Peter Briffett, Founder & CEO of Wagestream, talks about how they are planning to destroy the payday loans industry by letting employees withdraw their salary as soon as they earn it.
Find out more about Wagestream here: www.wagestream.co.uk
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[00:21] Maiko: In today's episode, I'm joined by Peter Briffett, CEO and co-founder of Wagestream, a fin-tech startup that's actually helping low wage workers to withdraw money straight away after their own debt and you're on a mission to destroy our payday loan industry.
[00:35] Peter: We are on that mission indeed, yeah.
[00:36] Maiko: Perfect, that is a very good mission to have. And, of course, the whole industry, the payday loans industry has been heavily criticized charging big interest rates, 1000, 500% sometimes, and there's a lot of backlash on an industry. So, I'm really glad to have you and see what the alternatives to payday loans are and what can actually be offered. You found multiple startups in different spaces and you took leadership roles across different companies. Your first company, I believe, IView, you sold to Microsoft.
[01:05] Peter: Correct, yeah. It's taken its toll startup,17, 19 years old, since it happens, so there you go.
[01:09] Maiko: Wow. So, you've been in startups for your entire life, grew LivingSocial in the UK from zero to 100 million in revenue. And now you embarked on this mission to eliminate payday loans. So, you just recently closed an investment round backed by prominent founders, investors like Jeff Bezos, Marissa Meyer, Bill Gates, and some leading funds here in the UK as well. It's really great to have you, Peter, welcome to Impact Hustlers.
[01:34] Peter: Thank you for having me, it's great to be here.
[01:36] Maiko: I'd like to start with the reality of your end customers, the people that you actually serve, the people that work in those jobs that might not make a lot of money, that might be very dependent on their salary. And that usually would go to go get payday loans, what is the problem they actually face and how are you tackling them
[1:53] Peter: At a very high level, wage stream allows any worker to have a salaried or paid hourly or lower income, any worker could have access to the earned income. So, instead of waiting for the end of the month pay cycle, they're able to access their earn income, as long as they've earned it. So as a business, we're regulated, but we don't provide, you know, loans or credit at all, we just give people access to their own income. And in the UK, and you know, payday loans are very prevalent. And one of the big reasons for that is because of the monthly pay cycle, which about 85% of the UK population are paid monthly. And the financial stress in the system is quite big, it's bigger than it is in the US, where everyone is paid every two weeks. So, per capita, you know, overdraft fees over here, payday loans are more prevalent simply because the monthly pay cycle.
[02:38] Peter: So, our solution that we can roll out to hourly paid workers through their employers is the option to take out, you know, money that they've earned to pay for any unplanned expenses, so that they don't have to go into overdraft fees, go into credit card debt, or worst case, take out a payday loan, which tends to put them in a cycle of poverty, that's very difficult for them to get out of. Because if you're be paying 3,000% interest, there's not many humans on Earth that can get out of that cycle. And unfortunately, payday loans do prey on lower income workers who have less ability to get out of those situations. So, we love what Wagestream does, and the fact that it can give people access to earned income. So, they have an unplanned expense in a given month, they've got an option, you know, to take some of their earned income, which, by virtue of the fact they've earned it, they can't possibly get into debt by doing that, which helps them out. And that's the whole premise.
[3:25] Maiko: So, if I work three days in a month, and after those three days, I have some emergency come up, I can use the money I earned in those three days, don't have to wait for my--
[3:32] Peter: You've got it, you know, we've got businesses that, you know, if I was, for instance, a waiter at a pizza restaurant, you know, and I did a great shift today and I had loads of tips, I wouldn't see those tips until the 31st of July, which is a long time away. But with Wagestream, I can access those tips immediately after my shift. So, it means actually, that I will probably change the way I work, I may take more shifts, I have immediate, you know, I see immediate satisfaction for the work I've done. And that just helps people plan and manage their finances better. So, it definitely has an impact on how people work.
