where it's faxing a document to, because that's actually a certain way to make insurance claims and things like that. So an agent implies that the AI is literally faxing the document and actually we're connecting it to the API manually. I think agents have maybe a year to go before they can do it on their own. Agents are very hype right now. So I love the explanation of breaking that down. Okay, so you've not only built this over the course of the last several years, but scaled it tremendously. You've saved an estimated$100 million for consumers.

4:28How many tickets does this equate to overturning? How many users is this in total? Yes, so Do Not Pay has successfully completed, the last time I checked, over 1.6 million cases for people. And this can be anything from a$35 in-flight Wi-Fi refund to we've had users in exceptional cases get back tens of thousands of dollars in medical bills. Parking tickets now only make up about 3 % to 4 % of our usage. and I think with every business the question is why now why hasn't this succeeded before and in do not pay's case the answer is unless you're a bad driver like me the average person only gets a ticket once a year and so I knew if I wanted to be successful I had to actually build out all of these different use cases to get people to be a subscriber and continue to use the service.

5:17What are like the typical use cases that you have and what are some of the newer ones that you've been adding? The biggest one is refunds. A lot of companies, they say they're going to give you a refund and they never follow up. Our most popular product though is something called the free trial credit card. And it's a special credit card that you can use for any free trial. And it's not linked to you. It's not linked to your credit. And you can just give that card number. And when they try and charge you, the subscription doesn't go through. You can just press refresh. So we have some people who actually just cycle through unlimited free trials for different services.

5:51I shouldn't really be saying that, but people love it. Have you had any wild card requests? Like, are there any crazy things that you've actually tried to go after that might have been too hard or that you actually were able to solve? My favorite product, it takes a little effort, but it's something called Robo Revenge. Robo Revenge allows users to get paid whenever they get a spam call. There's an amazing law. It's called the Telephone Consumer Protection Act. and it allows people to get up to$1 ,500 every time they get a call. But the problem is these spam callers, they don't tell you who their real name is.

6:29They're using fake names and fake numbers. And so the way this product works is it's a trap. So the spam callers call up our users and they try and sell them something. And our users say, I'm very interested. Here's a special credit card. And Do Not Pay gives them like a trap credit card. And when they try and charge the Do Not Pay card, Of course, it declines, but it gets their business name, business address, business details. And it uses all of that to send a demand letter to get this money under the law. And we have some users who are making tens of thousands of dollars a year suing spam callers and getting revenge.

7:05And one user actually in New Jersey bought a new roof for his house through all the money he's making suing the spam callers. So I love it because it's like trapping the scammers. You might be fighting big corporations, but I know you also have some allies within it. So who are some of your most unexpected allies that you've been partnered with? Well, I'll tell you two quick stories. The first was Warren Buffett's influence on the business. So I was fresh off the boat from the UK at Stanford, and I was sitting in a computer science class one day. And I got an email and it says, do you want to have lunch and interview Warren Buffett on stage in Seattle for a conference.

7:43And I thought this was a spam email because I'd never dealt with these people. It was actually an email from Microsoft. So it was a Microsoft conference. But I phoned up the number at the bottom of the email and it turned out it was legit. And for some random process, maybe they didn't like parking tickets at Microsoft or something. They just decided to do this cold outreach and asked me to do the Warren Buffett interview. So I flew to Seattle and I was really nervous about this interview because Warren Buffett has been asked everything. And I want my biggest takeaway is be authentic and original.

8:15And I didn't want to ask something that you could just read in a book or see online or things like that. And so I was agonizing over the different questions to ask him, as I'm sure you can relate with your great podcast. And I decided the only way I could make it unique was to engage in some shameless self promotion. And so one of the questions I asked him was, tell me about a time that you fought and stood up for your consumer rights and they fought for justice. And he told a story where he hadn't actually told before anywhere. And it was the first ever lawsuit that he was involved in when he was, I think, about 23.

8:48So truly back in the olden days, he was a subscriber to Harper's Magazine, which still exists today. And they kept sending him invoices. This was before the days of credit cards. So they would invoice you every month. And if you didn't pay the invoice, you get in trouble. And he tried to cancel a subscription, but they wouldn't cancel his subscription no matter what he said. He wrote to them. He phoned them up. I think he even visited their offices and they kept sending him these invoices. And so he decided to sue Harper's Magazine in small claims court. He won. He represented himself and he won his lawsuit.

