#77: PiggyVest - How the savings and investment platform is providing financial services across Nigeria

[00:00:00] We'll discuss PiggyVest's launch in Early History 3rd, its product-to-monetization strategy, and our conversation on African business and technology.

[00:00:30] Very, very nice, corporate-speaking, good marketing.

[00:00:32] I just thought it's a savings app.

[00:00:37] Yes, I prefer the simple one that I prefer to use, savings and investment platform for Nigerian consumers. Easier to understand than trust stuff. I don't know what all that other stuff is.

[00:00:46] Why we talk about PiggyVest today is it's a really big, sizable company. They keep their funding use close to their heart, but they have a lot of users.

[00:00:52] If you contrast it to some of the more popular ones that have raised literally hundreds of millions of dollars, they're in the same ballpark, with user numbers, etc.

[00:01:01] So it's reasonable to assume they've raised the same amount of money. They have global recognition.

[00:01:05] They are one of the top 250 fintech companies globally as ranked by CNBC, which means something.

[00:01:13] I don't know what that laughter is about.

[00:01:17] Also, why are you assuming they've raised a lot of money? They may just be capital-efficient. We'll talk about it later.

[00:01:21] We know they're big valuation-wise. That doesn't necessarily correspond to raising a lot of money.

[00:01:26] So you're saying they haven't raised a lot of money.

[00:01:28] Look, maybe, maybe not, but what are the odds, right?

[00:01:31] Because it's literally free money at this point. Free quote-unquote, but you know what I mean.

[00:01:36] Fair. I think for PiggyVest, they have a simpler business model than most other companies we've spoken about.

[00:01:41] I think it should be easier and more direct to talk about them. Anything else on context before we start?

[00:01:48] The way to think about PiggyVest, to place it in our other episodes is, think of it very similar to some of the banks.

[00:01:55] Yes.

[00:01:56] Like the fintechs that take money from users. We've talked about Fair Money. We've talked about...

[00:01:59] Cuda.

[00:02:01] Cuda, Crabon, and even some of the major banks. They're a deposit money bank. They're a microfinance institution. They have a license.

[00:02:07] However, their business model is much more focused on savings and taking money to save and different kinds of savings products uniquely versus, say, lending, which they don't do at least as of the time of this recording in October 20, 24.

[00:02:18] Yes. They are a consumer-facing savings and investment app that helps regular retail consumers save money and invest money.

[00:02:27] And because of the way they started, they seem to have a higher proportion of younger customers, AKA Gen Z and millennials.

[00:02:33] We'll start with it. Public service. Oh, another thing to mention. You mentioned number of users.

[00:02:37] So it seems they have around five-ish million users, which seems to be around the same number that Cuda had and around the same number that Chipper Cash had.

[00:02:46] But they seem to be not as well-known or basically lower on the investment radar.

[00:02:51] Because a lot of those other companies have raised a lot of money, which gets you on the news funding cycle.

[00:02:55] So we'll talk about all that as the story progresses.

[00:02:57] Okay, PSAs. Public service announcements.

[00:02:59] Listeners, founders, investors, operators.

[00:03:00] Love to link up with you. Email both of us.

[00:03:02] Info.afrability.com. Email boundcolle.afrability.com.

[00:03:05] Me at illuminatedafrability.com.

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[00:03:09] It's live. There's a bunch of articles going out.

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[00:03:13] Biases. Biases on piggy vests.

[00:03:15] It's piggy bank.

[00:03:18] My biases are positive.

[00:03:19] It's kind of...

[00:03:20] I'm not surprised.

[00:03:21] It's savings, man.

[00:03:22] Like...

[00:03:23] You can't even be mad at this.

[00:03:24] You always tell people don't borrow money, living poverty.

[00:03:27] I'm going to talk about it on this episode, even though it's not related.

[00:03:30] You're saying living poverty, don't borrow money.

[00:03:33] That's a living thing now.

[00:03:34] No.

[00:03:34] No.

[00:03:35] I'm much more open, but I think I'm much more...

[00:03:37] I like the...

[00:03:37] So I should defend myself.

[00:03:39] I said you shadowed me.

[00:03:40] I should just let it go.

[00:03:45] I'm not borrowing money that you can't repay.

[00:03:47] But anyway, let's stay on topic.

[00:03:47] I just had to defend myself very quickly.

[00:03:49] I know.

[00:03:49] I know.

[00:03:50] Lesson teacher, Olumide.

[00:03:52] Uncle, Uncle lesson teacher.

[00:03:54] Uncle lesson teacher, Olumide.

[00:03:56] No, but my biases are positive on piggy vest.

[00:03:58] Yeah.

[00:03:59] My biases are positive.

[00:04:00] Look, piggy vest does savings.

[00:04:01] They help people save.

[00:04:03] I am amazed how people feel positive about it.

[00:04:07] One of the challenges is having users who speak positively about the brand and feel an affinity with the brand.

[00:04:13] You can't purchase that or it's expensive to purchase that even if you could.

[00:04:17] A piggy vest seems to have had that very early.

[00:04:21] Yeah.

[00:04:21] Before I did any research, I was basically positive on the company.

[00:04:26] I like personal finance.

[00:04:27] I wrote a book about personal finance.

[00:04:29] I like personal finance stuff in general.

[00:04:31] It's one of my main interests.

[00:04:32] In fact, maybe my primary interest even above technology.

[00:04:35] For sure.

[00:04:35] I was like, well, this is a company that helps people better manage their finances and save.

[00:04:39] So I liked it.

[00:04:40] And when I did a bunch of research, I felt basically the same.

[00:04:43] I was also positively surprised by the fact that core management team stayed together for so long.

[00:04:50] I'll talk about that later, but I like that a lot.

[00:04:53] And they seem to be very capital efficient.

[00:04:54] Overall positive.

[00:04:55] That doesn't mean I won't have some negative things to say, but I think I'm leaning positive on this one.

[00:04:59] So we'll see how it goes.

[00:05:01] I mean, we can probably do the math.

[00:05:04] It just occurred to me now.

[00:05:06] I don't buy the capital efficiency point.

[00:05:09] We'll see when we get there.

[00:05:10] Because people are throwing money at them.

[00:05:12] Yes.

[00:05:12] Anyways, we'll see when we get there.

[00:05:14] And we'll do the math on what kind of spread you can expect based on what kind of A and see how much that turns to.

[00:05:19] 100%.

[00:05:48] Okay.

[00:05:54] So we're going to do South Africa, Nigeria, and Kenya.

[00:05:57] Yeah.

[00:06:11] Okay.

[00:06:15] So we're going to do the math.

[00:06:22] So we're going to do the math.

[00:06:24] So we're going to do the math.

[00:06:39] Yeah.

[00:06:44] So we are so much.

[00:06:45] capital base that all the banks needed. There was a bunch of like mergers and acquisitions.

[00:06:49] It's almost, it's becoming more and more similar to NewBank, which is, I guess,

[00:06:52] contact for the broader episode. If you talk about, in Nigeria, I think the top five banks

[00:06:56] make 85% of all the profits in the banking sector. Probably. Right? No, yeah, it's so metric for

[00:07:00] that. Like that's just standard. The profit-wise is concentrated. I think assets-wise is a bit

[00:07:05] more distributed and a bit less concentrated, at least within the top three. But the banks will

[00:07:09] tell you that it's harder for them to make money. So I got some sympathy from the banks from doing

[00:07:13] this. So first of all is Nigerians' cash reserve ratio requirements. Banks are mandated to keep a

[00:07:18] portion of their reserves, of their deposits, their reserves, the money they collect from customers

[00:07:22] at the CBN. And it's very high in Nigeria. It's probably one of the highest in the world. It was

[00:07:26] 20. CBN, Central Bank of Nigeria. Central Bank of Nigeria. It was 28%. They make them keep.

[00:07:31] Customer deposits rise. When customer deposits rise, basically, banks are required to top up

[00:07:35] their reserves because your reserves, to hit the 27.5% of corrupts, you need to keep putting deposits

[00:07:40] at the bank. But when your deposits drop, Central Bank does not return the money back to them.

[00:07:45] And that money does not earn any interest at the same time. You find banks having their effective

[00:07:49] CRR being 40%, 41%, because the Central Bank uses it to mop up liquidity and manage inflation,

[00:07:55] basically, by removing money from circulation. But if you have a bank keeping effectively 40%

[00:08:00] of their deposits at the Central Bank, earning no interest, they're not trying to give consumer

[00:08:04] loans or consumer credit. The people that they charge, they have to charge very high fees.

[00:08:09] The banks are working in a very hard, hard regulatory ecosystem. You have some sympathy for Nigerian

[00:08:16] banks. Supposedly.

[00:08:17] You should have some sympathy for them. I have some sympathy for them. Supposedly.

[00:08:19] And it affects their profitability. A CRR is one of the highest in the world for that reason.

[00:08:25] And therefore, the banks are then forced. We can't make money from lending because we don't

[00:08:29] have enough capital. They've moved to derivatives on fixed income. And I saw it start from 2009

[00:08:34] to 2019. Income from derivatives has gone from 15% to 35%. That's basically all they do now.

[00:08:40] Basically, like options, swaps, government securities, fixed income.

[00:08:43] Got it. Okay. Okay. What's the summary of the Nigeria piece? I think I got it now. You want

[00:08:48] to summarize that part?

[00:08:49] Overall, the banking sector is hard, but the banks will say that the reason why they're not

[00:08:52] making any money, why they're not able to offer better service is regulation and regulatory

[00:08:57] uncertainty and regulatory changes. I thought that part is very interesting.

[00:09:01] Got it. Okay. Okay. That's the Nigeria piece. Fascinating. If we take a setback of Nigeria

[00:09:06] a bit and talk about like Africa, I looked at a measure of banking sector concentration.

[00:09:10] Basically, what percentage of banking assets are held by the top three banks in each country?

[00:09:15] We're going to be quiz time. What do you think the answer is for Nigeria?

[00:09:19] How many of us do Nigeria last? USA.

[00:09:22] USA. Top three bank, 30%.

[00:09:25] 37.

[00:09:27] Okay.

[00:09:28] Yeah. South Africa?

[00:09:30] South Africa would be higher because it's more concentrated.

[00:09:34] Oh, remember it's top three banks.

[00:09:35] 55%.

[00:09:35] It's top three banks. South Africa has maybe four, five or six big banks even.

[00:09:39] Ah, right, right.

[00:09:41] It's top three banks.

[00:09:42] Nice. Right. Good.

[00:09:43] Yeah. The metrics are mostly similar. So it's 37 South Africa, 36% in Kenya, 42% in Nigeria.

[00:09:50] But in Nigeria, profits are super concentrated. Like the top five account for 85% of all the profits.

[00:09:56] I see.

[00:09:57] Our banking sector, if you look at it, I think for Brazil, it's about 80, 75, 80% for the top three banks.

[00:10:05] The banks are is concentrated from an assets perspective, but not nearly as concentrated as Brazil.

[00:10:10] Not more so, at least when you look at the top three. When you expand it to the top five, I'm sure if you did that analysis, you find it's concentrated, but less so than others.

[00:10:19] It's a very fascinating perspective.

[00:10:22] Right?

[00:10:23] Okay, cool. Should we talk about other African countries?

[00:10:25] Yeah.

[00:10:26] Or do the bubble up?

[00:10:27] Yeah. Let's talk about like, I want to talk about South Africa a little bit.

[00:10:30] I think part of the reason is the profits for the big banks are also very high.

[00:10:35] I think that's one of the things you look at. There's a Jeff Bezos quote where he says, your margin is my opportunity.

[00:10:39] The biggest banks in South Africa are clearing 18 to 25% return on equity compared to 9% in the US.

[00:10:45] Nice.

[00:10:46] Compared to even the 18% that made the founders of New Bank angry in Brazil.

[00:10:49] The banks in South Africa, the biggest ones are incredibly profitable.

[00:10:53] Made them angry.

[00:10:54] Yeah.

[00:10:55] Angry not to start a new company.

[00:10:57] Start a new company, right?

[00:10:57] You find that these margins are very similar in African countries where the banks are making outside profits.

[00:11:03] Now, it looks big, but also the cost of doing business, the cost of equity is also higher in those countries.

[00:11:08] Even though the return on equity seems high, you want to look at the gap between that and the return.

[00:11:12] But it seems by some measure of math, they are similar, but by other measures, it's not as bad.

[00:11:21] I think that's a really big takeaway here for all these African countries.

[00:11:25] I was going to say, we should also talk about the broader African statistics.

[00:11:29] We spoke about this on our first episode, actually, on Fintech episode.

[00:11:32] We said 67% of people in South Africa don't have a bank account, so they're unbanked.

[00:11:36] And then in Nigeria, it's 60%.

[00:11:38] And then in most African countries in South Africa, it's even higher.

[00:11:41] Some countries have as high as 70%, 80% of people are unbanked.

[00:11:44] And unfortunately, most of the unbanked people tend to live in rural areas and they tend to be female.

[00:11:49] So unbanked, being banked, being underbanked, however you want to frame it, is a massive issue across many different sub-Saharan African countries.

[00:11:56] But if you look at the opportunity for African neobanks is there's so many people, forget the people that are banked, like Olumide.

[00:12:02] There's so many people that are unbanked that there's, it's, I suppose, 40, only, in Nigeria, only 40% of adults have a bank account.

[00:12:09] I'm not surprised.

[00:12:10] You don't find many people with percentage of only total lending.

[00:12:14] So in South Africa, consumer credit is 40% of total lending in the economy.

[00:12:17] South Africa has a much more developed banking system.

[00:12:20] In Kenya, it's 28%.

[00:12:21] In Nigeria, consumer lending is only 8% of total lending, right?

[00:12:24] It's just not something that is deep or growing.

[00:12:28] And there's all these different gaps in the market.

[00:12:30] Like you can assume fundamentally that people need lending, like people need credit.

[00:12:34] That's almost like food, water, and credit, right?

[00:12:36] And there are many different pieces as to how people engage with their banks that are coming up in Africa as well.

[00:12:41] So mobile first generation, young generation, 80% mobile penetration across Africa, 350 million people unbanked.

[00:12:50] And that makes you go, well, that's an opportunity, right?

[00:12:53] You know, if everybody has a mobile phone, everybody has internet access, nobody has a bank account.

[00:12:59] It makes you go, hmm, I got to think about that.

[00:13:02] The audience can't see me right now, but I'm dancing.

[00:13:04] Okay, I have a few issues.

[00:13:05] A few things to raise African-specific challenges when you compare traditional banking model with neobanks.

[00:13:12] Yes, the other side of the opportunity.

[00:13:14] Traditional banks, you normally have issues, difficulty opening bank accounts.

[00:13:17] So for example, when I lived in Nigeria 2012, I tried to open a bank account, two bank accounts.

[00:13:22] Stambic, IBTC, one of the big banks, and then GTB.

[00:13:24] This is the process, and I'm not making this shit up.

[00:13:26] Probably not the process anymore, but hopefully not.

[00:13:28] At least, who knows?

[00:13:29] Well, yes, CTBG.

[00:13:31] You need to get three references.

[00:13:33] Why do you need references to open a bank account?

[00:13:35] I'll never understand.

[00:13:36] You need to get passport photos.

[00:13:38] You need to fill a form.

[00:13:39] You need to take the form to the branch.

[00:13:41] You probably need to queue for a while, deposit the form, and then wait three days for them to get back to you.

[00:13:45] I'm not making this up.

[00:13:46] It's almost...

[00:13:47] You didn't even add the utility bill to confirm your address.

[00:13:50] Oh, right.

[00:13:51] Thank you.

[00:13:52] Yes, I forgot.

[00:13:52] I wish I were making this up.

[00:13:53] Let's just say there's a lot of difficulty and inconvenience opening a regular traditional bank.

[00:13:57] Maybe it's changed.

[00:13:58] This is six years ago.

[00:13:59] Maybe not.

[00:13:59] I doubt if it's changed.

[00:14:00] Okay.

[00:14:00] Another issue with traditional bank accounts, high fees.

[00:14:03] One thing that struck me when I moved, because I had a bunch of bank accounts in America, and I compared it to Nigeria.

[00:14:07] Just the fees.

[00:14:08] They have all sorts of fees for different things.

[00:14:10] They even have...

[00:14:10] I'm not going to get into details.

[00:14:12] Let's say they have a fee that literally they just charge you every month just for having an account.

[00:14:16] It doesn't have anything.

[00:14:17] I'm trying to put text message, bro.

[00:14:19] I've been trying to unsubscribe from the text messages.

[00:14:22] I don't need you to send me a text.

[00:14:23] Oh, my goodness.

[00:14:24] God.

[00:14:24] Okay.

[00:14:25] That's the second thing.

[00:14:25] The third thing, which wasn't an issue for me, but when I did research, it's actually a major issue, is location of banks.

[00:14:31] So, I lived in Lagos.

[00:14:32] I lived in Nikoje.

[00:14:33] There were banks everywhere.

[00:14:34] But apparently, it's because I lived in an urban metropolis.

[00:14:36] If you live in more rural areas, banks are actually very, very inconveniently located.

[00:14:40] And people have to travel a lot to get to banks.

[00:14:42] And it's funny.

[00:14:42] Like, you travel a lot to get to a bank.

[00:14:44] When you get to a bank, you wait in line again.

[00:14:46] So, it's like two different things.

[00:14:47] It's a day trip.

[00:14:48] It's a distance.

[00:14:48] It's a day trip.

[00:14:49] Yeah.

[00:14:49] It's a day trip.

[00:14:50] When I did my NYSE in Oyo State, so it was very rural.

[00:14:55] It's four hours from me, but at all.

[00:14:56] The bank trip is I need to take time off.

[00:14:58] I need to take time off going to the city, get into the bank, join a line, get some money, worry about stuff getting stolen because I have to take money for a while because I don't want to do this trip again.

[00:15:07] Yeah.

[00:15:08] It's not a pleasant experience if I'm rural and have to go to a bank.

[00:15:10] So, to summarize it, there are a lot of issues, but three big ones the regular consumers face when you compare traditional banks with what could be with new banks is difficulty and challenges opening bank accounts, high fees, location of banks.

[00:15:22] There are other smaller reasons, but I won't go into them.

[00:15:24] I'll say these are the three biggest ones.

[00:15:26] Most people would honestly say it's just the fees is the biggest one out of these three.

[00:15:29] It's also like lack of trust, the fees.

[00:15:31] Yes.

[00:15:31] Those are some of the smaller ones.

[00:15:32] Too many banks.

[00:15:33] There's no difference.

[00:15:33] Like what I have a bank in Wemmer Bank versus a GT Bank.

[00:15:36] What's the difference?

[00:15:36] No difference.

[00:15:37] Like legacy tech infrastructure, everything gets shut down every now and then.

[00:15:41] Exactly.

[00:15:41] I feel like we've done, oh my God, somebody should build a new bank argument.

[00:15:44] I want to go to the other side of the argument.

[00:15:46] Like maybe you shouldn't even bother.

[00:15:48] Right?

[00:15:48] Oh, I can't wait.

[00:15:49] And one of the things is like a lot of these countries are, depending on the African country you go to, Africa is not a country.

[00:15:56] Remember that.

[00:15:57] People don't have money.

[00:15:59] As of 2018, 86 million Nigerians are below the poverty line, less than $1.90 a day.

[00:16:06] You don't want those deposits.

[00:16:08] Like maybe you do, maybe you don't.

[00:16:09] But the question is, how big is the actual market?

[00:16:13] Well, this is nuanced.

[00:16:14] Are you saying the people that have lower incomes don't need banks?

