The first wave of fintech focused on helping those people who already had money. The bottom half of the population was mostly ignored, and those companies that did try failed to get traction. But in recent years, there has been a new breed of fintech company emerging squarely focused on helping those people who are living on the financial edge.
My next guest on the Fintech One-on-One podcast is Rodney Williams, the President and Co-Founder of SoLo Funds. They call themselves a community finance platform and they are squarely focused on the subprime market. In fact, 82% of their members live in underserved zip codes. They are supplying a loan product that is sorely needed in these places.
In this podcast you will learn:
The essential need that led to the founding of SoLo Funds.
How their loan platform works.
The three verifications new borrowers must go through.
How many loans a typical borrower uses in a 12-month period.
What the typical use cases are for the borrowed funds.
Rodney’s favorite stat on their borrowers.
How they maintain the balance between borrowers and lenders on their marketplace.
Their regulatory challenges and where they stand with regulators today.
The three different ways they make money.
The list of investors backing them.
Why they recently decided to expand to Nigeria.
Why their p2p lending model is perfect for the subprime market.
Read the transcript of our conversation below.
Fintech One-on-One Episode 446: Rodney Williams of SoLo Funds
Peter Renton 0:01 Welcome to the Fintech One-on-One podcast. This is Peter Renton, Chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one-on-one interview show in all of fintech. Thank you for joining me on this journey. If you liked this podcast, you should check out our sister shows The Fintech Blueprint with Lex Sokolin and Fintech Coffee Break with Isabelle Castro, or listen to everything we produce, by subscribing to the Fintech Nexus podcast channel. (music)
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Peter Renton 1:19 Today on the show, I’m delighted to welcome Rodney Williams, he is the president and co-founder of SoLo Funds. Now, longtime listeners will know I got my start in this business in fintech via peer to peer lending. I was an investor on peer-to-peer lending platforms. So this is an episode that’s really close to my heart. I love what SoLo Funds are doing. They don’t call themselves a peer-to-peer lending platform. I think that’s intentional. They call themselves a community finance platform. But as you will understand in this interview, that’s really they’ve taken sort of the core of peer-to-peer lending and brought it to life in a mobile app. And we obviously talk about exactly how it works. We talk about the borrowers, we talk about how they make money. We talk about their regulatory challenges and how they’re overcoming them. And we talk about their investors, their international expansion and much more. It was a fascinating discussion. Hope you enjoy the show.
Peter Renton 2:17 Welcome to the podcast, Rodney.
Rodney Williams 2:19 Well, thank you for having me. It’s a pleasure.
Peter Renton 2:21 Okay, my pleasure as well. So let’s kick it off by just giving listeners a little bit of background about yourself. Looking at your LinkedIn profile. Interesting time at at a consumer product company, the Procter and Gamble that you started your career there, early on in your career. Why don’t you hit on some of the highlights to date?
Rodney Williams 2:40 Yeah, well, I definitely started my career at Procter and Gamble, interned to brand manager. I was brand manager and an intern. My entire career I’ve spent at Pampers, interestingly enough, when I first started at P&G, they tend to ask you what brand you would like to be on, and everyone tends to run towards the the more exciting brands as you imagine, maybe Gilette, or Old Spice and that. And I asked my lead at the time that I didn’t want to, I want to go into brand that could use me or could leverage my skills. And they then decided to put me on Pampers. Now, I was so confused. I was really confused, because at this point, I’m a pretty young guy.
Peter Renton 3:18 Yeah.
Rodney Williams 3:19 I don’t have any kids. And I’m like Pampers out of all places? But what they had a challenge with was that new moms were the, and the new moms segment was the most digital market segment in the entire company. Because new moms gravitated towards online resources for help the moment they even had the idea that they may be pregnant. It’s like searching for signs of pregnancy, right. And also the fact that most don’t know that Pampers is P&G’s largest brand at that time. By far. It was a it was hovering around a $13 billion brand, globally, and a $6 billion brand in the US alone. So it was like two massive gorillas in this market segment, which is Huggies and Pampers that in their words, their brightest and their best, went to Pampers. And I was a, that was where I was trained. I was trained to not know the consumer based on my personal experience, but to understand the consumer based on research and consumer insights and kind of diving into the things that the consumer needs. And that’s been my training ground. So that’s where I started my career.
