November 7, 2023 • 42 mins
Rodney Williams is Co-Founder and President at Solo Funds, one of the leading financial technology companies for underserved communities.
On this episode, Rodney speaks with AfroTech's Will Lucas about how to launch a fintech startup MVP with no venture capital, how challenging disruption can be in a highly regulated industry, and finding success when facing existential threats.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I'm will Lucas and this is black Tech, Dream Money.
Ronnie Williams is a three time venture founder currently serving
as president and co founder of Solo Funds, the largest
community fintech platform for everyday Americans, providing an opportunity to
access and growth capital and establish financial independence. He's also
co founder Listener and Ultratonic Data over Sound Technology Leader,
(00:24):
and he's an aspenc Institute Henry Crown fellow. Solo Funds
recently reached a major milestone achieving a million users, So
I'm interested if he had to rank the most important
factors in achieving that milestone, between a the demand for
the solution solo Funds provides, or be his ability to
build community. What would Rodney say is the most important
(00:46):
to reaching the MILLI.
Speaker 2 (00:47):
I think it's the right answer is probably a combination
of both. I don't think that one outweighs the other.
I think what made it so difficult is the concept
of a community as it released to financial services is
very very new. Right, That's not when you think about
financial services, you don't think about community, and and so
(01:11):
I believe that has to be a part of the
growth story, not just the demand part, Right, I think
I think the demand has always been there. I think
the community is what makes it unique and special.
Speaker 1 (01:26):
You had said in another interview, the system is somewhat
discriminatory or selective in that it's extremely expensive to start
a financial services company. To that end, like, what are
some of the most.
Speaker 3 (01:38):
Effective ways for people.
Speaker 1 (01:40):
Who are trying to build fintech, you know, whether in
whatever vertical, but particularly in fintech, whatever solution. I'm sorry,
you know, what are some of the best ways to
create MVPs, like minimum viable product when it's so tough
to get into this industry.
Speaker 2 (01:56):
Yeah, you know, I would I would say that I
think the way in which we did it was, you know,
was probably the cheapest, most efficient way to do so.
Speaker 4 (02:05):
It is expensive, probably more expensive.
Speaker 2 (02:07):
Than any other of the technology company outside of hardware,
in my opinion, because of the required amount of legal
work prior to launching compliance and then the ongoing regulation
or compliance that's necessary that to maintain whatever the idea
(02:30):
you have.
Speaker 4 (02:31):
So it's actually pretty pretty substantial upfront costs.
Speaker 2 (02:34):
But the way in which we did it was using
the accelerators, using the the those were those were incredible,
you know, launching pads for Solo. I think Solo participated
in three prior to launching yet alone, maybe probably about
three additional after launch.
Speaker 4 (02:54):
So you know, those those accelerators were huge for for
not for.
Speaker 2 (03:03):
Trying to just leverage resources despite the uphill battle of
the of the costs that it takes to do.
Speaker 1 (03:10):
So, you know, for I love this conversation because you know,
you talk about it's really expensive to do compliance. It's
heavily regulated industry, and I was reading something where you said,
you know, at the end of the day, the pattern
matching that vcs do when they're looking for the next
billion dollar exit, there's not a number of people who
walk in looking like you. You know, there's not a lot
(03:31):
of people who have attained that level of success and
look like us.
Speaker 3 (03:34):
You know.
Speaker 1 (03:34):
But when you put numbers on the board, you went
on to say, people start to wake up. And so
in order to get that VC attention. To your point,
you know, you have to put some numbers up on
the board. How do you do that if you're not
Rodney Williams.
Speaker 2 (03:51):
Well, I think, let's be very clear. I think that
I think everyone is capable of delivering on a concept
in a way that they need to.
Speaker 4 (04:09):
I think that some.
Speaker 2 (04:11):
Of the most the most important things that the founder
needs to do is persevere and get it done.
Speaker 4 (04:18):
And to do so, you.
Speaker 2 (04:19):
Got to learn, you know, coming from our first venture
and to this venture, myself and Travis didn't get here
by knowing all the answers or assuming that, you know,
because I've had success in the past, it's going to automatically,
you know, lead to success here.
Speaker 4 (04:39):
I think we we've attacked.
Speaker 2 (04:40):
It from the from from the position of not knowing
anything right and and what that means is we need
to know everything and and when when you know us
standing here today reaching the numbers that we have, is
that we have become the experts at what we do,
and we're the best in the world at it. You know,
every predecessor that has ever tried to do peer to
(05:04):
peer finance has failed or has has never reached the scale.
And you know, what we didn't know, we learned and
what we knew and anchored in the community in which
we serve to be quite frank we're black, we're African American.
Speaker 4 (05:21):
And.
Speaker 2 (05:23):
Fortunately I'm part of a community or we're part of
a community that has been taken advantage of by financial
services since the beginning of time and a lot of
the we know the dos and don'ts of our community.
We know the nuances of what the product needs to enable.
We know the nuances and what's going to encourage users.
Speaker 4 (05:44):
To pay back. These are some of the things that
we knew.
Speaker 2 (05:48):
All of the things that we didn't know is what
we learned to put those numbers on the board. So,
and to be clear, I think you know, we don't.
I don't think we get on the stage enough to
talk about the numbers on the board. But we're doing
something that has never been done before, at a scale
that has never been done before, and and and and
(06:12):
there's a lot of there's a lot of what I
would call pain and suffering and scar tissue and getting there.
Speaker 4 (06:21):
But we're excited about what's.
Speaker 1 (06:22):
Next coming to the game. Not knowing a whole lot,
you said, to your point, but you had to learn
a lot so that you could know everything about this.
I'm obviously I'm sure you came in with some assumptions
about things because I read your story and you and
Travis both come from very successful corporate careers and having
that you know, personal income, that revenue, you had people
(06:45):
around you who didn't have it, and so in order,
you were one of the people that people went to
the family, like, you know, if I need one hundred dollars,
I can go to Rodney.
Speaker 3 (06:52):
Well, so obviously other people have that issue as well.
Speaker 1 (06:55):
But what what are some of the things that we're
surprising to you about some of the assumption as you
made that may not have been turned out to be correct.
Speaker 2 (07:04):
You know, I used to think that it was just
my friends and family, meaning that you know, mostly you know,
the group of Americans that you know had limited savings
and didn't really have access to short term credit, whether
it's a credit card or a painting loan. I kind
of you know, I originally thought that it was focused
(07:24):
in African American communities.
Speaker 4 (07:28):
I'm still somewhat shocked that.
Speaker 2 (07:32):
No, it's it's it's it's something that's spread across all
middle class Americans.
Speaker 4 (07:38):
You know, over.
Speaker 2 (07:40):
Over over one hundred and ninety million middle class Americans.
Speaker 4 (07:46):
Yes, it's filled with the underserved.
Speaker 5 (07:49):
Communities are filled with communities that you would think of
like LGBTQ or you know, Americans with disability, for example,
but it's also filled with black ground and women Americans
who tend to be taken advantage of by financial services.
Speaker 2 (08:05):
So said differently, financial service companies haven't necessarily built products for.
Speaker 4 (08:09):
The needs for their needs.
Speaker 2 (08:12):
So that's probably, honestly, that one of the most incredible
assumptions that that continues to shock me. And and I
give you an example of that. Ten percent of our
borrowers make over one hundred thousand dollars a year. You know,
this person isn't financially illiterate. This person understands finance, this
person has a credit card. Why has the financial system
(08:39):
been built to whereas though they need two hundred dollars
and they can't get it. And that's the biggest question.
The bigger question isn't how we did it, it's why
is it successful? Why is it growing? Why is there
such a demand for this? Why isn't more people talking
about it? You know, there's a lot of regulators and
(09:00):
government agencies and politicians are always talking about reducing the
wealth gap and increasing the access to capital. You're always
talking about it, but where like, who are the people
that are doing it? And why aren't you supporting them?
And those are the questions that I now I sometimes
perplexed by. But I'm up for the challenge as well.
Speaker 1 (09:26):
You know, so historically we've leaned on the big three
credit companies Experience, Eco Fax, TransUnion to determine a large
part of our financial situation, whether we can get loans,
whether we can get a car, whether we can get
a house. So many other alternatives to that have come
into the conversation over the last few years, like.
Speaker 3 (09:46):
A social credit score and et cetera.
Speaker 1 (09:48):
How do you think how does Solo Funds think.