9:21And not only did they cancel, finally cancel his subscription, but he actually got some extra damages from the court. and that taught him a very valuable lesson which is no matter how small the issue you stand up for yourself with me I immediately had a realization which is this was back I don't know I can't even do the math as to how long ago this was but certainly before like 1970 maybe 1960 or even earlier and still in 2022 2023 2024 you still can't cancel your subscriptions and that was what gave me the idea to actually build this free trial credit card. So that was a big learning. Another big learning was Do Not Pay probably got about$10 million of free advertising from IBM.

10:08Back when we first started, we had some text-to-speech and speech-to-text in our product. And at the time, actually, it's not the case now, but the only best API to use was actually the IBM Watson speech-to-text API. And they were so excited that someone finally found a use case for Watson. They blasted it on like billboards and Times Square, full page ads in the New York Times and Wall Street Journal. And that also got us a lot of users. So I hate big, big companies. And like, but I think there are some times where your interests can align and you can ride on their coattails. That's an amazing story with Warren Buffett.

10:43Going on to something really fun. So So Do Not Pay has quite the spicy media strategy. It's like super fun and it's like righteous and it's for the people and all of that. So how did you come across the strategy and how would you actually frame this out? I learned this by accident when people were so angry at parking tickets that we got all of those users on Reddit. But I think the best consumer companies monetize and tap into core human emotions. so with Robinhood or Polymarket these days it's greed dating apps it's lust some apps are loneliness maybe character AI is loneliness but we do not pay it's really about anger and so my initial media strategy at the beginning was to find the things that people are really angry about and build solutions for them and then tap into current events and so for example in 2018-2019 Equifax, the credit bureau, leaked hundreds of millions of people's data.

11:43And I thought, wouldn't it be great to build a product to fight back against Equifax? And so we had a huge media launch around that. Even during COVID, we were really paying attention to the different problems and benefits and angry things that people were experiencing and making sure to tap into that. And every few months, the best thing about tapping into anger is people are always angry at something new. And that's what we've continued to do. And because of that, we've been very successful. We've been on the daily show. The daily show is like not typically a news program. It's a comedy segment, and they don't really promote startups.

12:17But there was a whole segment about me with a bat hitting a robot lawyer. So things like that, where you tap into people's emotions can really like separate you from the noise. Because especially now, we live in such a noisy world, You have to do something to kind of stand out. Do you have any other cameos coming up? Are you going to go on more podcasts? Are you going to go on SNL? This is the biggest thing. The Sorcery Podcast. Correct answer. Thank you. So within the media strategy, one of the spiciest things that you've also done is you offered a million dollars to anyone willing to use your AI to fight their case in the Supreme Court.

13:00This created a lot of buzz for the brand. So what was going through your head during this media storm and how did this play out? So I learned this lesson almost nine years ago when I was pitching for the pre-seed for Do Not Pay. And I was pitching all of the blue chip Silicon Valley firms. This was actually, my initial ask for the pre-seed was 500k. And these days, a scout of a scout could probably write a 500k check. but back in those days the olden days like 2015 2016 even asking for okay you would pitch the entire partnership even like the luminaries they would all be in the room and so i walked into this pitch and um there were like with the partners and then other people there maybe 18 people in the room and i started pitching and i was really excited to talk about users and growth and things like that and an argument broke out in the room and i really didn't think the pitch went well because the partners started arguing with each other and arguing with me over whether it's a good thing or a bad thing for society that robot lawyers can just generate lots of paperwork and whether society would collapse with all this litigation and things like that.

14:11And I thought the pitch went really, really badly because of this argument. And I was kind of depressed. But I was speaking to the partner who brought me in that evening. And he said, No, that this is great. Whenever there's this big controversy about whether it's good or bad for society, that means it's a winning company. So you probably got the deal. I'll let you know tomorrow. And so fast forward nine years, and I really wanted to push the needle about AI and law. And I think there was nothing more controversial than offering to pay a lawyer a million dollars to use our AI in the Supreme Court.

14:45Sure enough, it did create a huge controversy, but at the same time, it created a lot of marketing for us. It created a lot of enemies, but I still think it was a big net positive. Hey, we'll get right back to the conversation after a word from our sponsor. Sorcery is brought to you by Archer. I'm genuinely amazed at what Archer has been able to accomplish. Archer's goal is to transform urban travel, replacing 60 to 90 minute car commutes with estimated 10 to 20 minute electric air taxi flights. They're safe, sustainable, low noise and cost competitive with ground transportation. Archer's Midnight is a piloted four-passenger aircraft designed to perform rapid back-to-back flights with minimal charge time between flights.

