20VC: The Memo: Keith Rabois and Ramp's Eric Glyman on Behind The Scenes at The Best Run Private Company on the Planet; The Tools, Tips, Secrets and Process That Drive Efficiency

0:00Second framework that Jack Dorsey taught me is editing writing metaphor. And you want to be editing people's work as the CEO. You don't want to be writing. And if you feel like you're using a lot of red lines consistently in the same area of a company, that's a really bad signal. And if you're simplifying that could be a good thing. But if you're constantly asking clarifying questions and not really getting to the root, that's a problem. If you're systematically doing it in the same places of the organization. This is 20VC The Memo with me Harry Stebings. Now 20VC The Memo is the monthly show where we deep dive on a specific company.

0:34Today we're focusing on RAMP and I'm thrilled to welcome Ketra Boyack, Kostler and Eric Gliman co -founder and CEO RAMP. The company has scaled to a $7 .6 billion valuation in just a few years, often hailed as the best run company in the world. They famously have a day count where they count the number of days that they have been in in existence to drive operational velocity, they are execution machines. And today we deep dive into the specific tools, processes, tips and secrets that enable ramp to be the execution machine that it is. But before we dive into the show's day, Merge is the leading product integration platform offering a suite of unified APIs across key software categories from HRIRS to CRM.

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3:18You have now arrived at your destination. Guys, I am so excited for this. You are two of my favourite people, so first off, thank you so much for joining me today. Thanks for having us here, it's awesome to be back. It's so nice you being in the same room as well, it's so much better for the chemistry. I want to start off with a little bit of the context. How did you guys first come to me? And how did the first deal come to be with Founders Fund and then the Coastal Deal? Well actually Erick's co -founder Karim was playing video games with one of my colleagues at Founders Fund. We had been looking for something interesting in this space.

3:50We thought there's a great opportunity to reinvent finance and the finance of companies. And Delian walked into my office one day and said I think I found your founders. I was like okay. How was that first meeting? Take me to it. It was actually pretty amazing. So they actually flew out to SF almost like the next day and presented off notes So it was really like on the fly three minutes in I was like staring at Delian because I was like oh my god He's actually right. He found the perfect founders because as Eric was walking through the vision and how they were gonna approach the market It was dead on target of everything we believed those notes actually still exists.

4:27Yeah, I've actually I think you had an intern taking notes I've actually seen the notes from the meeting. And if you read the notes today, it is literally just like the board meeting we just finished with the exception of AI. We didn't really talk about AI. It's true. But everything else in the board meeting today is like right untargeted from this first note in maybe May of 2019. Keith, you don't know this. I had drinks with Eric in New York, just after Parabas before he started Ram. And all I can think is fuck, I should have asked if he was doing something great next. But that's on me. How did the latest deal come to be with Kocela?

5:03Well, for a variety of reasons, we were interested Kocela Ventures in Ramp. I mean, obviously it's a high profile company, but my involvement definitely put people's interest, but because of the possible intersection of AI and finance, my colleagues are very interested in AI. As you know, Vinod is like a pioneer in AI thinking, they understood immediately why Ramp have a lot of the secret sauce to be successful in using AI and finance and that nobody else of the pilot does. And so they were really excited to meet with actually Eric and Cream, almost independent of investing. It was more, this is the company that's going to be successful in AI as the future of finance.

5:39Why does Ramb have the secrets of ingredients to be successful as the future of finance? I think the first thing that's misunderstood about Ramb is that it's a money movement in a FinTech company. I think one of the deceiving kind of treasured horse ways in about Ramb is that, You know, we're a corporate card and we are the fastest growing corporate card in America, but we're actually a productivity company and a workflow company. People use ramp not to buy things, but to automate expenses. You know, not to have the tools to close your books, but to have it be automated. And so really what's going on inside of the strategy is trying to understand all the ways that companies are spending money and time and surface of data to show companies where they can spend less.