[00:16:19] Or are you saying the banks don't want people with such lower income because the likelihood of profits are super low?

[00:16:24] Which of them are you saying?

[00:16:25] I'm saying it's a chicken and the egg.

[00:16:27] In that like those people are not profitable to serve.

[00:16:29] And that's one of the challenges you see in your banks across the world.

[00:16:32] Is that they, first of all, they start off by siphoning off the worst customers from the banks.

[00:16:36] Which is why they don't notice.

[00:16:37] Right?

[00:16:38] They take the bank, the customers that the biggest banks in Brazil don't want in the first place.

[00:16:42] Because they are making $3 a day or whatever it is.

[00:16:44] And they siphon off those worst customers.

[00:16:46] And you could argue in Nigeria, like even if you've got this 86 million people with these numbers,

[00:16:51] is it a big enough market to build a big enough profitable business versus I have 3 million customers accepting deposits.

[00:16:57] And that's the other cynical point of view.

[00:16:59] It's like, if people don't have money, can you build something, a business model, a cost profile that can allow you to serve these people?

[00:17:07] It's very hard.

[00:17:08] And it's not going to be very hard.

[00:17:10] You're not going to win by stealing people off.

[00:17:13] Chime is not taking the customers who need Chase's entire profile of banking services because they just do more.

[00:17:19] And if you're a sophisticated customer, you want more from your bank than like a new bank on average.

[00:17:24] You end up taking off, siphoning off the worst set of customers, which can only be profitable to you,

[00:17:30] either because you need customer account to raise money or you're just not trying to be profitable.

[00:17:35] You're going to operate at much lower margins.

[00:17:37] Yeah, we discussed this twice.

[00:17:39] You can go and listen to our first ever episode, episode one, Afrability.com slash FinTech.

[00:17:42] We also discussed a little bit on the M-Pesa episode, Afrability.com slash M-Pesa or slash Safari.com.

[00:17:48] I think the comeback would be the way M-Pesa built their business model.

[00:17:52] Most of the people that use it were lower income anyway.

[00:17:55] That's one comeback.

[00:17:56] Except the other comeback to the comeback is M-Pesa was like a top-down government thing.

[00:17:59] If you don't have the government supporting you, how will you like manage the low profitability for long enough before you get scale?

[00:18:05] And does scale actually solve all problems?

[00:18:07] If you multiply 100 million by 0.000, it's still almost zero.

[00:18:10] Yeah, it's an interesting problem.

[00:18:12] Well, not even zero points.

[00:18:12] I'm talking negative.

[00:18:14] Like, I don't know if I'm a...

[00:18:18] To win, you need patient investors, long-term capital.

[00:18:20] Because I don't know if when I was in university, right?

[00:18:25] And getting an allowance of some sort.

[00:18:28] I don't know how good a customer would have been to GT Bank, right?

[00:18:33] And over time, you can grow.

[00:18:34] And as I've grown, as I've gotten jobs, gotten money through the system.

[00:18:37] But if you're a large portion of your customer base, you have to have different ways of monetizing them.

[00:18:41] What helps?

[00:18:41] Credit helps.

[00:18:43] Interchange-based revenue helps.

[00:18:45] Transactions help.

[00:18:46] But you need sort of a different business model than, like, I'm taking deposits and I'm doing stuff with them on the back end.

[00:18:51] It's also that neobanks are successful, but they can be successful without actually solving their own banked issue.

[00:18:58] So, for example, a neobank could just, like...

[00:19:00] Yeah, they could just get, like, richer customers.

[00:19:03] And then the richer customers will just use it and they can get profitable that way.

[00:19:05] But the challenge, I think, and we'll talk about this towards the end when we summarize, is...

[00:19:10] A lot of the customers the neobanks want that could be profitable may already be satisfied with their current banking services.

[00:19:15] There's high switching costs switching banks in Nigeria.

[00:19:17] And because I use a lot of neobanks, I use Kudo Bank.

[00:19:20] I'll talk about it later.

[00:19:21] I'm not sure the functionality differential is enough to get a lot of people to switch.

[00:19:24] And I...

[00:19:25] We should...

[00:19:26] Yeah.

[00:19:26] I want to spend...

[00:19:27] This is the summary of the end.

[00:19:28] Yeah.

[00:19:29] We'll...

[00:19:29] We'll get to that.

[00:19:30] Yeah.

[00:19:31] I feel like the banking opportunity we should...

[00:19:35] You talk about richer customers and I'm like, well...

[00:19:38] Well...

[00:19:39] The only rich person I know who uses a neobank.

[00:19:42] So...

[00:19:42] I don't know if all your other rich friends are using neobank.

[00:19:44] You should ask your rich people a good text.

[00:19:46] We should...

[00:19:47] We should...

[00:19:48] Wrap this section.

[00:19:49] But Bakul is making very good points.

[00:19:51] Okay.

[00:19:51] One last thing.

[00:19:52] One last thing I'd like to say to wrap this section is...

[00:19:54] I think for our American audience, for our European audience, for the audience that's not familiar with Africa...

[00:19:59] Here's the story I want to tell about thinking about traditional banks versus neobanks.

[00:20:03] Traditional banks in America and in Europe, they followed like a banking interaction model that's changed over time.

[00:20:08] There's bank tellers.

[00:20:10] Right?

[00:20:10] You interact with a bank teller.

[00:20:11] Then you switch from bank tellers to ATMs.

[00:20:14] Yeah.

[00:20:14] You interact with ATM.

[00:20:15] Then you switch from ATM to desktop online banking.

[00:20:18] And all these things, they're all happening simultaneously.

[00:20:20] So it's bank tellers plus ATM plus desktop online banking.

[00:20:23] Then from desktop online banking, you switch to mobile online banking.

[00:20:26] And then mobile online banking, you switch to fully only mobile online banking.

[00:20:30] Actually, that last piece, only mobile online banking, that's a neobank.

[00:20:34] But you see there are like four intermediate steps before that.

[00:20:37] But in Nigeria and in many African countries, you may be actually able to skip some of these steps.

[00:20:41] Like I was in Nigeria for a few years.

[00:20:43] The whole ATM phase, the second phase, that whole piece was skipped.

[00:20:46] Desktop online banking.

[00:20:47] It didn't last very...

[00:20:49] It still exists.

[00:20:49] It's still a large volume.

[00:20:50] It didn't last very long.

[00:20:51] Yeah, it exists, but it didn't last very long.

[00:20:52] Yeah.

[00:20:52] So the whole...

[00:20:53] The future, the hope for neobanks is skip all these middle steps.

[00:20:57] Just go straight from the banks to the only online bank neobank.

[00:21:00] And like help Africans skip all those middle steps and offer them things they didn't have before.

[00:21:04] Let's talk about banking in Nigeria.

[00:21:07] They're different levels.

[00:21:08] I'll talk about, first of all, like how regulation works in different kinds of banks.

[00:21:11] We can just put CUDA in the context of where other banks in Nigeria sit because they're not quite the same kind of bank.

[00:21:17] I'll talk about some banking sector information and then some credit, savings, financial inclusion data.

[00:21:23] So CUDA has a microfinance bank license, which is pretty much a banking license, pretty much a commercial bank license, which is what like let's call the GT banks and the Zemmets have.

[00:21:31] But they're limited...

[00:21:32] A full license, mostly.

[00:21:34] Mostly full.

[00:21:35] They're limited in what they can do.

[00:21:36] You basically have lower capital requirements.

[00:21:39] You can actually...

[00:21:39] Low capitalization requirements.

[00:21:41] And you have to be focused on low income financial inclusion.

[00:21:44] The idea is commercial banks finance all rigs and finance massive construction.

[00:21:49] And we need stuff that's going to finance my cousin, my classmates in Lagos.

[00:21:53] Everyone else.

[00:21:54] Small credit, small skilled customers.

[00:21:56] They ended up with a microfinance bank license.

[00:21:57] There are many different kinds of entities.

[00:21:59] And even though the name sounds not so good, it's basically one of the best kinds of licenses you can get, right?

[00:22:04] Because it gives you the ability to offer a wide range of financial services.

[00:22:07] But you don't necessarily have to get it if you want to do something differently.

[00:22:10] But they did it.

[00:22:11] So...

[00:22:11] No, the bar to get it, yeah.

[00:22:13] The bar to get it is way lower than to get, let's call it, any of the other licenses.

[00:22:18] Right.

[00:22:18] Like, the telcos are trying to get payment service bank licenses.

[00:22:21] That's not happening.

[00:22:22] Right.

[00:22:22] Commercial bank licenses, their capital requirements are astronomical.

[00:22:25] You have to have money to make money from that.

[00:22:26] Right.

[00:22:27] Right.

[00:22:27] So, there are a lot.

[00:22:28] There may be 900 microfinance banks in Nigeria.

[00:22:31] Yeah.

[00:22:31] I guess you want to put that in context of that maybe 20 or 22 commercial banks and 900 microfinance banks.

[00:22:36] There are different tiers of licensing.

[00:22:38] You can go to the CBM website if you want to do that.

[00:22:40] Or hire a lawyer.

[00:22:41] Yeah, a lot...

[00:22:42] No, do not email that.

[00:22:43] But their license is a great license, but I want to ensure that it's not that unique.

[00:22:50] So, at any point in time, any of these 900 companies could have been doing the same thing that Kuda has done.

[00:22:55] Right.

[00:22:55] In theory.

[00:22:57] It's more unique because they raise way more money than everyone else, and they start to use that as a jumping-off bump.

[00:23:02] Anyway, we're jumping ahead in this story.

[00:23:03] Anyway, you're saying.

[00:23:05] So, okay.

[00:23:05] So, that's how banks and its setups.

[00:23:07] 900 microfinance banks.

[00:23:08] Kuda is just one of them.

[00:23:09] And the banking sector itself.

[00:23:10] For the long time, it's been the biggest part of the industry, of the country.

[00:23:14] Biggest, most successful industry in the country.

[00:23:16] They were the first to list on international exchanges way before Jumia with depository receipts.

[00:23:20] First to raise more international euro bond with Access Bank, GT Bank.

[00:23:23] Probably one of the biggest banks in Africa.

[00:23:25] Ex-South African banks, to be honest, which are big for many different other reasons.

[00:23:28] It's just like, they've been a bright spot.

[00:23:31] I read Igu Mokwede's book where he said, where he said, Live in the Tamark, I think it's called, where he said, if Nigerian, if the rest of Nigeria's industry has grown as fast as the banks have over, say, 1990 to 2020, Nigeria will be in a much better place.

[00:23:46] I think a cynic would say that, like, the banks have grown at the expense of the real economy.

[00:23:51] Let's talk about how much actual data exists.

[00:23:54] I have some information about that.

[00:23:57] I'll just add in.

[00:23:57] I was looking at the top 20 companies in Nigeria.

[00:24:00] Whenever I say top, I almost always mean by market cap.

[00:24:04] And banks are between four and six of the biggest companies in Nigeria based on their market cap.

[00:24:09] They're actually a large size of the economy, even today, when you think it'd be more in other things.

[00:24:13] Just to add to your point about their size.

[00:24:15] Yeah, exactly.

[00:24:16] They're pretty big.

[00:24:16] But then an alternative perspective is that they got big at the expense of the real economy.

[00:24:21] And you could argue or disagree with that.

[00:24:25] Like, bank credit to the private sector as a percentage of GDP in Nigeria is, quiz, what do you think the percentage is?

[00:24:31] As a percentage of our GDP, bank credit to the private sector.

[00:24:34] And private sector isn't cut by any size.

[00:24:37] It can be anyone.

[00:24:38] It can be a massive company.

[00:24:38] Just non-government.

[00:24:39] Non-government.

[00:24:40] Non-government.

[00:24:40] And what's the denominator, you said?

[00:24:42] GDP.

[00:24:43] GDP.

[00:24:43] It will be, I guess, between five and 15.

[00:24:47] I'd say eight.

[00:24:48] Eight percent.

[00:24:49] Ten percent.

[00:24:50] But what's instructive is that we're 156 out of 162 countries where data is available.

[00:24:55] But the banks don't...

[00:24:55] Basically last.

[00:24:56] Close to last, basically.

[00:24:57] The banks don't do a lot of private sector credit as a percentage of GDP.

[00:25:00] Some of that is inflated because of our GDP is very subsistence, but at the same time, it's still very small.

[00:25:05] One of the only ones that subsistence is GDP.

[00:25:06] Can I say, I love the fact you say, of the countries available.

[00:25:08] I think they're only like 190-something countries.

[00:25:10] So we're close to last, even if you add all the countries.

[00:25:13] And the countries that don't have data, they're probably quite bad as well.

[00:25:16] There's no country with good data that's not on the list.

[00:25:18] Anyway, it's funny.

[00:25:18] Exactly.

[00:25:19] Take that an asterisk.

[00:25:19] Exactly.

[00:25:20] And the other thing that is interesting is that the bank charges are so high and they are fixed.

[00:25:25] And one of the things I could have kept coming back to on initial pitch talks is people just pay...

[00:25:29] Like what I pay for banking and what Illumide pays for banking and what somebody who's just coming out of college pays for banking at GT Bank is very similar.

[00:25:37] Which is kind of ridiculous, right?

[00:25:39] It's unfortunate.

[00:25:39] Because it's fixed fees.

[00:25:40] You pay for ATM, pay for text messaging.

[00:25:44] It's just...

[00:25:45] I will talk about the banks in a second, but it's a lot.

[00:25:48] The charges are a lot.

[00:25:48] I think so.

[00:25:49] Yeah.

[00:25:49] And I have a tendency to want to dog on them, but to defend them, it's a natural outcome of like an oligopoly market where most incumbents are large.

[00:25:59] Yeah, we can dog on them, we can shit on them, but like that's what I guess I would do to power them.

[00:26:03] Normally, if an oligopoly only has bigger companies, it's a natural expectation of the market, right?

[00:26:09] So only 40% of adults in Nigeria have a bank account versus say 7% South Africa, 80% in Kenya.

[00:26:15] Right.

[00:26:16] And better.

[00:26:17] And people like lending is not just that highly penetrated in Nigeria.

[00:26:21] Right.

[00:26:21] Like 5% to 6%.

[00:26:22] The banks don't really do a lot of that.

[00:26:24] They make a lot of money from big credit to large.

[00:26:27] If you look at like the revenue distribution, like the banks, commercial banks in Nigeria are beholden to a bunch of large customers.

[00:26:33] So either that's government interest income or credit from like Dangote, Boa Cement and like just incestuous family lending to the same seven or eight industrialists.

[00:26:42] From a consumer perspective, I would say it's not been a great, we've not had a great experience with banks relatively.

[00:26:49] Right.

[00:26:49] Right.

[00:26:50] I think I was going to, one of the things I was going to ask Olamide is like outside of Kuda Bank, which you're talking to is.

[00:26:54] Kuda, my love.

[00:26:55] Did you, like how many people do you think would say I like my bank?

[00:26:59] I like my commercial bank.

[00:27:00] Like I have a good relationship with my commercial bank.

[00:27:02] You like your bank.

[00:27:03] It's everyone hates their banks.

[00:27:04] Obviously it's because the banks are awful.

[00:27:05] There's no way around it.

[00:27:06] They're horrible.

[00:27:07] Even the most basic thing is a challenge.

[00:27:09] Let me actually also spend some time on the positives.

[00:27:11] When I first of all moved back to Nigeria in 2012, I was pleasantly surprised by the level of functionality of the apps.

[00:27:16] Like the banking apps are rock solid.

[00:27:18] The GTB app can do a bunch of things.

[00:27:20] Even my Chase app can't do.

[00:27:22] My Citibank can't do.

[00:27:23] The problem is like if you go beyond the surface and you actually try to do something, it just becomes a mess.

[00:27:28] Another positive, if we're talking about positive, the hold times very, very, very low.

[00:27:31] If you call GTB, you can actually talk to an agent like one to two minutes, which you think would be 15 minutes.

[00:27:37] They have some positives, but it's just if anything goes wrong, I need to go to the branch.

[00:27:40] Oh my goodness.

[00:27:41] They have some fundamental issues.

[00:27:42] Anyway, short answer to your question is most people don't like their banks just because they waste your time a lot.

[00:27:46] There's already a lot of traffic in Lagos.

[00:27:48] So anytime you need to go to a branch, it messes up the whole experience, unfortunately.

[00:27:53] That's the truth.

[00:27:54] And then the amount of ATMs and the amount of branches are just like really, really, really, really low.

[00:27:58] So it's like 4.3 bank branches for every 100,000 people.

[00:28:03] Tiny.

[00:28:03] Yeah.

[00:28:03] And only 12,000 ATMs as of two years ago in the whole of Nigeria.

[00:28:07] 12,000 for 200 million people.

[00:28:09] I think you got 18,000.

[00:28:10] The most recent data I have is 18,000.

[00:28:12] Okay, yes.

[00:28:12] 18,000 for 200 million.

[00:28:14] Wonderful.

[00:28:14] Exciting.

[00:28:15] Yeah.

[00:28:16] 18,000, 17,000 are operational.

[00:28:17] It's fine.

[00:28:18] Those are more directional data to think about.

[00:28:28] They don't have enough ATMs now.

[00:28:30] How can you do that?

[00:28:30] No, but you have to ask like what people are not trying to use ATMs, but people are trying

[00:28:34] to do banking services in a different way.

[00:28:36] For example, agent banking.

[00:28:37] In the last, I think there are 300,000 POS terminals.

[00:28:42] About 150, 170 of those are working.

[00:28:44] That's pretty massive.

[00:28:45] That's pretty good.

[00:28:46] So if I can do that instead of, which everybody does, by the way, in Nigeria, is the ATMs are

[00:28:51] basically long line things.

[00:28:52] You go somewhere and negotiate a fee and you would draw money from a random agent on the side

[00:28:56] of the road.

[00:28:56] But at the end of the day, you still need to circulate the money supply.

[00:28:59] The person, the agent, let's say you're a Paga agent.

[00:29:01] How are you going to get the cash?

[00:29:03] Eventually, you need to get the cash from the bank at some point, right?

[00:29:06] No, but as a user, that's not my problem.

[00:29:10] You see, my problem has always been if I'm in Lagos, when I'm in Lagos, I need cash

[00:29:14] for some strange reason, whatever, to have cash.

[00:29:16] I go to an ATM and there's a line or there's no cash or there's some English.

[00:29:22] When I can just go to an agent and they're everywhere, at least they're dancing,

[00:29:26] the city, the city areas.

[00:29:28] All those people have a lot of agents and there's a shared agent framework, all of that

[00:29:32] stuff.

[00:29:32] So there's a lot of agents and you can then use that for your financial services, which

[00:29:36] I think is personally like very, like for users, it solves a big problem.

[00:29:41] It just takes away a lot of friction from banking services.

[00:29:44] Agreed.

[00:29:44] But yeah, let's, yeah.

[00:29:46] Okay.

[00:29:46] So we had, that's a good conversation there about like 18.

[00:29:48] But I think overall, if we just summarize, the Nigerian banking sector has had some issues.

[00:29:53] It hasn't been the most customer friendly.

[00:29:55] And a lot of the users are either unhappy about the level of fees or just the amount of face

[00:30:01] to face physical time they need to solve some of their issues.

[00:30:04] So coming back from that clip, Bank Hall is going to talk about the history of PiggyVest.

[00:30:08] I have some broad contextual information before we start.

[00:30:11] So I think most of the history of PiggyVest starts around 2015, 2016.

[00:30:16] Here's what was going on in the world globally around tech, 2015, 2016.

[00:30:20] Microsoft acquires LinkedIn.

[00:30:22] Interesting.

[00:30:23] 26.2 billion.

