FINDING SUCCESS WHEN FACING EXISTENTIAL THREATS w/ Rodney Williams

I'm will Lucas and this is black Tech, Dream Money. Ronnie Williams is a three time venture founder currently serving as president and co founder of Solo Funds, the largest community fintech platform for everyday Americans, providing an opportunity to access and growth capital and establish financial independence. He's also co founder Listener and Ultratonic Data over Sound Technology Leader,

I think it's the right answer is probably a combination of both. I don't think that one outweighs the other. I think what made it so difficult is the concept of a community as it released to financial services is very very new. Right, That's not when you think about financial services, you don't think about community, and and so I believe that has to be a part of the growth story, not just the demand part, Right, I think

You had said in another interview, the system is somewhat discriminatory or selective in that it's extremely expensive to start a financial services company. To that end, like, what are some of the most.

Effective ways for people.

Who are trying to build fintech, you know, whether in whatever vertical, but particularly in fintech, whatever solution. I'm sorry, you know, what are some of the best ways to create MVPs, like minimum viable product when it's so tough to get into this industry.

Yeah, you know, I would I would say that I think the way in which we did it was, you know, was probably the cheapest, most efficient way to do so.

It is expensive, probably more expensive.

Than any other of the technology company outside of hardware, in my opinion, because of the required amount of legal work prior to launching compliance and then the ongoing regulation or compliance that's necessary that to maintain whatever the idea you have.

So it's actually pretty pretty substantial upfront costs.

But the way in which we did it was using the accelerators, using the the those were those were incredible, you know, launching pads for Solo. I think Solo participated in three prior to launching yet alone, maybe probably about three additional after launch.

So you know, those those accelerators were huge for for not for.

Trying to just leverage resources despite the uphill battle of the of the costs that it takes to do.

So, you know, for I love this conversation because you know, you talk about it's really expensive to do compliance. It's heavily regulated industry, and I was reading something where you said, you know, at the end of the day, the pattern matching that vcs do when they're looking for the next billion dollar exit, there's not a number of people who walk in looking like you. You know, there's not a lot of people who have attained that level of success and look like us.

You know.

But when you put numbers on the board, you went on to say, people start to wake up. And so in order to get that VC attention. To your point, you know, you have to put some numbers up on the board. How do you do that if you're not Rodney Williams.

Well, I think, let's be very clear. I think that I think everyone is capable of delivering on a concept in a way that they need to.

I think that some.

Of the most the most important things that the founder needs to do is persevere and get it done.

And to do so, you.

Got to learn, you know, coming from our first venture and to this venture, myself and Travis didn't get here by knowing all the answers or assuming that, you know, because I've had success in the past, it's going to automatically, you know, lead to success here.

I think we we've attacked.

It from the from from the position of not knowing anything right and and what that means is we need to know everything and and when when you know us standing here today reaching the numbers that we have, is that we have become the experts at what we do, and we're the best in the world at it. You know, every predecessor that has ever tried to do peer to peer finance has failed or has has never reached the scale.

And.

Fortunately I'm part of a community or we're part of a community that has been taken advantage of by financial services since the beginning of time and a lot of the we know the dos and don'ts of our community. We know the nuances of what the product needs to enable. We know the nuances and what's going to encourage users.

To pay back. These are some of the things that we knew.

All of the things that we didn't know is what we learned to put those numbers on the board. So, and to be clear, I think you know, we don't. I don't think we get on the stage enough to talk about the numbers on the board. But we're doing something that has never been done before, at a scale that has never been done before, and and and and there's a lot of there's a lot of what I would call pain and suffering and scar tissue and getting there.

But we're excited about what's.

Next coming to the game. Not knowing a whole lot, you said, to your point, but you had to learn a lot so that you could know everything about this.

Well, so obviously other people have that issue as well.

But what what are some of the things that we're surprising to you about some of the assumption as you made that may not have been turned out to be correct.

You know, I used to think that it was just my friends and family, meaning that you know, mostly you know, the group of Americans that you know had limited savings and didn't really have access to short term credit, whether it's a credit card or a painting loan. I kind of you know, I originally thought that it was focused in African American communities.

I'm still somewhat shocked that.

No, it's it's it's it's something that's spread across all middle class Americans.

You know, over.

Over over one hundred and ninety million middle class Americans.