Speaker 3 (09:50):
About the evolution of the credit score.
Speaker 4 (09:54):
Well, it's somewhat broken.
Speaker 2 (09:58):
If you think about an missed of COVID and thinking
sometime in twenty twenty one credit scores, what are all
time high where.
Speaker 4 (10:06):
No one will working?
Speaker 2 (10:08):
Well, you know what that What we're ultimately talking about
is that you know, the way the credit score currently
works is that it's an incredible measure of historical behavior,
but it doesn't necessarily give you a snapshot on the consumer,
the consumer's economic position today. It gives a snapshot of
what it was right and and and there's waste. There's
(10:33):
so much technology available to you at our fingertips that
it needs to it needs to be way more real time,
and it needs to have a forward looking out look
and and I think that's that's that's some of the
nuances in which and how we made our solo score,
which again takes into account real time cash flow to
to to assess, uh, who who that borrower may be today,
(10:57):
right and and and then try to under saying.
Speaker 4 (11:02):
What they can do in a near term.
Speaker 2 (11:03):
So it's a very different thing, you know what you
know when when you talk to anyone about the credit
report or the credit agencies, and there's a ton of
secrecy on how it's scored. There's some things that we know,
but it's a ton of different misconceptions about how it's scored.
(11:29):
We actually just tried to remove all of the misconceptions.
Speaker 4 (11:34):
You know.
Speaker 2 (11:35):
The way our score works is on cash flow. When
you pay something back on time, your score gets better.
When you don't, your score gets worse.
Speaker 4 (11:43):
That simple.
Speaker 2 (11:44):
No, no, no magic, saw us, no nothing that the
consumer can't understand.
Speaker 4 (11:49):
I wish our credit score was that simple.
Speaker 2 (11:51):
Meaning if I have a bill and I paid it
on time, it should maintain or get better. But it
kind of doesn't. You know, it seems that get worse
if I miss a payment. I make a ton of payments,
and it doesn't necessarily reflect that successful payment history in
the score at least, and and and no form of immediacy.
Speaker 4 (12:15):
So these are some of the things in which what
we leveraged to create our score.
Speaker 2 (12:19):
I will tell you the traditional credit system is built
on that, on the credit burd and agency. So it's
a necessary evil, but it is an evil that is
not widely understood and and that's been been a challenge.
Speaker 1 (12:52):
There are many people who might have just fell on
hard times or have an unexpected situation and need help.
And SOLO find is that assist others who might just
be financially unsaddened. How the solo funds man those behaviors
on this platform to be sure both the bowers assisted
and the lender is protected.
Speaker 3 (13:12):
Rodney speaks on it.
Speaker 4 (13:13):
Yeah, I will tell you where we see much far less.
Speaker 2 (13:19):
Than we see far less a percentages are examples of
consumers bad with money.
Speaker 4 (13:31):
We see.
Speaker 2 (13:33):
Much more examples of consumers operating on extremely tight budgets.
Speaker 1 (13:39):
You think that then it's like a negative stereotype that
they've said about us, that we just can't manage money.
Speaker 2 (13:45):
It's not true. It's actually really incorrect. It really bothers
me because in part they're talking about my mom. When
we talk about my mom, it's gonna be a problem.
Speaker 4 (13:59):
But I'm going to try to paint a picture for you.
For of our bars are college.
Speaker 2 (14:05):
Educated, mostly women. They tend to have multiple children, They're
gainfully employed. They live in cities like New York City,
San Francisco, Miami, Atlanta. These are high cost of living cities,
and they live on extremely extremely tight budgets. What I
mean by extremely tight budgets is that they have less
(14:28):
than eight hundred dollars.
Speaker 4 (14:29):
Of stavings in their bank account.
Speaker 2 (14:31):
Despite being college educated, savvy. To give you perspective, this
consumer can take twenty dollars and somehow.
Speaker 4 (14:40):
Figure out how to live off at that point an
entire week when they need to.
Speaker 2 (14:44):
They know every day that the bill is coming out
of their checking account. Literally, they know when Netflix is
coming out. Okay, this is how focused they are and finances.
So what we're talking about is the cost of living
(15:05):
is concern in a wage concern that's creating very very
tight constraints on budgets. And in a time like this
where inflation is happening all all of a sudden, my
gas to fill my tank when from forty dollars to
fifty dollars.
Speaker 4 (15:19):
I need that.
Speaker 2 (15:21):
So what happens is these consumers, despite that eight hundred
dollars savings, will have a financial emergency one to four
times every twelve months. And it looks very simple. My child,
my child is sick. I can't go to work for
(15:43):
three days. That's three days of pay.
Speaker 4 (15:47):
Wow.
Speaker 2 (15:49):
This is also when I now have a medical deductible
because my kid is sick, and even surgery that's five
hundred dollars. And the combination of the medical deductible and
the fact that I'm not going to work means I'm
going to be short on rent in two weeks.
Speaker 4 (16:07):
That's it. Eight hundred savings is gone like that.
Speaker 2 (16:12):
So all of a sudden, you know, you're like, you
know what, I'm gonna be late on the rent. I'm
gonna make sure my kid gets better, but I'm gonna
incur late fees on my rent and I don't have
any extra cash. Really, I'm just gonna be late. I'm
just gonna make sure I got food on the table.
Let me just borrow two hundred dollars to make sure
I got food on the table. That's not mismanagement of money,
(16:38):
that's a lack of cash.
Speaker 4 (16:41):
But that's a lack of salary.
Speaker 2 (16:42):
Given the cost of living and ef person lives in,
there's no scenario that this person can access short term
capital cheaper or more efficiently except for going to friends
or family or if you talk to a lot of
these consumers.
Speaker 4 (16:57):
I mean, what I love about this consumer is.
Speaker 2 (16:59):
That they're they're they're wet Americas built off of right.
We see teachers who sell t shirts on Etsy. We
see police officers who also drive Uber, We see you know,
I mean, we see multiple streams of income, especially in
moments of type and constraint moments, they actually dig themselves out.
(17:22):
The problem is we're trying to make sure that whole
isn't as deep as it would be what a subprime
credit card or paying loan, we're solo. That whole is
not deep at all. But it is a misconception that
I hate that this group of Americans is not, you know,
financially illiterate. It is not true.
Speaker 4 (17:44):
It's not true.
Speaker 1 (17:45):
Talk more about that the long term cycle of debt
that many of us, not many of us, may not
be aware of that the traditional emergency lenders put us
in because you know, you talk about yes, there there
may be some predators or a percentage race that those things,
But what is this real cycle that it gets people
into that's negatively affected our communities.
Speaker 2 (18:09):
The cycle isn't even the APR. The APR is an illusion
that's inaccurate. So I'm gonna give you too truth about
the APR, which causes problems for for for many Americans.
Number One, the APR is as a specific fee based
(18:31):
on the condition of credit. It is a fee that
they're supposed to communicate. It's it's a it's a fee
that takes the kind of like average rate and annualizes it.
Speaker 4 (18:43):
But I give you an example.
Speaker 2 (18:45):
When someone says, oh my god, that payday loan costs
four hundred per the consumer is not technically paying four
times what they borrow. It's an annualization relation based on
the short term. It's even difficult to understand as I'm
explaining it. Yeah, right, So that's that's problem number one.
(19:10):
Problem number two, which is more important than problem number one,
in my opinion, is that APR does not include subscription fees,
annual fees, late fees, origination fees, instant cash fees. I
give you an example, when you look at like subprime
credit cards or payday loans. I only think like twenty
(19:30):
percent of consumers actually paid them more time, so that
means what a consumer is really paying should then also
include the late fee, because most consumers are paying late fees.
Speaker 4 (19:43):
That gets into the predatory nature.
Speaker 2 (19:47):
And giving an example, a subprime credit card, which is
an average of about five hundred dollars, is your how
much credit they'll give you it will happen the highest
APR that's allowed in that state, plus the an annual fee.
There's a late fee, a flat late fee assessed every
month that you're late for the rest of the time.
(20:10):
Now they have caps, but for a while there's also
instant cash fees that you also don't care. So when
we actually we actually try to we call it total costs.
We actually commission the research projects or understand what are
consumers really paying?
Speaker 4 (20:30):
Not sure math.
Speaker 2 (20:31):
If a consumer takes one hundred dollars today, what are
they paying twelve months from them?
Speaker 4 (20:37):
That's it. It's everything plus.
