Yuron and Rafael.

Yuron.

Yuron.

Yes. Hi everyone, I'm Yuron. This is my co-founder and CTO Rafeal. and on Monday on this stage we unveiled the world's first anti-virus for bills. The most exciting thing I'm gonna tell you today are the results of what happened since then.

But to start, let me tell you the personal story that got us on this stage. It was a year and a half ago. Mike posted a story about a credit card scam that had hit millions of people and a buddy of mine calls me up and say, hey, you should check your bill too. It turns out I was spending - losing - over $12 a month or over six months without even knowing it.

You see my buddy is one of these people that checks every line item of their bill meticulously. I, on the other hand, let's just say don't. But I am like nine out of ten people in this audience, we almost never check our bills. And the sad truth is, it's not only hackers and fraud, but legitimate merchants that are taking advantage of us.

So much so, that the average American will lose over $300 this year, and our early results are showing even more. To things we simply miss. Things like: hidden charges, billing errors, subscriptions we simply forget about.


Exactly. I hope Tim's not in the audience, right?


Scams and flat-out fraud. Now card fraud alone will cost consumers over seven billion dollars this year. The banks will catch a third of it. The rest is up to us. Now there is good news. People actually do catch and report tens of thousands of bad charges everyday. Millions more post their complaints online.

But even with all that knowledge out there, guess who's still losing money? you. Now what if, and this is the big idea, what if we could simply harness all of that collective knowledge for the benefit of everyone. What if you could simply get an alert on your bill whenever anyone else out there flags a charge that also appears on your bill.

Introducing BillGuard. The people-powered anti-virus for our bills. With BillGuard, we're now safer together. Let's see the app.

Now the first thing you need to know about this is that once you register a card you'd like to protect your done. There's nothing else you need to do. What you're looking at here is live data for my personal AMEX. This is not a camed demo. For every transaction that came in, BillGuard ran over 100 automated tests.

All that complicated algorithm work we do? That's distilled down to very simply showing me that in in this case, I'm ninety four percent clean, but I have three charges that require my review. Let's take a look at them. This first one, seemingly free service I personally was not aware I was paying for.

BillGuard tells me that nine people have flagged this as misleading advertising. On Monday, there were four flags. This system is working. I can now flag this charge and BillGuard will give me detailed instructions on how to cancel the service and how to get my money back.

Phase 2 of the product will actually go get your money back for you. Let 's look at another charge. Actually while we're here, take a look at all that detailed meta data that helps me understand the transaction. And this is the meat of what we do, the merchant transaction reliability score.

Someday you will see this badge on eCommerce sites all across the web. If I still don't understand the transaction, I can post a question to other customers of this particular merchant, almost like a quora for transactions. Let's look at one more charge. Booksrun.com, seemingly harmless from the name, it turns out BillGuard traced its origins to a DNS server linked to other fraudulent sites and cross-referenced that with validated complaints online.

This one is a fraud. Go ahead and click the flag button. With that simple click, we've now not only helped to validate BillGuard's assumptions, we've potentially helped thousands of other people who have that charge on their bill. We have a bunch of other cool features like seeing all of your recurring subscriptions, and filtering - and I mean lightening fast filtering - for things like ll my charges below $5.00.

I want to summarize. BillGuard makes it one-click easy for anyone to flag charges on their bills. Let 's go forward. doesn't play? Okay, we had a little video to show you, but doesn't play. You want to see the video? Go ahead. Hit the play button. Working ? You want us to wait for it, Mike? PowerPoint on Mac in guess.

Okay, let me tell you, summarize, it's okay. One-click easy to flag a charge, analyzes millions of transactions from banks, and this is deep IP. Big data mining algorithms. Lastly, and most disruptively, listens for complaints online. There's a lot of data out there. We harness all of it we drop it into the brain that scans your card on a daily basis and simply emails you when your attention is required.

Let's talk about our business model.

You're out of time.