Yes, it's filled with the underserved.

Communities are filled with communities that you would think of like LGBTQ or you know, Americans with disability, for example, but it's also filled with black ground and women Americans who tend to be taken advantage of by financial services.

So said differently, financial service companies haven't necessarily built products for.

The needs for their needs.

So that's probably, honestly, that one of the most incredible assumptions that that continues to shock me. And and I give you an example of that. Ten percent of our borrowers make over one hundred thousand dollars a year. You know, this person isn't financially illiterate. This person understands finance, this person has a credit card. Why has the financial system been built to whereas though they need two hundred dollars and they can't get it. And that's the biggest question.

You know, so historically we've leaned on the big three credit companies Experience, Eco Fax, TransUnion to determine a large part of our financial situation, whether we can get loans, whether we can get a car, whether we can get a house. So many other alternatives to that have come into the conversation over the last few years, like.

A social credit score and et cetera.

How do you think how does Solo Funds think.

About the evolution of the credit score.

Well, it's somewhat broken.

If you think about an missed of COVID and thinking sometime in twenty twenty one credit scores, what are all time high where.

No one will working?

Well, you know what that What we're ultimately talking about is that you know, the way the credit score currently works is that it's an incredible measure of historical behavior, but it doesn't necessarily give you a snapshot on the consumer, the consumer's economic position today. It gives a snapshot of

What they can do in a near term.

So it's a very different thing, you know what you know when when you talk to anyone about the credit report or the credit agencies, and there's a ton of secrecy on how it's scored. There's some things that we know, but it's a ton of different misconceptions about how it's scored. We actually just tried to remove all of the misconceptions.

You know.

The way our score works is on cash flow. When you pay something back on time, your score gets better. When you don't, your score gets worse.

That simple.

No, no, no magic, saw us, no nothing that the consumer can't understand.

I wish our credit score was that simple.

Meaning if I have a bill and I paid it on time, it should maintain or get better. But it kind of doesn't. You know, it seems that get worse if I miss a payment. I make a ton of payments, and it doesn't necessarily reflect that successful payment history in the score at least, and and and no form of immediacy.

So these are some of the things in which what we leveraged to create our score.

I will tell you the traditional credit system is built on that, on the credit burd and agency. So it's a necessary evil, but it is an evil that is not widely understood and and that's been been a challenge.

There are many people who might have just fell on hard times or have an unexpected situation and need help. And SOLO find is that assist others who might just be financially unsaddened. How the solo funds man those behaviors on this platform to be sure both the bowers assisted and the lender is protected.

Rodney speaks on it.

Yeah, I will tell you where we see much far less.

Than we see far less a percentages are examples of consumers bad with money.

We see.

Much more examples of consumers operating on extremely tight budgets.

You think that then it's like a negative stereotype that they've said about us, that we just can't manage money.

It's not true. It's actually really incorrect. It really bothers me because in part they're talking about my mom. When we talk about my mom, it's gonna be a problem.

But I'm going to try to paint a picture for you. For of our bars are college.

Educated, mostly women. They tend to have multiple children, They're gainfully employed. They live in cities like New York City, San Francisco, Miami, Atlanta. These are high cost of living cities, and they live on extremely extremely tight budgets. What I mean by extremely tight budgets is that they have less than eight hundred dollars.

Of stavings in their bank account.

Despite being college educated, savvy. To give you perspective, this consumer can take twenty dollars and somehow.

Figure out how to live off at that point an entire week when they need to.

They know every day that the bill is coming out of their checking account. Literally, they know when Netflix is coming out. Okay, this is how focused they are and finances. So what we're talking about is the cost of living is concern in a wage concern that's creating very very tight constraints on budgets. And in a time like this where inflation is happening all all of a sudden, my gas to fill my tank when from forty dollars to fifty dollars.

I need that.

So what happens is these consumers, despite that eight hundred dollars savings, will have a financial emergency one to four times every twelve months. And it looks very simple. My child, my child is sick. I can't go to work for three days. That's three days of pay.

Wow.

This is also when I now have a medical deductible because my kid is sick, and even surgery that's five hundred dollars. And the combination of the medical deductible and the fact that I'm not going to work means I'm going to be short on rent in two weeks.

That's it. Eight hundred savings is gone like that.