Speaker 2 (20:39):
One hundred dollars, no offens and bucks, and the data
is really really upsetting.
Speaker 4 (20:45):
Subprime credit cards are.
Speaker 2 (20:46):
Actually more expensive and paying the most, which are a
subprime credit card of basically one thousand dollars, the average.
Speaker 4 (20:56):
Consumer is going to pay like nineteen hundred dollars.
Speaker 3 (20:58):
Fees on top of the thousand, on top of it.
Speaker 4 (21:04):
Principle, Yeah, it was, it was. Actually it's actually really bad.
Speaker 2 (21:09):
So, you know, these are some of the things that
aren't necessarily talking about, but mainly because who's who's the
who's the folks in the in the room arguing about
APR or talking about what consumers are really paying. Number One,
(21:29):
that they're too far removed. I know, I know, my my,
you know, the too far removed from the plight. They've
they've made their money a long time ago, they're doing
pretty well. They're not understanding what these consumers are really
paying for. And and if they're from non underrepresentative groups,
so underserved groups, it's just perpetuating a lack of understanding, right,
(21:57):
and and and and this is one of the biggest
reasons why we're we published as Total cross Support. Now
why again, we kept trying to figure out why we're growing,
you know, like maybe you know, because you start to
question yourself, like maybe we aren't so affordable, maybe we
aren't such a benefit. But when we surveyed our consumers
(22:18):
and they're like, I was like, why didn't you why
don't you?
Speaker 4 (22:20):
Do you have a credit card? Yes, well, that's shocking.
Speaker 2 (22:24):
They told us that they didn't have a credit right,
why don't you use your credit card?
Speaker 4 (22:28):
It's too expensive? And I was so confused by that.
Speaker 2 (22:33):
Because my credit card isn't that expensive, but their credit
card is.
Speaker 4 (22:38):
And these are just some of the things that you know.
Speaker 2 (22:41):
I think that's one of the best things about being
who we are as founders and entering this space within
financial services is that we it's I think it's our
duty to be a voice of who we represent and
to start to bring data and facts and start to push,
you know, are our leaders to answer these questions and
(23:05):
and and to and to start to create some level
of reform. I'm proud to say, and I think you know,
we're about a fifth of the cost of subprime of
subprime credit cards, the average consumer spends about thirteen point
four percent in addition to their principle after twelve months.
(23:28):
And then I'm gonna tell you the only reason is
that we don't compound fees. Not the only reason, but
we don't believe we don't give you like if you're
late every month, we don't charge you late fees every month.
Speaker 4 (23:40):
There's a one time fee that that's going to dig
a hole.
Speaker 2 (23:46):
And you got to understand, there's no what we have been,
what we have learned is that we actually have significantly
better repaying the rates.
Speaker 4 (23:53):
No, I it's easier to get out the hole.
Speaker 2 (23:57):
It's really hard to pay back one hundred dollars loan
that is now two hundred and fifty bucks versus one
hundred dollars loan that's now you know, one hundred and
thirteen dollars.
Speaker 3 (24:11):
Yeah.
Speaker 6 (24:11):
Yeah, it's really that simple when we think about it, right,
like you don't dig the hole too much, so it's
still in reach of a payment.
Speaker 2 (24:24):
But again, these are just some of the nuances that
we decided to do, and I mean to be honest,
we took it the extra step. We're one of the
few lenders in the space that is a benefit corporation
a certified benefit.
Speaker 4 (24:36):
Corporations via the b Labs. B labs is a nonprofit.
Speaker 2 (24:42):
Think of it like a governing body who certifies companies.
Speaker 4 (24:48):
To attain B CORP status.
Speaker 2 (24:50):
B CORP status is a combination of their certification as
well as like literally we submit we actually you know,
register with the government as a benefit corporation, which what
that ultimately means is that we balance the need for
profit alongside for people and we don't.
Speaker 4 (25:13):
We don't. That's that's important.
Speaker 2 (25:15):
So they come in and they look at all of
our finances, They look at how much money we make,
they look at how we play pay our employees, they
look at, you know, in terms of how we even
promote within and they give scores. But not only did
they assess all those different things, they assess our business
model and they assessed that, you know, how we're handling
(25:37):
our consumers, and it came back very, very positive.
Speaker 4 (25:41):
But I mean, that's the piece.
Speaker 2 (25:43):
I'll tell you another piece, the average mps's net promoter score.
It's how you know you can judge consumer experience. Most
financial services companies are around forty. Bank of America is
at a twenty two. Our average net promoter score is
a ninety.
Speaker 4 (26:00):
These are these are.
Speaker 1 (26:01):
That for the people who don't really understand what that means,
like what factors go into creating that score.
Speaker 2 (26:07):
It's it's really just about it's it's a measure of
its basically a measure of the amount of consumers that
are having a happy experience. So it's a random survey
that's distributed across all of our users, and it's it's
just them being happy. Companies that have really high net
promoter scores are companies like Apple and Nike, Patagonia, you
(26:32):
know what I mean. These are something not financial service companies.
Put it that way. So we we are extremely proud
of having an MPs like that.
Speaker 4 (26:46):
But that's the community part.
Speaker 2 (26:48):
Going back to your first question, it's it's because of
that why where we continue to reach the scale that.
Speaker 1 (26:56):
We are you you said earlier and I've read you said,
there's a few times, you know, you're innovating and thriving
where companies have failed. You guys are the first company
in this vertical, particularly black owned company, to find success.
Speaker 3 (27:10):
Why do people fail?
Speaker 1 (27:13):
Why is their line of you know, dead startups previous
to you guys?
Speaker 2 (27:19):
Well, I think a lot of people were making products
for middle class America and they're not middle class America.
One day, I'm going to start a VC firm, and
our goal is to invest in founders who are uniquely
(27:39):
positioned to be experts at the consumers they serve. That's it,
you know, And I think when you look at a
lot of the fintech innovation. Just look at a lot
of the fintech innovation, even the the what everyone talked
about for crypto is going to democratize finance for the people.
Speaker 4 (27:58):
You know what I mean, we're not going to talk
about that.
Speaker 2 (28:03):
Or you know, you know, credit builders and this this,
These are all Harvard, m I T and Stanford Dies
building products of people that look like you and I
and they're just where where where I truly believe they
failed is you know, not understanding the consumer. And it
(28:23):
makes perfect sense. I think people got to understand my background.
I'm a trained brand manager from Procter and Gamble.
Speaker 4 (28:33):
I spent five years becoming an expert at a consumer, being.
Speaker 2 (28:38):
Relentless at shipping cases. All right, I worked on Pampers.
Wasn't a dad. But the way I got good is
becoming an expert at who we serve. And I think
sometimes in fintech's we kind of or you know, we
kind of get we kind of get excited about the
(28:58):
opportunity and you miss the point.
Speaker 4 (29:03):
We at Solo are obsessed.
Speaker 2 (29:06):
With middle class America to the point where I live
down the street from a payday long London. Trust me,
I can live a lot of places, but I want
to drive past that line every Friday. I want to.
I want to. It does something to me, you know
what I mean? And my co founder lives also down
the street. We're doing these things because we've learned why
(29:31):
our success well, we've learned or we know why some
of our success has happened, and it's definitely because of
how anchored we are in the consumer we serve.
Speaker 1 (29:44):
You said something similar about community banks before and that
they weren't really doing what they're designed to do. You know,
so you said, I think about what the community bank
is supposed to do, and they're supposed to be lending,
allowing lending and borrowing in the community. You know, I
think about if we look at almost any deeply embedded
(30:05):
institution or industry, we can find where they failed to
live up to their promise. How did you know finance
was one you wanted to tackle and what was your insight?
You talked about being from middle of America, But there's
a lot of things you could have done. There's a
lot of places you could have lived. To your point,
there's a lot of things you could have put your
efforts and resources into. Why finance.
Speaker 4 (30:29):
You know.
Speaker 2 (30:33):
I wanted to make an impact, and I saw I
wanted to make a financial impact.
Speaker 4 (30:40):
And you know, Travis and I.
Speaker 2 (30:44):
We saw a lot of effort pushing capital to small businesses,
entrepreneurs of color, and we were still driving past the
woman who served me coffee, person who served me a drink,
and I was still getting picked up in ubers and
(31:06):
they needed support and help too. And for me, I
grew up in a working class family, and working class
family is who built me. I also know that my
working class family is so working classes no more. They're
doing pretty damn well. It's funny how people who work
(31:27):
really hard tend to dig themselves out of it.
