Pando allows individuals to contractually pledge a small portion of their future earnings above a set threshold to a shared pool, which is then distributed evenly. The pool offers each participant more career security and certainty in an increasingly volatile and uncertain world.
As Charlie and Eric continue to build on their success, we can’t help but look back on their early days at Pear — when they were just embarking on the volatile and uncertain journey of being startup founders.
When we met Charlie and Eric as Stanford MBA students, Pando was just an idea. Eric had been doing research with a labor economist at Stanford, and the research suggested two macro trends: first, that more people are graduating into high uncertainty, winner-take-all careers than before; and second, that our generation is less reliant on the community-based institutions that provided previous generations with a safety net.
Pando emerged as a modern, community-based financial tool.
“Mar quickly got beyond the idea. She clearly bought into what we were trying to solve, but it quickly became — okay, how are you going to do this? How are you going to target this customer base? How are you going to price this? This was before we had answers to any of those questions,” said Charlie.
The two founders realized that Pear could help push them further than they might be able to go on their own.
“There’s no substitute for experience. On the other hand, there’s a billion potholes and I don’t need to step in every single one of them,” said Charlie. “Early on, I saw that Pear would be able to steer me around the pothole minefield.”
The First Customers
To get started answering those questions, Charlie and Eric first thought about which groups of people would be the right customers for their idea. Many types of careers seemed to make sense, but they narrowed it down to baseball players, entrepreneurs, and MBA students. The next step was to test their hypotheses. To do that, the founders wrote up some Letters of Intent and pitched the idea to all three of these groups.
“Funny enough, we ended up having success with all three and realized we should start somewhere,” said Charlie.
Ultimately, the founders decided to focus on baseball players first, especially after considering the strong network effects at play. Sports are widely popular and athletes are widely admired. If they could successfully serve athletes, they hypothesized, the product would be much more interesting to many other customer segments — not to mention investors and future talent.
While that was the business reason, the team was also compelled by the human reason: baseball players seemed to face the most volatile career path of the three.
“I don’t think the rest of the world thinks about professional athletes as being vulnerable, but I would argue they’re some of the most vulnerable. We only see the superstars,” Charlie points out.
What many don’t see is the path it takes to get there. In 2018, Congress passed America’s Pastime Act, granting Major League Baseball the ability to pay minor league players below minimum wage.
“The vast majority of professional athletes play in the minor leagues for a few years before getting cut. They’ll never make significant money and will leave the game having sacrificed career and educational opportunities,” Charlie explains.
Further, even players on the right path face many daunting variables beyond their control, such as injury, the team they are drafted into, and organizational politics.
“These players live on a knife’s edge where a bad outcome is zero. It’s flat zero. That’s different from, say, MBA’s.”
Once Charlie and Eric decided on baseball, the next step was figuring out how to get those first customers. Neither had any real connections to professional baseball. Charlie knew only one minor league baseball player from his undergraduate years.
So, he spent spring break at baseball spring training in Scottsdale, Arizona.
“I just started calling agents and financial advisors and players. I was taking them out for coffees. I would go grab a beer. I would do anything — I was just begging for meetings,” Charlie laughed. “It was hilarious. It’s 100 degrees, I’m now inundated in the baseball ecosystem, and I know nothing about what I’m talking about. Yet, we found out pretty quickly that we were onto something, that there was a refined need here.”
Charlie took those learnings back to Stanford, where he and Eric refined the product and pitch. During the Pear Accelerator program, they revised those LOI’s and began approaching baseball players again. With the LOI commitments, they were able to attract investor interest. With investors on board, they convinced a lawyer to work with them in a unique product design capacity. Together, they drafted the first income pooling contract in the United States, which became a case study for a Stanford Law class.
The team also moved into the Pear offices.
“We put a dent on their food bill for sure — so I don’t know if it was a good idea for them, but they let us stay!” Charlie jokes. “It kind of became the Pando office, honestly. We’d have like 15 people in there on a daily basis and Pear would have three, so we ate them dry.”