So all of a sudden, you know, you're like, you know what, I'm gonna be late on the rent. I'm gonna make sure my kid gets better, but I'm gonna incur late fees on my rent and I don't have any extra cash. Really, I'm just gonna be late. I'm just gonna make sure I got food on the table. Let me just borrow two hundred dollars to make sure I got food on the table. That's not mismanagement of money, that's a lack of cash.

But that's a lack of salary.

Given the cost of living and ef person lives in, there's no scenario that this person can access short term capital cheaper or more efficiently except for going to friends or family or if you talk to a lot of these consumers.

I mean, what I love about this consumer is.

That they're they're they're wet Americas built off of right. We see teachers who sell t shirts on Etsy. We see police officers who also drive Uber, We see you know, I mean, we see multiple streams of income, especially in moments of type and constraint moments, they actually dig themselves out. The problem is we're trying to make sure that whole isn't as deep as it would be what a subprime credit card or paying loan, we're solo. That whole is

It's not true.

Talk more about that the long term cycle of debt that many of us, not many of us, may not be aware of that the traditional emergency lenders put us in because you know, you talk about yes, there there may be some predators or a percentage race that those things, But what is this real cycle that it gets people into that's negatively affected our communities.

The cycle isn't even the APR. The APR is an illusion that's inaccurate. So I'm gonna give you too truth about the APR, which causes problems for for for many Americans. Number One, the APR is as a specific fee based on the condition of credit. It is a fee that they're supposed to communicate. It's it's a it's a fee that takes the kind of like average rate and annualizes it.

But I give you an example.

When someone says, oh my god, that payday loan costs four hundred per the consumer is not technically paying four times what they borrow. It's an annualization relation based on the short term. It's even difficult to understand as I'm explaining it. Yeah, right, So that's that's problem number one. Problem number two, which is more important than problem number one, in my opinion, is that APR does not include subscription fees,

That gets into the predatory nature.

And giving an example, a subprime credit card, which is an average of about five hundred dollars, is your how much credit they'll give you it will happen the highest APR that's allowed in that state, plus the an annual fee. There's a late fee, a flat late fee assessed every month that you're late for the rest of the time. Now they have caps, but for a while there's also instant cash fees that you also don't care. So when we actually we actually try to we call it total costs.

Not sure math.

If a consumer takes one hundred dollars today, what are they paying twelve months from them?

That's it. It's everything plus.

One hundred dollars, no offens and bucks, and the data is really really upsetting.

Subprime credit cards are.

Actually more expensive and paying the most, which are a subprime credit card of basically one thousand dollars, the average.

Consumer is going to pay like nineteen hundred dollars.

Fees on top of the thousand, on top of it.

Principle, Yeah, it was, it was. Actually it's actually really bad.

So, you know, these are some of the things that aren't necessarily talking about, but mainly because who's who's the who's the folks in the in the room arguing about APR or talking about what consumers are really paying. Number One, that they're too far removed. I know, I know, my my, you know, the too far removed from the plight. They've they've made their money a long time ago, they're doing pretty well. They're not understanding what these consumers are really

Do you have a credit card? Yes, well, that's shocking.

They told us that they didn't have a credit right, why don't you use your credit card?

It's too expensive? And I was so confused by that.

Because my credit card isn't that expensive, but their credit card is.

And these are just some of the things that you know.

I think that's one of the best things about being who we are as founders and entering this space within financial services is that we it's I think it's our duty to be a voice of who we represent and to start to bring data and facts and start to push, you know, are our leaders to answer these questions and and and to and to start to create some level

There's a one time fee that that's going to dig a hole.

And you got to understand, there's no what we have been, what we have learned is that we actually have significantly better repaying the rates.

No, I it's easier to get out the hole.

It's really hard to pay back one hundred dollars loan that is now two hundred and fifty bucks versus one hundred dollars loan that's now you know, one hundred and thirteen dollars.

Yeah.

Yeah, it's really that simple when we think about it, right, like you don't dig the hole too much, so it's still in reach of a payment.

But again, these are just some of the nuances that we decided to do, and I mean to be honest, we took it the extra step. We're one of the few lenders in the space that is a benefit corporation a certified benefit.

Corporations via the b Labs. B labs is a nonprofit.

Think of it like a governing body who certifies companies.

To attain B CORP status.

