Harry Hurst, Co-Founder & CEO of Pipe: Building the NASDAQ for Revenue & Achieving the American Dream!
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Ryan Zauk sits down with the inspiring Harry Hurst, Co-Founder & CEO of Pipe, a company unlocking revenue as an asset class (and disrupting capital forever).
Harry is a true entrepreneur, having founded numerous businesses since childhood, with his last being Skurt, a financial technology company in the mobility space with Josh Mangel. Skurt was successfully acquired by Fair in 2018. Not long after, Pipe was founded in 2019 to unlock the largest untapped asset class in the world — revenue — to empower entrepreneurs and companies to grow their business on their own terms. No debt, no dilution.
Every company we have on the Wharton Fintech platform is an excellent company (IMHO). Most of them build amazing products with grand visions, and many of them change lives.
Then some are truly revolutionary, changing the broader financial ecosystem forever. Pipe and Harry are doing just that.
Pipe has been a success story of the pandemic and just raised strategic equity from an all-star cast of investors including Siemens, The Raptor Group, Marc Benioff, Michael Dell, Shopify, HubSpot, 776, Slack, Republic, Chamath Palihapitiya, and more.
Let’s break down the episode below.
What is Pipe?
Pipe is unlocking revenue as an asset class so founders can fund their businesses without the need to raise dilutive equity capital or restrictive debt. Pipe has forged a new, third path called ‘revenue-based financing.’
“Pipe is a two-sided trading platform. Companies come to Pipe to trade their recurring revenue streams (i.e. ARR for software) for as much cash as possible paid upfront, instantly.
Investors come to Pipe to bid on these revenue streams and earn yield as an alternative to fixed income products, money market funds and similar instruments.”
For a detailed breakdown of Pipe, Harry wrote a great piece on Pipe 101 in Wharton Fintech this March (providing the quote above).
Who is Harry Hurst?
Harry traces listeners through his childhood and how it drove him to be such a scrappy, bootstrapped business builder. Harry dives much deeper into his background in this fantastic interview with Secret Leaders, which you can check out here. It’s not often I recommend other podcasts here, but that episode was good.
“Who I am as a person, it’s really rooted in my upbringing. I didn’t grow up with money. But certain circumstances led me to be being surrounded by people that did have a lot of money, which in turn led me to developing this significant amount of financial insecurity.
But that’s kind of what gave me the drive and determination to be successful…What I fell in love with was the ability to just create something from nothing. I think that’s what always fascinated me.”
The Elusive American Dream
“I became fascinated by the idea of the American dream, which I think Hollywood marketed incredibly to young kids overseas. And it’s still probably a powerful marketing machine to this day.”
He takes time to dive into his long, arduous road to immigrating to America and getting approval to build a business. The process took 8+ years, and was extremely difficult as you can imagine. That long road built up an immense sense of gratitude and inspiration, which he attributes part of his success to.
LA + Computer Geeks + Rap = …Skurt?
After landing in America, Harry settled in Southern California. One evening, he was invited to a music studio by a close friend who was a rapper signed to Atlantic Records. His friend told Harry “I’ve got some computer geeks that want to meet with me and I don’t know what they want. Please help me with this meeting!”
What happened next?
Harry and one of “the computer geeks” hit it off. That geek turned out to be Harry’s Skurt & Pipe Co-Founder Josh Mangel. Always the hustler, Harry “practiced what I was preaching there at the studio that night. I had an iPhone full of maybe 50 or so business ideas or technologies that I wanted to build one day with the right team. And I was pitching Josh many of them that night. And we just hit it off!”
On how he felt about sharing his secret sauce (including early ideas for TikTok & Instacart):
“I’ve always been the type of person that has taken the perspective that you should talk about your ideas with everyone and get feedback and practice objection handling and evolve those ideas. I think it’s execution over everything — ideas effectively should be open-sourced amongst your peers.”
Raising $6M in 13 minutes from David Sacks
“The legend is true, we really did. It was sub 15 minutes, David sat back in his chair, and he said, ‘Okay, we’re going to do this deal.’ And he made us an offer there. And then we hammered out the details at his house in San Francisco that evening.”
Building Pipe
“There wasn’t one aha moment. It wasn’t sort of like I slipped on a banana and came up with the idea overnight, it’s really a combination of both Josh, my other Co-Founder Zain, myself, and a lot of our founder friends, just a combination of our collective experience raising many, many rounds of equity financing and noticing that there was this effectively arbitrage opportunity and inefficiency in the market.”
“We’re in SaaS companies, which was our initial go-to-market vertical that we focused on with discounting 20 to 30%, in order to get cash flow upfront…And my whole argument was that these customers that are willing to prepay annually are arguably your most valuable cohort and most committed cohort of customers that are least likely to churn over the long run, because they’re committed to paying you upfront.
So you’re taking your most valuable cohort of customers and you’re offering a significant discount to them not just a discount to your cash flow, but a discount to your top-line revenue, and therefore a discount to your equity value. And so it’s a really significant cost when you add it all up. And it culminates in a significant discount to your eventual valuation of the company!”
A Wharton Fintech Exclusive: New Product Ahead
Harry also drops a hint at what the future of Pipe will look like, including a new feature they’re launching in a Wharton Fintech exclusive:
“We do business globally, but we only support US dollar denomination trading. Multi-currency support is actually next up on the roadmap — there’s a sneak peek for you. So we will be unlocking a significant portion of our existing customer bases revenues that are currently not tradable.”
The TAM is nearly limitless though, as you can start to get much more creative with great clients outside of software…
The Future of VC
“Over the next 10 years, I think founders are going to have a lot more leverage and choice in the way that they finance their businesses. But at the same time, I really think that all the products that exist today, they’re going to continue to exist in some way, shape, or form. I just think the terms of engagement are going to evolve and they’re going to evolve to be more favorable for companies as we & the broader community are able to better assess risk!”
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Harry was fantastic in today’s episode, as they also cover Pipe’s amazing syndicate of investors, how Pipe is approaching remote work through ‘microhubs’, the hype in Miami, and a rapid-fire round including his favorite band (that’s never coming back), his favorite interview question, and more!
Enjoy the show!
Harry Hurst
Harry Hurst is a serial entrepreneur who developed a passion for technology early in life, graduating high school at age 12 studying Computer Science. Harry and Pipe co-founder Josh Mangel built their first company Skurt, a financial technology company in the mobility space. After four years, Skurt was successfully acquired by Fair in 2018. Pipe was founded in 2019, to unlock the largest untapped asset class in the world — revenue — to empower entrepreneurs and companies to grow their business on their terms without debt or dilution. Harry has raised over $150 million for his companies and is considered an industry expert on financial technology and emerging asset classes. He is also an angel investor and mentor to a number of companies. Prior to becoming a technology entrepreneur, Harry ran a professional recruitment consultancy, which influenced his approach to strategically and intentionally hiring the right talent, building strong teams, and developing enduring company culture.
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Ryan Zauk
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Ryan Zauk is an MBA Candidate at The Wharton School, where he runs the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. He has a passion for music, media, and all things FinTech.
You can reach him at rzauk@wharton.upenn.edu or on Twitter.