15:26Learn more about how Archer is set to open up a new world of opportunity for passengers by providing safe and efficient access to people, places, and events across the communities they live. Visit Archer.com. Do you think enemies are good for a media strategy? I think the right type of enemies. You want a kind of consistent buzz, but not someone who's obsessed about you trying to take you out. Another enemy that I'm very lucky to have is actually David Duke, the head of the Ku Klux Klan. Early on, do not pay. Another thing we did is we provided free services for immigrants, like to get housing and things like that.

16:03And David Duke found out about this and he unleashed his Twitter mob. And so those are the right enemies to have because no one would take them seriously. but they kind of elevate the brand and it creates this good versus evil narrative. That is wild. That is truly wild. Okay, so did anybody go to the Supreme Court? Like, where are we at? No, it turns out that lawyers make huge amounts of money arguing in the Supreme Court. And if they were to listen blindly to AI, they would probably lose their license. And so they probably lose a lot more than the$1 million they had to gain. With that said, though, I did get some interesting counter offers.

16:39I got a state Supreme Court, someone offered that they were arguing a case. And there was also a former solicitor general who is friends with one of the Supreme Court justices. And he offered to do a mock trial if we donated the money to charity. But I didn't want a state Supreme Court and I didn't want a fake case. I wanted a real case. So none of those two options were appealing. But it was interesting that it was close to happening. As we go into the business model of Do Not Pay, how has this evolved over time? And how does Do Not Pay make money? So Do Not Pay is a subscription model. It costs$18 a month, and we have over 200 ,000 subscribers.

17:21And this really goes back to building a retentive business model. It took about five years of building products that were free before I finally felt comfortable charging a subscription. So from 2015 to early 2020, Do Not Pay was a free public service. We had no business model. And it was only when we started having a critical mass of products did we finally feel that we can make it a subscription. The first subscription price was only$3 a month. And we chose that price because it was the minimum amount that you could charge without it being a joke. If we went into a VC meeting and said we're charging$1 a month for our subscription, they would think it's just a joke.

18:01but three dollars a month maybe it could be a serious business one day and then as we've added products and made it more useful we've kept the price mostly the same in terms of the value you're getting but we've increased it slightly and now it's 18 do you have any add-on purchases on top of that like where do you get extra cushion we don't have any add-on so it's all you can eat and our subscribers love it they get access to everything and with that said though we do have some crazy people who submit like 1000 letters a month. And if you reach like these absolute crazy limits, we don't want to ban them because they're our people that are, they're almost like us.

18:37So there are, we might charge per cost at these crazy levels, but 99 % of users don't reach those crazy levels. I wonder what kind of schemes they're running. I mean, they're like running law funds, maybe. Last April, you had a pretty big announcement. And so I'll just, I'll frame this out so unlike probably 80 of startups you're actually generating cash flow and even more unlike probably 99 if not 99.5 you're generating enough to pay dividends back to investors and you're one of the first companies to do that that's a startup what were you thinking here are you going to continue to pay dividends throughout the life cycle of the business so it's it's like a factor of three things combining.

19:23So the first is that with automation and increasingly AI, you can build really big consumer businesses with very few people. So Do Not Pay has only like 11 full-time employees, but hundreds of thousands of paying customers. And we automate things like customer support. So if someone writes in asking for a refund, our system identifies the email, classifies it, pre-issues the refund, things like that. So you don't need to hire like 50 people for customer support anymore. And all of these business functions can be increasingly automated with AI. The second is that employees and investors are really tired of money losing businesses.

20:04It's no surprise that in the past year, Google, Meta and Amazon have either paid dividends for the very first time, I think in Google's case, or increased the level of dividends that they pay. And that's the sign of what investors are demanding. And then the final thing is that it's a well known saying in consumer businesses that I think 50 % of the VC dollars or 50 % of the revenue go to Google and Facebook ads with paid acquisition. And with us, that wasn't the case. We managed to grow organically through these viral media moments and also through our SEO strategy. And so we were looking at all of these things and we are fortunate to have much more money than we've raised.

20:42And we thought it would be a really nice bonus and win for everyone, especially since we've all been working on it for so long to pay a dividend to both investors and all shareholders, including employees. Wow, that's crazy. Given that's such a strong signal to the market, do you have investors constantly in your inbox? So there are different types of investors. Some investors would probably want us to burn more money, but some are really happy to get the cash flow. So I think everyone has different goals. In terms of my goals for the business, I don't think growth and profitability can be mutually exclusive.