Speaker 4 (31:30):
Right, So I figured, you know, one of the things.
Speaker 2 (31:36):
Really the innovation that I would say that's really important
for us, and I usually glance over it. But our
solo score, our underwriting model is impressive. It's currently performing
about four times better than the industry average.
Speaker 4 (31:50):
That's all built in house.
Speaker 2 (31:52):
All built on a few AI models. Taking we used
to call it the hustle score. It's we're trying, We're
really met. We really designed an underwriting score that measures
a consumer's ability to make and to figure it out
(32:16):
and and that in combination with what we call our
real time or payment product or real real time payment solution,
we h we've kind of removed all of the dumbness.
And I'm going to give you an example. I sign
up for a system I didn't have to pay you
(32:36):
in a month. Instead of just pre scheduling it or
make it easy to pre schedule, we let consumers miss it.
That's a that's there's enough technology for every bill that
we have today to be automatically connected to us, right.
(32:59):
But that I'm ultimately getting is that we built our
repayment product to continue to monitor out borrowers accounts. So
never have we ever overdrawn, but we're we're we become
a partner in their finances, not a predator in their finances.
And that's that gives a little bit to our repayment product.
It's actually the code names get Money. The one of
(33:23):
the final things that we did, and we were the first,
one of the first companies to do so. We built
our entire payment structure on real time rails way before
FED now better than Zel, but we built it on
something called Visa Direct and Master Christ saying it's their
proprietary real time debit infrastructure. We were and are still
(33:47):
one of the few lending companies in the world that
are built.
Speaker 4 (33:52):
That's why follow me on Instagram.
Speaker 2 (33:53):
I'm always in Visa's office and these are some of
the reason why we're always in their office. What does
that allow us to do? That allows us to move
money faster and more efficiently when someone's in need and
when someone needs going to pay alone. Put yourself in
that single mom that I talked about, who knows exactly
(34:14):
when her.
Speaker 4 (34:15):
Netflix built is gonna come out.
Speaker 2 (34:18):
So if she says, solo, you need to pull this
money on the fourth, if you pull it too late,
you're not gonna get it.
Speaker 4 (34:33):
That's what she's also telling us.
Speaker 2 (34:35):
So we needed a real that's nobody, honestly, quite frankly,
no one who looks like me really understands that that
you need to pull money exactly when it's available.
Speaker 4 (34:46):
It cannot be a delay because all of that.
Speaker 2 (34:48):
You know, when things get pending in the ach, something's
gonna fall short.
Speaker 4 (34:52):
And that goes both ways.
Speaker 2 (34:54):
So we spent a lot of extra capital spending this
real time product.
Speaker 4 (35:00):
And I will tell you that's some of the I.
Speaker 2 (35:02):
Just kind of gave you the three part secret sauce
to why we exist.
Speaker 1 (35:08):
It was a quote I read where you said, our
goal is not for borrowers to remain borrowers. I think
Travis said this, Actually, our goal is not for borrows
to remain borrows on this platform forever. So how do
you think then about retention and which metrics matter to you?
Speaker 2 (35:24):
Since pretty early in the in the in the life
of the company, our bars.
Speaker 3 (35:30):
Have also lent, so they've graduated.
Speaker 4 (35:34):
They graduated. I'm pretty happy about that rate.
Speaker 2 (35:39):
It's fantastic because it goes back to the original assumption.
Speaker 4 (35:43):
They're not illiterate.
Speaker 2 (35:46):
They just have a cash need today, right, and and
if you give them a way to get out of it,
and they're not only just going to get out of it,
they're going to thrive.
Speaker 4 (35:55):
In six months. I mean, we we have examples of.
Speaker 2 (36:00):
One of my favorite examples, it was in the CNBC
article is an engineer at San Francisco. He lost his job.
He used US for a couple months three hundred, four hundred,
five hundred bucks. Eventually he got a huge six figure job.
He became a prolific lender on the platform.
Speaker 4 (36:24):
Is that if that's not everyday Americans? I don't know
who that is, right, this person.
Speaker 2 (36:32):
I mean, that's the life of an average American is
that at the end of the day, job.
Speaker 4 (36:37):
Security is not what it meant twenty years ago.
Speaker 2 (36:41):
Like no one's at GM working for twenty five years.
Job security today is fleeting for every American, especially if
you're fresh out of college. You know what I'm saying,
under thirty five years old, you haven't really got your
footing and your career. You're in and you're in and
(37:01):
out of jobs despite being.
Speaker 4 (37:03):
Very, very educated.
Speaker 2 (37:05):
So these are just some of the nuances that we
eventually know that you will land, and you're going to
land and do really well, and you're going to be
a thriving member of the society. And and you know what,
you for some reason have a connection with Solo that
no one can break because Solo.
Speaker 4 (37:21):
Was there when you needed them most. No other financial
institution was.
Speaker 1 (37:26):
Wow, I want to dig into your mindset a little bit.
I've always been fascinated by the way you think. And
I learned this and doing research for this conversation, that
there was a time just a few years ago before
the surgeon users that you know, Solo Funds was almost
out of business.
Speaker 3 (37:42):
I mean it was expectively out of money.
Speaker 1 (37:45):
You know, I want to know about your mindset in
those moments where you're facing existential threats to your business
and you've gone head to head.
Speaker 3 (37:55):
With major players at your.
Speaker 1 (37:56):
Previous companies and when those were still startups.
Speaker 3 (38:00):
Who do you put yourself?
Speaker 1 (38:01):
I want to like how Rodney's mind works. Who do
you put yourself around? Or what is your mindset when
it feels like all the moves in front of you
have to be played precisely, incorrectly in order to stay alive.
Much less fine success, but just to stay alive, like
so many people don't come back from that. And so
I'm interested in how Rodney thinks about these sorts of threats.
Speaker 2 (38:27):
You know, looking back at them, I would tell you
that they are very expensive. And what I mean by
that is they're expensive on your social relationships. They're expensive
on your romantic relationships because it's a bit irrational, too empty,
(38:49):
they account like, I don't know what else to tell you.
It's a bit irrational. It's a bit irrational to say
I'm not to you know, to your significant other, I'm
not giving you Christmas gift this year. You're gonna have
to wait or you know we're gonna you know, we're
(39:10):
not gonna go home for the holidays. These are things
that I've had to do so and unfortunately, most of
the time, most of the network don't really understand this
kind of belief that's rooted in data. I've never made
these decisions. I've never made these decisions based off of gut.
Speaker 4 (39:35):
I'm a p and ger. Don't let my wildness fool anybody.
We lead on paper, and I don't need as much
paper as most pgs. That's what I said.
Speaker 2 (39:49):
I don't give me two sentences in a bullet point
and I'm probably gonna I can do the rest. But
what I'm ultimately saying is that you know, at some
point you get to a conclusion that the opportunity outweighs
the risk and the cost, and that little bit of
information is something that you are the only person in
(40:12):
the world that knows.
Speaker 4 (40:13):
So you just have to get through this moment, and
if you can get through the moment, it will pay
for you. I wish it was easier, you know.
Speaker 2 (40:26):
I look at my counterparts will get to go and
raise hundreds of millions.
Speaker 4 (40:32):
Of dollars because they.
Speaker 2 (40:34):
Know someone at andresen or their father is an executive
at Goldman Sachs. I wish that I had those level
of security, but I don't. So that means you swing
for defenses. But I will not lie to anyone listening
(40:55):
on this call. The cost is expensive. There's a lot
of relationships I had to sacrifice to get here.
Speaker 4 (41:03):
There are a lot of.
Speaker 2 (41:06):
Moments that I had to miss to get here, and
and and if you want to be an entrepreneur and
be a founder, and you're not willing to do those things, you.
Speaker 4 (41:20):
Should do something else.
Speaker 2 (41:23):
You know you should, because you may you may waste
someone's money, and you're definitely gonna waste your time.
Speaker 5 (41:36):
M H.
Speaker 1 (41:44):
Black Tech Green Money is a production of Blavity, Afrotech
on the Black Effect Podcast Network and I Hire Media
and it's produced by Morgan Debonne and me Well Lucas,
with the additional production support by Sarah Ergan and Rose
mc lucas.
Speaker 3 (41:58):
Special thank you to MICUs David Sapping. That's a Serrano.