6:18Maybe they're buying 200 seats on a sauna, but only 100 people are logging in and we can detect that based on kind of octadata and show people ways to cut. Maybe companies are, you know, have 20 ,000 transactions with Ramp, we're able to suggest accounting categories. Certainly more quickly, but also more accurately than the vast majority of customers. And when you think about really where AI is excellent and has unique capabilities, and to really around a few things, doing work that previous was knowledge work that required context, required vast amount of data and then forwarded an informant output.

6:50And because we connect to so many data sources, because we automate so many functions, it's much easier to kind of see that can get applied already today for RAM customers and ladder up to kind of the simple ways people think about RAM, which is you say 5 % under card expenses, your books are closed much more quickly. And as RAM is touching not just cards, but bill payments by procurement, you know, and more aspects of how companies move money and spend time. Really the benefits of AI, you know, it's not just to write better poems or make great art, but it can actually automate all of these workflow processes.

7:21And so that's what was interesting. And, you know, I think beyond it, part of my rationales, you know, Keith and Ramp are, I can't really remember the time when we weren't working together. I think for 97, 98 % of the days we've existed, we've worked together and it's a reform lies to get the note and the team's great advice and to invest not just in delivering more value, but accelerating the business is what made us very excited. So it's been a very fun month. I want to see like an all -star partnership quiz with eBay. If you didn't get the schedule beforehand, so I had fun with this one. Keith, I wanted to start with you.

7:53What are the ones two elements that you think make Eric truly world -class that maybe not enough people see? So the focus for the very beginning was our talent. We spent literally the first board meeting, probably reviewing LinkedIn profiles for 40%. So the team, the note expression that I borrow all the time the team we build is the company built to very seriously from day one and it shows and now that there's 754 employees or something like that it's just compounded so the talented and has gone on secondly, cutting through an initial aperture in a market that was perceived as crowded Eric's marketing instincts are first rate and I think if the CEO doesn't have first rate marketing instincts you'd kind of never get there and so now the company's doing things that other people don't do we're gonna do things that the rest of the world can't do but in beginning how to cut through the clutter and the CEO has to be able to do that and Eric's phenomenal on it.

8:42That's actually why we preempted the Series A. It was these two dimensions actually, it's very tangible. The second board meeting I think we had, it was in the original New York office, the emphasis on talent and the emphasis on being able to frame the value proposition and a compelling, powerful way in what that was strategic was shockingly great. And actually, De Leon prompted me and said, you think we should print the Series A and the company hadn't really even launched. Basically, I think we have $30 ,000 of spend maybe at the time. a month. Yeah, so $30 ,000 of spend. But we preempted the A because it was so obvious that Eric and Kreeb really collectively together had those traits that this was a company we really wanted to double down on right away.

9:20Harry, you feel pretty great hearing that. I'm lushing. You can't do that to me. Oh, it's for a second here. Keith, on the flip side, you've known Harry for a long time. What do you think is one of Harry's biggest weaknesses that he could maybe work on? No, no matter is perfect. I think the company's results kind of speak for themselves. I think we just finished a board meeting where it's pretty clearer that this is the best run private company in the planet so I wouldn't really critique him too much. Keith Wildeun, very politically answered it. It's actually accurate though. If I were to apply the same to you, Eric, and you know he's so well -known for so many years, what do you think makes Keith the world -class partner in the years?

9:58It's a few things. I mean first, one of the things that people talk about rampant being grayed out is the efficiency and focus of our operations. It's very fast moving people know it's fast growing. I think it started a lot with some of the lessons we internalized from Keith. He talks about this concept of can you really articulate cleanly your business equations? What are the outputs you're trying to drive? What are the inputs in your business? Can you list that very clearly and map that and that exercise of mapping how does their business really worked? Created focus for a company. Next something I recommend to every founder.