21:16So we're still growing a lot. And we actually think of acquiring different businesses to add to our products. And we're also hiring a lot. So my goal is to just keep growing the business. And maybe we will pay more dividends. But we're also open to just following the open AI model if the right opportunity presents itself. We don't want to do anything stupid and we're very profitable right now. But we're not kind of focusing on profitability. We're focused on building the biggest outcome possible. Right, right. And you've raised around$23 million to date from some of the flashiest Silicon Valley names.

21:51I could probably run through the list. It would take a while. do you have any favorite investors or any particular ones that stood out throughout your journey or were particularly helpful our most helpful per dollar invested has to be musha from day one ventures so i was doing the pr kind of guerrilla style and with do not pay where i pitched journalists and we were actually fairly successful but musha really made me feel i think bigger and she actually managed to get us like the today show twice at crucial points where our metrics increased by 20 % in a day as we were raising rounds. And that really cemented both our user base and managing to close these rounds.

22:31So Marsha has been an amazing friend and investor. In terms of blue chip institutional investors, Andreessen Horowitz is really amazing. And Alex Rampell there is a genius. And he's really helped me think through a lot of things as I've grown through the business. What's it like working with Andreessen and their platform? They're really, really incredible because they know everyone. So going back to writing big corporations, we're actually trying something new where we're partnering with a big company to give free do not pay subscriptions to their entire customer base. And they have a whole enterprise partnerships team that's helping make that happen.

23:06So I think in terms of like partnerships and thinking in new directions and also strategic thinking, getting an institutional VC is really helpful. I see a lot of founders where their very first round is like angels at a high price. And I think that's really a bad idea. I do a lot of angel investing and I tell founders the best thing you can do is get an institutional top tier investor in from the very beginning because they stay with you throughout the life cycle of the company. And they typically have ownership requirements between 10 and 20%. So you might as well get them when you have nothing, just an idea rather than give up 10 to 20 percent when you have significant revenue.

23:44We were going to talk on this later, but I wanted to bring it up now. You have self-proclaimed as one of the most active Teal Fellow investors. So how many Teal Fellow companies have you invested in and what exactly was your strategy there? So I think statistically, I'm fortunate to be in the most Teal Fellows out of anyone. Just before this interview, I was actually counting, and I only got through to 2024 to 2019, and that already got me to 33. And then in the class of 2023, so last year, I was in 45 % of the Fellows, so 9 out of 20. And I really also got into that by accident. So I spent three and a half years at Stanford.

24:29I basically completed everything at Stanford, all the degree requirements and things like that. But just as I was about to finish, I got awarded the Teal Fellowship and I signed a contract not to confirm my degree. And I received the 100K over installments over two years. And I lived the do not pay lifestyle. At the time, I was like living in the office. I had a like poor, like bad apartment, but I would just like mostly sleep in the office. And so I didn't really need the 100K. And so I decided I'm going to invest it. And the first opportunity to invest it came very quickly, because it turned out that not only did they give me the Teal Fellowship, they wanted me to actually interview the next year's Teal Fellows.

25:14And so they said, do you want to form part of the interview committee? And I think they liked me because I was very good with spotting the red flags. And so I would, I'm very cynical person. So I would identify the ones that shouldn't get it. And so that's why I got into the committee. And I started interviewing these prospective fellows. And I was blown away by what other entrepreneurs were working on. I was particularly blown away because even an entrepreneurial place like Stanford, a lot of the people at Stanford just want to go work at Google or Facebook or BVCs. But it was amazing interviewing people.

25:49And they're like, I want to, I don't know, like build genetic testing or things like that at the age of 17 and even inspired me working on a software company for consumers maybe I should think bigger so there was one person I interviewed called Adam Guild and he's now the founder of a company called owner.com and I interviewed him and I was so blown away by his interview he was consulting for different restaurants and companies and things like that so he wasn't really he hadn't really formed a company yet and so I was trying to hire him for Do Not Pay. And so I flew him out to San Francisco and gave him a spot at the Do Not Pay office.

26:25And after about a day of him meeting the team and hanging out at the Do Not Pay office, I took him to Unami Burger on Embarcadero. And I said, well, what do you think? Are you willing to join Do Not Pay as the head of growth? And he was like, I'm really sorry, I can't. I'm actually been doing some reflecting and I want to start my own company. So I decided at that split second, I was going to take my Teal Fellowship money, all of the money after taxes and invest it in him. And that investment is up over 100x. And it really made me realize that this idea of being someone's first investor and helping them, especially when they're young, where there's like such high volatility, and they can like grow so quickly is really lucrative.