Since I started Simple.Innovative.Change, I have always stressed that the power of financial technology is in it’s ability to provide efficient and affordable access to financial services for millions, if not billions of individuals who have to date been underserved by traditional banking institutions across the globe.
In a world dominated by capitalism, the economics have to make sense to pursue a customer. Thus far, pursuing underbanked consumers just never made financial sense for an organization looking to make money. That was until Juvo identified the key to affordable access to customers underbanked by the current system.
They looked no further than the palm of every persons hand that oftentimes in this day and age contains a smart phone. In partnership with the biggest players in telecom across the globe, Juvo is pursuing the build out of a new type of financial services business built on creating access and visibility into the underbanked consumer.
Juvo in conjunction with mobile tech is about to open the world up to financial services in a way we never imagined. Check out my and Steve’s discussion below to learn more.
CL: Steve, you’ve had a fascinating career to date from investing in early stage telecom startups, to being President and COO of Flixster, known by many for its Rotten Tomatoe website entity. Now you are reimagining how people access credit through mobile technology. So why Juvo and why now?
SP: Yes, I know it’s a very natural and common transition to go from the movies business to financial services. All joking aside, I think Juvo pulls together several pieces of my career into one. For instance, I started my career in the telecom industry and worked overseas in countries like Venezuela, Argentina, and China, which gave me an opportunity to really see the power and reach of mobile technology.
It became immensely apparent to me that mobile technology impacts everyone. I also worked across startups and understand what it means to build something from the ground up.
CL: For those that don’t know, how do you define Juvo as a business?
SP: Juvo in Latin means “to help” or “to assist”. Our aim is to be a Fintech service provider enabling 100s of millions of people to walk up the pathway to the financial services of the world.
CL: Can you talk a bit about the scalable aspects of this business that get you excited?
SP: The scalability of this business comes from the fact that 80% of the world uses prepaid mobile plans. And people are constantly making small transactions via their phone. It dawned on us that we could apply scalable data science to the mobile phone market to capture and engage mobile phone prepaid users on everyday interactions. This is an amazing leverage point to build financial identities and help these people move up the ladder of financial services.
When the idea began to come together, and we saw the opportunity for such scale, we felt compelled to try it and introduce credit to people around the world via that mobile phone.
CL: What is the experience like trying to create partnerships and then collaborate with massive telecom enterprises that I’d imagine are a lot less agile than Juvo?
SP: One of our bets from experience was that we would be able to form deep partnerships with mobile operators that touch the majority of the world population, which we have. And the reason we have been able to do so is because we help mobile operators better understand their customers base by giving them better insight into the identities of their customers.
We also provide additional revenue opportunities, and reduced churn amongst their customer base all the while building pathway to better financial access for their customers. And thus far it has been really successful. We believe that these long standing partnerships allow us to create deep penetration within the organization and really provide a lot of value add for both sides.
CL: Through these telecom partnerships you have accessed a customer base of over 500 million customers across the globe, but how are you driving actual customer engagement, and do you have a sense of how many customers will ultimately adopt the financial services you offer?
SP: We have shown repeatedly across 24 markets that 6 months post launch, between 20 and 30% of all smartphones will transact with us. In some early markets we have seen nearly 50% of users transact regularly with us. Time and again across different eco-conditions we get deep engagement.
We start the relationship by helping users to keep their phones turned on. Imagine, there are 5 billion prepaid consumers in the world, and 1 out of 5 won’t have a balance available when they need to make a call. We help keep their phone turned on with a top off, which starts the relationship. It starts with the very initial transaction.
CL: Can you walk us through the types of data points you collect on customers and how that helps build a unique credit profile of an individual?
SP: In many countries there is no way to prove the ability of a person to be financially responsible because there is just a lack of information, even if they are good with their money. We help people by utilizing everyday mobile phone usage to create the beginnings of an identity score by coming to understand who you are.
CL: Will you look to monetize the platform through a referral program as you look to offer users of Juvo access to financial services that they would otherwise not have access to?
SP: From a mission perspective our goal is to expand access to financial services to new segments of the population, which will take the form of different business models to make that happen. In South America we partner deeply with customers to drive mobile bill payments, micro-savings, and adoption of further financial services.
In other parts of the world we have established more of a referral model for accessing financial services. It all depends on the cultural structure of the company. Ultimately, the focus is making sure consumers gain access to life changing financial services.
CL: What does a typical user of Juvo look like from a demographic perspective and does this vary by country?
SP: The great thing is, when we look at the data, many countries have 95 to 97% of the population using prepaid mobile service, and a lot of these economies also happen to be cash based, which means there is rarely a well-established credit system.
When we launch in a country we reach a broad section of the population fast and conveniently via mobile, and so there is actually no one type of user. We see adoption across income levels and demographics in all the countries we are in.
