How Chicago's Popular Pays Made the Most of Y Combinator
Jim Dallke - Staff Writer
03/26/15 @2:13pm in Tech
Two and a half minutes. After 100 days, countless hours, and many sleepless night, that's all the time startups have to impress investors at the Y Combinator Demo Day. Regarded as the best tech accelerator in the country, Y Combinator, which invests $120,000 for 7% of the company, has helped launch some of today's most well-known startups. And with its latest class, it can add a Chicago-born company to the list.
Popular Pays, a startup that allows Instagram users with a high number of followers to earn money by taking pictures with certain products, was part of the YC winter 2015 class. In an accelerator that sees mostly California-based companies, it was an important milestone for the young Chicago startup.
The company presented at Demo Day this week, and their performance has already resulted in a flood of interest from investors, according to founder Corbett Drummey.
"It was intense," Drummey said. "It was 100 days of very hard work ... The only goal you have is trying to get investors to remember 1 or 2 points of your company and have them want to reach out and contact you."
Since Monday's Demo Day more than 90 investors have reached out to the company, which is a kind of investor reach Popular Pays couldn't have achieved anywhere else, Drummey said. But the benefits of YC expand beyond just access to capital; the community of advisors, peer support from fellow startups, and the chance to focus on the direction of the company all helped mold Popular Pays over the past 100 days, Drummey said.
"One of the most underrated aspects of Y Combinator is focus," he said. "With our whole team out here working, we just had a tremendous amount of focus during these 100 days."
Popular Pays used YC to help the startup shift from connecting influential Instagrammers with small business, to adding larger brands to its platform. In the past three months Popular Pays brought on Nike and a large restaurant chain that Drummey declined to disclose, citing the company's wish not to be named.
Here's how Popular Pays works: Companies list what type of social media post they want on the platform, and "influencers" (people with a large social media following) choose the ones they want and name their price. If the company accepts the offer, the influencer is paid after the shoot.
Nike, for example, may say it wants an Instagram post showcasing its new glow-in-the-dark shoe, and requests a photo of someone wearing the shoe while running at night. Sometimes the payment is free product (like Nike shoes), but for users with a higher follower count (above 40,000) the company pays the user cash for the post.
Drummey said the company has 20,000 Instagrammers using the app, with roughly 1,000 people using it for paid deals. Popular Pays has paid out $130,000 to Instagrammers in the last 3 months, he said.
Drummey and the eight-person Popular Pays team is returning to Chicago in April, but he expects to move the company's operations and engineering to San Francisco in the near future. The sales will remain in Chicago, and he expects to begin hiring more sales people soon. The main reason for the move was that engineers were more likely to relocate to San Francisco than Chicago, Drummey found.
"That was the hardest decision to make," he said. "We wanted to keep our momentum going. When it came down to it, we knew we wanted our sales team in Chicago. But what we found for engineering talent is that people were less likely to move to Chicago. Engineers were more likely to relocate (to San Francisco)."
Popular Pays raised roughly $775,000 before YC, mostly from Chicago angels, including Howard Tullman and Lon Chow.