Speaker 1 (42:01):
Learn more about my guests and other tech dissent innovators
at afrotech dot com. Enjoy your black Tech three money,
Share this with somebody, Go get your money, Peace and love,
I'm will Lucas and this is black Tech, Dream Money.
Ronnie Williams is a three time venture founder currently serving
as president and co founder of Solo Funds, the largest
community fintech platform for everyday Americans, providing an opportunity to
access and growth capital and establish financial independence. He's also
co founder Listener and Ultratonic Data over Sound Technology Leader,
(00:24):
and he's an aspenc Institute Henry Crown fellow. Solo Funds
recently reached a major milestone achieving a million users, So
I'm interested if he had to rank the most important
factors in achieving that milestone, between a the demand for
the solution solo Funds provides, or be his ability to
build community. What would Rodney say is the most important
(00:46):
to reaching the MILLI.
Speaker 2 (00:47):
I think it's the right answer is probably a combination
of both. I don't think that one outweighs the other.
I think what made it so difficult is the concept
of a community as it released to financial services is
very very new. Right, That's not when you think about
financial services, you don't think about community, and and so
(01:11):
I believe that has to be a part of the
growth story, not just the demand part, Right, I think
I think the demand has always been there. I think
the community is what makes it unique and special.
Speaker 1 (01:26):
You had said in another interview, the system is somewhat
discriminatory or selective in that it's extremely expensive to start
a financial services company. To that end, like, what are
some of the most.
Speaker 3 (01:38):
Effective ways for people.
Speaker 1 (01:40):
Who are trying to build fintech, you know, whether in
whatever vertical, but particularly in fintech, whatever solution. I'm sorry,
you know, what are some of the best ways to
create MVPs, like minimum viable product when it's so tough
to get into this industry.
Speaker 2 (01:56):
Yeah, you know, I would I would say that I
think the way in which we did it was, you know,
was probably the cheapest, most efficient way to do so.
Speaker 4 (02:05):
It is expensive, probably more expensive.
Speaker 2 (02:07):
Than any other of the technology company outside of hardware,
in my opinion, because of the required amount of legal
work prior to launching compliance and then the ongoing regulation
or compliance that's necessary that to maintain whatever the idea
(02:30):
you have.
Speaker 4 (02:31):
So it's actually pretty pretty substantial upfront costs.
Speaker 2 (02:34):
But the way in which we did it was using
the accelerators, using the the those were those were incredible,
you know, launching pads for Solo. I think Solo participated
in three prior to launching yet alone, maybe probably about
three additional after launch.
Speaker 4 (02:54):
So you know, those those accelerators were huge for for
not for.
Speaker 2 (03:03):
Trying to just leverage resources despite the uphill battle of
the of the costs that it takes to do.
Speaker 1 (03:10):
So, you know, for I love this conversation because you know,
you talk about it's really expensive to do compliance. It's
heavily regulated industry, and I was reading something where you said,
you know, at the end of the day, the pattern
matching that vcs do when they're looking for the next
billion dollar exit, there's not a number of people who
walk in looking like you. You know, there's not a lot
(03:31):
of people who have attained that level of success and
look like us.
Speaker 3 (03:34):
You know.
Speaker 1 (03:34):
But when you put numbers on the board, you went
on to say, people start to wake up. And so
in order to get that VC attention. To your point,
you know, you have to put some numbers up on
the board. How do you do that if you're not
Rodney Williams.
Speaker 2 (03:51):
Well, I think, let's be very clear. I think that
I think everyone is capable of delivering on a concept
in a way that they need to.
Speaker 4 (04:09):
I think that some.
Speaker 2 (04:11):
Of the most the most important things that the founder
needs to do is persevere and get it done.
Speaker 4 (04:18):
And to do so, you.
Speaker 2 (04:19):
Got to learn, you know, coming from our first venture
and to this venture, myself and Travis didn't get here
by knowing all the answers or assuming that, you know,
because I've had success in the past, it's going to automatically,
you know, lead to success here.
Speaker 4 (04:39):
I think we we've attacked.
Speaker 2 (04:40):
It from the from from the position of not knowing
anything right and and what that means is we need
to know everything and and when when you know us
standing here today reaching the numbers that we have, is
that we have become the experts at what we do,
and we're the best in the world at it. You know,
every predecessor that has ever tried to do peer to
(05:04):
peer finance has failed or has has never reached the scale.
And you know, what we didn't know, we learned and
what we knew and anchored in the community in which
we serve to be quite frank we're black, we're African American.
Speaker 4 (05:21):
And.
Speaker 2 (05:23):
Fortunately I'm part of a community or we're part of
a community that has been taken advantage of by financial
services since the beginning of time and a lot of
the we know the dos and don'ts of our community.
We know the nuances of what the product needs to enable.
We know the nuances and what's going to encourage users.
Speaker 4 (05:44):
To pay back. These are some of the things that
we knew.
Speaker 2 (05:48):
All of the things that we didn't know is what
we learned to put those numbers on the board. So,
and to be clear, I think you know, we don't.
I don't think we get on the stage enough to
talk about the numbers on the board. But we're doing
something that has never been done before, at a scale
that has never been done before, and and and and
(06:12):
there's a lot of there's a lot of what I
would call pain and suffering and scar tissue and getting there.
Speaker 4 (06:21):
But we're excited about what's.
Speaker 1 (06:22):
Next coming to the game. Not knowing a whole lot,
you said, to your point, but you had to learn
a lot so that you could know everything about this.
I'm obviously I'm sure you came in with some assumptions
about things because I read your story and you and
Travis both come from very successful corporate careers and having
that you know, personal income, that revenue, you had people
(06:45):
around you who didn't have it, and so in order,
you were one of the people that people went to
the family, like, you know, if I need one hundred dollars,
I can go to Rodney.
Speaker 3 (06:52):
Well, so obviously other people have that issue as well.
Speaker 1 (06:55):
But what what are some of the things that we're
surprising to you about some of the assumption as you
made that may not have been turned out to be correct.
Speaker 2 (07:04):
You know, I used to think that it was just
my friends and family, meaning that you know, mostly you know,
the group of Americans that you know had limited savings
and didn't really have access to short term credit, whether
it's a credit card or a painting loan. I kind
of you know, I originally thought that it was focused
(07:24):
in African American communities.
Speaker 4 (07:28):
I'm still somewhat shocked that.
Speaker 2 (07:32):
No, it's it's it's it's something that's spread across all
middle class Americans.
Speaker 4 (07:38):
You know, over.
Speaker 2 (07:40):
Over over one hundred and ninety million middle class Americans.
Speaker 4 (07:46):
Yes, it's filled with the underserved.
Speaker 5 (07:49):
Communities are filled with communities that you would think of
like LGBTQ or you know, Americans with disability, for example,
but it's also filled with black ground and women Americans
who tend to be taken advantage of by financial services.
Speaker 2 (08:05):
So said differently, financial service companies haven't necessarily built products for.
Speaker 4 (08:09):
The needs for their needs.
Speaker 2 (08:12):
So that's probably, honestly, that one of the most incredible
assumptions that that continues to shock me. And and I
give you an example of that. Ten percent of our
borrowers make over one hundred thousand dollars a year. You know,
this person isn't financially illiterate. This person understands finance, this
person has a credit card. Why has the financial system
(08:39):
been built to whereas though they need two hundred dollars
and they can't get it. And that's the biggest question.
The bigger question isn't how we did it, it's why
is it successful? Why is it growing? Why is there
such a demand for this? Why isn't more people talking
about it? You know, there's a lot of regulators and
(09:00):
government agencies and politicians are always talking about reducing the
wealth gap and increasing the access to capital. You're always
talking about it, but where like, who are the people
that are doing it? And why aren't you supporting them?
And those are the questions that I now I sometimes
perplexed by. But I'm up for the challenge as well.
Speaker 1 (09:26):
You know, so historically we've leaned on the big three
credit companies Experience, Eco Fax, TransUnion to determine a large
part of our financial situation, whether we can get loans,
whether we can get a car, whether we can get
a house. So many other alternatives to that have come
into the conversation over the last few years, like.
Speaker 3 (09:46):
A social credit score and et cetera.
Speaker 1 (09:48):
How do you think how does Solo Funds think.
Speaker 3 (09:50):
About the evolution of the credit score.
Speaker 4 (09:54):
Well, it's somewhat broken.