I 'm out of time.

You want to say something, say it fast.

Okay, I'll tell you the most important thing. You guys have probably seen the business model, so let's talk about the results. Monday night, we opened up, can we go to that slide? This is the most important thing guys.

Let's start the timer at 12.

Day One. Over 10,000 cards have been registered. The next stat is the most important. Of the users in the system, we have found a bad charge on over 20 percent of their cards. That even blew us away. And lastly, the charges range from as little as two bucks, to we found a $6000 fraud on a very wealthy individual's card.

Thank you guys very much. Sorry I ran over.

Fred, I wanna start with you.

If you look at anti-spam products, and there are examples of this in anti-spam; crowd source spam filters, A lot of people mark things as spam that really aren't spam, they're just irritated by them. I would imagine a lot of people are marking things as fraudulent charges that actually are valid charges.

and that's going to be very annoying to the card companies when all of a sudden they're getting inundated with 'give me my money back' on things that are actually valid charges.

Right. So that's actually a problem we solved. That's what happens today. People lie. They say, the product wasn't delivered, I want my money back.' That's called a false positive. Right. Our system not only creates a merchant transaction reliability score, we also create a spotter reliability score.

Almost how eBay does reliability for sellers and buyers. So we're actually able to offset that and give a weighted voice to people who over time we see in the system have simply cried wolf.

Got it.

Do you guys understand the business model because I cut them off. You understand how they make money?

I'm a in investor and I don't feel I got it. I know it, but I think everyone should know it.

I'm sorry, I ran over time, we had a video that was supposed to work. The business model is very simple, your first and most primary card, the one you use most actively is absolutely free. Once you're convinced and realized that we are actually giving you actionable data that helps save you money, you can upgrade to a premium version of BillGuard for only $4 a month.

That covers unlimited cards.

I don't like that idea.

Okay.

I think it'd be better to take a fee, a success fee, on the money I get back from using your service. You charge people'a cards, they're not going to put the cards in your service. I don't think that's a good idea.

Ok . So we got that question in the last round and I'll repeat the answer and I'll expand on it a little bit. It is core to our DNA and our message to consumers that we are consumer advocacy service. These merchants have their fingers in the pockets of these consumers. That's a stream of cash we don't want to get in the middle of.

Okay? We believe we build a high-value service that people are willing to pay for. It might be a little bit of a novel concept and I would actually say to the entrepreneurs in the audience, don't be afraid to charge for your product. If you're building something of value, people will pay.

If you're going to build a small business. Thank you.

If you want to build a small business, charge for your product. If you want to build a huge business, it's going to change the world. I don't think you could do that by charging for your product.

So let's talk about phase two of our company.

OK.

Phase two of our business, and at the core, we are a big data company. The real value here comes at scale with the data, OK? What I didn't get a chance to announce is that we are in talks with three of the top U.S. banks. As of Monday, it's going to be probably four. Four of the top U.S. banks to have them actually deliver BillGuard as a service directly to their consumers I just want to get input from all of the judges.

Sure.

We're just getting back right into it.

The business model is actually one of the most important aspects of what I didn't get to get to.

So what is phase two besides three of the top four banks?

Specifically with the banks?

The data you are talking about, right?

Right. So what do the banks want? This is something that as a start up we didn't actually disrupt, the economy disrupted it. So the economic meltdown basically disrupted the banking industry and they're trying to figure out 1, how to generate new revenue from actually value add services how to bring down costs and the number one cost center is Call Center is lastly had to re-brand themselves as being Customer Centric and we simply walked into that and that's more timing than it is strategy, we got lucky.

What we're doing for them is automating the resolution management process. It's an online system rather than a phone call. We're giving them a service that they can either bake into the identity theft package that they sell, or sell as a new premium protection service. And lastly, what we're doing is building an industry standard central collaborative database, that all banks can feed into and benefit from the data out of, they're gonna pay for that.