CL: It appears as though a major focus for Juvo is in emerging markets. What are the benefits of the mobile banking structure of these countries that perhaps makes them more accessible than the US?
SP: I would say that there is absolutely an opportunity here in the US with 90-100M Americans on prepaid mobile service and a lot of them are underbanked, but we ended up launching overseas because there is a real burning need.
Reason being, a vast majority of these countries we are entering are primarily cash based economies. In the United States, credit cards work great and are an established way to pay for things. But across the world it is fascinating to see what is occurring from a payments perspective.
China is actually the most advanced payment system in the world and there is also a lot of innovation occurring in India. But that’s because systems like the credit card have never been as well established, so we feel like we can really provide value add from a mobile focused perspective.
CL: What are some of the performance metrics of Juvo in terms of benefitting your telecom partners?
SP: We have increased revenues for our telecom partners by 10 to 15% on pre-paid plans and we have reduced churn by 50%. Juvo has a very direct and measurable impact on the lifetime value of customers.
CL: One thing that I am blown away by is the multi-continent growth strategy. I have to imagine this has proven incredibly difficult so how are you managing to navigate these waters effectively?
SP: We are building an experienced team that comes form 30 countries, and speak 40 languages. So we are very diverse, and bring to the table many unique perspectives that help us launch in some of our target markets like Southeast Asia, and Latin America. Though its very challenging it’s also very exciting.
CL: Juvo has raised over $40M from some of the biggest names in VC including NEA, and from household Fintech names like Ron Suber. How have you managed to attract such top tier interest for your offering, and what type of grand vision do you and your investors have for the organization?
SP: I feel lucky for the investors we have that have been able to see the vision of what we want to accomplish from the start. Be it our VCs like NEA, Wing, Freestyle, Signal Fire and individuals too, like the Chairman of Vodafone, Telefonica, and Sprint.
We are surrounded by amazing people because we’ve been succeeding, and growing quickly. I think our investors understand that we are playing in very big space, and if we get it right we have the chance to be a really big impactful company. Juvo is a company you have to be all in on to succeed.
At the end of the day we are working on a really big idea. Think about it, a huge percent of the world has a mobile device and the idea is we are reaching directly down to billions around the world and opening up access to financial services.
CL: What more do you think we can do from a regulatory perspective to help improve access to financial services for individuals with thin credit profiles?
SP: For me, there is a US and an international answer for that. The US system is fairly complex. You have 50 states with regulations and the Federal Government. I think the biggest thing the US needs is to help Fintech’s that want to improve the well-being of thin credit profiles to be able to more manageably navigate the regulatory waters.
Overseas, I think we see that there are more proactive movements to fix regulations. We have seen in some of the countries we are in that governments take a sandbox approach, where startups like ourselves can help support the development of regulation that supports innovation. Our role is to protect consumers and the financial system but we also want to create space for innovation. If done correctly and with controlled experimentation we think we can build methods that at scale can have significant benefits to thin credit individuals.
The Minute Rundown with Steve Polsky
CL: If you could provide one tip to someone considering starting up, what would it be and why?
SP: My tip is to “Think Globally.” When you live and work in the United States, it is easy to think that you are in a gigantic market and so focusing solely on the US makes sense. But it has been exciting for us to think internationally from the beginning. There is a lot of opportunities that open up to you if from the start you focus on building a business that can serve people all over the world.
CL: Since you were President of Flixster, what movie must we all see and why?
SP: You know, I always felt like a disappointment to the people at Flixster, because they were all deeply passionate about movies. I have kind of always liked a broad set of movies, and was never able to keep up with them on movie stats or different individual movies.
But, I love Flixster and Rotten Tomatoes. Never watch a movie without checking out their ratings first. They know everything.
CL: If you could model yourself after one founder, who would it be and why?
SP: I hate to be mainstream here, but Elon Musk is so disruptive. The fact that he’s solving such gigantic problems in the world in such a disruptive way is pretty incredible. I love someone willing to take such risk and put it all out there to pursue change.
In a world where our mobile phone is increasingly becoming our mobile wallet, Juvo is a business that is capturing the power of handheld technology to drastically drive down customer acquisition cost in the financial service industry.
Like every market there are two sides, the supply side and the demand side. To date the doors have essentially been closed to the demand side of business when it comes to underserved banking consumers. The opaque nature of who this consumer base was made it challenging to understand who they were. And the cost of pursuing a misunderstood consumer population is an exercise in losing money.
Juvo has solved for this great need of being able to serve a hard to access consumer population. They have reimagined the economics of accessing this consumer base and created transparency where it used to not exist. The opportunity is massive and the future ahead is one worth watching. They might just be turning the key to reinventing the financial services industry.
Thank you Steve and the whole Juvo team for investing in truly Simple.Innovative.Change