10:30It certainly changed my ability to operate and helped ramp reach the scale that we're doing quickly is this talk you give a decade ago called how to operate. It's on YouTube, it's free, it is worth a lot more than that and I recommend everyone watch it and I think that his focus on clarity of thought, excellence in operations, central casting, finding extraordinary talent. At the end of the day, all the company is, is it's a collection of people. If you hire great people, you give clear focus and you you've executed vigorously, you know, it's not much more complicated than that. Eric, how do you think bio inputs and outputs today?

11:07What are they if you would output them? We can certainly send from the very first board deck, we tried to write this business equation out. And it clarified there were two cuts that led to the early ramp strategy. The first, if you were to still, okay, we had no revenue, we really want to make revenue. We asked how, where does it come from? And there was at the time three basic variables, purchase volume, how much are people spending on the cards? Interchange rate of what people spend how much were able to keep, and then last funding cost for it is pre -rewards. And if you looked at every one of those variables, well, the purchase volume went up, revenue went up, that was straightforward, grow purchase volume.

11:44Interchange rate, you could see it very clearly. The more purchase volume you had, the more interchange we would keep. Funding costs, similar thing. If you go to a bank and say I'd like to borrow $100 million, please, they will certainly give you a lower interest rate than if you say I'd like to borrow one, you will be better predicting fraud, all that. So every single one of these variables, we mapped out pretty clearly what were the drivers of them. And it turned out that there was only one variable that moved everything and it was just participable. And so the whole question was, how do you make a product that people want to use and use deeply in the organization?

12:14And I actually think it surprised a lot of people, which was it was a very crowded field, how did ramp grow out of it? And so we compared it against this came later into the deck where product needs based off of size of company. And so the bias that everyone in the industry has was you need to acquire customers as soon as they're incorporated. And if you don't get them, you'll never get them again. And so it behaved a lot like consumer cards. It was who could offer the most points, who could offer the biggest sign on bonuses. And who could get you an allowance. And when you had 10 people at a company, that was what people wanted.

12:48Founders wanted that. But when you got to like 15, 20, 25 more than that, the needs changed. People said my business is working. I just feel like I can't close my books on time. Suddenly people are telling me to contact sales and I'm getting charged different rates and people are looking for more predictability and more critically. The problem was to buy one thing. You needed two to three sets of products. You needed an MX. You needed a concur expenseify. You needed bill .com. And so what we said was we actually care a lot less about being someone's first card. We're much more interested in how do you be there last?

13:21How do you help them spend less? There's not only did it differentiate or positioning, but our business model was we made a percentage of purchase volume And when you went from like 10 employees to 20 employees businesses didn't spend twice as much They would spend like 5 10 50 times as much in some cases And so it allowed us to be much more surgical just breaking or just stealing what the market is telling us and mapping our strategy back to that and just Focusing the whole team on that. I mean the thing that wish tries me with your business is bluntly the speed of execution And you have the day count, which is so different, I find.

13:54When you think about advising founders say on having the same speed of execution that you have, what are one to two of the biggest pieces of advice that you have to them on driving that execution speed? I love that you started with the day count. It was actually, so today is day 1866. We do know it by the day. But it's not what you think. It's not like a, it's 1866, yellow, carpe diem, like go, let's get it. It's much more focused on thinking about the passage of time. I don't know if I ever told you this. When we met for the first board meeting, it was day 133. And part of the context we wanted to drive is it's just four months old.

14:28Here's what we've done. But in that October meeting, the second meeting Keith was talking about, we kind of mindlessly went to go update it from 133 to 199. And it forced it. We were like, wait a minute, 66 days had passed. Do we get the same amount done with the same set of people? Do we get more done? Or did we get less? And as far as I know, no one has more than 24 hours in a day, but there are certain hours that certainly counted for a lot more and it It's set off this this thought exercise for us or more formally maybe called a calendar audit and learned from Prometheath, which is if you measure time in this way, it creates the space for you to say no to the things that are less impactful and to say yes to the areas of your business that create a lot more leverage.

