Monday, June 27, 2011
Interview with Scott Saunders, Payoff.com
Story by Benjamin F. Kuo
Are you constantly battling creditors, dealing with debt, late credit cards, and finance fees? Well, you shouldn't have to be -- or at least, that's the premise behind Payoff.com (www.payoff.com), a new startup launching today. Scott Saunders, the CEO and co-founder, of the company is hoping to change that, by providing tools to consumers to help pay off their debt and achieve their life goals. To do that, the firm has combined the world of social networking and personal finance with its newly launched service. The firm is backed by a notable list of angel investors, and based in Los Angeles.
Tell me the story behind Payoff.com?
Scott Saunders: I spent nearly my entire career on the investment side, and in 2005 switched over to the entrepreneurial side of the world. I built up the company, the Walz Group, with partners. The company already had momentum, and $300,000 in revenue, providing a special process to help banks communicate with defaulted borrowers. Out of that, I got to learn about default, financial services, and banks. We were able to scale the business and become a three-time, Inc. 500 company. The company is doing great, and now has more than $30 million in revenue. However, through that process, I got very depressed about the state of America's financial affairs, and wanted to figure out what I might be able to do about things. I also wanted to approach things differently than they are now. In terms of the problem, the majority of tools available today to help people with their money have been designed by financial analysts, for people more like them. It's managing money for money's sake, rather than money in the context of life. That's part of the premise. In 2009, I teamed up with my co-founder Eden Warner. He was the startup-to-profitability CFO at Fandango, and really is one of the most incredible, operational executives in all of So-Cal. He's a super smart guy, and had similar vision of how to help people with their money. When I showed up with a few pages of conceptual, early stage ideas around consumer finance, it was immediately captivating, and it really lined up with what he wanted to do. So, we were set to start the company. The premise was that Payoff.com would make money more fun.
How are you doing that?
Scott Saunders: We are doing personal finance in a way that is entirely different than it has ever been done before. We've made it simple for the lay-person to manage their personal finance, in a way that is not arcane or boring. There is everyone else doing personal finance, and then there is Payoff.com. We're doing more than just managing your cash flow, we've also got social elements to our product, some game mechanics involved, things I think will make it something people will actually want to do. That's compared to other financial products, which are designed for managing money, and just feel like work.
What does that look like to consumers?
Scott Saunders: It's Mint, plus social elements, and game mechanics. It's personal finance management, but in a much different light that you would typically expect. There are three main components of the product. The first,is the ability to share dreams. Imagine being able to upload your "bucket list" online. If you want to start a company, buy that mountain house, whatever your dreams are, anything that involves some component of money, you can upload them, and then actually tag friends that are connected to your dreams. It's like a support group for each one of your dreams. You can tag different people for different dreams. The idea is that if you put those dreams up, it will give you some context and make paying attention to your finances worthwhile. A lot of tools focus only on very tactical goals -- looking at financial accounts. Instead, we're trying to first get people to consider the context of why all of those things are important. I think we're tapping into the more emotional part of money, the social aspects, and the ability to share your dreams with other people. We think that will be very motivational for people. From the social aspects, I think if you can see what other people are dreaming about, you might also be able to help those people.
So that's the high level context. You can see your debt goals, pay off a credit card, save for a trip, start a business, and we let you link those goals to a specific, financial account, and track your progress toward those goals. We'll also give you ideas of things you can do to cut your expenses and increase your income. Also, what we have done, is we've broken those goals into little, bite sized chunks, so that you can get little wins along the way. Every time you get a win, you can earn a badge, and every time you earn a badge, that increases your likelihood to win a cash surprise. Part of our advertising, is we are sending people checks in the mail for $25, or $50. Ultimately, we expect those to be ad-funded by different advertisers involved in our platform. The third component is the ability to track your finances and accounts, and aggregate your financial accounts in one place. Our special sauce in that,is instead of focusing on categories like groceries and restaurants, we've mapped everything to brands instead. You'll come in, and see your spending--how much money you've spent at Target, Apple, Chevron, and Starbucks, next to their logo. That will take you to a brand page. We have 700 pages like that on our system, and you'll be able to see your historical interaction with any major merchant. You can sort your spending at Starbucks over the last week or last month, and you'll be able to toggle and see the top companies with who you are spending money. Ultimately, that will provide an opportunity to involve those brands in our world, while giving them an avenue to help their customers achieve their goals and dreams.
Is this available to the public yet?
Scott Saunders: We've had a limited beta with a few thousand users over the last several months. On the 27th, we are pushing the product live and coming out of beta. That is the big day for Payoff.com, and we will push on every front to get media exposure and attention to what we're doing. I think it's really needed. Our country is in complete disarray from an economic perspective. But, I think we have this secret sauce, which is needed to inspire people to get their financial house in order.
What drove the social aspects behind this?
Scott Saunders: Our users actually told us so. We had a more limited, social experience in our beta product, which was really limited to allowing your Facebook friends to see the badges you were earning. Finances have traditionally been very personal, but we've seen a willingness of about 80 percent of our users to make their profiles public. Those profiles don't have detailed information about our finances, but it does have your dreams, your goals, and the badges you have earned. You can opt to make any aspect of that profile private or public, but we've had an overwhelming majority of the people want to share things publicly. Sharing dreams, in particular, is really meaningful. Consider your set of friends--do you know what's most important to them? This gives you some idea, and there actually might be a lot of people you might be able to help accomplish their dreams, either by referring them to others or encouraging them. I love the idea of people being able to do that through Payoff.com, to be able to share the things that are most meaningful to them, help them to accomplish those dreams and their bucket list, and help them connect with people closest to them and who are connected into those dreams.
You mentioned you had been on the investment side of things -- what pushed you to become an entrepreneur?
Scott Saunders: It's where the action is. I've been on the institutional side -- investing in private equity funds, funds investing in companies, and so on -- and with all these things, all of the value that is created in the ecosystem starts at the ground floor, at the entrepreneur level. There are funds that invest in these companies, and there are funds of funds investing in funds investing in companies. But, at the en dof the day, the value is created at the entrepreneur level. It's a really creative process, and it's also extraordinarily challenging. The big payoff for an idea, is going out three, building a team around it, and successfully executing.
So, what have you learned most so far from the entrepreneurial experience?
Scott Saunders: That's a phenomenal question. I think the idea of an entrepreneur focusing on a minimally viable product is a good one. It really boils things down, to the simplest, simplest possible concept. I think, also, that one of the things I've always known, but learned more about here, is that it's all about the team. We have an amazing team at Payoff, and there is no "I" in team. You hear about that all the time, but being able to pull together people that have such disparate skill sets, to be able to have them wear all the different hats in an organization, that is so critically important. You've got to value different kinds of smart. I think lots of organizations have a predominant kind of smart. For example, if it's an engineering centric organization, engineering is valued, but sometimes UI gets tossed out the window. You need great engineers, a great UI person, great sales and marketing, plus you need the investor relationships and ability to raise money. Not very often do you get people who have all of those disparate kinds of skills, who can come together in one place. Typically, if you have an engineer in charge, they'll hire more people like them, and so on. The ability to attract a team of people who have talents that aren't the same talent is the wow. I feel like that's what we've done at Payoff.