[4:02] Maiko: But you're actually not selling directly to those employees, you're actually selling to the companies employing those employees, right? Yeah. So, the question is, why would they be interested in it?
[4:10] Peter: So, we have, there's loads of reasons that company would do it. And we're learning those all the time as well, but primarily, it's retention gain, if you give someone better financial health, and you make them feel you reduce the financial stress in their life, then they're going to stay with you longer, as a worker or I will work for places where reduces my financial stress because most people work for money. But the other gain for an employee that we found is people become more productive. We have a, you know, security company that rolled out Wagestream across their entire base in the UK, they had a problem with their staff taking over time shift, no one wants to take in. Now he's rolled out Wagestream and allowed people to access their overtime income, they're fighting over those shifts now. So, there's a different way people work, so people become more productive, because they can see, you know, if I want to go out this weekend, do I want to pay for something in the next couple of days, I'm able to, you know, I could put some work in and I can see an immediate gain to that. And because of the monthly pay cycle, you know, my child selling lemonade at the end of our street has a has a better connection with their revenue in their work effort than most UK workers.
[05:08] Peter: So, this allows people to see an immediate gain for their work. So, there's a productivity gain. And of course, recruitment benefit. If you say you pay daily, and I can work at a number of different coffee shops, I'm going to work at the one that pays daily. So, there's some quite significant employer gains. But really, it's about you give someone financial freedom, and you give a worker that ability to see the benefit in their earnings, it's a better world.
[5:28] Maiko: And how can this be a profitable business model? I mean, you're not just doing it, you're not a charity, right?
[05:36] Peter: Yeah, we're not, we do have a social mission and a social charter. So, we're set up to get people out of cycles of poverty, that's really important to us. But the only charge in the business model is that the employee, every time they would do withdraw, they're charged £1.75 to do that withdraw. But that's regardless of the amount, it could be £500, they withdraw, it could be 100, it could be 200, whatever it is. So, it's like taking money out of an ATM. So that is not a big fee and that has to start pull all our, you know, our banking infrastructure, our faster payments, and also the loan facility we have, because the big thing about Wagestream is that we enable all these payments ourselves. So, we're not relying on the employer doing that, so that doesn't impact their cash flow at all. And that's one of the big benefits for them. But the truth is, we have some great bankers, great investors, we certainly would like to have QED, which is a Capital One founding team and they've enabled us to, you know, build a banking infrastructure behind the scenes that makes it very economical for us to do the model, be at works at scale, you know, you need a lot of people using it for it to be something that we will have as a profitable business. But we feel it's such a game changing concept that, you know, once people start getting paid that earn income, then that's something they're going to want to keep.
[6:44] Maiko: I'd like to talk a bit about your journey. Of course, you have funded several startups, I think this is the first startup has a pure, like social impact mission, I would--
[6:53] Peter: That's true, well my other ones were for a profitable gain, this one's different, yeah.
[06:57] Maiko: But it's both, right?
[06:58] Peter: Yeah, sure right.
[06:59] Maiko: So what interests me is what triggered you when you decided, okay, I want to start another company, what triggered you to attack like a big social problem like this?
[07:07] Peter: I mean, I love, sort of businesses that can, A, you see immediate benefit in this world and if it's a marketplace model, we've got an immediate benefit for the employer and a massive benefit for the employee. If you can, you know, and our mission in life is to destroy payday loans and it's nothing better for me than trying to take a stab at them, but also put some real benefit to, you know, the economy, in terms of how people are paid in this country. So, from that point of view, I just was, as soon as I heard about the concept in QED, they approached us with that concept, you know, back at the beginning of the year, I just couldn't resist the opportunity to get involved with something like this, because it is, you know, it's something game changing, I think it will change how people, not only interact with their employer, but also, you know, how they're actually, you know, managed their finances. And I think that's something that, you know, I couldn't resist that opportunity, especially because, you know, you're providing two benefits, we sit in the middle between those benefits. And it was, for me, it was a model that I couldn't resist taking on.