[00:30:24] I remember at the time I was like, wow, this is quite expensive.

[00:30:27] But now in retrospect, if you look at LinkedIn's revenue, it's actually turned out to be a great

[00:30:31] acquisition, but there was a whole shock across the whole Valley ecosystem when that

[00:30:34] happened.

[00:30:35] Massive.

[00:30:35] Launch of Pokemon Go.

[00:30:36] I remember when this happened, it was unbelievably successful.

[00:30:41] It was a weird time.

[00:30:42] In AR, people outside fighting each other on their smartphones and collecting different

[00:30:47] Poke...

[00:30:47] It was bizarre.

[00:30:49] Apple releases iPhone 7 or whatever.

[00:30:51] It's the same shit every year.

[00:30:52] Yahoo data breaches.

[00:30:54] Who cares?

[00:30:55] Samsung Galaxy Note 7 recall.

[00:30:57] Every flight is like, if you have a Galaxy Note, don't come on this plane.

[00:31:00] Don't come on this...

[00:31:02] Just tell your daddy to buy you a plane.

[00:31:04] Go outside.

[00:31:05] Take the train.

[00:31:06] Do you ever have a Note 6?

[00:31:09] I have the Note 6.

[00:31:10] But the new one...

[00:31:11] I'm like, no.

[00:31:12] It's just Galaxy Note.

[00:31:13] Just get off this plane.

[00:31:14] Run outside.

[00:31:16] It was actually...

[00:31:17] For the longest time, I thought for sure they would change the brand because they had

[00:31:20] such negative affinity.

[00:31:22] But it turned out fine.

[00:31:23] Six years later, brand is doing well.

[00:31:24] Samsung is doing well.

[00:31:25] So that's what's in tech globally.

[00:31:27] In Africa tech, specifically 2015-2016, Jumia became Africa's first unicorn.

[00:31:31] Shout out to Jumia episode 2.

[00:31:32] Andela Series B funding, one of the largest Series B ever raised by an African company.

[00:31:37] Listen to our Andela episode.

[00:31:39] Mess Incubator opened in Kenya.

[00:31:41] Paystack Seed Funding, one of the initial seed funding they raised after their YC demo

[00:31:45] day.

[00:31:46] And then Mobile Money has started to see hockey stick growth in Kenya with M-Pesa.

[00:31:50] So that's the context for global tech and Africa tech 2015-2016 before the founding of

[00:31:55] PiggyVest.

[00:31:55] I love it.

[00:31:56] That's like a great fertile time.

[00:31:58] You look back and be like, those are the best times.

[00:32:00] We're living in the olden days right now.

[00:32:02] So enjoy it.

[00:32:03] Okay, cool.

[00:32:03] Let's talk about PiggyVest founding early history.

[00:32:06] So the way I'll walk through this is to talk about the founders a little bit, their background

[00:32:09] and how their previous startup, PushCVA, a job marketplace, led to the founding of

[00:32:13] PiggyVest.

[00:32:14] PiggyVest was founded by three people.

[00:32:16] Somtei Fezwe, Oduan Yoiwini, and Joshua Chibuze.

[00:32:21] All who, from what I can tell, met as undergraduates at Convenant University in undergrad.

[00:32:26] I'm going to call them by their first names and see if I know them personally, but I do

[00:32:29] not.

[00:32:30] Hey, I know some of them personally.

[00:32:32] They don't mind.

[00:32:32] Also, this is the second or third founding team we've seen from Convenant.

[00:32:35] Shout out to Convenant University too.

[00:32:37] Who are the other two?

[00:32:38] I don't remember.

[00:32:39] I need to search mine.

[00:32:40] I don't think so.

[00:32:52] Okay.

[00:32:53] Back to the founders.

[00:32:54] Somtei Fezwe, Oduan Yoiwini, Joshua Chibuze all studied some version of science or engineering

[00:33:00] at Convenant University.

[00:33:02] Some version of science.

[00:33:03] That sounds super broad.

[00:33:04] A version of science and engineering.

[00:33:05] Somteo studied mechanical engineering.

[00:33:08] Oduan Yoiwini studied computer engineering.

[00:33:10] And Joshua studied computer science, I think it was.

[00:33:13] And if I'm wrong, they can always email me and tell me that I studied something else.

[00:33:18] As I looked through this, I was prepping for this.

[00:33:19] I started thinking about what universities in Nigeria produce the most startup founders.

[00:33:24] I tried to look into it.

[00:33:26] It's definitely not Covenant University.

[00:33:28] I'm very surprised you even said that.

[00:33:29] Because this is the second or third time, but I want to say it's the most.

[00:33:33] Okay.

[00:33:33] Name one other one.

[00:33:35] Another one?

[00:33:37] Yes.

[00:33:37] Another one.

[00:33:38] Let me give you $100.

[00:33:39] Name it.

[00:33:39] $100.

[00:33:40] If you don't name it, you give me $100.

[00:33:42] Name it $100.

[00:33:43] I don't care.

[00:33:43] You cannot name it.

[00:33:44] Show me your hands.

[00:33:44] Don't type on your computer.

[00:33:46] $100.

[00:33:47] You cannot name it.

[00:33:49] The most common fertile ground for founders or not for abilities is actually being in business schools, not undergrads.

[00:33:55] That's the most common thread.

[00:33:56] So you just lied.

[00:34:00] You just lied.

[00:34:01] I didn't lie.

[00:34:02] Go ahead.

[00:34:02] Okay.

[00:34:03] I'm going to find the confidence university.

[00:34:05] Not a single person.

[00:34:06] Check in Canada because I already checked it.

[00:34:08] I'm going to check out for ability.

[00:34:09] What's my business with internet?

[00:34:10] The top five Nigerian universities for these most startup founders is the first is Abafami

[00:34:14] Awolo University.

[00:34:15] Oh, shout out.

[00:34:16] Kudi, Jobberman, Flux, Farm Crowdy, Property Pro.

[00:34:20] Covenant University has PiggyVest and MDAS.

[00:34:24] MDAS, right.

[00:34:25] Yeah.

[00:34:26] Unilag has BuyCoins and Publisir.

[00:34:29] BuyCoins is funny.

[00:34:30] I think they've gone out of business, no?

[00:34:32] The founder was in engineering in the University of Lagos.

[00:34:36] I remember one day, something happened on Twitter many years ago.

[00:34:40] Some professor said something.

[00:34:42] I think they made a funding announcement or something.

[00:34:44] They had some positive news.

[00:34:45] This was the height of the pandemic after that.

[00:34:46] Somebody said something about it.

[00:34:47] Some professor was like, oh, good guy, my student or something like that.

[00:34:52] And the founder just tore into the professor with big insults in public.

[00:34:58] That was a hilarious day.

[00:35:01] Some of these children are built from their children of perdition.

[00:35:07] That's hilarious.

[00:35:08] Just born into violence.

[00:35:09] Okay.

[00:35:10] The founders of PiggyVest, back to the founders of PiggyVest.

[00:35:12] The three of them went to university together.

[00:35:14] Which is good.

[00:35:14] Went to university together.

[00:35:15] And part of the story of the early story of them is I listened to some of,

[00:35:20] listened and read some of their interviews.

[00:35:21] They had worked on eight startups that didn't work even before Push TV,

[00:35:24] which is the one that, let's call it, worked and still seems to exist today

[00:35:27] looking at the website.

[00:35:29] Supposedly.

[00:35:30] According to them, most of their failures were not because they were incompetent.

[00:35:35] They had something called 500 Dishes, 99 Startups, Front Desk,

[00:35:39] a lot of marketplace, kind of what you do when you're in college.

[00:35:41] You think, I want to connect these people to that people.

[00:35:43] I want people to find tailors on the website type stuff.

[00:35:46] It doesn't require a lot of capital, so it's smart to do while you're in university.

[00:35:48] The rage at that time.

[00:35:50] Of all of these things, the one that got the traction was Push TV.

[00:35:54] So Push TV was a job search platform for job seekers and companies to connect with each other.

[00:35:59] If you listen to the founder talk about it, Push TV at the time, I found an old interview saying,

[00:36:04] it's like, oh, I was looking for a job, couldn't find a platform to look at job listings,

[00:36:08] I created something for companies and employers, blah, blah, blah, blah, blah.

[00:36:11] That was, I couldn't figure out when, but maybe let's call it 2013, 2014, up until 2015.

[00:36:17] Yes, 2013, 2014.

[00:36:19] That's what all three founders did before PiggyVest.

[00:36:21] Yes.

[00:36:22] It technically was an automatic CV sending service, but then later on,

[00:36:28] they pivoted to do something broader than just sending CVs.

[00:36:30] It would match candidates with job openings since they already had the CV.

[00:36:33] It was sort of a marketplace for job seekers and job providers, but it started with just CV sending.

[00:36:38] Yeah, and there was some publicity around that.

[00:36:40] There's some news reports.

[00:36:41] They did some interviews when they were in that Push TV phase, right?

[00:36:45] The internet remembers all.

[00:36:47] Right.

[00:36:47] I'm going to believe for all of some of the audience, they were in their early 20s because

[00:36:51] they were just in university.

[00:36:53] They weren't super young or super old.

[00:36:55] Well, I guess it depends what you're comparing to, but early 20s.

[00:36:59] So that was PiggyVest.

[00:37:01] I was Push CV.

[00:37:02] I apologize.

[00:37:02] At some time after, well, at some time when they were running Push CV,

[00:37:06] different version of the story says they started to run out of money.

[00:37:09] And December 2015, somebody saw a tweet of somebody who saved money in a piggy bank

[00:37:13] and showed the money.

[00:37:14] Like if you save on a regular basis, how much shows up.

[00:37:17] Most cultures have this.

[00:37:18] In Nigeria, it's called a Kolo.

[00:37:21] It's a piggy bank.

[00:37:22] I had one as a kid.

[00:37:22] You put money inside of it.

[00:37:24] You make a whole song and dance to break it to get your savings out.

[00:37:27] That was the whole point.

[00:37:28] It's like a piggy bank kind of same concept.

[00:37:30] Okay.

[00:37:30] But Mongoli is under hyping the founding story with minimal enthusiasm.

[00:37:34] Let me tell her with more enthusiasm.

[00:37:35] There was a lady who had saved 1,000 Naira every day throughout 2015.

[00:37:41] 1,000 January 1st, 1,000 January 2nd, yada, yada, yada.

[00:37:44] By December 31st, 2015, she claimed she saved about 350K, 300 something thousand.

[00:37:50] Basically in an actual piggy bank.

[00:37:54] Like an actual physical piggy bank.

[00:37:56] She had a tweet that went viral and she broke it.

[00:37:59] And I think it's actually wooden, not ceramic as you'd expect in other cultures,

[00:38:02] but it doesn't matter, but she broke it.

[00:38:04] And people were like, oh my God, I mean, you don't have that much money yet.

[00:38:07] You were able to save so much by this habit.

[00:38:09] So there was a whole Twitter, whatever conversation, excitement around it.

[00:38:13] And a lot of people were starting to think, oh, can we also do the same?

[00:38:16] But then the push TV people thought, oh, why don't we find a digital electronic platform

[00:38:21] way to do this versus people just buying wooden boxes, which is unsafe, dangerous,

[00:38:25] and it may not even work as well.

[00:38:27] That's the story.

[00:38:28] How much of that is true?

[00:38:29] Normally I would shit on founding stories, but since this is an actual Twitter,

[00:38:32] Twitter posts, you can actually find it.

[00:38:35] So I would say an interesting founding story and one that's actually quite surprising

[00:38:40] based on our ability.

[00:38:40] Usually there's always like crowded and trotted in mystery and unclear,

[00:38:44] but this is an actual tweet.

[00:38:45] So fascinating.

[00:38:46] Yeah.

[00:38:47] Yeah.

[00:38:47] I found that founding story interesting.

[00:38:50] Ultimately, it was time to then move on from push TV to piggy vest.

[00:38:56] That was it.

[00:38:56] And so they built this product and according to them, they launched the MVP,

[00:39:01] not like in a month, like in 3rd of January is what it says.

[00:39:04] This was December 2015.

[00:39:05] And by 3rd of January, they launched.

[00:39:07] Right.

[00:39:07] And we call it piggy vest.

[00:39:08] But back then it was piggybank.ng.

[00:39:10] The piggy vest name we're going to use to all the podcasts,

[00:39:13] but the actual name for three or four years was just piggybank.ng.

[00:39:17] But we're just going to use piggy vest.

[00:39:19] So ultimately, they built that product, launched in January.

[00:39:24] And by the end of 2016, they were able to help people save 21 million Naira,

[00:39:29] which is significant.

[00:39:30] Very.

[00:39:30] At the time, especially in 2016, way different exchange rates.

[00:39:35] I think it was probably 200 Naira to a dollar at the time.

[00:39:38] Correct.

[00:39:39] Or 150 Naira to a dollar at the time.

[00:39:40] So pretty significant money, even if you think about it in terms of...

[00:39:42] So it's sort of like they tried a bunch of different...

[00:39:44] I hate to use the word experiments,

[00:39:46] but let's say they tried a bunch of different startup ideas that didn't work.

[00:39:48] This one seemed to gain traction so much faster

[00:39:52] that I guess they were excited that they finally done something that could work.

[00:39:55] So if you watch a lot of interviews with the founders

[00:39:57] or you listen to a lot of interviews,

[00:39:59] they felt that this idea would have the most potential

[00:40:01] because it had the fastest uptake in terms of users and that exciting first year.

[00:40:08] Yeah.

[00:40:08] A couple of things that I...

[00:40:10] Before I talk about fundraising, that struck me as I listened to the founder story.

[00:40:14] So two things.

[00:40:14] One is just how that coincided with kind of social media being the engine for their growth.

[00:40:20] A lot of the things that started the product was social media.

[00:40:23] A lot of their marketing, just not having a lot of money,

[00:40:26] was social media and being viral on the internet.

[00:40:28] They had a bunch of viral tweets that went public based on PiggyVest

[00:40:32] and wanting to go out with somebody or on a date,

[00:40:36] you need to break your PiggyVest investment or something like that.

[00:40:39] Okay.

[00:40:39] It was a thing.

[00:40:40] It's funny because that was the first time I heard about it.

[00:40:43] I heard about it in context because at this time I wasn't...

[00:40:46] Not on a date.

[00:40:47] What's wrong with you now?

[00:40:48] I find it exciting that you said that right after the date.

[00:40:51] But finish your treatment.

[00:40:52] No.

[00:40:52] I heard about it in the context of somebody having a large expense,

[00:40:57] large expense incoming and saying,

[00:40:59] and referring to how they might have to dip into their PiggyVest to get it.

[00:41:03] And I was like, excuse me, what do you mean?

[00:41:05] What does that have to do with anything?

[00:41:06] If you're broke, just so you're broke.

[00:41:36] Oh.

[00:41:37] You want the world to look like and just go do it.

[00:41:40] No promotion required.

[00:41:40] So it's the second most noble.

[00:41:41] What's the most noble then?

[00:41:42] Finance.

[00:41:43] Dude, we're not doing that discussion.

[00:41:44] Oh, right.

[00:41:45] Okay.

[00:41:46] Finance is a very broad term.

[00:41:48] Yeah.

[00:41:48] Exactly.

[00:41:48] Nothing more specific.

[00:41:49] Just the whole sector.

[00:41:49] The men who control money control all.

[00:41:52] Finance.

[00:41:53] Finance is the primary discipline.

[00:41:54] And the rest of us work for the men who control the money.

[00:41:56] That's interesting.

[00:41:57] I like that.

[00:41:57] Yes.

[00:41:58] Finance is primary discipline.

[00:41:59] Being a founder is second.

[00:42:00] Okay.

[00:42:01] But that was my second kind of big takeaway from the story.

[00:42:04] You can just build things.

[00:42:05] And if you don't like something, go build it.

[00:42:08] If you think it should exist, go build it.

[00:42:10] And business models will follow.

[00:42:12] Some thoughts.

[00:42:12] When they said they help people save approximately $21 million now, I was trying to think about that number of contacts.

[00:42:19] Later on, I found out that corresponded to around 450 users, which is not a lot of users, but a lot of money, which shows the average saving per user was quite high, relatively.

[00:42:29] That was my first observation.

[00:42:31] Then second observation relates to what you were saying.

[00:42:33] And it's, I think, one of the first, maybe the first Afrability company where not only is the founding story around Twitter, the initial marketing hype, customer acquisition, customer support was very social media driven, primarily Twitter, which is very odd.

[00:42:50] The Dollar Shave Club of Africa Tech, right?

[00:42:52] Yeah.

[00:42:52] Yeah.

[00:42:53] Exactly.

[00:42:53] Exactly.

[00:42:53] I don't think we've come across that a lot in Afrability because, number one, I mean, I can't even.

[00:42:58] Okay.

[00:42:59] First of all, these are some of the youngest founders we've ever had.

[00:43:01] Because when they found this company, they were around 21, 22.

[00:43:04] So I guess that makes sense.

[00:43:05] They don't work, so they use social media more.

[00:43:07] And then number two is just so rare to see it actually work.

[00:43:10] Normally, companies do social media and Twitter marketing after the company's launched, but this was as part of the initial launch.

[00:43:15] Exciting.

[00:43:16] And then for our users in America, the 21 million Naira they helped people save was around $50,000 or $60,000 at the time.

[00:43:23] So it sounds low, but I'd say quite high considering how young the users are.

[00:43:27] Interesting founding story.

[00:43:28] It seems it's like a nice, soft, happy story that we tried a bunch of things that didn't work.

[00:43:34] One thing, Push TV almost worked, and then we eventually got on this thing, and we got some initial momentum.

[00:43:40] So a good founding story, one that sounds like a nice, encouraging story to other founders.

[00:43:44] Yeah.

[00:43:45] Yeah.

[00:43:45] Great founding story from the outside, at least.

[00:43:48] Yeah, from the outside.

[00:43:49] We know what happens on the outside.

[00:43:51] On the fundraising side, they tied it to their chest.

[00:43:55] Most of their fundraising news for whatever reason.

[00:43:58] But what is public is that they were involved in a lot of different accelerators that generally come with free money, which was good.

[00:44:04] 2015, 2016, a lot of the startups that we know today were part of the same accelerators like Flutterwave and Paystack.

[00:44:09] So Google Launchpad Africa, Village Capital, there was $50,000 from there.

[00:44:13] Black Box, Pitch Drive.

[00:44:16] In 2018, they raised a seed round of $1.1 million.

[00:44:20] And that was the only funding round information that I could possibly even find there.

[00:44:26] But without a doubt, I'm sure they've had to raise other amounts of money, but definitely not public.

[00:44:32] And also doing a very good job of not making it public.

[00:44:36] Because even though you hear when they are raising, but you don't hear when they have raised.

[00:44:40] I don't know how to describe it.

[00:44:41] Some notes on the $1.1 million.

[00:44:44] So around 2018, and from Lead Path, Nigeria, which is Oluomide Shoyunbo, who now runs Voltron Capital.

[00:44:51] So shout out to Oluomide and Voltron Capital.

[00:44:54] Also from Venture Platforms, which is Kola Aino.

[00:44:57] So Oluomide, Shoyunbo, and Kola Aino are very notable African angels seed investors.

[00:45:03] Congratulations to both of them.

[00:45:04] Because if they invested back then, and now the company is so much bigger and it's much more successful,

[00:45:09] it seems to be quite an important investment for them.

[00:45:11] Also Village Capital, which we've seen them a little bit on Afferability, but typically not that early.

[00:45:15] Overall, it seems like the round was led by Lead Path, a.k. Oluomide, and then they did smaller amounts.