B CORP status is a combination of their certification as well as like literally we submit we actually you know, register with the government as a benefit corporation, which what that ultimately means is that we balance the need for profit alongside for people and we don't.

We don't. That's that's important.

So they come in and they look at all of our finances, They look at how much money we make, they look at how we play pay our employees, they look at, you know, in terms of how we even promote within and they give scores. But not only did they assess all those different things, they assess our business model and they assessed that, you know, how we're handling our consumers, and it came back very, very positive.

But I mean, that's the piece.

I'll tell you another piece, the average mps's net promoter score. It's how you know you can judge consumer experience. Most financial services companies are around forty. Bank of America is at a twenty two. Our average net promoter score is a ninety.

These are these are.

That for the people who don't really understand what that means, like what factors go into creating that score.

It's it's really just about it's it's a measure of its basically a measure of the amount of consumers that are having a happy experience. So it's a random survey that's distributed across all of our users, and it's it's just them being happy. Companies that have really high net promoter scores are companies like Apple and Nike, Patagonia, you know what I mean. These are something not financial service companies. Put it that way. So we we are extremely proud of having an MPs like that.

But that's the community part.

Going back to your first question, it's it's because of that why where we continue to reach the scale that.

We are you you said earlier and I've read you said, there's a few times, you know, you're innovating and thriving where companies have failed. You guys are the first company in this vertical, particularly black owned company, to find success.

Why do people fail?

Why is their line of you know, dead startups previous to you guys?

Well, I think a lot of people were making products for middle class America and they're not middle class America. One day, I'm going to start a VC firm, and our goal is to invest in founders who are uniquely positioned to be experts at the consumers they serve. That's it, you know, And I think when you look at a lot of the fintech innovation. Just look at a lot of the fintech innovation, even the the what everyone talked about for crypto is going to democratize finance for the people.

You know what I mean, we're not going to talk about that.

Or you know, you know, credit builders and this this, These are all Harvard, m I T and Stanford Dies building products of people that look like you and I and they're just where where where I truly believe they failed is you know, not understanding the consumer. And it makes perfect sense. I think people got to understand my background. I'm a trained brand manager from Procter and Gamble.

I spent five years becoming an expert at a consumer, being.

Relentless at shipping cases. All right, I worked on Pampers. Wasn't a dad. But the way I got good is becoming an expert at who we serve. And I think sometimes in fintech's we kind of or you know, we kind of get we kind of get excited about the opportunity and you miss the point.

We at Solo are obsessed.

With middle class America to the point where I live down the street from a payday long London. Trust me, I can live a lot of places, but I want to drive past that line every Friday. I want to. I want to. It does something to me, you know what I mean? And my co founder lives also down

You said something similar about community banks before and that they weren't really doing what they're designed to do. You know, so you said, I think about what the community bank is supposed to do, and they're supposed to be lending, allowing lending and borrowing in the community. You know, I think about if we look at almost any deeply embedded institution or industry, we can find where they failed to

You know.

I wanted to make an impact, and I saw I wanted to make a financial impact.

And you know, Travis and I.

We saw a lot of effort pushing capital to small businesses, entrepreneurs of color, and we were still driving past the woman who served me coffee, person who served me a drink, and I was still getting picked up in ubers and they needed support and help too. And for me, I grew up in a working class family, and working class family is who built me. I also know that my working class family is so working classes no more. They're

Right, So I figured, you know, one of the things.

Really the innovation that I would say that's really important for us, and I usually glance over it. But our solo score, our underwriting model is impressive. It's currently performing about four times better than the industry average.

That's all built in house.

All built on a few AI models. Taking we used to call it the hustle score. It's we're trying, We're really met. We really designed an underwriting score that measures a consumer's ability to make and to figure it out and and that in combination with what we call our real time or payment product or real real time payment solution, we h we've kind of removed all of the dumbness. And I'm going to give you an example. I sign up for a system I didn't have to pay you

That's why follow me on Instagram.

I'm always in Visa's office and these are some of the reason why we're always in their office. What does that allow us to do? That allows us to move money faster and more efficiently when someone's in need and when someone needs going to pay alone. Put yourself in that single mom that I talked about, who knows exactly when her.

Netflix built is gonna come out.

So if she says, solo, you need to pull this money on the fourth, if you pull it too late, you're not gonna get it.

That's what she's also telling us.