Rodney Williams 4:30 I then went to start my first company, which was called LISNR. I was actually incubated by a P&G funded incubator out of Cincinnati, Ohio. It was called Centrifuge. I was the first Centrifuge company, ever. It literally went from one P&G office to another P&G office. And I did that ’til, until SoLo Funds. That company, largest investor being Visa. It ended up starting in an engagement, kind of marketing type of product to a security payment financial technology product. I know that’s difficult. But to tell you what LISNR is, LISNR is an ultrasonic data transmission product, it’s an alternative to NFC for mobile payments, it’s an alternative to the QR code. And to be transparent, it’s significantly better, more secure, more universal. But as you can imagine,there’s a lot of parties that are much more influential than a little company out of Cincinnati, Ohio in terms of what’s being, what’s going to be used at the device level, or what’s going to be used at the software level. Despite that, that technology today is used in about 12 countries for mobile payments. And some countries have done, have penetration over 80%, like Angola, is rapidly growing in Nigeria, and and that company is live and well, today.
Rodney Williams 5:56 So I know as I kind of was leading that company, to be transparent, I still would go home to my friends and family who weren’t at the same financial level as myself. And I then took on the burden of a family member who would, you know, everyone would always ask me for loans. And it was $50, it was $100. And it was $2. It was $200. And I remember thinking to myself, is this just a problem amongst my friends and family? Or is this the, you know, or this is a greater problem. And I think with a little bit of research, it was a much greater problem. And then I think that I started to, like, really think about my family’s position and the way my mom and way I grew up, in the experiences that I had when things would go short. And she would then have to make loans, and she would need to go to the post office to turn back on the utility. Or if you ever been into a payday loans, right, that you can go to a check cashing place and actually pay your electric bill, and all of the different fees that would then be added on to these types of scenarios. I was at a very, very intimate knowledge.
Rodney Williams 7:05 And that’s what some of the premise that started SoLo, you know, my best friend, Travis Holoway, my co-founder, he shared an alternative experience, which was really his father, working at General Motors for 35 years, he was the financial advisor. And he could never call on someone like his father, because they didn’t have, they were deemed not to have net worth, like enough net worth. So, you know, he’s looking at an entire company focused of driving investment options for a group of Americans that his father was not included in. And, and that’s what kind of gave him this concept that if we want to create a true community finance product, we can’t just provide access to capital. When people do have capital, you have to give them the opportunity to grow it as well. You will never change their financial position if you don’t do those two things. And those two groups are more similar than any other group. And that’s the concept of what we ultimately do by putting these two groups together,
Peter Renton 8:06 Right, interesting, interesting. Okay, so then, why don’t you explain exactly what SoLo Funds does and how it works?
Rodney Williams 8:14 SoLo Funds, allows borrowers to, to make a request for short term capital, it’s roughly up to $575. They can choose how much they need, when they’re going to pay it back, and how much they’re going to pay. It’s 100%, voluntary and optional, what they pay when they sign up, there’s no credit check, there’s no approval or denial, users just connect their bank account. And then once they connect their bank account, they make a request. Our request system is a ladder system. When you first come into the platform, you only can request up to $100. And then it increases in $50 increments as you pay on time. If you pay late, it will decrease. That’s as simple as the request flow I can explain. But super simple. The users clearly understand what they’re doing. On the lender side, the lender can scroll a marketplace of requests, they can see how much that consumer needs, when they’re going to pay it back. What’s the reason and ultimately, their tip. So what a consumer chooses in terms of what they will pay is a tip that goes 100% to a lending member and a donation that goes 100% to the platform. There are no mandatory fees, no verification costs, no transaction costs, no subscription fees, no annual fees. It’s literally to request that loan and to receive that amount, there’s a tip, and a donation. Borrowers choose those and lenders choose who to fund based on those steps.