[00:45:21] Because a lot of articles said Venture Platforms contributed $50,000, and Village Capital also contributed $50,000.

[00:45:28] So the remaining of the $900,000 was probably a syndicate led by Oluomide and then his firm Lead Path.

[00:45:33] Fascinating.

[00:45:35] Yeah.

[00:45:35] Some of it was accelerator-type programs, which was kind of like the rage at the time.

[00:45:40] I guess it's free money.

[00:45:42] I guess accelerators are investors as well.

[00:45:43] Free?

[00:45:43] You never know the terms of accelerators.

[00:45:44] Some accelerators, they accelerate.

[00:45:48] Anyways, this is not the time for that conversation.

[00:45:50] Okay.

[00:45:50] But they said they raised...

[00:45:52] They should have got some money, Sha.

[00:45:54] Some money from somewhere.

[00:45:55] A million dollars.

[00:45:55] Some money from somewhere.

[00:45:56] A million dollars at least.

[00:45:58] I think they would have had to have raised more subsequently down the line, but...

[00:46:01] Of course.

[00:46:01] Of course.

[00:46:02] These things are very straightforward to do, especially if you're a market leader in that sense.

[00:46:06] It's very easy to single source your rounds, if you think about it.

[00:46:09] You can easily go to one investor, so therefore it's not like 10, 20 people.

[00:46:12] You'd be like, one person says, look, don't even talk to anybody.

[00:46:15] Just here's this money.

[00:46:16] Here's the valuation.

[00:46:17] What valuation do you want?

[00:46:18] Okay, fine.

[00:46:19] You don't need me to announce, necessarily, unless you want to do it for marketing reasons.

[00:46:25] They said they raised the $1.1 million from LeadPath in 2018 to acquire the MFB license,

[00:46:30] which is the microfinance bank license.

[00:46:32] For those that have listed off your ability before, you already know, but the MFB license

[00:46:35] is very important for fintechs because it allows you to do remittances.

[00:46:39] You can do agency banking.

[00:46:40] You can do lending.

[00:46:41] You can accept deposits.

[00:46:43] So it's what you get from a commercial.

[00:46:45] It's not the full commercial banking license, but it allows a lot of things.

[00:46:48] Lending, Forex.

[00:46:49] You can invest in government securities.

[00:46:51] You can't do Forex.

[00:46:52] You can't do Forex.

[00:46:53] Just like, Forex is the one thing you can't do.

[00:46:54] No, no.

[00:46:55] You can do limited Forex to a low amount, a low cap.

[00:46:58] Yeah.

[00:46:58] You can do, you can do, you can take, well, when you say Forex, I'm talking about you

[00:47:02] cannot buy and sell.

[00:47:02] I cannot buy dollars on Kuda Bank, basically.

[00:47:04] No, you can collect a small amount, but it's capped because you don't have a full license.

[00:47:08] But the main thing it allows you to do, which is very, we're going to talk about in the future

[00:47:12] set later, is you can invest in government securities, which means you can collect deposits,

[00:47:16] which is, of course, one of the features, invest in government securities and get whatever

[00:47:20] interest the government gives you, and then give the consumers a lower interest, which

[00:47:24] is basically then the net interest margin spread.

[00:47:26] Also a little bit of agency banking.

[00:47:28] But this license was very, very important for them because of the features they're going

[00:47:31] to do later.

[00:47:31] That was 2018.

[00:47:33] 2019, they changed their name to PiggyVest, finally.

[00:47:36] And I think they said, because we're now more than just a savings platform, we want to do

[00:47:41] more than savings.

[00:47:41] But funny enough, the name PiggyVest, then to me, just sounds like we're an investment

[00:47:45] product.

[00:47:46] I guess that's why the holding company is called PiggyTech.

[00:47:48] But it doesn't sound any better for me to go from piggy bank to PiggyVest.

[00:47:52] It still sounds very single product oriented, but hey, I'm not a marketing person.

[00:47:56] It's funny because when I hear PiggyVest, I actually don't think investment, which is interesting.

[00:48:00] A lot of words, PiggyVest.

[00:48:01] Yes, exactly.

[00:48:03] Which is why I find odd.

[00:48:04] You ever, some words that just take on a different meaning.

[00:48:07] Ah, okay.

[00:48:07] The brand?

[00:48:08] The brand is PiggyVest.

[00:48:10] I didn't even think of PiggyInvest is what you're hearing.

[00:48:13] I'm just saying PiggyVest is just like tabletop.

[00:48:16] Yes, yes.

[00:48:17] Okay.

[00:48:17] And then in 2021, a Nigerian investment firm called VFD Group got 12% of the company, which

[00:48:23] is strange because I was trying to find VFD Group in Afferability.

[00:48:27] Very, very few investments.

[00:48:29] However, it seems to be 99% locally owned.

[00:48:32] Like they're all Nigerians.

[00:48:33] Yeah.

[00:48:33] And they got 12% of the company, which I thought was incredible.

[00:48:37] We don't know the exact amount of the round, but reading between the lines, they later announced

[00:48:42] that they'd raised $5 million in their entire history.

[00:48:44] So if they raise $1 million in the seed and $3 million from Flutterwave, it means this round

[00:48:50] is probably around $1 to $2 million as well.

[00:48:51] $3 million from Flutterwave, sorry?

[00:48:54] 2023.

[00:48:55] We saw some rumors that Flutterwave invested $3 million at an unknown valuation in PiggyVest.

[00:49:01] So those are the three rounds we have.

[00:49:03] $1 million.

[00:49:04] I'm very...

[00:49:05] Yeah.

[00:49:05] $1 million in 2018.

[00:49:07] Approximately $1 to $2 million in 2019 from VFD Group, and then around $3 million from Flutterwave

[00:49:11] in 2023.

[00:49:12] You were going to say something about the rounds?

[00:49:13] Yeah.

[00:49:14] Nothing about the rounds.

[00:49:15] I am honestly skeptical about the things we know.

[00:49:19] Because if they have $5 million spent in 10 years...

[00:49:24] No, that's how much they raise, not spend.

[00:49:27] Fair.

[00:49:27] Fair.

[00:49:28] Assuming their income...

[00:49:29] $5 million inflow.

[00:49:31] Yes.

[00:49:31] That's not even the right word.

[00:49:32] $5 million invested...

[00:49:34] Raised, yes.

[00:49:34] ...and they've used that to generate a business with 5 million users over some regularity.

[00:49:40] It's definitely impressive, if you believe that.

[00:49:42] Definitely impressive.

[00:49:43] It's impressive because their business model is so sweet.

[00:49:45] The government securities give you X, and they give the users X plus Y.

[00:49:49] It seems straightforward.

[00:49:50] The only problem why this business model is sometimes hard to make work is your competitors

[00:49:55] have so much money that they skew the economics and it doesn't work.

[00:49:59] But at the time when they launched, they were the first.

[00:50:00] So they were able to build enough consumer trust, consumer love, whatever, whatever,

[00:50:04] that they actually made the business model work.

[00:50:06] So anyway, it looks like they've raised around $5-ish million, most notably from Flutterwave

[00:50:10] and then from...

[00:50:11] Do you believe that number?

[00:50:13] I'm just looking for intuition here.

[00:50:15] You don't have to...

[00:50:16] I'm asking you...

[00:50:16] Because they said they were...

[00:50:20] Because they said they were cash flow positive around once or two years after launch, yes.

[00:50:26] If it's Kuda Bank, no, because they're running at a loss.

[00:50:28] These guys are always running at a profit right from the start.

[00:50:31] Interesting.

[00:50:32] I would say yes.

[00:50:33] I just can't believe they gave away 12% of the company in 2021.

[00:50:36] That's so strange.

[00:50:37] That's such a high percentage to give away if you don't need the money.

[00:50:39] So there's some question marks about all the details.

[00:50:41] I would give away way less if I'm cash flow positive unless they needed it to get some

[00:50:45] sort of advanced license.

[00:50:48] But they already had the MFB and they didn't get the commercial.

[00:50:50] Commercial banking license is the most expensive.

[00:50:52] Some question marks around it, but I think I would believe it.

[00:50:56] But it sounds like you're more dubious, it sounds like.

[00:50:59] I think I'm skeptical.

[00:51:02] But they said they were cash flow positive, so they don't need to raise money.

[00:51:04] Yeah, but cash flow positive is an interesting thing.

[00:51:09] I don't know how to describe it.

[00:51:10] But then again, you're...

[00:51:12] It's cash flow.

[00:51:14] It's not accounting income.

[00:51:16] Yeah, I mean, yeah, but yes, yes, yes.

[00:51:19] It depends on your accountants.

[00:51:21] It depends on your accountants.

[00:51:22] But for now, we'll take it as net cash.

[00:51:25] I think it's fair.

[00:51:26] Yeah, if I assume that they're cash flow positive, which is they're spending more cash than they're

[00:51:29] spending.

[00:51:30] Are they spending enough cash to...

[00:51:31] It's not so much that they're cash flow positive, which is usually like, you know how

[00:51:35] people say they're EBITDA positive.

[00:51:36] You make a dollar of profit.

[00:51:38] You EBITDA positive.

[00:51:39] And many people set up to get to that milestone.

[00:51:42] But what we're saying is that they're making enough money to run their businesses, which

[00:51:45] is what has to be true for them to have raised $5 million.

[00:51:47] I think that's what I was...

[00:51:48] Maybe that's the question I should have asked.

[00:51:49] Yes.

[00:51:49] Do you think that they run their business with profits plus $5 million?

[00:51:53] 100%.

[00:51:53] Or they run their business with only $5 million?

[00:51:55] Because only $5 million is what I'm not convinced.

[00:51:58] Profit and $5 million.

[00:52:00] Because they have the least...

[00:52:01] I'm going to make fun of them later in the podcast.

[00:52:03] Let me just make fun of them now.

[00:52:04] They have the least aggressive growth strategy of any startup I've spoken about.

[00:52:07] They don't go internationally.

[00:52:08] They don't care.

[00:52:09] For the first three years, they only had savings.

[00:52:11] Sort of like they only had one future and one country for three years.

[00:52:15] Like when have we heard that?

[00:52:16] It never happens.

[00:52:17] It never happens.

[00:52:18] In fact, I was trying to think of, okay, well, at least they did some state expansion.

[00:52:22] But state expansion doesn't require any money.

[00:52:23] Like it's the same license.

[00:52:25] If you're on Sokoto, just log in.

[00:52:27] I'm not saying they hardly did anything to the app.

[00:52:29] But the future set for the first three years is almost exactly the same.

[00:52:32] What's the cost?

[00:52:34] The app looks slightly nicer.

[00:52:35] Are you asking a Nigerian startup what's the cost?

[00:52:38] Okay, fine, fine.

[00:52:39] Should we go to the next section?

[00:52:40] I think that's what I'm saying.

[00:52:41] Are you asking a Nigerian startup?

[00:52:42] What did you spend money on?

[00:52:44] Is that what you're trying to figure out?

[00:52:45] Because you must be joking.

[00:52:46] Should we go to the next section?

[00:52:49] So I'm building on an argument that you're going to help me get to, which is there must

[00:52:53] be some kind of disciplined business people or saints relative to the rest of the ecosystem,

[00:52:58] right?

[00:52:58] At the very least.

[00:52:59] If that is true.

[00:53:01] Well, that's one way to put it.

[00:53:02] Another way to put it is it was so hard for them to raise any money that when they eventually

[00:53:06] got the one million from, shout out to Kola and Olumide, they're like, we have to make

[00:53:09] this money last.

[00:53:10] And luckily for them, their business model, like anyone that lives in Nigeria knows the

[00:53:14] Nigerian government gives you bonds at crazy percentage rates.

[00:53:17] And you just need to give people a little bit.

[00:53:18] The business model makes sense.

[00:53:20] Especially because nobody's giving interest in Nigeria.

[00:53:22] Shout out JT Bank.

[00:53:23] Exactly.

[00:53:23] Exactly.

[00:53:24] Oh, JT Bank gives interest.

[00:53:25] It's not to be fair.

[00:53:26] They give something.

[00:53:27] To be fair.

[00:53:27] Okay.

[00:53:27] So let's rewind a little bit.

[00:53:29] I lived in Nigeria from 2012 to 2014.

[00:53:31] And at the time, I'm just going to call them government bonds.

[00:53:34] No one calls them government bonds in Nigeria, but it doesn't

[00:53:36] matter.

[00:53:36] Government bonds were giving like 18 to 22 and GTB was giving 14.

[00:53:41] So there was enough spread, right?

[00:53:44] By the way, I'm talking about percentage annual returns.

[00:53:46] Sorry, I'm just giving numbers like a crazy person.

[00:53:47] There was enough spread in between the actual government bonds of 20 and GTB 14 for them

[00:53:52] to give 17 and still make money.

[00:53:53] And by the way, the government used to actually repay in very short term, 30, 60, 90 days.

[00:53:57] I won't say it's guaranteed, but their business model sort of makes sense.

[00:54:00] I was also disappointed when I looked at the spread between the government and GTB to the

[00:54:03] point where people started to say, is there a way for me to get government bonds

[00:54:06] directly?

[00:54:07] But then you needed like a higher amounts.

[00:54:09] So basically, if a startup can aggregate all those amounts and then get the government

[00:54:12] bond and then give you a spread higher than the bank, it sort of works.

[00:54:14] It makes sense.

[00:54:15] I don't know how the market changed.

[00:54:16] I'm talking about nine years old news.

[00:54:17] But at the time when I lived there, it definitely was a thing.

[00:54:20] Don't worry.

[00:54:21] The Nigeria is spending a lot of money that the government borrowing costs are going

[00:54:23] up.

[00:54:23] It has nothing to do with you.

[00:54:25] It just has nothing to do with...

[00:54:26] No.

[00:54:27] Bank of the business is profligated.

[00:54:28] Don't come attack me.

[00:54:29] That's right.

[00:54:30] Our fiscal stance.

[00:54:31] Nigeria's fiscal stance, please.

[00:54:33] I go to Lagos regularly.

[00:54:34] For our audience in other countries, you hear, oh, the Nigerian government is giving

[00:54:37] 22% returns.

[00:54:39] This bank's giving 14% returns.

[00:54:41] These are nominal returns.

[00:54:42] So Nigerian inflation is 20%.

[00:54:43] So actually, these returns are not very high.

[00:54:45] They just seem high.

[00:54:46] If you do the nominal minus inflation, the 22 is actually like 2.

[00:54:49] The 18 is negative 4.

[00:54:50] Or just to be clear, these percentages are not adjusted.

[00:54:51] We even saw 32% recently.

[00:54:54] I read it.

[00:54:55] I didn't even double click it.

[00:54:56] I said congratulations to all involved.

[00:54:58] Inflation is now 26.

[00:55:00] Even that 32 is still 6.

[00:55:01] I don't trust that.

[00:55:02] And that 32 may be the marketing number.

[00:55:04] When you click, it has all these weird things.

[00:55:07] I've said it on 77 Afrability episodes.

[00:55:09] I'm not a fan of narrow investments.

[00:55:11] You can do it, but just know you're taking on inflation and devaluation risk.

[00:55:14] I wouldn't do it if I were you.

[00:55:15] I'd convert directly to dollars.

[00:55:16] But that's a separate conversation.

[00:55:18] Okay.

[00:55:18] Anything else on fundraising?

[00:55:20] No, that's it.

[00:55:20] So that's it.

[00:55:21] That's it on fundraising.

[00:55:21] It's a great segue.

[00:55:22] Great chat.

[00:55:23] All right.

[00:55:24] Talk about growth, expansion.

[00:55:25] Go ahead.

[00:55:26] Yes, thank you.

[00:55:27] I'm going to talk about growth and expansion like Banko was saying.

[00:55:29] Geographical expansion, I mean, it's very short.

[00:55:31] The short answer is they've been in Nigeria for all their history.

[00:55:35] Normally, for the startups on Afrability, you sort of infer the company's expansion plans

[00:55:41] by what the execs have said.

[00:55:42] So a few years ago, they said maybe Kenya.

[00:55:45] If you remember some of our other companies, Paga said they were going to go to Thailand.

[00:55:49] Fair Money and India.

[00:55:51] But for the most part, PiggyVest is extremely concentrated in Nigeria.

[00:55:54] I'm going to give a little bit of a longer answer to give some more nuance around that.

[00:55:58] But that's a short answer.

[00:55:58] So this is the nuance.

[00:55:59] 2016, primarily focused on Nigeria, specifically Lagos.

[00:56:03] 2017, they started to do some more Burbian rural marketing in some other areas around Nigeria.

[00:56:11] 2019, 2020, they focused a lot more on underserved rural areas and marketing for them.

[00:56:15] And in 2022, they started to have some rumors and chats about other countries in West Africa

[00:56:19] and Kenya.

[00:56:20] So a lot of words, but basically all Nigeria, very, very concentrated company.

[00:56:24] Yeah.

[00:56:25] Yeah.

[00:56:25] And one of the things is they've said, I think it was a year ago, I saw an interview where

[00:56:32] they want to, they were looking up, looking at hitting 10 million and going outside of

[00:56:38] Nigeria.

[00:56:38] But we'll see.

[00:56:39] People are waiting for them there.

[00:56:41] Yeah.

[00:56:41] Luckily for them, I mean, so they have 5 million.

[00:56:44] And depending on who you trust, the Nigerian market, number of BVNs is 40 to 50 million.

[00:56:49] NINs is 50 to 60 million.

[00:56:51] So they still have some growth.

[00:56:52] It's just, I feel as though there's always a conversation about international expansion.

[00:56:59] How difficult is it?

[00:56:59] Is it worth it?

[00:57:00] I like their strategy.

[00:57:01] I think it makes sense, especially because they have such low numbers, but I wouldn't

[00:57:04] be surprised if they looked at other big markets.

[00:57:06] It's just Nigeria is the biggest market and they're all Nigerians.

[00:57:09] So I don't know why they go to a smaller market with more competitors.

[00:57:13] Honestly, the other thing to really think about is capital efficiency can then be a

[00:57:16] strength.

[00:57:17] Because if they're actually really low burn, because it's crazy low burn and their business

[00:57:21] model is pretty light.

[00:57:22] So they don't take on all this extra cost that you have to do if you do lending, for

[00:57:25] example, where you do collections, you got to pay somebody else for credit evaluation,

[00:57:28] you got to do a different UI.

[00:57:29] They keep the cost low.

[00:57:30] They have the same infra.

[00:57:32] They have the same technological costs.

[00:57:33] It doesn't scale as much.

[00:57:35] It scales sublinearly to users or markets.

[00:57:39] But it seems possible because the largest expense would be marketing expenses in these countries.

[00:57:45] Honestly, it doesn't seem that expensive relative to...

[00:57:49] Like the playbook is repeatable.

[00:57:50] It's like if you spent $1 million, could you get to a dominant...

[00:57:54] Could you get to an EBITDA positive position in Kenya?

[00:57:57] Yeah.

[00:57:57] They just need to find markets that have the same...

[00:57:58] It's believable, right?

[00:58:00] I said $1 million.

[00:58:00] Sorry.

[00:58:01] $100,000.

[00:58:01] $20,000.

[00:58:02] $50,000.

[00:58:03] Could you get to EBITDA positive in Kenya or in Ghana with 50K publicity investment and

[00:58:07] licensing or whatever?

[00:58:08] Depend on licensing, I guess.

[00:58:09] They have to find markets that have the same...

[00:58:11] I'll call it arbitrage opportunity where the governments or the corporations are giving

[00:58:16] bonds or relatively safer investments and the banks are not able to give the users.