So we needed a real that's nobody, honestly, quite frankly, no one who looks like me really understands that that you need to pull money exactly when it's available.

It cannot be a delay because all of that.

You know, when things get pending in the ach, something's gonna fall short.

And that goes both ways.

So we spent a lot of extra capital spending this real time product.

And I will tell you that's some of the I.

Just kind of gave you the three part secret sauce to why we exist.

It was a quote I read where you said, our goal is not for borrowers to remain borrowers. I think Travis said this, Actually, our goal is not for borrows to remain borrows on this platform forever. So how do you think then about retention and which metrics matter to you?

Since pretty early in the in the in the life of the company, our bars.

Have also lent, so they've graduated.

They graduated. I'm pretty happy about that rate.

It's fantastic because it goes back to the original assumption.

They're not illiterate.

They just have a cash need today, right, and and if you give them a way to get out of it, and they're not only just going to get out of it, they're going to thrive.

In six months. I mean, we we have examples of.

One of my favorite examples, it was in the CNBC article is an engineer at San Francisco. He lost his job. He used US for a couple months three hundred, four hundred, five hundred bucks. Eventually he got a huge six figure job. He became a prolific lender on the platform.

Is that if that's not everyday Americans? I don't know who that is, right, this person.

I mean, that's the life of an average American is that at the end of the day, job.

Security is not what it meant twenty years ago.

Like no one's at GM working for twenty five years. Job security today is fleeting for every American, especially if you're fresh out of college. You know what I'm saying, under thirty five years old, you haven't really got your footing and your career. You're in and you're in and out of jobs despite being.

Very, very educated.

So these are just some of the nuances that we eventually know that you will land, and you're going to land and do really well, and you're going to be a thriving member of the society. And and you know what, you for some reason have a connection with Solo that no one can break because Solo.

Was there when you needed them most. No other financial institution was.

Wow, I want to dig into your mindset a little bit. I've always been fascinated by the way you think. And I learned this and doing research for this conversation, that there was a time just a few years ago before the surgeon users that you know, Solo Funds was almost out of business.

I mean it was expectively out of money.

You know, I want to know about your mindset in those moments where you're facing existential threats to your business and you've gone head to head.

With major players at your.

Previous companies and when those were still startups.

Who do you put yourself?

I want to like how Rodney's mind works. Who do you put yourself around? Or what is your mindset when it feels like all the moves in front of you have to be played precisely, incorrectly in order to stay alive. Much less fine success, but just to stay alive, like so many people don't come back from that. And so I'm interested in how Rodney thinks about these sorts of threats.

You know, looking back at them, I would tell you that they are very expensive. And what I mean by that is they're expensive on your social relationships. They're expensive on your romantic relationships because it's a bit irrational, too empty, they account like, I don't know what else to tell you. It's a bit irrational. It's a bit irrational to say I'm not to you know, to your significant other, I'm

I'm a p and ger. Don't let my wildness fool anybody. We lead on paper, and I don't need as much paper as most pgs. That's what I said.

I don't give me two sentences in a bullet point and I'm probably gonna I can do the rest. But what I'm ultimately saying is that you know, at some point you get to a conclusion that the opportunity outweighs the risk and the cost, and that little bit of information is something that you are the only person in the world that knows.

So you just have to get through this moment, and if you can get through the moment, it will pay for you. I wish it was easier, you know.

I look at my counterparts will get to go and raise hundreds of millions.

Of dollars because they.

Know someone at andresen or their father is an executive at Goldman Sachs. I wish that I had those level of security, but I don't. So that means you swing for defenses. But I will not lie to anyone listening on this call. The cost is expensive. There's a lot of relationships I had to sacrifice to get here.

There are a lot of.

Moments that I had to miss to get here, and and and if you want to be an entrepreneur and be a founder, and you're not willing to do those things, you.

Should do something else.

You know you should, because you may you may waste someone's money, and you're definitely gonna waste your time.

M H.

Black Tech Green Money is a production of Blavity, Afrotech on the Black Effect Podcast Network and I Hire Media and it's produced by Morgan Debonne and me Well Lucas, with the additional production support by Sarah Ergan and Rose mc lucas.

Special thank you to MICUs David Sapping. That's a Serrano.

Learn more about my guests and other tech dissent innovators at afrotech dot com. Enjoy your black Tech three money, Share this with somebody, Go get your money, Peace and love,