Peter Renton 9:44 Right. Got it. Got it. As I said in my introduction, I’ve been an occasional investor on your platform now for a couple of years. I have funded, I don’t know how many, a couple of dozen or so loans over that time period, and it’s a very simple process. That’s the thing I like as a lender. I mean, I can literally be in and out in 15 seconds funding a loan, if I don’t want to, I don’t want to read all the details, whatever, it’s very, very simple. So a borrower like comes on, opens an account, you said you don’t do any credit checks, do you do any identity checks, or is there anything that’s going on before they’re able to ask for money?
Rodney Williams 10:21 Yeah, one of the things that we do that has naturally worked as, what I would call like a security measure, is that there’s essentially three verifications that’s required to be a member, mainly because we actually meet all the requirements for our user to start a bank account to actually access their loan, we actually do create a consumer deposit account in each user’s name. So what I’m referring to is that you have to meet all the AML and KYC, that was required to start a bank account. So that means we do collect things like ID and other personal information, it is a pass through to our partner. The second piece is that we do connect to your Plaid, via Plaid, your external bank account. So your external bank account is whenever we take into account your cash flow history, and that’s what we use to create your SoLo score, it’s it’s super simple, the more activity you have in generally speaking, the more of that score, that score will reflect that activity. As you create that score.
Rodney Williams 11:17 In the beginning, the highest that a borrower can get is a 60. And because the rest of the incremental ability to increase your score only can happen once you start paying on time. But the third and final verification step is actually a debit card verification, where you have to add a debit card that not only matches the account that was just set up, but also matches the external bank account. And then we do micro deposits to ensure that you have ownership into that flat, external bank account. Those three kind of verification steps as you can imagine, you would think, wow, that’s kind of a lot to get a loan. But number one, I think our conversion for, since the beginning, has been around the 30% range for borrowers. I actually, when I look at the entire lending industry, when I see the lending industry, don’t do the amount of verification that we do, I wonder why. We do that much verification, because it’s super important for us to understand who they are, we have to stay connected to them. And if this borrower, the best thing that you can do to a borrower is help them repay. Not expect them to repay. And that’s one of our philosophies if I kind of get into the rest of the product, but those are the ways in which we verify each user and sign them up.
Peter Renton 12:35 Right. Okay. And obviously, I know people use this a lot in the borrower that I actually have a loan out with right now. I think she had 35 loans. She was a 99, those ones don’t stay on the platform very long. Anyway, so she’s obviously done a lot of loans. But I’d love to kind of get what is the typical borrow, I mean, I imagined 35 loans is probably not typical. But I’d love to kind of get if you could maybe paint a profile of the typical user and how often they use the product.
Rodney Williams 13:04 Yeah, typical borrower is using the product for about five loans in a twelve month time period. That is the typical, because the duration is really well, I was going to tell you an interesting stat, that borrowers will tend to use the product a lot more what we are learning, they are using it. And interestingly enough, we have some evidence that they’re using it to kind of maintain a business. And I know, some people would say, Well, how does $500 every two weeks maintain a business? There’s things that we’re learning. For example, there’s a person who is on our platform, who borrows to maintain the inventory of their e-commerce business online. So they basically sell about $500 worth of products every two weeks. And that’s their business. We have some information around some Uber drivers who tend to leverage all of their gas and all of their car expenses, as an example. So they don’t have to kind of eat into their operating capital. Again, I’m always amazed at the need for short term capital. It’s much greater than what we what we initially thought. But on average, you’re talking about five times a year, which is which is less than payday loans, the average payday loan user uses about eight loans per year. And then if you think about cash advance companies, cash advance companies, users tend to use them a lot more than both. That’s kind of the example of the industry.
Peter Renton 14:27 Right, interesting. So then what about on the other side of the equation? Who are these investors and do many of the borrowers kind of graduate to be investors?
Rodney Williams 14:36 Yeah. 30% actually graduate and become investors, which I’m very, very excited about. It’s my favorite stat. And I think one day we’re gonna get that to 50% with some of the products that we’re going to be launching because again, that’s the power of community finance, but today it’s 30%. Our borrowers tend to be around between $35,000 in salary up to about $100,000. It has increased over time. When we first launched the product, I would tell you that the top of the ceiling would be around $35,000, it has increased significantly over the past 24 months, 10% of our borrowers make over $100,000 a year. This concept, it’s kind of greater and that person, to be very clear, who makes about $100,000/year, is very sophisticated, has credit cards, understands APRs. And again, continues to use a product like SoLo, because they have also determined how affordable this option can be, how flexible it can be, and how easy it can be. So there’s a lot of advantages in that. But that’s who our borrowers are.