Speaker 2 (09:58):
If you think about an missed of COVID and thinking
sometime in twenty twenty one credit scores, what are all
time high where.
Speaker 4 (10:06):
No one will working?
Speaker 2 (10:08):
Well, you know what that What we're ultimately talking about
is that you know, the way the credit score currently
works is that it's an incredible measure of historical behavior,
but it doesn't necessarily give you a snapshot on the consumer,
the consumer's economic position today. It gives a snapshot of
what it was right and and and there's waste. There's
(10:33):
so much technology available to you at our fingertips that
it needs to it needs to be way more real time,
and it needs to have a forward looking out look
and and I think that's that's that's some of the
nuances in which and how we made our solo score,
which again takes into account real time cash flow to
to to assess, uh, who who that borrower may be today,
(10:57):
right and and and then try to under saying.
Speaker 4 (11:02):
What they can do in a near term.
Speaker 2 (11:03):
So it's a very different thing, you know what you
know when when you talk to anyone about the credit
report or the credit agencies, and there's a ton of
secrecy on how it's scored. There's some things that we know,
but it's a ton of different misconceptions about how it's scored.
(11:29):
We actually just tried to remove all of the misconceptions.
Speaker 4 (11:34):
You know.
Speaker 2 (11:35):
The way our score works is on cash flow. When
you pay something back on time, your score gets better.
When you don't, your score gets worse.
Speaker 4 (11:43):
That simple.
Speaker 2 (11:44):
No, no, no magic, saw us, no nothing that the
consumer can't understand.
Speaker 4 (11:49):
I wish our credit score was that simple.
Speaker 2 (11:51):
Meaning if I have a bill and I paid it
on time, it should maintain or get better. But it
kind of doesn't. You know, it seems that get worse
if I miss a payment. I make a ton of payments,
and it doesn't necessarily reflect that successful payment history in
the score at least, and and and no form of immediacy.
Speaker 4 (12:15):
So these are some of the things in which what
we leveraged to create our score.
Speaker 2 (12:19):
I will tell you the traditional credit system is built
on that, on the credit burd and agency. So it's
a necessary evil, but it is an evil that is
not widely understood and and that's been been a challenge.
Speaker 1 (12:52):
There are many people who might have just fell on
hard times or have an unexpected situation and need help.
And SOLO find is that assist others who might just
be financially unsaddened. How the solo funds man those behaviors
on this platform to be sure both the bowers assisted
and the lender is protected.
Speaker 3 (13:12):
Rodney speaks on it.
Speaker 4 (13:13):
Yeah, I will tell you where we see much far less.
Speaker 2 (13:19):
Than we see far less a percentages are examples of
consumers bad with money.
Speaker 4 (13:31):
We see.
Speaker 2 (13:33):
Much more examples of consumers operating on extremely tight budgets.
Speaker 1 (13:39):
You think that then it's like a negative stereotype that
they've said about us, that we just can't manage money.
Speaker 2 (13:45):
It's not true. It's actually really incorrect. It really bothers
me because in part they're talking about my mom. When
we talk about my mom, it's gonna be a problem.
Speaker 4 (13:59):
But I'm going to try to paint a picture for you.
For of our bars are college.
Speaker 2 (14:05):
Educated, mostly women. They tend to have multiple children, They're
gainfully employed. They live in cities like New York City,
San Francisco, Miami, Atlanta. These are high cost of living cities,
and they live on extremely extremely tight budgets. What I
mean by extremely tight budgets is that they have less
(14:28):
than eight hundred dollars.
Speaker 4 (14:29):
Of stavings in their bank account.
Speaker 2 (14:31):
Despite being college educated, savvy. To give you perspective, this
consumer can take twenty dollars and somehow.
Speaker 4 (14:40):
Figure out how to live off at that point an
entire week when they need to.
Speaker 2 (14:44):
They know every day that the bill is coming out
of their checking account. Literally, they know when Netflix is
coming out. Okay, this is how focused they are and finances.
So what we're talking about is the cost of living
(15:05):
is concern in a wage concern that's creating very very
tight constraints on budgets. And in a time like this
where inflation is happening all all of a sudden, my
gas to fill my tank when from forty dollars to
fifty dollars.
Speaker 4 (15:19):
I need that.
Speaker 2 (15:21):
So what happens is these consumers, despite that eight hundred
dollars savings, will have a financial emergency one to four
times every twelve months. And it looks very simple. My child,
my child is sick. I can't go to work for
(15:43):
three days. That's three days of pay.
Speaker 4 (15:47):
Wow.
Speaker 2 (15:49):
This is also when I now have a medical deductible
because my kid is sick, and even surgery that's five
hundred dollars. And the combination of the medical deductible and
the fact that I'm not going to work means I'm
going to be short on rent in two weeks.
Speaker 4 (16:07):
That's it. Eight hundred savings is gone like that.
Speaker 2 (16:12):
So all of a sudden, you know, you're like, you
know what, I'm gonna be late on the rent. I'm
gonna make sure my kid gets better, but I'm gonna
incur late fees on my rent and I don't have
any extra cash. Really, I'm just gonna be late. I'm
just gonna make sure I got food on the table.
Let me just borrow two hundred dollars to make sure
I got food on the table. That's not mismanagement of money,
(16:38):
that's a lack of cash.
Speaker 4 (16:41):
But that's a lack of salary.
Speaker 2 (16:42):
Given the cost of living and ef person lives in,
there's no scenario that this person can access short term
capital cheaper or more efficiently except for going to friends
or family or if you talk to a lot of
these consumers.
Speaker 4 (16:57):
I mean, what I love about this consumer is.
Speaker 2 (16:59):
That they're they're they're wet Americas built off of right.
We see teachers who sell t shirts on Etsy. We
see police officers who also drive Uber, We see you know,
I mean, we see multiple streams of income, especially in
moments of type and constraint moments, they actually dig themselves out.
(17:22):
The problem is we're trying to make sure that whole
isn't as deep as it would be what a subprime
credit card or paying loan, we're solo. That whole is
not deep at all. But it is a misconception that
I hate that this group of Americans is not, you know,
financially illiterate. It is not true.
Speaker 4 (17:44):
It's not true.
Speaker 1 (17:45):
Talk more about that the long term cycle of debt
that many of us, not many of us, may not
be aware of that the traditional emergency lenders put us
in because you know, you talk about yes, there there
may be some predators or a percentage race that those things,
But what is this real cycle that it gets people
into that's negatively affected our communities.
Speaker 2 (18:09):
The cycle isn't even the APR. The APR is an illusion
that's inaccurate. So I'm gonna give you too truth about
the APR, which causes problems for for for many Americans.
Number One, the APR is as a specific fee based
(18:31):
on the condition of credit. It is a fee that
they're supposed to communicate. It's it's a it's a fee
that takes the kind of like average rate and annualizes it.
Speaker 4 (18:43):
But I give you an example.
Speaker 2 (18:45):
When someone says, oh my god, that payday loan costs
four hundred per the consumer is not technically paying four
times what they borrow. It's an annualization relation based on
the short term. It's even difficult to understand as I'm
explaining it. Yeah, right, So that's that's problem number one.
(19:10):
Problem number two, which is more important than problem number one,
in my opinion, is that APR does not include subscription fees,
annual fees, late fees, origination fees, instant cash fees. I
give you an example, when you look at like subprime
credit cards or payday loans. I only think like twenty
(19:30):
percent of consumers actually paid them more time, so that
means what a consumer is really paying should then also
include the late fee, because most consumers are paying late fees.
Speaker 4 (19:43):
That gets into the predatory nature.
Speaker 2 (19:47):
And giving an example, a subprime credit card, which is
an average of about five hundred dollars, is your how
much credit they'll give you it will happen the highest
APR that's allowed in that state, plus the an annual fee.
There's a late fee, a flat late fee assessed every
month that you're late for the rest of the time.
(20:10):
Now they have caps, but for a while there's also
instant cash fees that you also don't care. So when
we actually we actually try to we call it total costs.
We actually commission the research projects or understand what are
consumers really paying?
Speaker 4 (20:30):
Not sure math.
Speaker 2 (20:31):
If a consumer takes one hundred dollars today, what are
they paying twelve months from them?
Speaker 4 (20:37):
That's it. It's everything plus.
Speaker 2 (20:39):
One hundred dollars, no offens and bucks, and the data
is really really upsetting.
Speaker 4 (20:45):
Subprime credit cards are.
