How Did Lob Co-Founders Build an API for Mailing Automation?

TL;DR

Lob co-founders Harry Zhang and Kevin Hale built an API for mailing automation by first identifying core problems and iteratively developing a product based on customer needs. Initially starting with a simple API that mirrored responses, they later focused on enterprise clients and emphasized the importance of aligning customer expectations and prioritizing feature development based on perceived value.

Transcript

today we have harry zhang co-founder of lob lob makes api's for companies to send letters and postcards so kevin has a question for you I'm trying to think back to when you guys applied to YC you you didn't have almost anything like I would say it was fairly embarrassing yes you could say that I mean honestly we were scrambling weeks before the int... Read More

Key Insights

• 😊 Lob started off with almost nothing when they applied to YC, but the key was focusing on the problem they were working on.
• 😅 Their MVP when they applied to YC was an API that simply mirrored the response back, but they were hoping they wouldn't have to demo it because they hadn't built much product.
• 😎 APIs are like interfaces, and Lob focuses on making their API documentation the best in the industry.
• 👍 They learned that having a strong problem statement and understanding the core problems of their customers was crucial in gaining their first customers.
• 😮 Lob initially built a Mugs API because a customer requested it, but the deal fell through and they learned the importance of aligning with customers and not overpromising.
• 🤝 Alignment with customers and setting expectations is crucial in making big deals with enterprise customers.
• 💼 Lob has built a network of printers around the world to provide flexibility and support different mail formats, but they have no plans to vertically integrate and purchase their own printers.
• ✍ Lob constantly shifts and adapts as a company, with the roles of founders and managers changing over time as the company grows and new hires are made.

Questions & Answers

Q: Why did Lob initially target SMBs and later shift their focus to enterprise customers?

Lob initially targeted SMBs as they wanted to gain traction and learn from customers. However, they realized that capturing the entire market required focusing on the enterprise segment, which sent an enormous amount of mail. By offering API capabilities to smaller customers, Lob differentiated itself and expanded its market reach.

Q: How did Lob align customer expectations and manage their expansion into Europe and Asia?

Lob made sure to be transparent about their capabilities, future plans, and timelines with enterprise customers. This allowed them to work in partnership with customers who were willing to commit to Lob's services. The customers' desire to help Lob succeed expedited their entry into new markets.

Q: What pricing model did Lob adopt when targeting enterprise customers, and why?

Lob introduced a platform fee along with per-piece pricing. They wanted to separate the perceived value of their technology, which warranted a higher fee, from the cost of a mail piece, which should be competitive. This model allowed Lob to focus conversations on the value they provided beyond simply mailing letters.

Q: Have there been instances where Lob had to develop new features based on customer demands, even if it wasn't initially in their product roadmap?

Yes, Lob regularly evaluates customer requests for new mail formats and features. They prioritize customer needs that align with their business strategy and if a commitment level is established, they develop and launch new products accordingly. For example, they recently launched certified mail receipts based on customer demand.

Summary & Key Takeaways

• Lob started with little preparation before their YC interview, but focused on understanding the core problems they wanted to solve.

• Their MVP was a simple API that mirrored the responses back to the users.

• The founders emphasize the importance of thoughtful documentation in API companies, citing Stripe as an example.

• Lob's initial focus was on SMBs, but they later shifted to target enterprise customers, understanding that they needed lighthouse customers to attract more big clients.

• They prioritize building features and functionality based on customer needs, pricing their offerings based on perceived value.

• The founders learned the importance of aligning customer expectations, being honest about what they could deliver, and mapping out a timeline.

• Lob does not plan on owning printers or becoming vertically integrated, as they value the flexibility and specialization that comes from working with partner printers.