Rodney Williams 15:36 On the lending side, they tend to be around from $75,000 in salary, up to around $150,000 in salary, they tend to still be relatively close in proximity in terms of location to our borrowers. So 82% of those members, total members actually live in underserved zip codes. We’re very, very proud about that. So that’s ultimately maybe, you know, the small business owner in that neighborhood. It’s the person who lives in that neighborhood, but older, a little bit more, has a little bit more tenure in their career, for example. So they’ve kind of gotten a better footing, but they’re very, very similar to each other. And the way I like to describe both our borrowers and our lenders is that they’re everyday Americans that are working class of America. They’re the barista that served your coffee this morning, the Uber driver who took you to work, they are the mechanic, the janitors, you know, I always say if I look at an office building, it’s the person, it’s the group who is running the building. It’s not the group that’s working at the building, if you think about it that way.
Peter Renton 16:35 Right. Right. Interesting. Interesting. So then platforms like yourselves, obviously, you have to balance the borrowers and the investors how, how do you maintain that balance? And are you typically overweight on one side or the other?
Rodney Williams 16:50 Yeah, you know, honestly, from from a lending perspective, and a default rate and a repayment rate. We have outperformed every other investment option since 2019, since 2020. I know a lot of our predecessors have had a ton of problems, maintaining one side of the marketplace or the other. I think we you know, transparently, I think there’s, we’ve unlocked something very, very special with the short term nature, which has allowed flexible access to people who need it. But also we have to provide, created something who has created a return to everyday Americans that they wouldn’t otherwise, not be accessible, like they wouldn’t have access to, you know, the the average lender on our platform can clearly make more than 12% annually. The average lender can make over 20% annually. And where else can an everyday American decide to put their capital, make a social impact, and make a return? They don’t have enough information and awareness and education to be great at DIY, stock market investing, I promise you. You know that is a that is a market that is much more complicated than whatever Robinhood could provide. I will tell you, crypto and NFTs. Unfortunately, middle class Americans took on the burden. And they suffered the burden, to be transparent. If we want to be, if consumer protection agencies want to be accurate, that’s what happened, I know. And the reason why I know is because my family was taken advantage, my barbers, they thought that they were putting money in cryptocoins and things that they were going to be quick, rich schemes, and then their few $1,000 were lost, and they’re never going to get it back.
Rodney Williams 18:25 So when you think about everyday Americans, what options do they have for yield? Maybe a savings account? Maybe. Maybe Apple savings account? Kudos to Apple, that’s fantastic. We all know that, depending on your net worth, I can get a significantly greater yield than that. Right? On average. And this is this is the example of the problem that we’re trying to fix. The reason why all lenders have gravitated towards lending on our platform, is because the learning curve to actually become good, is really small. The learning curve to actually figure out how to create yield for yourself is small, and it helps you, you can create that, I guess strategy and deploy it relatively quickly. It takes the average lender around three to four weeks of lending to have a positive return and be able to consistently maintain that positive return. And then as it relates to the borrowers, unfortunately the group that needs Short Term Lending, people used to think it was just low income, then I think it was clear that it was middle class. I think people are just really confused that 10% of our borrowers make over $100,000/year, I think that’s now shocking.
Rodney Williams 19:36 But what we what we have learned is that cash poor doesn’t mean no cash in savings. Cash poor actually means that, it basically means in a given 30 day time period, your income is going to be lower than your bills, right, or it’s going to be relatively tight. Meaning it’s break even to negative, and that margin of error is so tiny, that whatever you have in savings can be wiped out pretty quickly. So for example, when we see someone who makes about $100,000, they they will have $2,000 to $5,000 in their bank account. The problem is their mortgage is $4,000, or $3,000, or their rent is due that they drive a drive a car, that’s $700 a month. So the problem is, when something happens to their car, it’s not $100 tire, it’s a $700 tire, right. And so they’re 2,000, $3,000 gets wiped out just as fast as someone who only has $100 or $200 in savings. And the major differences is that the person who has a lower income when they get a $500 loan, in may be able to cover a good portion of rent, or the expense. When someone makes $100,000 gets a $500 loan. They’re really just trying to cover a trip to the grocery store, right in between this moment for their family. This is not fixing their problem. This is just covering a moment in time.