Speaker 2 (20:46):
Actually more expensive and paying the most, which are a
subprime credit card of basically one thousand dollars, the average.
Speaker 4 (20:56):
Consumer is going to pay like nineteen hundred dollars.
Speaker 3 (20:58):
Fees on top of the thousand, on top of it.
Speaker 4 (21:04):
Principle, Yeah, it was, it was. Actually it's actually really bad.
Speaker 2 (21:09):
So, you know, these are some of the things that
aren't necessarily talking about, but mainly because who's who's the
who's the folks in the in the room arguing about
APR or talking about what consumers are really paying. Number One,
(21:29):
that they're too far removed. I know, I know, my my,
you know, the too far removed from the plight. They've
they've made their money a long time ago, they're doing
pretty well. They're not understanding what these consumers are really
paying for. And and if they're from non underrepresentative groups,
so underserved groups, it's just perpetuating a lack of understanding, right,
(21:57):
and and and and this is one of the biggest
reasons why we're we published as Total cross Support. Now
why again, we kept trying to figure out why we're growing,
you know, like maybe you know, because you start to
question yourself, like maybe we aren't so affordable, maybe we
aren't such a benefit. But when we surveyed our consumers
(22:18):
and they're like, I was like, why didn't you why
don't you?
Speaker 4 (22:20):
Do you have a credit card? Yes, well, that's shocking.
Speaker 2 (22:24):
They told us that they didn't have a credit right,
why don't you use your credit card?
Speaker 4 (22:28):
It's too expensive? And I was so confused by that.
Speaker 2 (22:33):
Because my credit card isn't that expensive, but their credit
card is.
Speaker 4 (22:38):
And these are just some of the things that you know.
Speaker 2 (22:41):
I think that's one of the best things about being
who we are as founders and entering this space within
financial services is that we it's I think it's our
duty to be a voice of who we represent and
to start to bring data and facts and start to push,
you know, are our leaders to answer these questions and
(23:05):
and and to and to start to create some level
of reform. I'm proud to say, and I think you know,
we're about a fifth of the cost of subprime of
subprime credit cards, the average consumer spends about thirteen point
four percent in addition to their principle after twelve months.
(23:28):
And then I'm gonna tell you the only reason is
that we don't compound fees. Not the only reason, but
we don't believe we don't give you like if you're
late every month, we don't charge you late fees every month.
Speaker 4 (23:40):
There's a one time fee that that's going to dig
a hole.
Speaker 2 (23:46):
And you got to understand, there's no what we have been,
what we have learned is that we actually have significantly
better repaying the rates.
Speaker 4 (23:53):
No, I it's easier to get out the hole.
Speaker 2 (23:57):
It's really hard to pay back one hundred dollars loan
that is now two hundred and fifty bucks versus one
hundred dollars loan that's now you know, one hundred and
thirteen dollars.
Speaker 3 (24:11):
Yeah.
Speaker 6 (24:11):
Yeah, it's really that simple when we think about it, right,
like you don't dig the hole too much, so it's
still in reach of a payment.
Speaker 2 (24:24):
But again, these are just some of the nuances that
we decided to do, and I mean to be honest,
we took it the extra step. We're one of the
few lenders in the space that is a benefit corporation
a certified benefit.
Speaker 4 (24:36):
Corporations via the b Labs. B labs is a nonprofit.
Speaker 2 (24:42):
Think of it like a governing body who certifies companies.
Speaker 4 (24:48):
To attain B CORP status.
Speaker 2 (24:50):
B CORP status is a combination of their certification as
well as like literally we submit we actually you know,
register with the government as a benefit corporation, which what
that ultimately means is that we balance the need for
profit alongside for people and we don't.
Speaker 4 (25:13):
We don't. That's that's important.
Speaker 2 (25:15):
So they come in and they look at all of
our finances, They look at how much money we make,
they look at how we play pay our employees, they
look at, you know, in terms of how we even
promote within and they give scores. But not only did
they assess all those different things, they assess our business
model and they assessed that, you know, how we're handling
(25:37):
our consumers, and it came back very, very positive.
Speaker 4 (25:41):
But I mean, that's the piece.
Speaker 2 (25:43):
I'll tell you another piece, the average mps's net promoter score.
It's how you know you can judge consumer experience. Most
financial services companies are around forty. Bank of America is
at a twenty two. Our average net promoter score is
a ninety.
Speaker 4 (26:00):
These are these are.
Speaker 1 (26:01):
That for the people who don't really understand what that means,
like what factors go into creating that score.
Speaker 2 (26:07):
It's it's really just about it's it's a measure of
its basically a measure of the amount of consumers that
are having a happy experience. So it's a random survey
that's distributed across all of our users, and it's it's
just them being happy. Companies that have really high net
promoter scores are companies like Apple and Nike, Patagonia, you
(26:32):
know what I mean. These are something not financial service companies.
Put it that way. So we we are extremely proud
of having an MPs like that.
Speaker 4 (26:46):
But that's the community part.
Speaker 2 (26:48):
Going back to your first question, it's it's because of
that why where we continue to reach the scale that.
Speaker 1 (26:56):
We are you you said earlier and I've read you said,
there's a few times, you know, you're innovating and thriving
where companies have failed. You guys are the first company
in this vertical, particularly black owned company, to find success.
Speaker 3 (27:10):
Why do people fail?
Speaker 1 (27:13):
Why is their line of you know, dead startups previous
to you guys?
Speaker 2 (27:19):
Well, I think a lot of people were making products
for middle class America and they're not middle class America.
One day, I'm going to start a VC firm, and
our goal is to invest in founders who are uniquely
(27:39):
positioned to be experts at the consumers they serve. That's it,
you know, And I think when you look at a
lot of the fintech innovation. Just look at a lot
of the fintech innovation, even the the what everyone talked
about for crypto is going to democratize finance for the people.
Speaker 4 (27:58):
You know what I mean, we're not going to talk
about that.
Speaker 2 (28:03):
Or you know, you know, credit builders and this this,
These are all Harvard, m I T and Stanford Dies
building products of people that look like you and I
and they're just where where where I truly believe they
failed is you know, not understanding the consumer. And it
(28:23):
makes perfect sense. I think people got to understand my background.
I'm a trained brand manager from Procter and Gamble.
Speaker 4 (28:33):
I spent five years becoming an expert at a consumer, being.
Speaker 2 (28:38):
Relentless at shipping cases. All right, I worked on Pampers.
Wasn't a dad. But the way I got good is
becoming an expert at who we serve. And I think
sometimes in fintech's we kind of or you know, we
kind of get we kind of get excited about the
(28:58):
opportunity and you miss the point.
Speaker 4 (29:03):
We at Solo are obsessed.
Speaker 2 (29:06):
With middle class America to the point where I live
down the street from a payday long London. Trust me,
I can live a lot of places, but I want
to drive past that line every Friday. I want to.
I want to. It does something to me, you know
what I mean? And my co founder lives also down
the street. We're doing these things because we've learned why
(29:31):
our success well, we've learned or we know why some
of our success has happened, and it's definitely because of
how anchored we are in the consumer we serve.
Speaker 1 (29:44):
You said something similar about community banks before and that
they weren't really doing what they're designed to do. You know,
so you said, I think about what the community bank
is supposed to do, and they're supposed to be lending,
allowing lending and borrowing in the community. You know, I
think about if we look at almost any deeply embedded
(30:05):
institution or industry, we can find where they failed to
live up to their promise. How did you know finance
was one you wanted to tackle and what was your insight?
You talked about being from middle of America, But there's
a lot of things you could have done. There's a
lot of places you could have lived. To your point,
there's a lot of things you could have put your
efforts and resources into. Why finance.
Speaker 4 (30:29):
You know.
Speaker 2 (30:33):
I wanted to make an impact, and I saw I
wanted to make a financial impact.
Speaker 4 (30:40):
And you know, Travis and I.
Speaker 2 (30:44):
We saw a lot of effort pushing capital to small businesses,
entrepreneurs of color, and we were still driving past the
woman who served me coffee, person who served me a drink,
and I was still getting picked up in ubers and
(31:06):
they needed support and help too. And for me, I
grew up in a working class family, and working class
family is who built me. I also know that my
working class family is so working classes no more. They're
doing pretty damn well. It's funny how people who work
(31:27):
really hard tend to dig themselves out of it.
Speaker 4 (31:30):
Right, So I figured, you know, one of the things.
