High School Students Launch Automatic Escrow System at Demo

Pavilion.io uses Bitcoin technology to verify dollar transactions and avoid fraud

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Photo of Jamie Young (left) and Brendan Duhamel (right)
Seventeen-year-olds Jamie Young (left) and Brendan Duhamel (right) present a Bitcoin-based automatic escrow technology at Demo in San Jose.
Photo: Tekla Perry

If you’ve ever had an idea for a startup and didn’t follow up on it, you now have absolutely no excuse, because these teens are making it look easy.

Jamie Young and Brendan Duhamel, the founders of Pavilion.io, kicked off their presentation at Demo 2014 last week by saying: “We’re both 17 and we go to high school” and “one day we ordered a skateboard on eBay and our board never arrived.” My initial reaction—this will probably be cute but nothing to take seriously—was quickly replaced by respect. These kids have a pretty good idea, appear to be able to implement it, and definitely had thought through may of the potential problems in at least as much—and in some cases more—detail as any adult presenter.

Pavilion’s product, called Trustless Exchange, is designed to allow ecommerce sites to reduce bad transactions, that is, situations in which a buyer pays money for a product never delivered or a less than honest buyer falsely reports that an order that actually arrived didn’t do so.  Trustless Exchange uses the Bitcoin blockchain—that is, the public record of all confirmed transactions conducted as part of the Bitcoin service—but stays away from the Bitcoin currency itself; all commerce is conducted in dollars, with no conversion to Bitcoin at any point.

Pavilion also taps into the package tracking records of shipping companies, such as FedEx and UPS, and puts it all together into a system that links control of a payment to the delivery of a package. The seller can’t take control of a payment until the package delivery service lists the package as arrived; then the payment is automatically released. (Of course, the package could be empty, but at least it got there.) Pavilion hopes to convince eBay to be their first customer, and follow that by going after Chinese ecommerce company Alibaba.

After a short rehearsed spiel, Demo presenters field questions from expert judges. This give and take often trips up experienced entrepreneurs. But these teens had a solid answer to each question—and knocked one out of the park.

Q: “Why should users trust you?”

A: “They aren’t placing trust in us, or each other, or eBay—it’s an automated system, the funds are released when the package arrives.”

Q: “How would this work with a rating system of transactions?”

A: “It would get rid of the rating system, what do you need ratings for if you don’t need trust?”

Q: “What is your blocking?” (Translation: How do you prevent a competitor from  jumping in?)

A: “We got a provisional patent yesterday.” (That was the home run answer.)

The Pavilion founders had to rush to the airport right after their presentation—they currently live in Boston, and had to be back at high school the next day. But I caught up with Pavilion CEO (and adult) Jim Thompson, who filled me in on how Pavilion is evolving as a company. (It takes some smart young entrepreneurs a while to figure out they need adult supervision—latest case in point, Ubergate; but these two already figured that out).

Young, Thompson told me, had the initial idea, bringing in close friend Duhamel to help him market it. The two then hired two people—33-year-old CEO Thompson and 25-year-old CTO Poramin Insom—by scouring Angellist, a resource for people who are starting companies or looking to join or finance startups.  They interviewed candidates via Skype. Young and Duhamel then went to a recruiter to find a Bitcoin expert, and came up with 31-year-old Hector Chu, now Pavilion CIO. Chu built the system Young had envisioned. For money, they haven’t spent much to date—mostly airfares—and have been promised $25,000 in seed funding from accelerator Plug and Play Bitcoin.

Right now, the team is geographically scattered, with Young and Duhamel in Boston, Thompson in Silicon Valley, Insom in Baltimore, and Chu in England.  But Young and Duhamel, after rushing through their high school courses this autumn, will graduate a semester early, and all the members of the team will join Thompson in Silicon Valley in January. And I mean really join Thompson, the group plans to live AND work together, just like on the HBO comedy Silicon Valley. Stay tuned—I hope to catch up with them again in a few months.

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