Peter Renton 21:05 I want to switch gears and talk about regulation. Because you’ve had you had some challenges over the years. Some state regulators, consumer groups don’t like your business model. But you have had some some recent wins as well. So tell us a little bit about where you stand with regulators today. And what is the pathway for you to kind of become not in anyone’s crosshairs?
Rodney Williams 21:29 Is there any financial institution in the United States not in anyone’s crosshairs?
Peter Renton 21:36 Probably not. Fair point. Fair point.
Rodney Williams 21:39 You know, one of the things that I like to be clear about our product and every product is that according to our current financial system, every successful financial service company is facing scrutiny. I don’t think any regulator or any consumer advocate group has selected any specific financial service company as the benchmark. From a culture, I think the deregulatory culture of the financial service system is to restrict, and is to penalize and to what I call legislate by enforcement. That is the current culture of our financial service system, which let’s just talk about our financial service system. Because I think it’s really important. It’s created the largest wealth gap in the history of America, between low income and high income or minorities, and unarmoured is the largest it’s ever been what I’m saying I’m gonna say directly, black, brown, and women are, have less wealth today than they’ve ever had in history of time in the United States.
Rodney Williams 22:41 Our financial system was built on discriminatory regulation many, many, many, many years ago. And all that has happened over time, is some unraveling some re policymaking some things to correct those things. But in a nutshell, the financial system as a whole is relatively the same financial system of 50 years ago. Right. Right. And that’s the that’s the problem with with our current financial system, as it relates to everyday Americans and people. My next thing, and I can answer this question 1000 ways, but I will tell you what, what our financial system does is they create really great products for people who have money, they don’t make any products or people who don’t have money. And that’s the challenge. That’s the challenge that we’re facing, as the average American is that’s how products are made. So if you’re going to make a product for people who have limited cash flow, you’re going to do something very, very different. And that’s what that’s what Solo has done.
Rodney Williams 23:39 So at this race, there are specific regulatory challenges. Honestly, they’re there in most instances, number one, I’m thankful to the regulators in Connecticut, and DC, in California, for giving us an opportunity to share our perspective and given us a pathway for it, because that’s transparently that’s what they did. They came they said, you know, what, there’s some things that I don’t like, there’s some things I don’t have an issue with. But if you make these changes, generally speaking, we’re gonna be okay with you operating as you operate. And I think that would in itself, gives me hope for regulators as a whole. Yeah, that’s how you should assess things that are making an impact in your community. That’s my hope. So I’m happy about that. I am even happy about you know, for example, in the state of California, I’m not sure if it’s public, but I have no problem sharing with you. We have a positive opinion on a evolution of our product that is a technically a new product that is going to be added to what we do today. That’s going to allow us to automate lending so basically, today, each person has to go in and actually individually event and if you have done it, that’s you will get fatigued at some point. And so it’s one of the product that you’re going to be able to take a take a large deposit set risk preferences, and it will automatically lend on your behalf, it will be a product that will be technically significantly better for a lender in terms of risk, it will be have a lot less risk, it will, it won’t yield as much as an individual lender, but it will yield a market leading yield. And then on the borrower side, there will be a lot more automation.
Rodney Williams 25:22 So we’re very excited about the states that have gone in and kind of said, Hey, how can I work with this company, this company does seem to be doing something very positive. And we and we want to see this company survive. So I’m thankful for those for those states. I will tell you, as relates to policymakers, you know, we started spending our time educating policymakers and legislators, this is about education. And more than anything, this is about awareness. It’s impossible for a consumer advocate group to go on our website to read a review, or to read some article from someone who believes they’re an expert, and understand what we do. That’s how you that’s one of the most number one challenges that that we see, when we talk to consumer advocate groups. I’m like, did you really use the product? You know, there’s one in particular that comes to mind. And I’m like, I don’t think you read, I don’t think you’ve used the product. I do believe you’ve run, we’ve read some things about it. I think I do think you’ve done a lot of online research about it. But I do not think you’ve used the product. And it’s this, these are the nuances that I understand. I mean, you have consumer advocate groups and regulators staffed to a minimum, they’re not staffed well, and they’re expected, you know, it took us years to build this product, we spent, we spent hundreds and hundreds of thousands of legal fees before we ever wrote code. So to think that two to three hours of reading it online, you would understand the nuance of how we built this product, the intention, the legal president’s and center to come to to to make a drastic headline conclusion that this product is not good, is absurd. It took the B Corp.