[00:58:21] They're doing a very unique situation in Nigeria.

[00:58:23] I don't know how replicable that is.

[00:58:25] It may make more sense for them to just go deeper with the same customers and offer them

[00:58:29] investments and lending and other things.

[00:58:31] So it depends on their strategy.

[00:58:32] We'll discuss it more in the product.

[00:58:34] I want to talk about that.

[00:58:35] I want to talk about that.

[00:58:36] I want to talk about anything about that.

[00:58:37] Inez, go ahead.

[00:58:37] Okay.

[00:58:38] We're going to talk about partnerships.

[00:58:39] One key partnership that they mentioned a lot during their launch in 2016 was a partnership

[00:58:43] they had with Paystack.

[00:58:45] And I think this is important because I don't think PiggyVest could really have launched and

[00:58:50] worked out the way it worked without Paystack.

[00:58:52] Why?

[00:58:52] So Paystack is the payments infrastructure rails that allows the users to connect their bank

[00:58:58] accounts and transfer money into the wallets on PiggyVest, on PiggyBank.

[00:59:02] So I think it was foundational for them to need that.

[00:59:05] Otherwise, they needed to find a hacky way.

[00:59:07] That's one of their primary partnerships.

[00:59:08] I think over time, they've also partnered now with Flutterwave.

[00:59:11] They have a bunch of other partnerships.

[00:59:12] Of course, they partnered with banks, most notably UBA.

[00:59:15] UBA was their initial commercial bank license partner where they stored the actual money.

[00:59:20] If you left some money, let's say, 50,000 naira in PiggyVest app, the money was actually

[00:59:25] held by UBA as a custodian on the back end.

[00:59:28] They have a bunch of other partnerships, but those ones are not as important as those two.

[00:59:31] The banking partners they had for the custodial money storage and then Paystack and Flutterwave

[00:59:36] later on to allow the transfer and flow of cash and payments.

[00:59:39] Exactly.

[00:59:39] An organic group.

[00:59:40] We've done two major acquisitions and then one, I wouldn't even really count as an acquisition,

[00:59:45] just a marketing thing.

[00:59:46] So 2021, they acquired Savvy.ng, S-A-V-I.ng, which was funny enough.

[00:59:52] I'd never heard about it.

[00:59:52] It must have been super small.

[00:59:54] It was a wealth management app launched in 2018 that allowed savings, deposits, and all

[01:00:00] those things.

[01:00:01] It was sort of like a competitive product, but they probably did an acqui-hire to enable

[01:00:07] them to offer more services.

[01:00:09] So that's 2021.

[01:00:09] I'll just call it a token acquisition acqui-hire.

[01:00:13] 2022, Piggy Vest acquired Abeg, which Abeg is such a funny company.

[01:00:18] They rebranded it as Pocket.

[01:00:20] You hear us use the terms Pocket and Abeg separately.

[01:00:22] So what was Abeg?

[01:00:23] Basically, 100% cash app clone.

[01:00:25] It's a consumer-to-consumer app and you use it to send money.

[01:00:29] And you're like, well, why do you need to use a consumer-to-consumer app to send

[01:00:31] money?

[01:00:31] In Nigeria, you can already send money in so many different ways at very, very low cost.

[01:00:35] It turned out their angle was exactly the cash app angle.

[01:00:37] They were doing all this cash giveaway strategy, social media, user tags.

[01:00:41] If you know about Square and Cash App in America, they have celebrities give away money for free

[01:00:46] marketing on Twitter.

[01:00:47] They did a bunch of that.

[01:00:48] I was actually surprised anyone would be willing to spend any money on it.

[01:00:50] For me, it just seems like a terrible idea.

[01:00:52] But hey, they got to supposedly around 2 million users.

[01:00:55] It looks like they're about to go out of business and then Piggy Vest bought them.

[01:00:58] Strangely, there's some rumors that it actually incubated in Piggy Vest.

[01:01:01] It's not even an independent company.

[01:01:02] We don't have time to talk about the rumors here.

[01:01:04] That's why I like that.

[01:01:06] I also like what I like about your story is where you started this story from.

[01:01:09] The one that you called the rumor and the one that you called the story is interesting.

[01:01:14] Reflect on that.

[01:01:15] Are we going to talk about it or no?

[01:01:17] They acquired it in 2022.

[01:01:18] But the rumor is that they incubated it.

[01:01:21] Okay, let's talk about the rumors and the truth.

[01:01:23] The rumors are they incubated it as a project within Piggy Vest.

[01:01:27] And then they made it seem like an external facing entity.

[01:01:30] And then they just pulled it back.

[01:01:31] Whether rumors, truths, it doesn't matter.

[01:01:33] All that matters to me, I bet it just seems like such a terrible idea.

[01:01:36] But it doesn't matter now, it's part of Piggy Vest.

[01:01:38] I don't understand.

[01:01:39] The question I would have, not even a beg, I remember the sentiment was the brand came

[01:01:45] on with a bang during Big Brother Nigeria.

[01:01:48] Yes, they sponsored it.

[01:01:48] And they sponsored it.

[01:01:49] And they need a sponsor.

[01:01:51] So if you've never watched Big Brother, they make them wear the shirts, wear the headbands.

[01:01:59] And basically, these people are walking around, they're not touching their beg on their forehead.

[01:02:03] And you're like, at least this must cost a lot of money.

[01:02:06] And people weren't hearing about their app or the brand then at the time.

[01:02:10] But it seems to have come out of a different place.

[01:02:12] Hence, my own hesitation about fundraising as well.

[01:02:15] I think that's part of my bias about that.

[01:02:16] They must have raised some kind of money before.

[01:02:18] I just don't understand the beg thing, man.

[01:02:20] I can understand Square and Cash App.

[01:02:22] Okay, Square has billions of dollars.

[01:02:24] But a beg is literally just using investor money to give away money.

[01:02:28] The consumer, when you spend that, they just take losses.

[01:02:31] They're not charging either party.

[01:02:33] If I use that beg app to send money to Bankoli, it was free for Bankoli to receive and free

[01:02:37] for me to send.

[01:02:38] Literally just a cash loss.

[01:02:39] But anyway, I'm not going to make fun of them.

[01:02:40] It doesn't matter.

[01:02:41] I just find it absurd.

[01:02:42] Yeah, but that's internally...

[01:02:43] I can tell you the bull case.

[01:02:44] Not that I believe that it's possible, but I will play devil's advocate to your argument.

[01:02:47] Is, look, if you have a lot of money, it's the Venmo argument.

[01:02:50] You have a lot of people sending back and forth.

[01:02:52] You are going to have a lot of float.

[01:02:54] Which is why PayPal bought Venmo in the first place.

[01:02:56] Purely for float.

[01:02:57] The problem is those arguments don't work.

[01:02:59] Which is why Venmo was not profitable when they bought them.

[01:03:01] And Venmo is still a cost sink for PayPal today.

[01:03:04] Because PayPal is forcing Venmo to do credit card, debit card.

[01:03:07] Like, too many things are monetized.

[01:03:09] It's a good idea in theory where the banks didn't have...

[01:03:12] At the time of ABEG, 2021 even.

[01:03:14] Maybe less so even now, but you could argue that.

[01:03:17] The interface for sending a user-to-user money...

[01:03:20] Yes, you can do it for a bank account.

[01:03:21] It is still clunky.

[01:03:22] I have to ask you for a 10-digit number.

[01:03:24] You have to memorize it.

[01:03:25] I have to put a 10-digit number.

[01:03:26] It has to resolve.

[01:03:28] I have to send it.

[01:03:29] I have to put in a PIN or a token or a code.

[01:03:32] And then I have to send it.

[01:03:33] For all, some, small, or large.

[01:03:37] Except maybe airtime.

[01:03:38] But for all, some, small, or large P2P...

[01:03:40] For all, some, small, or large P2P...

[01:03:41] That's the way you have to do it.

[01:03:43] The cash app of Venmo way is way quicker.

[01:03:45] And the argument was don't Nigerians deserve that kind of way?

[01:03:47] And if you can get them to change their behavior, to transact for these small amounts through a bag, we can make money on the float to keep it.

[01:03:55] I don't think there's enough of that because people don't trust.

[01:03:58] Of course, I mean...

[01:03:59] It's also...

[01:03:59] Everything you said is 100% correct.

[01:04:01] The problem is, at this time, you could already do the exact same thing in chipper cash.

[01:04:04] You can already do the exact same thing in carbon.

[01:04:07] It's like, yes...

[01:04:08] Like, it's just...

[01:04:08] Anyway, I'm not going to make fun of them too much.

[01:04:10] Also, to ask about...

[01:04:10] You could do it in Cuda as well.

[01:04:12] Exactly.

[01:04:12] With Cuda.

[01:04:13] And the UX was even better in Cuda than regular banking app.

[01:04:15] Also, a lot of these consumer-to-consumer apps, they always say eventually we'll get merchants on board and then we'll charge the merchants.

[01:04:21] Initially, it's consumer-to-consumer.

[01:04:23] It never works.

[01:04:24] But anyway, they bought them, quote-unquote.

[01:04:26] They're now part of PiggyVest and they're now rebranded as Pocket.

[01:04:29] Also, Pocket launched what they're calling social commerce, which is a way for regular people to sell things.

[01:04:37] If I sell clothes or hair or bags, I can create like a store and then sell it on the Pocket app.

[01:04:43] Social commerce, we've seen Paystack try to do that and Flutterwave try to do that.

[01:04:47] This is not the core part of Pocket, but it's definitely something they launch after the acquisition.

[01:04:51] So we'll see how that goes.

[01:04:52] And then lastly, this is not even a real acquisition.

[01:04:53] I don't know why the marketing spiel made it seem like an acquisition.

[01:04:57] It's very strange to me.

[01:04:57] Anyway, 2024 May.

[01:04:59] This recording is 2024 October, five, six months ago.

[01:05:02] Paystack and PiggyVest apparently formed a coalition to acquire brass.

[01:05:05] Now, it doesn't make any sense in many ways.

[01:05:09] Number one, Paystack and PiggyVest formed a coalition to acquire brass means what?

[01:05:13] It means who actually paid for brass?

[01:05:15] Who's actually getting into it?

[01:05:16] If you look at all the flow, it turns out a lot of the brass employees and products are not part of Paystack.

[01:05:21] It doesn't have anything to do with PiggyVest.

[01:05:23] Also, does PiggyVest have enough money to be acquiring another company, which is orthogonal business model?

[01:05:27] I'm telling you, it's not $5 million.

[01:05:29] Anyways, go on.

[01:05:30] That's what I'm talking about.

[01:05:31] The questions you have are all answered by a very simple thing.

[01:05:34] Oh, how did they fund this big brother thing?

[01:05:36] Oh, how did they purchase brass?

[01:05:38] Oh, is this simple?

[01:05:39] It's pointing out to that sign.

[01:05:41] The big sign is on the highway.

[01:05:42] Read it.

[01:05:43] We'll go ahead.

[01:05:44] Sorry.

[01:05:44] Anyway, my interpretation of the event is actually Paystack did an acquihire for brass for peanuts.

[01:05:53] And PiggyVest's name was just added to it just for marketing high purposes.

[01:05:57] I don't think it has anything to do with them, especially because the reporting lines don't even match.

[01:06:01] None of them are reporting into anyone at PiggyVest.

[01:06:03] So that's it.

[01:06:04] I'm going to talk a little bit about the team and the people strategy.

[01:06:07] It's lovely.

[01:06:07] I love it.

[01:06:08] The three key founders, Odunayo, Somto, Joshua, Bankoli spoke about.

[01:06:11] They've been at PiggyVest since 2016.

[01:06:14] In fact, technically, if you count University, PushCV, and other companies they've worked on,

[01:06:18] two of them worked together for around 10 years.

[01:06:20] And they're still in the company.

[01:06:21] They're still in the same roles.

[01:06:22] CEO slash CTO for Somto, COO for Odunayo, and CMO for Joshua.

[01:06:27] They've been in the same roles, doing the same thing, working together as a quarter team for 10 years.

[01:06:30] Incredible.

[01:06:31] It's funny because normally when you see that stat, you'd be like, okay, I guess they're all super old.

[01:06:35] They're 50.

[01:06:35] No, they're all 28, 29, 30.

[01:06:38] But because they started when they were 19 in college, they have so much experience working together.

[01:06:42] None of them have quit.

[01:06:43] Remarkable.

[01:06:43] And it's not even that they've been together.

[01:06:44] There hasn't been a situation where one of them quits, came back.

[01:06:48] It's just been fascinating.

[01:06:49] Now, sometimes on these podcasts, you see that on the outside.

[01:06:52] On the inside, they actually hate each other.

[01:06:53] If you guys hate each other, that's fine.

[01:06:55] But based on what we know publicly, we're just going to say it's a solid team.

[01:07:00] Also, I'm going to give a shout out to the other.

[01:07:03] Technically, it turns out they're like seven, not three.

[01:07:06] So there's four other, I'll call them supporting team members who are, they're sometimes called co-founders.

[01:07:13] This is not, this is Andela's situation where there are 14 co-founders.

[01:07:16] Lots of Andela.

[01:07:17] I love you guys.

[01:07:17] I'll just talk about these four other people.

[01:07:19] They seem to, I'll call them secondary members, but they've also been with the team for almost 10 years.

[01:07:24] So shout out to Ayo Akinola Ibukun, Akinola Terukanu, and Nonsu Igo.

[01:07:30] I'm not sure what the decision-making process is.

[01:07:32] If I were a betting man, I'd say the three core people make all the decisions.

[01:07:35] Regardless, it's amazing to see a group of seven people stay together for that long.

[01:07:39] It's extremely, extremely rare.

[01:07:40] I haven't done so many Africa Tech episodes.

[01:07:42] Yeah, I also feel like they haven't even fought over money or fundraising or secondaries.

[01:07:51] That's good.

[01:07:52] They've collected a lot of secondaries, man.

[01:07:54] They have nothing to worry about.

[01:07:55] Shout out to Joshua.

[01:07:56] Joshua, you know.

[01:07:58] Maybe the structure does end out nice.

[01:08:01] Guys, everybody's just, they'll say, here's a hundred K.

[01:08:05] Let's extend your vest to eight years.

[01:08:07] Yo, why should I leave when I'm rich, bro?

[01:08:09] I'm not only rich now, I'm rich later.

[01:08:11] Do you understand?

[01:08:13] It's not even now.

[01:08:14] Forget how I collect.

[01:08:15] It's like later.

[01:08:16] All I have to do is persist.

[01:08:17] Anyway, sorry.

[01:08:18] I don't know why I'm such a hater.

[01:08:19] I'm just so jealous.

[01:08:20] I have to go to the office.

[01:08:21] Shout out.

[01:08:22] Okay, I'm going to wrap up this section.

[01:08:23] And then Banco is going to talk about product and monetization strategy.

[01:08:26] I'm going to wrap up by talking about all the stats and data metrics we have on them.

[01:08:29] I'm going to use three different categories.

[01:08:32] So number of users, AUM, aka assets under management, and savings disbursements.

[01:08:38] Let's go through all of them.

[01:08:39] Users, 2016, 450.

[01:08:41] Not 450,000.

[01:08:42] 450,000.

[01:08:43] Like 100.

[01:08:44] Yeah.

[01:08:45] 450.

[01:08:45] 2018, 53,000.

[01:08:47] Just incredible.

[01:08:48] So I saw 2017, 1,000 users.

[01:08:51] Ah, thank you.

[01:08:52] January 2017, 1,000 users.

[01:08:54] So 450,000, 2016, 1,000, 2017, 53,000, 2018.

[01:08:59] It went from 1,000 to 53,000 in one year.

[01:09:00] Wow.

[01:09:01] 2019, about a million.

[01:09:03] 2022, 3.7 million.

[01:09:06] 2024, early, 4.5 million.

[01:09:08] 2024, late, 5 million.

[01:09:10] Incredible growth.

[01:09:11] The other thing to highlight is 2018, I saw that they had a Google event and they went from 50K to 133K after a few months.

[01:09:18] Basically, all this accelerators and stuff helped them with publicity because of how much they were trying to do that.

[01:09:25] How they grew, basically.

[01:09:27] Changed the name to PiggyVest, 700,000.

[01:09:30] And then 2020, 1 million users, ECCTC.

[01:09:36] End of 2020, pandemic, everybody saw.

[01:09:38] Everybody got it.

[01:09:39] Doubled.

[01:09:40] Very nice.

[01:09:41] On one hand, quite fast user growth, but not the fastest we've seen at all.

[01:09:45] Chipper Cash was way faster.

[01:09:47] However, like I said on the Chipper Cash episode, when things go up quickly, there's inherent instability and risk in the system, which is why Chipper Cash has had a bumpier journey than they have.

[01:09:57] So that's on the user side.

[01:09:59] AUM, so assets under management.

[01:10:00] And read this as total amount saved or invested on the PiggyVest platform.

[01:10:06] Read this as that.

[01:10:07] 2016, around 21 million Naira, $50,000.

[01:10:12] 2017, around 700 million Naira or $1 to $2 million.

[01:10:17] 2019 ending, $80 million.

[01:10:20] Again, they had a 40, 50x growth.

[01:10:23] Their 2018 and 2019 were just crazy years for them.

[01:10:25] I don't have more recent numbers.

[01:10:26] I just have the 2019, 80 million assets under management.

[01:10:29] But now I'm sure it's multiples of that.

[01:10:30] Because if you look at the user growth multiple and assume it's the same AUM per user, it could be hundreds of millions of AUMs.

[01:10:37] And then disbursements, the crazy, I mean, I just want to go to the end, but I'll do it chronologically.

[01:10:43] 2022, in the year 2022, they dispersed, which means they returned savings.

[01:10:48] Like I put in 5K savings, I'm getting 6K.

[01:10:51] So the 6K is the disbursements.

[01:10:54] $519 million.

[01:10:55] Not Naira, $519 million.

[01:10:57] And then they said, they also announced in 2022, yeah, that was for the year.

[01:11:00] But cumulatively, in our six years of existence, we've dispersed $1.4 billion.

[01:11:06] And at the time, I was like, wait, what?

[01:11:08] Because it's like, it's not Naira now, it's dollars.

[01:11:11] Considering all the devaluation crap and shit that's happened, it could actually be $3 or $4.

[01:11:16] But let's just use the dollars.

[01:11:17] Let's not use the Naira because the Naira is in trillions.

[01:11:19] For them to have returned over a billion dollars in six years is just crazy.

[01:11:22] Also, the fact that half of that happened in the last year.

[01:11:26] They experienced some sort of hockey stick growth.

[01:11:27] Incredible.

[01:11:30] Honestly, that's the thing to sit on, which is that they are in a different phase of growth.

[01:11:36] If you look at the contrast, I like to contrast it to Criter Bank, one I'm most familiar with.

[01:11:41] They get a lot of press.

[01:11:42] And you see their user growth and their user growth.

[01:11:45] You get a sense of it's growing just not as fast as it was in the first two years.

[01:11:48] Like, you wouldn't say Criter Bank is growing as fast as it was in the first two years.

[01:11:51] Big Invest seems to be growing faster as it gets older.

[01:11:54] So it's a very interesting dynamic compared to some of the other fintechs in this category.

[01:11:58] You don't say the others are growing faster the longer they exist.

[01:12:02] Big Invest seems to be growing faster the longer it exists.

[01:12:04] Five minutes after a minute.

[01:12:06] Sorry, sorry.

[01:12:07] Finish.

[01:12:08] No, right.

[01:12:08] It seems to be growing faster the longer it exists.

[01:12:10] And that's something to sit on, contrasting to other fintech companies in the ecosystem.