Speaker 2 (31:36):
Really the innovation that I would say that's really important
for us, and I usually glance over it. But our
solo score, our underwriting model is impressive. It's currently performing
about four times better than the industry average.
Speaker 4 (31:50):
That's all built in house.
Speaker 2 (31:52):
All built on a few AI models. Taking we used
to call it the hustle score. It's we're trying, We're
really met. We really designed an underwriting score that measures
a consumer's ability to make and to figure it out
(32:16):
and and that in combination with what we call our
real time or payment product or real real time payment solution,
we h we've kind of removed all of the dumbness.
And I'm going to give you an example. I sign
up for a system I didn't have to pay you
(32:36):
in a month. Instead of just pre scheduling it or
make it easy to pre schedule, we let consumers miss it.
That's a that's there's enough technology for every bill that
we have today to be automatically connected to us, right.
(32:59):
But that I'm ultimately getting is that we built our
repayment product to continue to monitor out borrowers accounts. So
never have we ever overdrawn, but we're we're we become
a partner in their finances, not a predator in their finances.
And that's that gives a little bit to our repayment product.
It's actually the code names get Money. The one of
(33:23):
the final things that we did, and we were the first,
one of the first companies to do so. We built
our entire payment structure on real time rails way before
FED now better than Zel, but we built it on
something called Visa Direct and Master Christ saying it's their
proprietary real time debit infrastructure. We were and are still
(33:47):
one of the few lending companies in the world that
are built.
Speaker 4 (33:52):
That's why follow me on Instagram.
Speaker 2 (33:53):
I'm always in Visa's office and these are some of
the reason why we're always in their office. What does
that allow us to do? That allows us to move
money faster and more efficiently when someone's in need and
when someone needs going to pay alone. Put yourself in
that single mom that I talked about, who knows exactly
(34:14):
when her.
Speaker 4 (34:15):
Netflix built is gonna come out.
Speaker 2 (34:18):
So if she says, solo, you need to pull this
money on the fourth, if you pull it too late,
you're not gonna get it.
Speaker 4 (34:33):
That's what she's also telling us.
Speaker 2 (34:35):
So we needed a real that's nobody, honestly, quite frankly,
no one who looks like me really understands that that
you need to pull money exactly when it's available.
Speaker 4 (34:46):
It cannot be a delay because all of that.
Speaker 2 (34:48):
You know, when things get pending in the ach, something's
gonna fall short.
Speaker 4 (34:52):
And that goes both ways.
Speaker 2 (34:54):
So we spent a lot of extra capital spending this
real time product.
Speaker 4 (35:00):
And I will tell you that's some of the I.
Speaker 2 (35:02):
Just kind of gave you the three part secret sauce
to why we exist.
Speaker 1 (35:08):
It was a quote I read where you said, our
goal is not for borrowers to remain borrowers. I think
Travis said this, Actually, our goal is not for borrows
to remain borrows on this platform forever. So how do
you think then about retention and which metrics matter to you?
Speaker 2 (35:24):
Since pretty early in the in the in the life
of the company, our bars.
Speaker 3 (35:30):
Have also lent, so they've graduated.
Speaker 4 (35:34):
They graduated. I'm pretty happy about that rate.
Speaker 2 (35:39):
It's fantastic because it goes back to the original assumption.
Speaker 4 (35:43):
They're not illiterate.
Speaker 2 (35:46):
They just have a cash need today, right, and and
if you give them a way to get out of it,
and they're not only just going to get out of it,
they're going to thrive.
Speaker 4 (35:55):
In six months. I mean, we we have examples of.
Speaker 2 (36:00):
One of my favorite examples, it was in the CNBC
article is an engineer at San Francisco. He lost his job.
He used US for a couple months three hundred, four hundred,
five hundred bucks. Eventually he got a huge six figure job.
He became a prolific lender on the platform.
Speaker 4 (36:24):
Is that if that's not everyday Americans? I don't know
who that is, right, this person.
Speaker 2 (36:32):
I mean, that's the life of an average American is
that at the end of the day, job.
Speaker 4 (36:37):
Security is not what it meant twenty years ago.
Speaker 2 (36:41):
Like no one's at GM working for twenty five years.
Job security today is fleeting for every American, especially if
you're fresh out of college. You know what I'm saying,
under thirty five years old, you haven't really got your
footing and your career. You're in and you're in and
(37:01):
out of jobs despite being.
Speaker 4 (37:03):
Very, very educated.
Speaker 2 (37:05):
So these are just some of the nuances that we
eventually know that you will land, and you're going to
land and do really well, and you're going to be
a thriving member of the society. And and you know what,
you for some reason have a connection with Solo that
no one can break because Solo.
Speaker 4 (37:21):
Was there when you needed them most. No other financial
institution was.
Speaker 1 (37:26):
Wow, I want to dig into your mindset a little bit.
I've always been fascinated by the way you think. And
I learned this and doing research for this conversation, that
there was a time just a few years ago before
the surgeon users that you know, Solo Funds was almost
out of business.
Speaker 3 (37:42):
I mean it was expectively out of money.
Speaker 1 (37:45):
You know, I want to know about your mindset in
those moments where you're facing existential threats to your business
and you've gone head to head.
Speaker 3 (37:55):
With major players at your.
Speaker 1 (37:56):
Previous companies and when those were still startups.
Speaker 3 (38:00):
Who do you put yourself?
Speaker 1 (38:01):
I want to like how Rodney's mind works. Who do
you put yourself around? Or what is your mindset when
it feels like all the moves in front of you
have to be played precisely, incorrectly in order to stay alive.
Much less fine success, but just to stay alive, like
so many people don't come back from that. And so
I'm interested in how Rodney thinks about these sorts of threats.
Speaker 2 (38:27):
You know, looking back at them, I would tell you
that they are very expensive. And what I mean by
that is they're expensive on your social relationships. They're expensive
on your romantic relationships because it's a bit irrational, too empty,
(38:49):
they account like, I don't know what else to tell you.
It's a bit irrational. It's a bit irrational to say
I'm not to you know, to your significant other, I'm
not giving you Christmas gift this year. You're gonna have
to wait or you know we're gonna you know, we're
(39:10):
not gonna go home for the holidays. These are things
that I've had to do so and unfortunately, most of
the time, most of the network don't really understand this
kind of belief that's rooted in data. I've never made
these decisions. I've never made these decisions based off of gut.
Speaker 4 (39:35):
I'm a p and ger. Don't let my wildness fool anybody.
We lead on paper, and I don't need as much
paper as most pgs. That's what I said.
Speaker 2 (39:49):
I don't give me two sentences in a bullet point
and I'm probably gonna I can do the rest. But
what I'm ultimately saying is that you know, at some
point you get to a conclusion that the opportunity outweighs
the risk and the cost, and that little bit of
information is something that you are the only person in
(40:12):
the world that knows.
Speaker 4 (40:13):
So you just have to get through this moment, and
if you can get through the moment, it will pay
for you. I wish it was easier, you know.
Speaker 2 (40:26):
I look at my counterparts will get to go and
raise hundreds of millions.
Speaker 4 (40:32):
Of dollars because they.
Speaker 2 (40:34):
Know someone at andresen or their father is an executive
at Goldman Sachs. I wish that I had those level
of security, but I don't. So that means you swing
for defenses. But I will not lie to anyone listening
(40:55):
on this call. The cost is expensive. There's a lot
of relationships I had to sacrifice to get here.
Speaker 4 (41:03):
There are a lot of.
Speaker 2 (41:06):
Moments that I had to miss to get here, and
and and if you want to be an entrepreneur and
be a founder, and you're not willing to do those things, you.
Speaker 4 (41:20):
Should do something else.
Speaker 2 (41:23):
You know you should, because you may you may waste
someone's money, and you're definitely gonna waste your time.
Speaker 5 (41:36):
M H.
Speaker 1 (41:44):
Black Tech Green Money is a production of Blavity, Afrotech
on the Black Effect Podcast Network and I Hire Media
and it's produced by Morgan Debonne and me Well Lucas,
with the additional production support by Sarah Ergan and Rose
mc lucas.
Speaker 3 (41:58):
Special thank you to MICUs David Sapping. That's a Serrano.
Speaker 1 (42:01):
Learn more about my guests and other tech dissent innovators
at afrotech dot com. Enjoy your black Tech three money,
Share this with somebody, Go get your money, Peace and love,
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