Rodney Williams 26:58 To give you perspective, B Corp roughly 10 months to approve us, right. And this is 10 months of bi weekly meetings and diligence, to understand the nuances, not just what we say on websites, not just emails, but you know, going through our financials, looking at the product using the product, it may just take some time. So number one, I think, you know, from from, I think I’m excited about the regulators and the consent orders that have been in place. I think when I look at the rest of the state regulators, I’m hopeful that with awareness, you’ll be able to see what we’re doing and understand the good, and then figuring out how we can work together. And then I think my message to the consumer advocate, but honestly, is that it’s a new day, for the first time ever. a marginalized community member has traded a product that is working, and it’s working better than traditional players. And I think, I think to live up to your purpose, as a consumer advocate, you need to do the diligence to understand why not understand what’s wrong with it. I understand why it’s working. And that’s my challenge to consumer advocates. Understand why it’s working. And then we should have a healthy conversation. That’s what I’m looking forward to.
Peter Renton 28:11 Yep, no, that’s totally fair enough. And I and I do remember a couple years ago, when we all we had a big call with your legal team, because I wanted to know, your legal approach, because there was a lot of criticism that have been leveled at you. And I felt like you hadn’t been able to, you know, answer a lot of that. So I got comfortable with that. And I’m glad that, as you said, some of the states are getting comfortable now as well. But I do want to make sure we cover how exactly SoLo Funds makes money. And I know you’re at your a B Corp now, but still want to make sure we cover what are the revenue streams for SoLo Funds.
Rodney Williams 28:47 So here’s our challenge. But this is also why we became a B-Corp. Historically, we’ve been operating at about a 23 to 26% margin is really, really low. Yep. So So after you criticize us and you go to our financial, that’s what it is, there’s nothing there to get. So good job. Because if you know anything about fintech and financial services, everything that I just mentioned, even the signup process is not a process. It’s about a $3 to $5 process, the even the way we move money, we do not use Ach, we use push and pull payments, it is the most expensive transaction, it’s to complete the loan and repay the loan. That’s like another $4 to $5. So long story short, and there’s many reasons why we put it this way. But we operate at a slim margin as a relates. We have improved our margin over time, but that’s really around driving our cogs down and changing the structure.
Rodney Williams 29:39 There’s essentially three ways in which we make money and this is how we communicate it to to investors. Number one is the revenue that is associated to the onset of the loan, that is a donation that is 100% optional. And then as then we have a product called lender protection. That is when the protection fee that is the lenders pay lender protection fee. As you can imagine, that donation is self selected by the borrower, but a lender actually fronts and pays that on behalf of the borrower. So that’s a nuance that’s super important. The second bucket is buckets that’s related to our payments, money movement. And it’s hyper focused on money movement post delinquency. So post delinquency, we do charge to recover those loans. And we’re causing that to transaction fees. And we charge the lender a fee to recover those ones. So that’s basically post delinquency. So it’s prior to default. So it’s not like we’re not in the debt collection era, we’re in just a recovery time period. And then the third piece of how we make revenue, which is the fastest growing piece of our revenue to be transparent, and it’s how it’s how we’ve always pitched, what we’ve always said is the first two pieces of our revenue, the onset revenue, as well as the recovery revenues, basically, marketplace revenue. And think about our marketplace, being the borrower and lender, that essentially the marketplace, we were going to operate that pretty breakeven, our goal is to not make money off of lending and borrowing. We don’t feel like we need to.