[01:12:15] Yes.

[01:12:16] I think they're all so lucky that right from the start, even when they had 450 users in 2016,

[01:12:21] they already had a profitable business model.

[01:12:22] Just the strange arbitrage of governments giving 28%, regular banks giving 10% and then them giving 15, 16.

[01:12:31] It's just, it's nice versus Cuda.

[01:12:33] They had to later on give savings, later on do these things.

[01:12:37] But initially they were just taking losses.

[01:12:38] I want to pull that.

[01:12:40] Cuda doesn't give me interest as far as I know.

[01:12:42] I've used Cuda 3 and a half.

[01:12:43] Yes.

[01:12:43] They don't like your accounts.

[01:12:45] Log in, click on savings and they give you different rates.

[01:12:48] And it depends on how much and how long you're going to hold the money.

[01:12:50] Yeah, but I don't, I don't get interest in my regular like account on Cuda.

[01:12:54] Yeah.

[01:12:54] Yeah.

[01:12:54] You can get a savings, open the app and do savings.

[01:12:57] You want to do a savings bucket and you can transfer money from the savings.

[01:13:01] It's different than the checking account.

[01:13:02] And the different interest rates.

[01:13:04] I have a, so it's funny because I have a spend account.

[01:13:06] I have a save account.

[01:13:07] This is important.

[01:13:08] Save, save.

[01:13:09] Yes.

[01:13:09] Go on, save.

[01:13:10] Save interest rates.

[01:13:10] I have money in the save account.

[01:13:12] I have never gotten an alert from Cuda's same interest.

[01:13:15] They do give you your money.

[01:13:17] Okay, Bakulia has a personal problem.

[01:13:18] But Bakulia, your problem isn't a real problem.

[01:13:20] But anyway, they're supposed to give you different interest amounts depending on the length and the amounts you put in.

[01:13:25] I will definitely message them because I've never gotten one.

[01:13:27] What do you mean?

[01:13:28] What's the point of keeping in the save account?

[01:13:30] And I will message Babs directly because there's some fraud going on.

[01:13:33] But where I was going to with that is I was challenging your point about being profitable.

[01:13:37] There's nothing unique about that in that Cuda can do the same thing with this MFP.

[01:13:41] Cuda probably has a sizable AUM.

[01:13:43] They can do the same thing.

[01:13:44] Correct.

[01:13:45] Fair Money can do the same thing.

[01:13:46] They started three years later, but they started four years later, yes.

[01:13:48] Yeah, but why are they not, why can they not be cash flow positive if they're cash flow positive?

[01:13:54] What is it about Cuda?

[01:13:55] So I'm challenging the idea that because they do only this, they're cash flow positive.

[01:13:59] Why can these guys not be cash flow positive if they're only paying off on the spread?

[01:14:04] Because they're the biggest that does the spread by far.

[01:14:07] Fair Money is bigger in lending, but in terms of spread, collecting money at X and giving it Y, they're by far the biggest.

[01:14:13] Because they launched two years before Cuda.

[01:14:15] What has to be true is that PiggyVest has 2x, 3x more AUM than Cuda.

[01:14:22] For this to be true, it has to be like, do you believe that's possible?

[01:14:25] Do you think that PiggyVest probably has multiple AUM than Cuda?

[01:14:26] 100% because they have the same amount of users.

[01:14:29] But because remember, when Cuda launched, okay, let's think about this in terms of customer perception, customer appeal.

[01:14:34] When Cuda launched, their marketing was, we're going to replace your bank account.

[01:14:38] We'll give you a lot of free services, right?

[01:14:39] Which meant people thought about it as a bank account that has free services.

[01:14:43] When PiggyVest launched, right from the jump, their whole spiel was around, like, we're going to give you interest on your money.

[01:14:48] So just the way they marketed it was completely different.

[01:14:50] Even you, you've been using Cuda for two years, you don't even know about the savings.

[01:14:54] I mean, you're the prime example.

[01:14:56] You're not using, you're using other features versus the primary feature, which means people may be using Cuda in a way they may not give it the same amount of revenue.

[01:15:03] And now this will change in the future.

[01:15:05] What do you say the AU for these guys are again?

[01:15:08] Okay, as of 2019 ending was 80 million.

[01:15:11] But if you look at the 2019 users and you assume the same, maybe four or 500 million.

[01:15:17] Okay, because I can see Cuda's total assets, one of those leaked things, is $150 million.

[01:15:23] And the asset is going to be a lot of stuff.

[01:15:24] You're probably in the same ballpark.

[01:15:25] If Cuda has 150, 200 million and these guys were 104 years ago or something, then it makes sense that they would be at 500, 600 million, especially if they're focused on larger sums.

[01:15:35] If I want an open PiggyVest, I would want to go and put 100,000 there.

[01:15:39] 100,000 there at once.

[01:15:40] And also, don't forget, we're missing something very obvious.

[01:15:45] they can give higher interest loans than CUDA.

[01:15:49] Why?

[01:15:50] Because they have more money.

[01:15:51] The more money you have, the more you can do net interest spread

[01:15:54] because you can get, you can deposit more.

[01:15:55] The more you can afford.

[01:15:56] You make more dollars.

[01:15:58] Yes, yes, yes.

[01:15:58] Less percentage more dollars.

[01:16:00] Exactly.

[01:16:00] So there's so many things.

[01:16:02] Now, over time, this may change

[01:16:03] because I think CUDA may be growing at a faster rate

[01:16:06] than they are in terms of the number of users,

[01:16:08] but not in terms of the number of users.

[01:16:08] Anything can change.

[01:16:09] But as of now, we did some quick back-of-the-envelope math,

[01:16:13] but I'm sure, I'm 90% sure

[01:16:17] they're the biggest Nigerian fintech that does savings right now.

[01:16:22] Now, that's not lending.

[01:16:23] That's not banking.

[01:16:24] That's not international remittances.

[01:16:26] But for savings and giving money back on savings,

[01:16:29] I'm 90% sure that they're the biggest.

[01:16:31] They launched first.

[01:16:33] Yeah, CUDA deposits at $100 million in 2022.

[01:16:36] Yeah, and this was $80 million in 2019.

[01:16:40] And they had 3x user growth since then.

[01:16:42] So it could be $200 million, $300 million, or $400 million.

[01:16:44] No surprise.

[01:16:44] Yeah.

[01:16:45] Not the same ballpark.

[01:16:46] It's their core offering.

[01:16:48] I use CUDA.

[01:16:49] I never use the savings feature.

[01:16:50] And by the way, if I open the savings feature

[01:16:51] and it gives me $21 million,

[01:16:53] and PiggyVest gives me $25 million,

[01:16:54] best believe I'm using PiggyVest.

[01:16:55] Why would I pick the lower interest one?

[01:16:58] No reason.

[01:16:59] Somebody asked.

[01:16:59] I'm going to message them.

[01:17:01] You don't understand.

[01:17:02] I've never caught that interest.

[01:17:03] Even G3 Bank gives me interest.

[01:17:04] Providers Bank gives me interest.

[01:17:07] How can a saving account not give you interest?

[01:17:09] That's a major differential between a checking company.

[01:17:11] I'm telling you, once I get off this recording,

[01:17:14] I'm going to message Babs on Twitter.

[01:17:15] Hello.

[01:17:16] It's I, a customer.

[01:17:19] Congratulations on your success so far.

[01:17:23] Where's my money?

[01:17:25] However, I want you to back calculate all my transactions.

[01:17:29] Anyway, it's not the point.

[01:17:30] I'm going to talk about product strategy,

[01:17:32] how they make money,

[01:17:34] and how they make money.

[01:17:34] Basically, I want to talk about product strategy,

[01:17:35] how they make money.

[01:17:36] This would be a much more involved conversation.

[01:17:37] A couple of things that I want to hit in this conversation

[01:17:39] is the choice to not do credit or lending at this point.

[01:17:43] Yeah.

[01:17:44] And how that is a positive or not so positive thing.

[01:17:48] That's probably the things.

[01:17:48] And I'll go through some of their products.

[01:17:50] But I'll save the strategy conversation for the last

[01:17:52] because it's a bit more meaty.

[01:17:54] Cool.

[01:17:55] How did they grow?

[01:17:55] We've talked about this ad nauseum,

[01:17:57] but word of mouth marketing was kind of like the first thing.

[01:17:59] They obviously spent some money on ads later on.

[01:18:01] They also did referrals where they paid for referrals.

[01:18:04] A lot of social media content, tons and tons.

[01:18:07] Go to Twitter, go to threads, search PiggyVest.

[01:18:09] You see stuff.

[01:18:11] They're very good at marketing.

[01:18:12] I'd say very closely tied with Paystack

[01:18:14] as probably some of the best consumer marketing companies,

[01:18:16] which is strange because Paystack should be B2B

[01:18:18] and not need to market as well.

[01:18:19] Those guys have an amazing marketing team for B2B,

[01:18:21] but this is the more B2C one that has good marketing.

[01:18:24] Yeah, exactly.

[01:18:25] They're pretty much, they give out good vibes.

[01:18:28] They have good, I don't know how to frame the metric

[01:18:30] as people hear them and think positive feelings.

[01:18:33] Some of the products that they have, it's fairly conventional.

[01:18:35] They are products of maybe two broad kinds.

[01:18:39] One is savings products with interest rates

[01:18:42] that vary on how much they restrict access to the money

[01:18:45] when it's in there.

[01:18:46] That's called different things.

[01:18:47] It's like there's some for savings,

[01:18:49] automated savings, saved daily, weekly.

[01:18:51] There's targets for goal-oriented savings

[01:18:53] for different interests.

[01:18:54] 9% is the latest one I checked on the website.

[01:18:56] They have FlexSave where you can save,

[01:18:58] where you can access your funds,

[01:18:59] more like a traditional savings account,

[01:19:00] limited to how many times you can withdraw a month.

[01:19:02] They have a safe lock, which is you lock it,

[01:19:05] you don't touch it for a year,

[01:19:07] but higher interest up front.

[01:19:09] They have an, yeah, those are the savings products.

[01:19:12] They also have an investment marketplace.

[01:19:14] That's pretty much.

[01:19:14] Oh, don't forget FlexDollar, very important,

[01:19:16] because I'm always banging.

[01:19:17] If you had to pick, sorry to be a broken drum,

[01:19:19] FlexDollar busts.

[01:19:20] Unless the Nigerian government is going to miss all the currency.

[01:19:23] Because when you look at FlexDollar,

[01:19:24] it looks to give you a lower return,

[01:19:25] but you're hedged, which is what you want.

[01:19:28] You want to hedge yourself.

[01:19:29] Anyway, Bankway, Cuba, I don't want to admit that.

[01:19:31] It's very important.

[01:19:31] Yeah, they have a FlexDollar account

[01:19:33] where you can save in dollars,

[01:19:34] which is important,

[01:19:35] because one thing you're worried about

[01:19:35] if you're in Nigeria saving

[01:19:37] is you have to be,

[01:19:39] like the iPhone,

[01:19:40] the iPhone 15,

[01:19:41] is sold and priced in dollars.

[01:19:43] Okay?

[01:19:43] You don't want it to be,

[01:19:45] you don't want it to go from X percent of your salary

[01:19:47] to, you don't want it to go to,

[01:19:49] from a fraction of a salary

[01:19:50] to a multiple of a salary

[01:19:50] in a matter of months.

[01:19:51] And the currency has done that.

[01:19:52] Correct.

[01:19:53] Listen to our World War Tech episode.

[01:19:54] I don't only focus on the valuation,

[01:19:56] it's also inflation is 20 to 30,

[01:19:58] and the valuation is 50%.

[01:19:59] So it's sort of like,

[01:20:00] it's always two fights.

[01:20:01] Even if the valuation is stable,

[01:20:03] the inflation is so high,

[01:20:04] if inflation,

[01:20:05] well,

[01:20:06] if America's historical inflation

[01:20:07] is 2 to 3%,

[01:20:08] Nigerian's historical inflation

[01:20:09] is 20 to 30%,

[01:20:10] there's a 10x delta

[01:20:11] you're eating every year.

[01:20:12] I'm sorry to be the person

[01:20:13] who's so direct,

[01:20:14] but I would not invest

[01:20:16] in any developing country currency

[01:20:19] unless I have inside information

[01:20:21] I'm working for the government.

[01:20:22] Okay,

[01:20:23] Olin,

[01:20:23] but you invest in businesses

[01:20:25] that make money in Naira

[01:20:27] to give you returns in dollars.

[01:20:29] Do I?

[01:20:29] How do you,

[01:20:30] tell us more about that.

[01:20:32] Well,

[01:20:32] okay,

[01:20:32] first of all,

[01:20:33] you should know that

[01:20:33] some businesses,

[01:20:34] even though they're in developing countries,

[01:20:36] if they're B2B,

[01:20:37] they may still be able to charge

[01:20:38] their businesses in dollars,

[01:20:39] number one.

[01:20:40] Okay.

[01:20:41] And then number two,

[01:20:42] to explain in a very simplistic way,

[01:20:44] some business models

[01:20:45] naturally account for inflation

[01:20:47] as part of the pricing strategy.

[01:20:48] It's sort of like

[01:20:49] they price the product

[01:20:50] in such a way

[01:20:50] that naturally

[01:20:51] when there's any inflation,

[01:20:52] it's baked into the increased price,

[01:20:54] but that's different than devaluation.

[01:20:55] Those are the two things.

[01:20:57] Some products are just priced in dollars.

[01:20:58] Some,

[01:20:59] there's a natural thing.

[01:21:00] You're still a little bit susceptible to it,

[01:21:02] but not as much as a regular consumer.

[01:21:04] Yeah,

[01:21:04] yeah.

[01:21:04] I see,

[01:21:05] I see all of that.

[01:21:06] That's fine.

[01:21:07] The expectation,

[01:21:08] the hope

[01:21:08] is that the returns

[01:21:10] can overcome all of this,

[01:21:11] but the mountain is becoming bigger

[01:21:12] and bigger and bigger and bigger.

[01:21:13] A hundred percent.

[01:21:14] A hundred percent.

[01:21:16] Scale,

[01:21:17] tech enabled business,

[01:21:18] zero marginal cost,

[01:21:19] whatever,

[01:21:19] all this good stuff.

[01:21:21] It's difficult to overcome

[01:21:23] the devaluations,

[01:21:24] the steep devaluations

[01:21:26] contrast in partnership

[01:21:27] with the high inflation.

[01:21:29] Like you're asking for,

[01:21:30] like I don't even know

[01:21:30] if Google

[01:21:31] kind of accommets in,

[01:21:32] you know what I mean?

[01:21:33] In Nigeria,

[01:21:33] the returns in 2004,

[01:21:35] if you look back over 10,

[01:21:36] 15 years.

[01:21:36] All you need to know is

[01:21:38] YouTube premium is $1.12.

[01:21:41] You need to know that.

[01:21:42] Google has given up

[01:21:43] on developing countries.

[01:21:44] I did a conversion

[01:21:45] for the Kenyan one.

[01:21:45] I think it was like 94 cents

[01:21:47] per month.

[01:21:48] Sort of like,

[01:21:48] forget about the $12

[01:21:49] you're paying in America.

[01:21:51] If you live in Kenya,

[01:21:52] your Google,

[01:21:52] your YouTube premium is a dollar.

[01:21:54] They know.

[01:21:56] It's a crazy kind of business.

[01:21:58] Right.

[01:21:59] It's not any better

[01:22:00] on the ad side.

[01:22:00] Anyone looking at CPMs

[01:22:01] in developing countries

[01:22:02] is atrociously bad.

[01:22:03] 10 to 100 X worse.

[01:22:04] But hey,

[01:22:05] it is what it is.

[01:22:05] All of us that are

[01:22:06] either from developing countries,

[01:22:08] investing in developing countries,

[01:22:09] believe in developing countries,

[01:22:10] it's more about

[01:22:11] future potential,

[01:22:12] future growth

[01:22:13] than the current status.

[01:22:14] The current status

[01:22:14] is obviously shit.

[01:22:15] That's the definition

[01:22:16] of developing country.

[01:22:17] Hopefully they all come out of it

[01:22:18] in our lifetime.

[01:22:21] Okay.

[01:22:21] So piggy bank,

[01:22:23] piggy vest.

[01:22:23] They have a bunch

[01:22:24] of investment products

[01:22:24] and an investment marketplace.

[01:22:26] How do they make money?

[01:22:27] So I saw an interview

[01:22:29] that Dwyer gave somewhere.

[01:22:31] They make money

[01:22:31] in three ways.

[01:22:32] The first and the biggest

[01:22:33] and the most obvious

[01:22:34] is net interest income.

[01:22:36] This is spread between

[01:22:37] what they pay out as interest

[01:22:38] and what they can get

[01:22:38] by investing those funds.

[01:22:39] Yes.

[01:22:40] Just to highlight,

[01:22:41] there's very strong restrictions,

[01:22:43] trust regulators in Nigeria,

[01:22:44] like on what they can do

[01:22:45] with money,

[01:22:45] where they can invest.

[01:22:46] But honestly,

[01:22:47] government is always selling bonds

[01:22:48] and there's always people

[01:22:50] like piggy vest to buy them.

[01:22:52] This is not uncommon,

[01:22:53] by the way.

[01:22:54] The biggest commercial banks

[01:22:54] make a good proportion,

[01:22:56] maybe half of their income.

[01:22:58] Nigeria is a strange country.

[01:22:59] They don't make money

[01:23:01] from lending

[01:23:02] or from traditional banking operations.

[01:23:04] They make money

[01:23:04] from net interest income.

[01:23:06] And piggy vest is kind of like,

[01:23:08] piggy vest does not look

[01:23:10] unique to commercial banks

[01:23:11] in this sense,

[01:23:12] even though they seem

[01:23:12] like they're unique.

[01:23:13] They are very similar

[01:23:14] in the way they make their money

[01:23:15] because piggy vest,

[01:23:16] Zenit Bank,

[01:23:17] GCP Bank,

[01:23:18] Access Bank

[01:23:18] make money from net interest income.

[01:23:20] And I've told this story before,

[01:23:21] but I can't even help myself.

[01:23:22] I have to tell it again.

[01:23:23] I moved to Nigeria 2012.

[01:23:24] I opened a retirement account,

[01:23:27] called a pension account,

[01:23:28] who the fuck cares,

[01:23:29] with Stanby Guy BTC.

[01:23:30] I log in.

[01:23:31] At the time I'm 20,

[01:23:33] 2012,

[01:23:34] I'm like 27, right?

[01:23:36] So I should have 100% stocks.

[01:23:37] Anyone personal finance

[01:23:38] will tell you.

[01:23:39] Maybe 80% stocks

[01:23:40] in terms of asset allocation.

[01:23:41] I literally had 95% bonds.

[01:23:45] 95%.

[01:23:45] In my Stanby account,

[01:23:46] my pension account.

[01:23:47] I log in.

[01:23:48] I'm like,

[01:23:48] oh, maybe the default is crap.

[01:23:50] How do I change it?

[01:23:51] There's no way to change it.

[01:23:52] Now, over time,

[01:23:53] there's more options.

[01:23:54] But even now,

[01:23:54] they've made it more flexible.

[01:23:56] I'm in my late 30s now.

[01:23:57] I still have 75% bonds.

[01:23:59] Why?

[01:24:00] They make it so conservative.

[01:24:02] They don't give you enough options.

[01:24:04] I don't know if I like it

[01:24:05] or I hate it,

[01:24:05] but it is what it is.

[01:24:06] Imagine that they take your pension

[01:24:07] and they put it in

[01:24:09] Intercontinental Bank.