Aside from eating our food (we forgive them!), Charlie and Eric also spent many nights sleeping on our couches as they worked through those early ground zero challenges.
“Starting a company is about no’s. You’re getting no’s early and often. You either have a good idea and the product is not there, or a person doesn’t like the idea, or the idea is just repulsive because it’s new. You’re pitching things to investors and you’re getting hit for any number of 6 trillion things. Meanwhile, your company has been in ‘existence’ for three days and you’re like, ‘I don’t have any of these answers, I have no clue what we’re doing,’” said Charlie.
Because Pando was such a novel product, one of the early challenges for Charlie and Eric came in learning how to best educate their customers.
“My baseball calls — it was like I was an economics lecturer trying to teach about the value of diversification and risk mitigation,” Charlie said. “The early client wins — there’s nothing sexy about it. It’s hand to hand and trying to figure out how to be really curious and match product value with customer need.”
Nowadays, as a maturing company, Charlie has been able to take himself out of the baseball sales process and has passed on the torch to a very strong sales team (“they’re better than I am!”). Charlie, meanwhile, is back at school — working on their second customer segment: MBA students.
“I think about my job as CEO as having three parts: the first is making sure we don’t run out of money, the second is aligning my team with company vision and company strategy, and the third is hiring and retaining great talent,” said Charlie. “For me, knowing the customer and the different segments is absolutely critical to my ability to do every other part of my job, and I wouldn’t know it unless I go do it.”
Whether Charlie will continue the strategy of learning about each new segment personally is, however, an open question.
“I think your company looks very different every time it grows 100%. Running a five person company is radically different from a 10 person company, which is different again from 20,” he says.
Indeed, Pando has had to face inevitable growing pains — such as the first firing. It’s an inevitable responsibility for a CEO, but it’s never easy.
“Frankly the first person I fired, I had no idea how to do it. I didn’t know how to think about having the conversation. There’s a lot that goes into it that I wouldn’t have known how to do, and I wouldn’t have had the order of operations,” said Charlie. “I went into it with a 10 point checklist that we executed well. Because we executed it well, I think all parties involved left feeling better — including the person that we split ways with, because it was handled professionally and respectfully.”
Again, there are business concerns, and there are human concerns.
“We were emotionally invested. It was definitely the right call for the company, but it had us really stressed out. We came to Pear for a quick conversation, like ‘Here, this is what we’re thinking,’ and they said, ‘Hey! Here are some best practices, but also sounds like you’re making the right decision.’ That support in that moment made the next conversation very much easier,” said Eric.
“You have a lot to go through and having somebody who you know is 100% in your corner is really important. The way Pear has set things up, from day one, they’re 100% in your corner regardless of whether or not they end up being your major backer. Starting a company should be hard, but it doesn’t have to be impossible and Pear makes things possible,” Eric added.
Now, the Pando team is paying it forward. Their ultimate vision is to make income pooling available to anyone in any career, allowing more people to pursue their ambitions, just as they have been able to pursue their vision as founders.
“I think Pando can help unleash a lot of people into careers that they’re passionate about and liberate them from near term financial constraints,” says Charlie. “I hope that Pando can help better encourage people to better align their personal risk preferences with career choice.”
Charlie and Eric see a world where communities come together to celebrate and empower each other in the pursuit of their passions, and also to support each other in the hard times. Pando creates a trusted environment for individuals to share directly in each others’ success.
“We live in a volatile world. Am I willing to give up a small portion to a group of people that helped me get there, in the case where I make so much money that I don’t need it? Yeah! Of course I’d make that trade,” says Charlie.
“That trade also helps ensure I don’t have a bad outcome and allows me to be more comfortable with the risk I’ve taken. As an added benefit, I’m with this great group of people and we’re going to work together. It’s so intuitive to me. We see this as the future.”