Rodney Williams 31:12 But we believe that to build a better financial institution, you have to provide a better lending product and a better yield product. And basically, that marketplace provides those two things. But the what we’ve spent a lot of focus on especially the last 12 to 15 months is our banking revenue. Our transaction, we call it banking revenue, it’s basically the revenue that’s attributed to a lot of the ways in which other Neo banks make revenue, its float, its interchange, and its transaction fees from leveraging our solo wallet like you would a Standard Bank. Right. So if you think about this, from a margin perspective, the marketplace is paying for the business and making it breakeven. So when we when we add on additional banking services, given that the specialty bank account is already there, it’s high. These are high margin solutions. For us. That’s our business model. Right?
Rodney Williams 32:05 Here’s our example, in today’s economy, and today’s financial system, the financial system wants you to be a lender. And then there’s a separate company that is a payments provider. And then there’s a third company, who is a debt collector. So there’s three companies, three to four, maybe even five companies that tend to be involved when servicing alone. And that makes it really, really expensive. What we have said is if you build an entire platform, right, and if you can not just provide the loan, you can provide the money movement, you can provide the bank account in which those funds will sit and then operate. And then you can also manage the repayment process. If you think about that, from an entire platform perspective, it becomes a significant cheaper product. And that’s where we’ve driven efficiencies. This is what I would tell regulators because what much more educated and you know, folks who have been at a table, they’re looking at the wrong thing. If Bank of America says it’s too expensive to provide these subprime products, I would then tell them, It’s so expensive, because you think about it as a loan. We don’t think of it as a loan, we think of it isn’t it then when someone comes into solo, they come into our community finance platform that manages the entire lending, borrowing and baking experience as it relates to this access to capital. And that has allowed us to to kind of share costs, kind of spread them out, but at the same time provide something unique, but that’s that’s that’s how we make money.
Peter Renton 33:33 Okay, thank you. I want to touch on investors because I know you I saw Serena Williams company or investment company invested in you earlier this year. So who are who are some of the investors backing you?
Rodney Williams 33:45 I would like to start off with the black women investors. We have them all. queued up kudos to them from Serena Williams and Serena ventures to to rain ventures who Raine Ventures is Monique isolette and Erica Donegan to the largest black woman fund and Kesha cash cash has her funds called Impact America. And here’s the insight on why that’s important. Do you know who’s the number one lender of a payday loan or cash advance or any subprime product? It’s African American woman. So number one I’m really referring to is that we tend to attract investors who have an intimate awareness of the good that we’re doing. So they don’t necessarily need to read the publication to understand they can do their own diligence and actually determine their own value. That’s important. I would tell you Acme BC Acme is formerly Sherpa Capital. Acme lead our Series A Acme were early investors into DraftKings Robinhood. Uber, they love marketplaces. And when they met us, and they did their due diligence they had never seen marketplace engagement like they saw with Allah. So kudos they have been incredible marketplace investors for us, and to help us to understand the nuance of our consumer experience.
Rodney Williams 35:07 And then finally, Richielieu Dennis originally didn’t I swear, we got to talk more about Richelieu Dennis. There’s been so many times in this journey that we have ran out of money. And I mean, really were like, we didn’t know how we were going to pay payroll, and originally then has led our seed round, and he’s continued to step up for us, Richelieu Dennis is the he’s the investor behind a Family Fund caught new general markets, or new voices family get his credit as well, by selling one American credit as well, with one of the first benefit corporations called Sundial Brands, it was in the CPG space, that company was sold to Unilever. And he’s been a prolific investor across a number of products designed to kind of change America in a good way. And he’s continued to believe in us. So those are, those are some of our investors, I will tell you, we don’t have the traditional stance, we have none of the guys who show up at your conferences Peter. And I’m really referring to, you know, who’s the Who’s your mark key, like fintech investors to QEDs of the world, the Nycas of the world. Now, they got to learn with Lending Club, they’re scared, you know, they’re fearful. The folks at that then maybe invested in LendUp, for example, they’re so nervous. How can two African American males navigate this regulatory infrastructure? How can they… How did they figure out something that’s good, this thing is what has to fall apart at some point. And what it’s doing, Peter is the complete opposite. We were literally about the past 2 million users, we announced 1 million in January, if everyone can do the math of our growth rate, we’re crossing over to month 2 million, we’re not even going to announce it. Because it’s like we’re wet. Right? We’ve already crossed over a million consumer deposit accounts, back to our Solo wallet, back to the fastest growing portion of our revenue is our neo banking. Right. So these are the things that the company is doing. And then finally, it’s probably going to be your next question of Nigeria.