[01:24:10] Chipper Cash.

[01:24:11] Why did you say Chipper Cash?

[01:24:12] Oceanic Bank.

[01:24:13] Let's talk about Chipper Cash.

[01:24:15] I don't talk about

[01:24:15] Oceanic Bank.

[01:24:16] They put it in Chipper Cash.

[01:24:17] Olimde, Olimde,

[01:24:19] I have friends.

[01:24:20] I have friends.

[01:24:21] I want to keep my friends.

[01:24:22] I don't know you're doing this podcast.

[01:24:24] I don't know.

[01:24:24] I have friends.

[01:24:25] Okay, so the point is,

[01:24:27] Mangali has a point.

[01:24:28] All I want is

[01:24:29] default perceptionality.

[01:24:30] The defaults can be whatever,

[01:24:31] but for an advanced user like myself,

[01:24:33] I want to change it.

[01:24:34] Having said that,

[01:24:34] there have been a bunch of scandals

[01:24:35] and equity investments

[01:24:37] not going well,

[01:24:37] but the conservative nature

[01:24:39] of investments in Nigeria

[01:24:40] is astonishing,

[01:24:42] if you know about the market.

[01:24:43] Astonishing.

[01:24:44] 27 years old,

[01:24:45] my age,

[01:24:46] and having 95% bonds.

[01:24:47] I mean,

[01:24:47] it's almost insanity.

[01:24:49] Anyway,

[01:24:50] you were saying.

[01:24:50] They also have referral bonuses

[01:24:51] from the investment marketplace.

[01:24:53] If you buy something in the marketplace,

[01:24:54] they get a VIG.

[01:24:56] They also have withdrawal fees

[01:24:57] on some of their wallet products.

[01:24:59] Basically,

[01:24:59] if you say you don't want to withdraw,

[01:25:00] then you withdraw,

[01:25:01] blah, blah, blah, blah, blah.

[01:25:01] They have fees they collect.

[01:25:03] But primarily,

[01:25:04] it is net interest income.

[01:25:06] That's their bread and butter.

[01:25:07] Now,

[01:25:08] talk a bit about their product strategy now

[01:25:10] as we can interpret it.

[01:25:12] They are an assets management business.

[01:25:14] Contrast this versus a business

[01:25:16] that takes your money

[01:25:17] and makes a spread

[01:25:18] based on what they can lend.

[01:25:21] Like,

[01:25:21] they can turn the money

[01:25:22] fractional reserve banking

[01:25:24] as it's called.

[01:25:24] They do not do that at all.

[01:25:26] They basically take your money

[01:25:27] and they invest it in funds

[01:25:31] and they get X on your money

[01:25:33] and they give you a fraction of X

[01:25:34] and they keep the spread.

[01:25:36] Right.

[01:25:36] And they do very conservative investment.

[01:25:38] They're less likely to invest

[01:25:39] in chipper cash,

[01:25:40] more likely to invest

[01:25:41] in government corporate bonds

[01:25:42] and stuff like that.

[01:25:43] Yeah.

[01:25:44] Not even corporate,

[01:25:45] just government T-bills bonds.

[01:25:46] Just different government instruments.

[01:25:48] Commercial paper.

[01:25:49] They do some commercial paper.

[01:25:50] So,

[01:25:50] they will spread it a bit

[01:25:52] even longer than it is.

[01:25:53] This is interesting

[01:25:54] because a lot of banks,

[01:25:55] a lot of the other fintechs

[01:25:56] do other things.

[01:25:57] They take the money,

[01:25:58] they want to lend it out to you.

[01:25:59] They have a pricing,

[01:26:00] lending,

[01:26:01] lending engine

[01:26:02] that evaluates risk management engine.

[01:26:04] They have investments

[01:26:05] where they are able to give you

[01:26:08] returns

[01:26:08] or give you access to funds

[01:26:10] and give you a specific interest rate

[01:26:11] based on how much money you spend there,

[01:26:14] how much you have there.

[01:26:15] They do none of this.

[01:26:16] They just do pure,

[01:26:18] pure,

[01:26:18] putting money here,

[01:26:19] giving money after some time.

[01:26:20] Take it or don't take it.

[01:26:21] Doesn't matter.

[01:26:22] You want to borrow money?

[01:26:23] That's not something

[01:26:24] that we are doing right now.

[01:26:26] It's an interesting choice

[01:26:27] because all the other fintechs

[01:26:28] we've covered

[01:26:28] that are banks

[01:26:30] in this episode

[01:26:31] in Affrability,

[01:26:31] Fair Money, Carbon

[01:26:32] kind of lead heavily with lending

[01:26:34] because lending is

[01:26:35] probably the most profitable

[01:26:37] and riskiest.

[01:26:39] Profitable,

[01:26:39] I mean,

[01:26:40] no,

[01:26:41] that's the nature

[01:26:42] of a fair market.

[01:26:44] Profitable

[01:26:45] part of the entire

[01:26:46] running like a bank.

[01:26:47] It's the lending part.

[01:26:49] Yes.

[01:26:50] JP Morgan would not be

[01:26:50] if they could not lend.

[01:26:52] JP Morgan would not be big.

[01:26:53] If you want to take risk,

[01:26:54] you can do it.

[01:26:55] Yeah.

[01:26:55] So that's an interesting thing.

[01:26:57] I'm curious to hear

[01:26:58] what you think about that

[01:26:59] and the potential of them

[01:27:00] going beyond that

[01:27:01] and whether they should

[01:27:02] go beyond that.

[01:27:03] Yeah.

[01:27:04] So normally,

[01:27:05] this would be the part

[01:27:06] where we go back and forth.

[01:27:07] We give our thoughts.

[01:27:08] We do some hypothesizing.

[01:27:09] Luckily for us,

[01:27:10] the CMO

[01:27:12] actually said

[01:27:13] the strategy is

[01:27:14] we get all your

[01:27:16] saving data

[01:27:18] from PiggyVest.

[01:27:19] We get all your

[01:27:20] spending data

[01:27:21] from Pockets.

[01:27:22] And then when we feel

[01:27:23] comfortable that we have

[01:27:24] enough user internal data

[01:27:25] on you,

[01:27:25] we're going to launch

[01:27:26] something around lending.

[01:27:27] It sounds like they're

[01:27:28] thinking about it.

[01:27:28] The logic he said

[01:27:29] sort of makes sense.

[01:27:30] The part where

[01:27:31] I'm not sure if it still

[01:27:32] makes sense is

[01:27:32] number one,

[01:27:33] there's a lot of

[01:27:33] reputational risk

[01:27:34] around doing this.

[01:27:35] They have,

[01:27:36] like I went on their

[01:27:37] Google Play Store ratings

[01:27:38] like 4.5, 4.6,

[01:27:39] iOS 4.6, 4.6.

[01:27:41] They have one of the best,

[01:27:42] the highest amounts

[01:27:42] of user trust,

[01:27:43] user love.

[01:27:44] When you start collecting

[01:27:45] money from defaulters,

[01:27:46] it may go sideways.

[01:27:47] So there's something around

[01:27:47] that that he didn't

[01:27:48] seem to consider.

[01:27:49] And then the second thing

[01:27:50] is you still need

[01:27:52] more data than

[01:27:53] just your own internal data

[01:27:54] because who the hell

[01:27:54] is using Pocket?

[01:27:55] Like they still need

[01:27:56] more data than

[01:27:57] whatever is in Pocket.

[01:27:58] They need to aggregate

[01:27:59] whatever internal data

[01:28:00] they have with actual,

[01:28:03] not even just

[01:28:03] credit bureau data,

[01:28:04] like with a platform

[01:28:05] that has a lot of

[01:28:06] user traffic

[01:28:06] because Pocket data

[01:28:08] is only going to get

[01:28:08] smaller and smaller.

[01:28:09] So yeah,

[01:28:10] they're planning,

[01:28:10] just to summarize,

[01:28:11] they're planning to do lending.

[01:28:12] I hope they think about

[01:28:13] it in a thoughtful way

[01:28:14] and I think they need

[01:28:15] a lot more data

[01:28:16] than they think they need

[01:28:17] and I think it's going

[01:28:17] to be way more difficult

[01:28:18] than they think it is.

[01:28:19] I saw that interview

[01:28:21] and...

[01:28:21] Oh yes, good.

[01:28:21] I had a separate reaction

[01:28:24] which is,

[01:28:25] okay,

[01:28:26] like everybody says that.

[01:28:28] Like Kuda says

[01:28:29] the same thing.

[01:28:30] Kuda says my savings

[01:28:31] and like my

[01:28:32] withdrawing and deposit.

[01:28:32] Like Kuda says

[01:28:33] the same thing.

[01:28:33] Everybody says

[01:28:33] the same thing.

[01:28:34] Yes, yes.

[01:28:34] And they've all had,

[01:28:38] as far as we can tell,

[01:28:40] not great success

[01:28:42] or output with that.

[01:28:43] As far as we can tell.

[01:28:43] Fair Money would be angry

[01:28:44] with you if you say that

[01:28:45] because...

[01:28:46] As far as we can tell.

[01:28:47] That's what I'm saying.

[01:28:48] Based on Fair Money's trajectory

[01:28:50] and marketing

[01:28:51] and fundraising

[01:28:52] and hype,

[01:28:52] they seem to be

[01:28:53] the best lending platform.

[01:28:54] Best in terms of hype.

[01:28:56] Okay,

[01:28:56] maybe Fair Money

[01:28:57] has figured it out.

[01:28:58] But as far as we can tell,

[01:28:59] like it's not obvious

[01:29:00] that the data

[01:29:01] is the blocker.

[01:29:02] Let's put it that way.

[01:29:02] Yes, it's very hard.

[01:29:03] It's very hard.

[01:29:04] It's not that the data

[01:29:04] is the blocker

[01:29:05] because GT Bank also

[01:29:06] has lending products as well.

[01:29:07] GT Bank has

[01:29:08] instant lending products as well.

[01:29:09] Of course.

[01:29:10] Just to be clear,

[01:29:11] commercial banks in Nigeria,

[01:29:12] they offer everything

[01:29:12] the fintechs offer.

[01:29:14] Their apps are ugly,

[01:29:15] it's slow,

[01:29:16] and sometimes users

[01:29:17] are unaware

[01:29:17] of the actual features.

[01:29:18] So everything

[01:29:19] that's been launched,

[01:29:19] Pocket,

[01:29:20] PiggyVest,

[01:29:21] they have everything.

[01:29:22] In fact,

[01:29:22] you can pay for your

[01:29:23] child's school fees

[01:29:24] living in Austin, Texas

[01:29:25] with your GTB app.

[01:29:26] It's just buried

[01:29:27] in like a terrible UX.

[01:29:28] Shout out to the banks.

[01:29:29] They're there,

[01:29:30] but they have a lot

[01:29:31] to do on marketing

[01:29:31] and like actual product flow.

[01:29:34] The thing I wanted

[01:29:35] to pick on

[01:29:37] is whether

[01:29:37] they should do it.

[01:29:39] And I think

[01:29:39] that's an interesting question.

[01:29:40] I know that they want

[01:29:41] to do it.

[01:29:42] It seems obvious.

[01:29:42] It makes sense.

[01:29:43] It's an interesting question

[01:29:44] whether they should do it

[01:29:46] or maybe whether

[01:29:47] they should do it now.

[01:29:47] Now, let's call it

[01:29:48] a two-year answer.

[01:29:52] The more I think about it,

[01:29:53] it's an interesting thing.

[01:29:55] It just seems like

[01:29:56] I need better evidence

[01:29:58] if I were in their shoes

[01:29:59] that it's not a money sink.

[01:30:01] Like it's all bad.

[01:30:03] Like what is the upside

[01:30:04] of this stuff?

[01:30:05] Like what is the upside

[01:30:06] of waiting two years?

[01:30:07] What is the downside

[01:30:07] of waiting two years?

[01:30:08] What is the upside

[01:30:08] of doing it now?

[01:30:09] I struggle.

[01:30:10] Unless you're playing

[01:30:11] the fundraising game,

[01:30:13] which is interesting.

[01:30:14] You can play that game

[01:30:14] and take it.

[01:30:15] Playing it.

[01:30:16] Exactly.

[01:30:16] According to you,

[01:30:17] they're not playing it.

[01:30:19] If you're not playing

[01:30:19] that fundraising game,

[01:30:20] what is the upside?

[01:30:21] It just seems like expensive

[01:30:22] because you think about

[01:30:23] all the,

[01:30:23] it's a complexifier.

[01:30:25] And you use the words

[01:30:26] of Jeff Bezos.

[01:30:27] It's a complexifier

[01:30:28] for their business

[01:30:31] and not just technically

[01:30:33] from like an infra perspective,

[01:30:35] but also from like a operational

[01:30:37] business operations perspective.

[01:30:39] And it's not clear

[01:30:40] that the reward,

[01:30:41] that there's something

[01:30:42] worth winning

[01:30:42] on the other side of it.

[01:30:45] That's one perspective.

[01:30:47] It's the most profitable.

[01:30:47] So there's definitely

[01:30:48] something worth winning.

[01:30:49] So for sure,

[01:30:51] there's something to it.

[01:30:52] No, no, no, no.

[01:30:53] It's the most profitable

[01:30:54] in the abstract.

[01:30:56] It's not,

[01:30:57] it's the most profitable

[01:30:58] in the abstract.

[01:30:58] It's not.

[01:30:59] The podcast is abstract, though.

[01:31:00] No, market specifically,

[01:31:02] the question you have to ask

[01:31:03] is it profitable,

[01:31:04] market specific.

[01:31:04] In the abstract,

[01:31:05] it's profitable.

[01:31:05] If you look at

[01:31:06] JPMorgan Chase,

[01:31:07] banks anywhere in the world,

[01:31:08] you see that, right?

[01:31:08] But if you look at GT Bank

[01:31:10] and look at how they make money

[01:31:11] as a percentage,

[01:31:12] it's not that profitable.

[01:31:13] If you look at

[01:31:14] other fintechs

[01:31:15] and how they make money,

[01:31:16] it's not that profitable.

[01:31:18] Look at them,

[01:31:18] pay so how they make money,

[01:31:19] it's not going on and on.

[01:31:20] And then you're saying,

[01:31:21] hmm,

[01:31:22] why,

[01:31:23] maybe later,

[01:31:24] maybe not now

[01:31:24] because the ground

[01:31:25] hasn't really settled.

[01:31:26] Like if we had it

[01:31:27] three years ago,

[01:31:28] would there have been a good idea

[01:31:29] that's what I would say?

[01:31:30] Can I do it any better?

[01:31:31] Why?

[01:31:32] I'm putting that as like

[01:31:33] a straw man argument,

[01:31:34] by the way.

[01:31:35] I'm curious what you think about that.

[01:31:36] That's a straw man.

[01:31:37] I'm going to answer the question

[01:31:38] in a very long-winded,

[01:31:39] orthogonal way.

[01:31:40] I have a,

[01:31:41] if you listen to our

[01:31:42] WealthTech episodes,

[01:31:42] I have a whole list

[01:31:43] of every possible way

[01:31:44] a consumer fintech

[01:31:46] could make money

[01:31:47] and then we'll talk about

[01:31:48] which ways are more attractive

[01:31:49] or not attractive.

[01:31:50] I'll blow through this

[01:31:50] in five minutes

[01:31:51] and then I'll answer

[01:31:52] the question at the end.

[01:31:52] Okay,

[01:31:53] so personal finance OS

[01:31:55] aka WealthTech

[01:31:56] aka Consumer Fintech,

[01:31:57] how do you make money?

[01:31:58] Well, all the different

[01:31:59] entry points.

[01:31:59] The first category

[01:32:00] is deposit accounts monetization.

[01:32:02] They already do this

[01:32:03] but there's some sub-aspects.

[01:32:05] Net interest margins

[01:32:06] are bread and butter.

[01:32:07] They don't do recurring

[01:32:08] subscription fees.

[01:32:09] Obviously,

[01:32:09] no one is going to pay.

[01:32:10] Interbank transfers,

[01:32:11] they basically do it for free.

[01:32:13] ATM fees,

[01:32:14] obviously,

[01:32:14] they don't do that

[01:32:14] because they don't have

[01:32:15] a virtual account product.

[01:32:16] Interchange revenue

[01:32:17] doesn't really work

[01:32:17] outside of America.

[01:32:19] It's capped in a lot of places.

[01:32:20] It's very low in Africa.

[01:32:21] Okay,

[01:32:21] next thing is lending

[01:32:22] but it's lending

[01:32:24] slash credits

[01:32:24] slash BNPL

[01:32:26] slash mortgages

[01:32:27] slash credit cards.

[01:32:28] Even under lending,

[01:32:29] there's all these

[01:32:29] different categories

[01:32:30] which are sort of different.

[01:32:31] Like mortgage is asset-backed,

[01:32:33] right?

[01:32:33] You can do something like that.

[01:32:34] Credit card is whatever.

[01:32:35] Shout out to Newbank,

[01:32:36] they made it work.

[01:32:37] BNPL is for the merchants

[01:32:39] so you can potentially

[01:32:40] make a lot of money

[01:32:40] but they don't really

[01:32:41] work with merchants,

[01:32:41] they work with consumer.

[01:32:42] And then lending

[01:32:43] slash loan interest

[01:32:44] is a core one

[01:32:44] that fair money does,

[01:32:46] credit tax does.

[01:32:46] So I would say

[01:32:47] under that category,

[01:32:48] the one they could

[01:32:49] potentially do is lending

[01:32:50] but we'll come back to that.

[01:32:51] But the other ways

[01:32:51] they could make money,

[01:32:52] investing monetization.

[01:32:53] They do a little bit

[01:32:54] of this today

[01:32:55] but if you look at

[01:32:56] pure stock trading,

[01:32:57] I mean Bamboo,

[01:32:58] Shaka, Trove,

[01:32:59] they charge 1% to 2% commissions.

[01:33:01] I mean it's unheard of.

[01:33:02] Not 0.1%,

[01:33:03] 1% to 2%.

[01:33:04] So they could do

[01:33:05] a little bit more of that

[01:33:06] because right now

[01:33:06] they're just getting the spread.

[01:33:07] They're not really saying,

[01:33:08] oh,

[01:33:09] does Bankoli want to buy

[01:33:10] Amazon stock?

[01:33:11] They're saying,

[01:33:11] does Bankoli want to buy

[01:33:12] corporate debts?

[01:33:13] Which is,

[01:33:14] it's an investment

[01:33:14] but it's like a,

[01:33:15] it's an aggregated

[01:33:16] mutual fund debt offering

[01:33:18] which is different

[01:33:18] than individual stocks.

[01:33:19] So the different things

[01:33:20] they could do there,

[01:33:21] that already to me

[01:33:21] sounds way more attractive

[01:33:22] than lending.

[01:33:23] Second piece is crypto trading.

[01:33:25] I wouldn't even touch that

[01:33:25] but hey,

[01:33:26] I mean it's not legal,

[01:33:28] it's sort of illegal,

[01:33:29] it's frowned upon,

[01:33:30] government doesn't like it.

[01:33:31] There's all sorts of stuff

[01:33:32] around that I wouldn't touch.

[01:33:33] Next thing is remittances.

[01:33:34] They're doing remittances.

[01:33:35] SendWave makes a shitload

[01:33:36] of money off remittances.

[01:33:37] Chipper Cash makes

[01:33:37] a bunch of money off remittances.

[01:33:39] Again,

[01:33:39] that to me is way more attractive

[01:33:40] than lending

[01:33:41] but I hate consumer lending.

[01:33:42] What else?