15:09in for a small start, young start up just getting going, your most limited asset is time. And there are certain parts of your week that simply count for more. So it was an obsession with measuring this and focusing your time on that. So the number one piece of advice, I genuinely would give to early stage companies once you're past your business equation, you're spending time with customers but like count the days and think about what gives your business leverage and what gives you a chance to out -compete others would probably be my top. I don't know how it goes. And it was very stark too. So there's a lot of complexity in setting up issuing cards, just the very basic fundamentals.

15:44Usually taking the infinite amount of time, usually six to 12 months is pretty good. As someone has been involved in companies like this for like 20 years. I think Eric did it like 50 days, 40 days. Yeah, there's different, he needs so many different layers of things you have to negotiate different partners you need. And it was like 30 days, 40 days, 50 days, 60 days. It was like unprecedented. What did you say no to? That you wish you'd said yes to? In general, we try to move pretty quickly, say, us, launch and test things because I know I'm going to be wrong about a lot of things I just want to find out very quickly.

16:13Would be the general framework. There is different moments where certainly we could have capitalized. So something we don't do, you know, historically, we know store funds, you know, in the wave of bank failures a year ago, we could have been very well positioned to capture a lot of things. So there's things that we certainly would have benefited from. You know, we've tried to stay fairly consistent in having all of our products be focused on how do you help people save time, save money, you know, batch around that and just be very focused on this workflow. And I think actually there's advantages to not changing directions too often.

16:43And so though we may have missed some opportunities, I think the regular repeated motion and focus on the same mission, same goals, creates a lot of advantages. And so I could list things we missed, but I don't have too many regrets. When you look forward today at like the next, I don't know, six to 12 months, and you think about the hurdles that one has to overcome. and the challenges that you face in this next stage of growth. How do you think about what those one or two biggest challenges are that you have to see, identify, and then overcome? Typically, in organizations this size with this growth potential, it usually becomes organizational design.

17:15It's just like how do you simplify decision making, how do you, where does it seems in the organization, how do you adjust that? That is very, very complicated because what worked historically, sometimes often doesn't work when you multiply the number of people by 3, 4, 5 and it definitely doesn't work when you multiply them with people by 10. Even though the organization has led you to your success, the way you divide responsibility, the way you make decisions is why you're here. At some point that will break, and so you have to really think about that, the people side gets increasingly more difficult, actually.

17:45All right, how do you think about that? I mean, Keith is exactly right. There's other things like worth -reld, we're call it 1 % of how businesses spend money and on cards in America, but there's 99 % to go. How do you build a nationally known beloved brand? there's a lot of questions around that. Scaling the full platform, it's the majority of how we're moving funds. It's gone beyond card. And so just thinking through just constantly reinventing our other questions. On the all design side, I am fascinated. I think it's Aaron Lavi says you need five turnovers before you go to a public company in the trajectory of company scaling.

18:18I think you need some Facebook re -imagined the full executive team. Aaron definitely turned over a fair amount. There's some different. It's like baseball. Jeff Wiener always sees the metaphor of like, basically you have a starting picture, it gets you a lead. That doesn't mean you want your starting picture to finish the game and sometimes how your relief picture has different skills, different energy, it's fresh, et cetera. It might be a good way to continue to have success. So you have to be very judicious, but I wouldn't recommend like fine turnovers on all. That sounds actually scary. I do think there is a tendency, and I found this is particularly true.

18:51Go higher. This executive firm here in replace, And in the supposition is that there are people outside the company who are inherently better. Sometimes you need outside expertise, but I find there's nothing more motivating than taking someone who's doing well and stretching and giving more and so we actually try to hire somewhere in the Oregon stretch and stretch and stretch and so most of the team you'll see today running ramp is the same team as it was two years ago three a lot of the same people and the depth of that and people knowing each other's patterns the strength of weaknesses are good So I always remember I think it was Keith that told me about like the smoothie test where you like give someone a small task And then you're expanding and expanding expanding.

