Q&A with Harry Zhang and Leore Avidar, Cofounders of Lob

by Y Combinator10/17/2018

We put together a list of the top YC companies by valuation as of October 2018. You can see that list at https://ycombinator.com/topcompanies.

Here’s a Q&A with Harry Zhang and Leore Avidar, Cofounders of Lob, one of the companies featured on the list.

What does Lob make/do?

Lob’s software platform and APIs automates age-old offline business processes in a modern, intelligent, and technology-forward way. We offer various APIs that enable companies to programmatically send personalized letters, postcards and checks with cohesive per-piece mail tracking and analytics. Our USPS-certified, global address verification APIs keep enterprise databases accurate and ensure that products and mailings reach the right person every time.

How many employees does Lob have?

Lob’s team is made up of 54 people and counting.

How many founders?

Lob has two co-founders: Harry Zhang and Leore Avidar.

What is your most impressive recent product milestone?

When Lob’s Address Verification API achieved USPS-certification on address quality and accuracy (CASS), we were told that Lob was the first new company in nearly a decade to meet this rigorous standard. Along with this certification, we also launched various features that cements Lob’s status as one of the leading providers of address quality data. Our Address Verification API has seen nearly a 10x growth in subscribers over the past year and we’ve acquired some of the largest customers in the world (Capital One, Microsoft, State of California) who verify millions of addresses per day.

What is the larger impact / societal impact of your product in the space you work within?

Lob is reinventing how people and businesses utilize mail – bringing innovation to an age-old problem. We’re doing this by building the first ever Print Delivery Network that automatically routes mail across a network of printers for speedy delivery anywhere in the world. If we’re successful, we believe that we can eradicate the world of “snail-mail”, creating an entirely new channel where completely personalized mail can be produced and delivered in days rather than weeks. Lob is also recognizes the impact on the environment that our work has, so we’re doing all this using FSC certified paper and we’ve made a public pledge for reforestation to offset our impact on the environment.

By crafting API’s and software that digitize complex enterprise workflows, the speed of innovation will drastically speed up and the next generation of enterprise applications will launch in five years rather than ten.

What’s an interesting element of Lob’s company culture?

Our goal when we designed our values at Lob was to ensure they were action-oriented and embedded in how we operate and make decisions day-to-day. We can’t possibly cover them all here, but the way Leore likes to describe working at Lob is “Running to Work” – we wanted to create company where each person is so excited every morning to see people at the office that they want to run to work.

It’s important to us at Lob to create a workplace that gives our team purpose, that provides the mentorship people need to move up, and to challenge our team by providing them a lot of responsibility paired with a lot of autonomy.

Many people forget that half the fun of a startup is the journey – and we wanted to ride this roller coaster together. We believe in investing in our team for the long run and building a company where employees feel valued. At Lob, we hope to change the way tech companies think about their workplaces, and build a culture that lasts a lifetime.

Looking back, what motivated you to start Lob?

When we started Lob in 2013, nothing we did felt like work. We enjoyed what we did so much that we couldn’t stop programming. The best way to understand that is by comparing it to that feeling when you are reading a really good book and can’t put it down. I vividly remember the days in our Sunnyvale apartment where we would sit side-by-side on our dining table turned shared desk, blasting music, laughing uncontrollably, and coding until 4am.

We were inspired by some of Harry’s work at Microsoft, where he needed to hire and manage basically a mini-army of people to effectively execute all of their mail campaigns. If a company like Microsoft was having trouble doing this, then clearly there was a strong business need. It was clear to us that we were building something truly valuable and wanted to give people their time back by automating the complex workflows and bringing efficiency back to enterprises.

Is what you’re working on now the original idea or did you pivot?

We stayed pretty true to our roots, but as we have grown our vision has evolved from just a Print API to enabling the digital transformation of the offline world using APIs. When we first applied to Y Combinator back in 2013, we applied as a company called Printbox (later, Infraprint…thanks Paul Graham for that name); an IaaS company that allowed software developers to programmatically print and mail various different types of print collateral using a RESTful API.

Today, Lob’s offering has evolved immensely because of the hard work every one of our team members have contributed. We’ve gone from printing our customer’s letters ourselves with our inkjet printer and hand stuffing envelopes to building an international print delivery network capable for sending millions a day. We’ve expanded from just one product offering to a growing suite of APIs all in an effort to realize our vision and make the world programmable.

Were there any memorable mistakes the company made? Describe one of those and anything you learned from it.

There was a time just a few months after we had launched Lob where we spent nearly a month building a new product – what we called a Mugs API. Like most startups, we were willing to go practically any length to close a prospective customer and this one asked us if we’d ever consider printing onto other physical goods like mugs. They promised to send “thousands a month” as soon as we could get it up and running. Our eyes lit up at the potential huge revenue stream and after some consideration, thought that a Mugs API could fit within our vision for being able print anything on-demand via an API.

Powered by coffee and late nights coding, we cobbled together a working product within a few weeks. We were really proud of the product and after presenting it to the customer, they told us they would start implementing it. As weeks went by, there was no progress and they started to become unresponsive to emails and calls. Half a year later, the total number of mugs that were ordered through our API was exactly two (one went to a YC partner, the other was a test order by us). We shelved that product shortly thereafter…it was a total waste of valuable engineering time that could have been spent improving our core product.

The valuable lesson we learned is that you have to really validate new products and run a tight customer development process before starting engineering work. We missed a key part of it – asking the customer to commit to spending money on it (either upfront or through an LOI) because we were so blindsided by the potential revenue based on a 30 minute phone call. When we are developing new products and features now, we work side by side with a customer who desperately needs it and is willing to commit to spend for that functionality. This ensures that we build exactly what the customer is looking for and that we don’t waste any engineering time.

What was a particularly important insight you had about your market that made your product work?

Managing print at scale is really really difficult because of the complexity involved with multiple vendors that all have different capabilities. Enterprise customers have different requirements (compliance, product type, etc.) and have to adapt to working with print vendors who send or receive data in different ways. That means there could be hundreds of different permutations they must build for every type of mail they send. It’s very expensive operationally and requires a lot of custom integration work.

As we began signing on larger customers, we built our API in a way that changing product types was as simple as configuring a different template or toggling a specific permutation on or off. Everything was also built to meet a stringent level of compliance required for GDPR or HIPAA, regardless of mail type. We also made all of our data accessible programmatically and gave insight into mail deliverability in a consistent format.

The customers that have switched to Lob don’t have to rely on crappy FTPs to transfer that valuable and sensitive customer data. Management of different mail types is a breeze and they can rest easy knowing everything meets compliance requirements. They are able to automate any mail type based on event triggers and capture all of the outputs within their own systems by ingesting our deliverability data. Lob saves companies tons of money by streamlining operations and turning a very tedious process into one that’s automated through code.

What’s one piece of advice you’d share with a young founder?

At Lob we think about growth with a sustainable mindset, being responsible with your resources. Controlled growth is a mindset in which you have a growth trajectory in which you can always pull a lever to speed up or slow down growth so that as a founder you’re always in control of your own destiny. Think about it as if you’re driving a car. Can you change the gears when you’re driving fast? Can you put the car back in first gear to slow things down in case there is an obstacle in the road? There are always things we can’t predict, such as external market factors and as John Keynes said, “The market can stay irrational longer than a company can stay solvent.” One of the biggest fears we have as founders is that while our company is doing so well the only way I can stay in business is to raise money. So be aware of the other levers you can pull so that you’re in control of your own growth trajectory, and always be an arms length away from profitability.


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