[7:59] Maiko: When I speak to founders, and many of them tend to be but less experienced than maybe what you have under your belt or just starting out and trying to make an impactful startup work, one main thing they struggle with is really raising investment, very often. They say, you know, very often, investors don't seem to have the appetite to invest in really long-term social impact solutions. Did you see any of that? Or do you think that's an issue?
[8:24] Peter: Yeah, I know, it's true. I mean, look, if you've got more experience, and you've done some successful businesses before, that, obviously helps you get investment, because when you're raising money from the back of a, you know, one investment deck, credibility matters to a certain extent there, and that helps. But I think, you know, if investors could see a market for it, and it provides social good, most investors do very much enjoy being part of something that has social impact, I think that's definitely the case that we saw. That most investors will, wow, this is a great model. Some people didn't believe we could do it, or didn't understand how it would work, but ultimately, most investors were happy with, you know, but yes, you have to be able to see that grow, it has to be meaningful. And if you are going to provide a social impact, it has to be something that touches, you know, millions of people. I think investors can get as excited about that as any other opportunity. But like anything in life, it's got to be something that's game changing, big and there's going to provide a material difference to two people, if you can prove that, then, you know, it's a good investment story. The fact that, you know, in the US as this this type of concept emerging as well, there's some proof points. So, all that sort of stuff helps. But yeah, credibility always helps in investment. So, I guess, the only one benefit of getting older, it's probably easy to get investment.
[9:34] Maiko: And that's a very good point. The other point is more on a business side, right, if you're trying to solve a big social environmental problem, how do you actually improve your likelihood of success? Do you ever feel like you need to balance the profit or profitability of the business versus them pack?
[9:51] Peter: Yeah, I think I mean, the thing in real life, is something has to make money. And if you're going in, certainly in our world, you know, if you want to do good, and you want to keep putting that money back in to do better then you have to be able to prove that this is something that does actually end up, you know, A, employing people, B, having a real impact on people. But, you know, you're not going to get investment for a huge loss making social impact deal, unfortunately, and that's unfortunate, or fortunately, but, you know, our model is definitely, you know, can be very sort of profitable or bit, you know, we have a social charter to make sure we continue to get people out of cycles of poverty, but I think it's got to have a growth story to it. It can't just be, you know, a negative revenue business forever, because that's, again, you know, difficult for people to understand how to invest in. But the best social impact businesses are, you know, something that are game changing, profitable and, you know, provide that good. I think those are the probably three ingredients.
[10:44] Maiko: I want to go way back when you started your journey into entrepreneurship. I heard about that story where you told where you started selling books in the US, going from door to door selling children's educational books, I think.
[10:57] Peter: Yeah, that was true, seems like a long time ago, it's still roaring my mind.
[11:01] Maiko: How long ago was that?
[11:02] Peter: It was five years ago. Yeah, not long. But that was when I was at university and you could go out, you could go, and you know, work in the US as an exchange program and the US student could come over here. And I got involved with a company that was basically you know, we went to New York, got a train to Nashville, and then they trained us to sell books door to door. I think there's probably a cult, but I wasn't sure, but we ended up working 80 hours a week, you know, knocking door to doors, he just said right, Peter, you in Boston went out there. But it did teach me a lot about sales. I mean, you have to literally I mean, we're working so hard, I used to see people literally cleaning sewage thinking you're the luckiest guys alive, I've got the best job in the world, because this job was that hard. But persistence paid off, if you kept going, you kept knocking on the doors, you kept improving your sort of sales pitch and at the end of the day, you ended up you know, you could walk into a home you could talk to everyone there, in fact help kids out with their, sort of home work. You could, you know, they'd pay the money, then you do the books at end of summer. So, you know, it taught me a hell of a lot. It was hard, but I did go back for some more abuse, and not in the summer after that with a team. And we did very well. So, it was it was hard. But it did teach me a lot about how, like, unless you're going to get out of bed in the morning. And it was 100% commission as well, which I didn't I didn't they told me that I hadn't sent commission. So, unless you work so you and I was a student, so I had no money. I mean, you weren't eating unless you work. So, that was a big sort of correlation between effort and food, that gets you out of bed.