There's also a component for merchants. As you notice people are communicating about these merchants. Merchants will be able to also get alerts from us when people are complaining about them and fix the problem for the consumer before the data goes to the bank and their commissions get jacked up.

I'm going to cut you off. And I want the companies in the back to listen too. This is like going on a first date. You want to have the other person think you're fascinating. You want to do a lot of listening here. And we can always do a a little bit more talking backstage afterwards. You want to get all the feedback from all the judges.

I'm not going to say this again with the other companies.

Sorry about that.

Who else feels strongly about this?

So I just have a question, like If AOL, if you said 90% of AOL subscribers don't know they're paying for it -

Why do you have to bring AOL into this?

What would AOL be flagged in this? Would they be flagged as fraud?

AOL provides a valuable dial-up service to million consumers around the world. Why would this have anything to do with that?

Very specifically not AOL as a merchant but the specific charge.

The dial-up service charge would have a lower liability score because of flags from other customers saying "I didn't even know I was paying for this".

Were those your charges on the screen?

Yeah.

Were those your charges that were in there? Was that your Amex that you said was?

That was my live Amex So you really charge at Burger King?

I do. I ate at Burger King. Yeah, I'm a starving entrepreneur. What do you want?

Okay.

I'd love to go out with you for dinner, judge. Let's hear it for Burger King!

Roleoff is this a Sequoia investment?

I'd love to meet the company actually, I think it's a very interesting idea, I The first question I had when I heard about the idea was distribution, because it feels a lot like insurance, an industry I know a little bit about where the maxim is you have to sell insurance it's not bought. It's the same reason why backup hard drives are sold the day after someone loses their hard drives and anti virus sales spike after virus outbreaks.

But you seem to have addressed that problem through getting the distribution from the banks, which I think is really interesting. The other question I had, was how to get users to trust you. Something that we dealt with Paypal back in 2000, 2001.

Yeah.

We got Trust e-badges, got to deal with Travelers to put their little umbrella on our website. So the consumers felt that they could trust our servers. And I think about you having a similar challenge. Obviously, if you have the distribution of the banks, that goes somewhat towards solving that problem.

But if if I'm just arriving at your web site, how do you deal with that trust issue?


So two pieces of that, and first of all, I didn't get a chance to announce this but later this year we are going to announce major a distribution that deals with some of the leading identity theft companies and top anti-virus companies in the world. We'll be distributing billGaurd very widely through their customer base. Regarding the trust issue, it's one of the most encouraging things of the last two days.

We have only a 13% drop-off rate at the page where you have to add your card. And that's because we have a lot of early adopters signing up. We're aware of that. But what we're doing by surrounding ourselves with not only, you know, building a security product, we're security people. We're funded by people who have founded VeriSign, the former CEO of McAfee on our advisory board.

We 're trying to create a sense that this is a business founded by people who understand security, and we will earn your trust over time. We don't expect it to happen overnight.

Since you have answers to all our questions, it seems, what is it that you worry about?

That I worry about? I'll tell you the truth, and we spend a lot of time and money on this. Obviously when you're in this business, you're a potential target for those hackers out there who say, "I can be smarter than you, and I can break into your system". And so what we do is spend a lot of money on lots of third-party auditing, penetration testing, we're I assume you are using Yodlee on the backend, right?

We are. So we don't store any passwords, we don't ask for any personally identifiably information. We ask for your email address to send you alerts and that's it. And we're very, very sensitive to this. It's actually in our culture, the number one thing on the list: first do no harm. Your privacy and your data is our number one priority.

If we actually get that right I think we'll be fine. And we're really stressing that at the company

Did you - because I know there's a feature that when you pay your $4 a month at the end of the year - if the company has not given you at least that amount in benefit, you get a refund. Right?

Yes. I wasn't going to announce this.

This sounds like a set up.

No, no no. Ron doesn't even know this.

Does this sentence start with, "Later this year, we will announce partnerships with three of the largest I wish we were that coordinated.