Peter Renton 37:15 Sure, tell us about Nigeria,
Rodney Williams 37:17 I will tell you, we traveled a lot prior to making this company. And the a lot of the things that the way we designed this company. So we actually learn about microfinance. And we learned about community finance, in places like Nigeria, Africa, and Southeast Asia and India, we did a lot of research on microfinance. And instead, and everyone said microfinance would not work in the United States. As they said, it’s not needed in the United States. We, we were like, That’s not true. If I get another request for $20, from a school teacher, who’s my aunt, I know that it could exist here. Us going to global, Nigeria has been something on our radar for some time, we’ve been actually we started to diligence on Africa as a whole as well as South America as a whole two years ago, it became pretty apparent to us that United States that was going to be the hardest and most scrutinized market for us to operate. And it will be our bread and butter, and it will be our foundation. But for us to protect the viability of this market, to us to also meet our true goal, our true goal was never to provide a solution for everyday Americans, our true goal was to provide a solution for the working class, global citizens, the working class, people around this world do share in the fact that they don’t have access to capital. And when they do have capital, it does not grow. It does not grow.
Rodney Williams 38:40 Wealth is hyper concentrated an area where we need to disperse it. So for us, as we kind of assessed Latin America, as well as Africa, Nigeria quickly continued to be a place where the fintech infrastructure was attractive, the user base was attractive the dynamics and the macro economic environment was attractive. And, you know, we also have an investor out of Africa, who as the second largest private equity company in Africa, and we, you know, prior to ever even launching, we were able to be presidents, we were able to meet regulators, we were able to meet bank partners. I mean, we we’ve been able to meet that I give you an example. This is a bad example. But hear me out. Maybe everyone that’s listening will have a giggle. When you start a financial service company in the United States, and you’re doing something new, and you hire a bunch of lawyers and they give you an opinion, then you build your product, based on your opinion, and opinion is interpretation. And it can change based on administration. That’s the mere fact. Also, if you think about regulators, regulators like police, different police departments, they’re different strategies.
Rodney Williams 39:48 That’s kind of how regulators are, they are not all equal, what they say is, well, before you launch, why didn’t you reach out to us? You know, why didn’t you call So as that process is really, really difficult in the beginning days, we tried so much to get the attention of certain departments. But no one wants to talk to two kids, and an accelerator in Kansas City, Kansas, about a product, it was really difficult. So what I like about a lot of these markets, and maybe it’s because the company exists already, who cares, we have been able to talk directly with regulators and get direct feedback about what they like and what they don’t like, and how we’re going to work together. And Africa as a whole, has been a market that’s been so welcoming to this concept of microfinance. And so welcoming to the concept of people helping people. And there’s other countries around the globe. Long story short, yes. That’s what I’m saying. You know, Peter, if you think and, you know, I know that you have your, you know, and thank you, because I, we actually look up to you and your organization, as you know, especially from a peer to peer model, I believe many of your insights about how powerful it could be, were accurate, and I’m thinking about the history of Fintech Nexus, I’m talking about the history, guys, if everyone everyone should know the history, and maybe Peter’s gonna talk about history, where your roots, your roots started in peer to peer. And, and the only thing that they did wrong was that they use peer to peer to fix the prime market, right. And we use it to fix the subprime market. That’s the one mistake they truly did. And that’s the difference. It this is a product that’s designed to fix the bottom half of the market. And that’s globally.
Peter Renton 41:37 Right. Well, that’s a good point to end on. Rodney, we’ve gone over time. Great chatting with you, though. Really appreciate you sharing all the insights. It’s very important work and I wish you all the best.
Rodney Williams 41:47 Thank you so much. And thank you for going over a bit.
Peter Renton 41:51 Well, I hope you enjoyed the show. Thank you so much for listening, please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off I very much appreciate you listening, and I’ll catch you next time. Bye.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.