[12:25] Maiko: So yeah, if you really depend on it, you got to get up.
[12:28] Peter: And, even you know, you couldn't have anywhere to live, you have to go knock on doors and find somewhere to live and get. I mean, it was hard, I think, had I been a bit older and wiser, I may not have gone for it, but actually, I always look back on it and it was magic days.
[12:39] Maiko: So, what are the specific skills you learned? Was it like the hustle sales skills? What was--
[12:44] Peter: It's everything to like, yeah, there's hustle, there's scale, there's persistence, there's never, you know, keep going at all times, even in, you know, and it was even things like you'd walk into a town, you wouldn't know anyone. So, you'd have to reference neighbors, or the headmaster of the school or the local sheriff and say, you if they bought books, well, we say, hey, they bought books. So even now, in the enterprise sales we're doing with, you know, blue chip, 400,000-person organizations, I'm still referencing other clients, and I'm still knocking on doors, maybe I haven't evolved at all. And it's just, you know, those skills that I learned on the book field in Boston, you know, still exists today to a large extent, because, you know, you're trying to get instant credibility for someone to open a door and, and let you in there, and then show them what you've got, and then obviously, do a transaction and sell them something. So, the cycle of selling we used, way back way in the book field hasn't really changed from where it is today. I may, you know, I may wear a better shirt now, but that's about it. But it's still hard.
[13:42] Maiko: So, is that also some advice for founders to really kind of get those skills?
[13:46] Peter: Yeah, totally, there's persistence, right. And, in fact, when you are founding something, you've got to believe in it, you've got to persist. I mean, there's going down a road that has, that you shouldn't go down, that you need to learn sometimes to stop and go down another, but there's never been anything bigger than hard work ethic and persistence, I think, to get something done. If you've got those skills, then you have 80% of what it takes to keep going. And that means, you know, that those things are what really matters.
[14:14] Maiko: Maybe talking a bit more about your long-term vision, right, you only just started Wagestream, I think you have your first initial customers that you're working with, but what's the big mission here beyond eliminating the payday loans industry? Like, what's the big movement that you think, you're, part of?
[14:30] Peter: Yeah, no, we're on our mission right now, to really take a big chunk out of payday loans and provide an alternative to that, we think we've got a game changing technology platform that allows us to do that. But once you've got a large installed base of people, you know, using you to access their earned income, there's lots of different ways we can help them and that we're lucky enough to live, you know, on a small island, but in a country, which has quite advanced banking infrastructure. And, that allows us you know, with open banking data, we will have something that, not many other companies will have, which is we understand how much people earn, every hour of every day, and what they could earn, and what they have earned. And that means, you know, with open banking data, we can come up with a sort of financial fit-bit type solution for them to give them an idea of every minute of every day, where they are in the red or black in terms of their finances.
[15:24] Peter: And obviously encourage them to say, look, if you've had a big night out last night, you're in the red, you could potentially take another shift here or you want to go on that holiday, you'll be able to do this and recommend ways to help them out. Because, no one really has any idea where they are in their financial health, any one minute in every day, so giving them like a financial health tool that shows them, at all times where they are. And hey, we know you're going into overdraft, so let's take some of your earned income and stop that happening. Or let's pay that bill with your earned income and get them in a position where they're actually in a much better financial health position. I think that's, that's game changing. So, we are all driven through an app, all with data that essentially allows them, you know, you're giving that to people and just getting them in a better position. So, not only, you're provide them a facility to stop taking payday loans, but really give them you know, a tool that shows them why and how they need to get in a better position.