19:31Yeah, keep expanding and this is definitely the PayPal model We basically had no external hires that thrived and so everybody was internally groomed for within That's challenging usually you're dealing with a ratio of you know 70 % internal promotions and 30 % you're so actively adding new capabilities So you're always playing around with some ratio. I don't think a hundred percent works but if you're below 50 -50, then you're responsible in a different way. How quick did you know when an internal hire doesn't stretch? When does the stretch not stretch? So I'll give you a couple of tricks I've learned from actually just watching other CEOs.

20:02So Brian Chesky, for example, taught me the six months ahead task, which is can you think like an exactly if you have in place, a leader in place will deliver results or you wouldn't have them there. Right? By definition, sort of not delivering the outputs that you expect the business needs. You're going to need to make a change. But there's people who are delivering just in time and there's people thinking three steps ahead and Brian's sort of taught me six months is about where you want someone thinking ahead because not every lever can be tuned in a week Most can't not every lever can be even tuned in a month So if you think six months ahead though if you're really consistently six months ahead most levers can be manipulated within six months you land where you're supposed to land or better or beat Expectations second framework that jock Dorsey taught me is is editing writing meta for and And you know when you're editing or when you're actually writing and you want to be editing people's work as the CEO, you don't want to be writing.

20:53And if you feel like you're using a lot of red lines consistently in the same area of a company, that's a really bad signal. The reason why I like this metaphor is people have a feel with what what a red line means. Like you know when you're taking someone else's work product in your red lining. And if you're simplifying that could be a good thing. Like, you know, like editors cross things out and they try to simplify, simplify, simplify. But if you're constantly asking clarifying questions and not really getting, you know, to the root, that's a problem If you're systematically doing it in the same places of the organization.

21:23So those are the two like signals that I've learned to look for I constantly ask myself the question of do we agree with like higher great people and get out the way or promote and get out the way or do the best Micromanage to an extent and an incredibly cool. I'll give you a real answer It's actually in my YC lecture that Eric alluded to it depends you want to be actually an evidence the leadership training sort of DACA kind of built first square, which is you actually want to be inconsistent on this, whether you're quote unquote, micro managing, or you're giving a lot of rope, because it depends on the task, all of it maturity of the person and the project and the consequences to the business.

21:57So Andy Grove had this concept of task, all of it maturity from high upload management, which is basically has someone dealt with similar problems, you know, in their life. And depending upon that task, all of it maturity, you may sample like using Erics, you know, a sort of metaphor, sample at different rates. Like so if it's low, relevant maturity, you might sample it like every day or every week. It also depends on the consequences, how catastrophic, gray symmetric is the result or the results to the company. And so this metaphor allows you to figure out what to do, but ultimately, CO is ultimately responsible for everything, there's no excuses.

22:29So you can't ever obdicate. There's no such thing as like, I let this person do acts, but I'm not responsible for the results when you're CEO. So then you have to decide, use frameworks for how much rope do you give someone which is a really a function of your conviction level in the consequence level. So you have like almost like a two by two grid in a matrix, it's in my YC lecture of your level conviction in the consequences and whether it intervened or delegate or what to do you know in the other cases. Eric, can you talk to me about when you've had the highest level of conviction and you've been wrong?

22:59People don't always internalize the importance as a founder, as a CEO at the end of the day. Everything that's going well for a good thing, like credit to your team, everything that's going bad is your fault and you need a fix. And that is the right mentality. For me, the question is not, will people be wrong? It's a question of how does your company deal with it culturally? And I think two things. When good companies talk about wins, great companies talk about misses, the way that we start. Every Bordeca is what goes going well. What is going less well than we hoped and why? And so it's not letting there be a culture of sweeping things under the rug and not Crucifying people when things do go wrong.