We're obviously not.

No. We're obviously not. I'm on camera. I'm in trouble.

So we were not getting that out. So we subscribe to the Tony Hsieh school of delivering happiness. We want to surprise our customers. So if someone at the end of the year- we haven't caught anything for them which, by the way, is a good thing. If your card is clean that's a good thing, but there'll be some people who will say "You know what?

I signed up $4 a month, and it didn't catch anything." We're going to give them their money back.

I think that's a cool feature. But I didn't know it was undisclosed, and I'm sorry.

Fred, does that make you happy or do you- you seem to think that they should be-

I 'm just telling him what I think. I think this'll to be a bigger business if you let people put their cards in for free and make them money, saving them money as opposed to charging them for the service. That's just my opinion.

No, I agree with you.

OK. It's a little bit complicated by the way, operationally. Cause when you say "OK we saved this money and they're like, oh I knew that ahead of time." You know what I mean? We want it to stay very clean. But I- coming from you Fred, we're gonna take that into very serious consideration.

Yeah but-

I think the concern would be-

what we just pre-announced helps that issue a little bit.

So it wasn't set up?

People don't like to come out of pocket. People are cheap.

That's the problem.

Yeah. I think that they should start charging $4 once they've saved me some money. Which by the way, I stole that idea. Somebody actually in the audience told me that that's what they thought about this. So, I love stealing good ideas. But that to me makes more sense.

Yeah.

I think that is that they already see that's a problem and they can initiate a charge back on on their own. But if you can make easy enough to automate the process then.

It feels like mint. You don't pay for mint, so why would I pay for this?

Well, there are today about 35 million Americans, who pay between 10 to 15 dollars a month for identity theft.

Those things are scams. The fact that you're associating yourself with that market is crazy.

I'm trying to make a point, I'm trying to make a point. This is like insurance. This is like a system that is protecting you from losing money. We believe people will pay for it. If we're wrong and you're right, we're going to change the model.

No, look. we dont need to argue about that. I think you've got a great business.

Thank you.

You just gotta figure out how to make money out of it.

Marissa?

I'll give you two compliments. One i think the marketing piece is really clear, people I think just get it. I also think that the technical aspects of what you talked about are pretty interesting. Being able to go back to DNS servers, figuring out who's linked to who, pulling together all of this data, doing a lot of analysis.

I think the technically chops are really there. I think that I have two concerns. One of them is the business model concern. But I even have deeper, I think, concern on that. Meta effect, which is your system will become better as more people sign up. You actually want the clean cards because that will help you understand what's good and what's bad.

And anything that's a deterrent to people putting their card in, is a problem, which to me that argues for charge me later, don't charge me upfront. Because you getting even more cards up front really actually helps your system get better. And the fourth observation, I'm sorry, the second observation on sort of the negative side,I do worry about the user promise.

I think people are going to expect to have you really find these charges. But even in your own example, I think those were probably charges that you did sign up you start looking at AOL or HBO or any of these models where they say "three months free" and then suddenly it kicks in and starts charging.

It's not that you are a way that you remind users about that and shut that off. I'm worried that it's not really just about finding fraud or finding viruses per say; it's about finding your own behaviors. I think there's this very fine line of what's a fraud that you can report to someone, versus what's something they did they might just regret.

Brief response, and then we have to move on, you're out of time.

I'll give you one simple example, its actually the most common case where people sign up for stuff, they simply forgot about it or they didn't read the fine print, that they were charged this extra SMS ringtone package on their cellphone bill.

That's still money that is being lost by the consumer, and we can help save that, that's equally damaging to a hardworking individual as a fraud. We think that somewhere in between, we'll be able to establish ourselves as a defining brand for personal finance security, whether it be fraud or otherwise.

Thank you very much.

Thank you guys. I'm not reading tweets on stage but this one was, personally I think arguing endlessly with Fred Wilson is not particularly wise