[16:14] Maiko: Do you think this is a solution, specifically and it's always going to be specifically for low wage workers or do you think this is a bigger trend?
[16:22] Peter: Well, we're initially, sort of targeted a couple of marketplaces like, think manufacturing, retail hospitality, where there is low retention of staff, it's just a transient workforce. But what's happened, is we've actually, our solutions are being rolled out to quite a few, just purely salaried workers. It has exactly the same impact. So, you can see how much you've earned, it shows you every minute of every day, your salaried wage ticking up. So, you can go out to lunch, come back, and it shows it a bit more. And you're able to draw some of that out if you want to. It's not just for hourly workers at all, hourly workers are good because we can connect to their timekeeping platforms through API and have a real time understanding of what they do. But, salaried workers, we've rolled it out to a number of talented workers and we think that's a huge marketplace. And it doesn't have to start with just hourly paid workers but that's just where we start.
[17:09] Maiko: That's very interesting. I think one interesting aspect about you guys is that I think a lot of technology startups are focusing, ideally, on customers that have a lot of money or like, have a high ability to pay for a premium product. So, it's, usually always a good strategy, right. But you're focusing on customer segment that doesn't have much money to dispose that you can't like charge hundreds of pounds to. Do you think this is a generally under-served segment and could there be more solutions like yours?
[17:36] Peter: Totally, like some of our best is with our social impact fund will say, it's a big poverty premium, that if I'm a low income worker, I live in a certain area, I have to pay more car insurance, I pay double the electricity bills, I'm paying for the car, I pay more, you know, phone charges. So, all those things add up. So, for us to provide something for them, that enables them to have access to a form of income, which otherwise, you know, you'd probably never take a 3,000% loan, but someone else, you know, will, and those things, if we can stop that happening or give them an advantage or something then absolutely. And I think technology allows that because you can you can impact a lot of people through a platform, and that allows you to obviously take care of low-income workers in a way that potentially you know, 20, 30 years ago would have been tougher, because it's there wasn't any technology.
[18:20] Maiko: Do you see other issues that your customers are struggling or that you think should be tackled that maybe don't fall within what you're doing?
[18:27] Peter: I just think financial education, financial health, people don't realize sometimes they get to the end of the month, they have all these outgoings, they don't have the money. You know, it's understanding, and I have the same point like people just do not understand sometimes all their outgoings, it's quite convoluted, what they're actually spending, at any minute of every day. And if you can provide a tool that shows them that at all times, it just helps them make better decisions. I've made some awful financial decisions my life and probably do on a daily basis, I'd love to have something that showed me, at all times, what was right and wrong. I still could make my own decisions, but it means that something's just guiding me and telling me and being available and visible to me. And I think that alone, you know, people will still make bad decisions, but you've given them something that can educate them. Now, that would be really helpful, I'd like it
[19:11] Maiko: Definitely. I think the last question I'd like to ask is really, if you imagine the world in 10 years, how does the world look like where Wagestream succeeds? And how does the company look like?
[19:22] Peter: Yeah, no, I just I'd love to be in a position where, we've put such a dent in payday loans, that they're suffering as a result of that. And, they're less prevalent, that they're not taking advantage of so many low-income workers. But also, I'd love to be in a world where, you know, we have millions of people using the platform, you know, and we've reduced financial stress, we've got much better visibility and education around their financial health, and where they're able to make much better decisions. So, you're getting people out of cycles of poverty and if we can prove that on mass, then you know, it's a good place to be and I think wow, that's a great business we've built.
[19:57] Maiko: Thank you very much for joining today. I wish you all the best for the next ten and the hundred years, with the company and your entrepreneurial journey.
[20:04] Peter: And if not, I can always go back and sell books, I guess.
[20:07] Maiko: Thanks very much.
[20:09] Peter: Bye.