After helping workers get paid faster at DailyPay, Jason Lee and Rob Law want to help now them build wealth at Salt Labs.
Recently emerging out of stealth, Salt Labs is an HR and fintech startup that enables hourly workers to own the value of their work, Lee, Salt Labs’ CEO, explained. It’s an intriguing idea that allowed Lee and Law to raise $10 million in pre-seed funding. Fin Capital led the round, with all of DailyPay’s funders backing Salt Labs too.
“I have this core belief that there is much great technology that’s been built for a lot of rich people to spend their money,” Lee began. “There is not much great technology for people trying to make ends meet.”
How Salt Labs helps hourly workers build wealth
Lee said hourly workers miss out on wealth-building opportunities such as stock options, 401Ks, and partnerships. While growing DailyPay, he saw a chance to help them build wealth that accrues with their efforts.
The disparity dates back centuries, with some families able to pass assets and savings to the next generation and some excluded. Laws were passed that allowed some people to receive plots of land but not others. Later legislation like the GI Bill provided opportunities, but only to some. The problem compounds with the generations.
Consider the numerous loyalty programs available to consumers, Lee said. They are so prolific that consumers expect their interactions with businesses to deliver more than exchanging money for goods and services.
Salt Labs applies this philosophy to the working world by rewarding workers with Salt for every hour they work. Think of it as loyalty points. It can be exchanged for goods and services and saved as assets. Salt is the worker’s property.
Earners own Salt, not the company
Because individuals own the Salt they amass, they can transfer some to friends, whether they are members or not. That increases its utility and makes it more asset-like.
So do options like a vesting feature where, instead of companies providing hourly Salt rewards, they give a set number after so many months as a retention incentive. That’s a significant incentive, especially in a tight labor market, with Lee believing its design can create an effective behavior change.
“Psychologically, it’s a lot more impactful for someone to be earning something than simply to get a discount on the thing that you’re already going to buy,” Lee explained. “Our thesis is that hourly workers would rather accumulate Salt… take a bad shift and get more Salt and then be able to redeem for goods and experiences as opposed to waiting around working for three months to earn a random, after-tax 100-dollar payment on their paycheck.”
Salt as a wealth-building tool
Lee sees most people saving their Salt and letting it build. As more businesses and people sign up for Salt, an ecosystem will develop where Salt is ascribed value, with some acquiring it to use and others accumulating it as an appreciating asset.
Lee said that the market would set a price as Salt gains popularity. If one employer gives a $150 reward after 500 hours of work, that puts a value at 30 cents each. A securitization could be in the offing.
Salt is being trialed directly to consumers in Puerto Rico, with more than 4,000 signing up in the first week. Eventually, Lee sees the most activity in B2B2C. Salt Labs is funding the rewards for now, but Lee expects employers to take over as soon as later this year.
Lee said that Salt’s design is more contemporary, where people can see their holdings grow directly due to their efforts. For some, it will allow them to save up for that special treat gift; for many others, they will hold on to an asset whose value will hopefully grow over time that can become a significant holding, one that can be passed on to the generations just like property.
“Someone’s got this thing that she’s working for that she sees every day that she’s earning,” Lee said. “What is distinct about how we’re thinking about this versus how every other reward program is structured? In corporate America, the whole thing relies on your manager saying you did a good job. The agency is all in the hands of the employer. It’s all arbitrary, so it creates a lot of ineffectiveness.
“Employees love (this). It’s not any more of them trying to impress the manager, but rather know that if they come to work, they determine the payout.”
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.