[01:33:43] Insurance monetization,

[01:33:43] that's just referral.

[01:33:45] Advertising,

[01:33:46] that's fine.

[01:33:46] Referral and transferring people

[01:33:47] for other services,

[01:33:49] data monetization,

[01:33:50] whatever advertising.

[01:33:51] Basically to summarize,

[01:33:52] if you ask me,

[01:33:53] the most attractive places

[01:33:54] that I would look to

[01:33:55] if I were them

[01:33:55] would be stock trading

[01:33:58] and remittances

[01:33:58] and then last would be lending

[01:34:00] and if I did lending,

[01:34:01] I'd do it for merchants

[01:34:02] or business people,

[01:34:03] entrepreneurs on my profile,

[01:34:04] not regular consumers.

[01:34:05] Long answer,

[01:34:06] short answer is

[01:34:06] I wouldn't do it

[01:34:06] if I were them.

[01:34:07] I would do it as a third wave.

[01:34:09] I just think it's so much easier

[01:34:10] to make money

[01:34:10] through remittances.

[01:34:12] Obviously you need to get

[01:34:12] the quarters,

[01:34:13] it's very competitive

[01:34:14] but they have users

[01:34:15] that want to send money,

[01:34:16] obviously.

[01:34:17] They're already in the app,

[01:34:18] they've already saved money

[01:34:18] in the app

[01:34:19] and then second,

[01:34:20] I'll do about stock trading,

[01:34:20] they're already doing investments.

[01:34:22] It's just a different type

[01:34:23] of investment

[01:34:23] which is equity in stock

[01:34:24] and then I would do lending

[01:34:25] but I'd do businesses

[01:34:26] and merchants first

[01:34:27] because in Africa

[01:34:28] there's a very minor difference

[01:34:29] between a regular user

[01:34:31] and like an SMB user

[01:34:33] on the app.

[01:34:33] I'm sure a lot of people

[01:34:34] using PiggyVest,

[01:34:35] they have businesses

[01:34:35] on the side

[01:34:36] and if you have enough,

[01:34:37] I mean really you need

[01:34:38] their transaction data

[01:34:38] for their primary checking account

[01:34:39] then I would offer that.

[01:34:40] So that's the answer.

[01:34:41] I wouldn't do it,

[01:34:42] I'm biased,

[01:34:42] I do those other three things

[01:34:43] and then eventually do it.

[01:34:44] It's way easier

[01:34:45] to set up remittances

[01:34:46] corridors

[01:34:47] and have partners

[01:34:48] and make money

[01:34:49] than to come up with lending.

[01:34:50] You may make less money

[01:34:51] but hey,

[01:34:52] Chipper Cash made a shitload

[01:34:52] of money doing it,

[01:34:53] SendWay made a lot

[01:34:54] of money doing it,

[01:34:54] I would do those first.

[01:34:55] And then the stock one is,

[01:34:57] I'm sure it's already

[01:34:57] on the roadmap

[01:34:58] because if you go

[01:34:58] on their app now,

[01:34:59] what they do is a little bit

[01:35:00] different than the way

[01:35:01] Bamboo and Chakad do it.

[01:35:02] That's my answer

[01:35:03] to your question,

[01:35:03] I wouldn't do it

[01:35:03] as a first wave,

[01:35:04] the risk is too high.

[01:35:05] They have so much

[01:35:05] consumer trust,

[01:35:06] consumer love

[01:35:08] and remittances

[01:35:08] and stock trading

[01:35:09] is something people want

[01:35:13] It's madness,

[01:35:14] the commission rates.

[01:35:15] It's all interesting.

[01:35:17] I'll come to lending last.

[01:35:18] On the stock trading,

[01:35:19] they have what I can argue

[01:35:20] is probably the better product

[01:35:22] which is

[01:35:23] they have a marketplace,

[01:35:24] people pay them

[01:35:25] for the privilege,

[01:35:26] just keep jacking up

[01:35:27] the prices

[01:35:27] and don't take any risks.

[01:35:29] Don't go find

[01:35:30] your own integration

[01:35:30] with DriveWealth.

[01:35:31] Don't argue

[01:35:32] the 1% to 2%.

[01:35:33] Make them pay you.

[01:35:34] That contract

[01:35:35] to structure

[01:35:35] whoever is in your marketplace

[01:35:37] is you have a lot

[01:35:38] of flexibility

[01:35:39] and range to structure

[01:35:40] that marketplace

[01:35:40] in a way that makes sense

[01:35:41] for you.

[01:35:41] Correct.

[01:35:41] But the demand

[01:35:42] is lower

[01:35:43] is the problem.

[01:35:44] Yeah,

[01:35:44] but we have to get

[01:35:45] at risk.

[01:35:45] Hypothetically,

[01:35:46] the problem is

[01:35:46] consumers want to invest

[01:35:48] in Amazon,

[01:35:49] Facebook,

[01:35:49] Google.

[01:35:50] Yeah.

[01:35:50] The offerings they have

[01:35:51] are not attractive enough

[01:35:53] to get a wide

[01:35:54] amount of customers.

[01:35:55] I'm not saying

[01:35:55] what customers should do,

[01:35:56] I'm saying what they want.

[01:35:57] So what the customers

[01:35:59] could want,

[01:36:00] so do you mean

[01:36:00] the customers want that?

[01:36:01] It is trivial for you

[01:36:02] to have a marketplace

[01:36:04] where Bamboo

[01:36:04] pays you money,

[01:36:06] one,

[01:36:06] advertising,

[01:36:07] to put Apple there

[01:36:08] where you go to Bamboo

[01:36:09] and complete the transaction.

[01:36:10] You don't even need

[01:36:11] to complete it.

[01:36:11] It's an API integration.

[01:36:12] Bamboo has B2B stuff

[01:36:13] and you just do the transfer.

[01:36:15] Click through,

[01:36:15] yeah, exactly.

[01:36:16] Or you can buy

[01:36:17] the Apple or Microsoft,

[01:36:18] all of that,

[01:36:19] without them taking

[01:36:19] any of the risk

[01:36:20] or any of the technological.

[01:36:21] Yes, it's perfect.

[01:36:23] They do that with the income

[01:36:24] and they do that.

[01:36:25] That's way better

[01:36:26] than lending to me.

[01:36:27] That's a marketplace

[01:36:27] implementation that I think

[01:36:29] that is not far

[01:36:30] for them to do.

[01:36:31] Yes.

[01:36:32] And also,

[01:36:33] on that one,

[01:36:34] they can do that

[01:36:34] as a testing ground

[01:36:35] and then depending on

[01:36:36] if they see growth potential,

[01:36:38] then they could transition

[01:36:39] from marketplace

[01:36:40] to do something more direct.

[01:36:41] It's never that direct.

[01:36:42] You still need some partners,

[01:36:43] but that all depends.

[01:36:43] But I would definitely

[01:36:44] start with that.

[01:36:45] That to me sounds

[01:36:45] way more interesting

[01:36:46] than trying to give people loans.

[01:36:49] That's the first

[01:36:50] on the thing.

[01:36:51] Remitant is interesting

[01:36:52] because on one hand,

[01:36:53] I like the idea

[01:36:53] of sending money

[01:36:55] to a savings account

[01:36:56] in Nigeria.

[01:36:57] The challenge is

[01:36:58] the customer acquisition

[01:37:01] is on the sender side

[01:37:04] and Nigeria

[01:37:04] is a receiver country.

[01:37:06] So,

[01:37:06] it comes on the sender side,

[01:37:07] it's a receiver country.

[01:37:08] So,

[01:37:09] what can happen

[01:37:09] is interesting.

[01:37:10] Like any microfinance bank,

[01:37:11] they work with the same

[01:37:12] remittance money transfer partners.

[01:37:13] I'm sure I should be able

[01:37:14] to transfer directly

[01:37:15] from Remitly

[01:37:15] to my piggy vest

[01:37:17] or for that to my piggy vest.

[01:37:18] So,

[01:37:19] I don't know how

[01:37:19] it's going to cost a lot of money

[01:37:20] to go market in Houston.

[01:37:22] Like,

[01:37:23] good luck.

[01:37:23] Maybe less so,

[01:37:24] but it's an interesting...

[01:37:26] Yes,

[01:37:27] you're right,

[01:37:28] but usually

[01:37:30] the sender is in control

[01:37:31] and the sender lives

[01:37:32] in America,

[01:37:32] Europe,

[01:37:33] whatever.

[01:37:33] But the person

[01:37:34] that wants to borrow the money,

[01:37:35] the collector,

[01:37:36] usually can pressure the sender

[01:37:38] to use a specific platform.

[01:37:40] Like,

[01:37:40] the sender cares,

[01:37:41] but not that much.

[01:37:42] Like,

[01:37:42] like if my mom says,

[01:37:43] oh,

[01:37:43] you must send money

[01:37:44] to my piggy vest account

[01:37:46] because piggy vest

[01:37:47] is going to give her more money.

[01:37:48] Of course I'll install it.

[01:37:48] I don't give a shit.

[01:37:49] Really?

[01:37:50] Do I care?

[01:37:51] I don't care.

[01:37:52] I think many people will not.

[01:37:53] I definitely will not install

[01:37:54] an account to send them money.

[01:37:56] Like,

[01:37:57] you're asking,

[01:37:58] you're saying that people

[01:37:58] will install a new app.

[01:37:59] Think about that for us.

[01:38:00] just for,

[01:38:01] even for their family members.

[01:38:02] Because the piggy vest users

[01:38:03] are in Nigeria.

[01:38:04] Your point is...

[01:38:05] I'm not a...

[01:38:06] Yeah,

[01:38:06] yeah,

[01:38:06] yeah.

[01:38:07] Like,

[01:38:07] bro,

[01:38:07] like that's not...

[01:38:08] Beggars can be choosers.

[01:38:09] But also,

[01:38:10] it depends on the fees.

[01:38:12] But I don't want to install

[01:38:13] more apps,

[01:38:14] to be fair.

[01:38:14] They can't,

[01:38:14] they can't,

[01:38:15] and they can't compete.

[01:38:16] They're just going to compete

[01:38:16] against like Tap Tap Send

[01:38:18] and Zeps Remitly

[01:38:20] and Sendwave.

[01:38:21] Those guys are

[01:38:22] and Send by Flutterwave.

[01:38:23] Those guys are killing...

[01:38:24] Flutterwave is Flutterwave.

[01:38:25] Have a headache.

[01:38:27] No,

[01:38:27] by the way,

[01:38:27] dude,

[01:38:27] Send by Flutterwave.

[01:38:28] Terrible app.

[01:38:29] If anyone is listening,

[01:38:30] guys,

[01:38:31] can you fix the app?

[01:38:31] It works only 50% of the time.

[01:38:33] Those are my people,

[01:38:34] though.

[01:38:34] Those are my people,

[01:38:35] send me your complaints.

[01:38:37] I'll send them.

[01:38:37] There are so many bugs.

[01:38:38] Okay,

[01:38:38] okay.

[01:38:39] Shout out to Boundary's people.

[01:38:40] Guys,

[01:38:40] please,

[01:38:41] so I have like a 99%

[01:38:43] success rate with Sendwave,

[01:38:45] but with a Send by Flutterwave app

[01:38:47] is like 50%.

[01:38:48] What's going on?

[01:38:48] I don't know if it's my bank account.

[01:38:50] I had issues with it

[01:38:50] and they stayed on with me

[01:38:52] and helped me fix it.

[01:38:54] I will have somebody

[01:38:55] email you directly

[01:38:56] and say,

[01:38:57] I don't want to send them anymore.

[01:38:59] I don't want to fix it.

[01:39:00] I know.

[01:39:00] I know.

[01:39:01] Anyways,

[01:39:01] say I'm partial.

[01:39:02] Everybody must succeed.

[01:39:03] Everybody must eat.

[01:39:04] The only people I hate

[01:39:06] that I still use

[01:39:07] is JTBag.

[01:39:08] I got JTBag.

[01:39:10] I got JTBag.

[01:39:11] Everybody else is fine by me.

[01:39:13] Everybody else must succeed.

[01:39:14] Everybody else must succeed.

[01:39:17] Yeah.

[01:39:18] See how many JTBag

[01:39:18] are paying their engineers.

[01:39:20] Anyways,

[01:39:20] not the point.

[01:39:21] Talking about the monetization angles.

[01:39:23] And then the last point I have

[01:39:25] is on,

[01:39:25] if you think about,

[01:39:26] so on the lending piece,

[01:39:28] the more I listen to you

[01:39:30] talk about it,

[01:39:30] it's just,

[01:39:32] what needs to be true

[01:39:33] for this to be a good idea?

[01:39:34] I have to believe

[01:39:35] that they have a better

[01:39:36] differentiated way of doing it.

[01:39:37] It's not data

[01:39:39] and it's not risk scoring.

[01:39:41] And if they believe

[01:39:42] that data is better,

[01:39:43] like that's what

[01:39:43] I would have to believe.

[01:39:44] And I don't see

[01:39:45] how it's better from the outside.

[01:39:46] It can't possibly be better.

[01:39:48] You need the person's

[01:39:49] primary checking account

[01:39:51] as the foundation

[01:39:52] for any data.

[01:39:53] Because think about it,

[01:39:54] first of all,

[01:39:55] everyone in Nigeria

[01:39:55] has multiple accounts.

[01:39:56] But let's just assume

[01:39:57] they have their primary

[01:39:57] checking accounts.

[01:39:58] That's why Kuda

[01:39:59] has an advantage over them.

[01:40:00] Because you need to see

[01:40:00] the inflows and outflows.

[01:40:02] Like,

[01:40:02] Bankoli earns

[01:40:03] XYZ thousand

[01:40:04] because we can see

[01:40:05] every 30th he gets that.

[01:40:06] He spends X percent on rents.

[01:40:08] That's the most important data.

[01:40:09] Everything else is trash.

[01:40:09] What if the person

[01:40:10] is saving X percent

[01:40:11] in the app?

[01:40:12] It doesn't matter.

[01:40:13] It's not the salary accounts.

[01:40:14] You need the salary accounts.

[01:40:15] And even that's not enough.

[01:40:17] Yeah,

[01:40:17] amongst other things.

[01:40:18] So,

[01:40:18] the lending for me

[01:40:20] is a bit

[01:40:22] what I have to believe

[01:40:22] they can do it well.

[01:40:24] And I cannot believe that.

[01:40:25] Maybe that's an interesting question.

[01:40:27] I just have to believe

[01:40:27] they can do it well.

[01:40:28] And I don't know.

[01:40:29] I think that

[01:40:30] if you give you and I

[01:40:31] $5 million,

[01:40:32] no,

[01:40:33] or just call it

[01:40:33] $2 million

[01:40:34] to go start a lending app

[01:40:35] in Lagos,

[01:40:37] will be started

[01:40:38] at the same point

[01:40:38] as PiggyVers.

[01:40:39] That's not a good thing.

[01:40:40] Do you see what I mean?

[01:40:41] Like if you had a big chest,

[01:40:42] if you gave a technical founder

[01:40:44] a big investment chest

[01:40:45] to start a business in Lagos,

[01:40:47] there's something that is similar

[01:40:48] or the gap between them

[01:40:49] and PiggyVers

[01:40:49] will not be the same

[01:40:50] based on data,

[01:40:51] access,

[01:40:51] things like that.

[01:40:52] That's what I'm really

[01:40:53] pushing back against.

[01:40:55] This is what could work.

[01:40:56] Number one,

[01:40:57] if they have a salary account,

[01:40:58] we already spoke about that.

[01:40:59] Number two,

[01:41:00] they have access

[01:41:01] to the credit bureaus.

[01:41:02] They used to be trash

[01:41:02] in 2020,

[01:41:03] 2021.

[01:41:04] They're getting better now,

[01:41:04] number two.

[01:41:05] And then number three,

[01:41:06] they need to use

[01:41:07] a third-party API provider

[01:41:10] that does all the phone

[01:41:11] signal stuff

[01:41:12] like what Branch does.

[01:41:13] So I'll be convinced

[01:41:15] if they have

[01:41:15] the phone signal stuff,

[01:41:16] which by the way,

[01:41:17] question mark it even works.

[01:41:18] But let's say that

[01:41:18] plus salary data

[01:41:20] plus,

[01:41:21] God, what's the third one now?

[01:41:22] I lost my mind.

[01:41:22] Okay, their own internal data,

[01:41:23] salary data,

[01:41:24] the signal data,

[01:41:25] that could sort of work.

[01:41:27] But even then,

[01:41:28] I would still give it

[01:41:28] to merchants.

[01:41:29] But you know what?

[01:41:30] You know what?

[01:41:31] The flip side of that is

[01:41:33] they have 5 million users,

[01:41:34] zero.

[01:41:36] Sure.

[01:41:36] It doesn't have to work

[01:41:38] that much.

[01:41:39] Right.

[01:41:39] Like if you get a slice

[01:41:40] of that,

[01:41:41] it's the 1% argument.

[01:41:42] It's a market size

[01:41:42] 1% argument.

[01:41:44] That's the worst argument

[01:41:45] to give.

[01:41:45] If you get a slice

[01:41:47] of that to work,

[01:41:48] you get,

[01:41:48] hey,

[01:41:49] that's it,

[01:41:50] long shots.

[01:41:51] They need better data.

[01:41:53] They need better data.

[01:41:54] The slice of that.

[01:41:55] No.

[01:41:56] If you have the same data

[01:41:57] as everybody else

[01:41:57] that works.

[01:41:59] This idea came from,

[01:42:00] you mentioned like

[01:42:00] a credit bureau,

[01:42:01] whichever they

[01:42:01] ostensibly

[01:42:02] have access to.

[01:42:02] Correct.

[01:42:03] So if you have

[01:42:04] the same data

[01:42:04] as everybody else

[01:42:05] and you have

[01:42:05] some set of

[01:42:06] data sets

[01:42:07] or process

[01:42:08] that works,

[01:42:09] their user base

[01:42:10] gives them,

[01:42:11] so invalidate

[01:42:12] my Ella point

[01:42:12] about starting

[01:42:13] from scratch,

[01:42:14] their user base

[01:42:14] gives them

[01:42:15] a trapped,

[01:42:16] a captive audience

[01:42:17] to sell these things

[01:42:18] to.

[01:42:19] So maybe that's

[01:42:19] their edge.

[01:42:20] They have cross-selling.

[01:42:22] Yes.

[01:42:22] If I have data

[01:42:23] that can show

[01:42:24] that someone's

[01:42:25] saving profile

[01:42:26] is highly correlated

[01:42:28] to their salary

[01:42:31] account data,

[01:42:32] I'll believe it.

[01:42:32] I just don't believe

[01:42:33] it's correlated.

[01:42:34] I just don't believe it.

[01:42:35] If I have,

[01:42:36] actually,

[01:42:36] I'm not even

[01:42:36] talking about that

[01:42:37] at all.

[01:42:37] If I have the same

[01:42:40] credit evaluation

[01:42:40] of Bank Oli

[01:42:41] as Fair Money

[01:42:43] and let's call it,

[01:42:44] assuming Fair Money

[01:42:44] is successful,

[01:42:45] has,

[01:42:46] if I can get to

[01:42:47] the same credit

[01:42:47] evaluation of Bank Oli?

[01:42:48] No,

[01:42:48] you only have

[01:42:49] the third-party

[01:42:49] bureau data.

[01:42:50] You don't have

[01:42:50] the internal data.

[01:42:51] Fair Money

[01:42:51] has all the internal data.

[01:42:53] Like,

[01:42:53] Fair Money knows

[01:42:54] the NPLs

[01:42:55] for someone

[01:42:55] living in Sur-Liri

[01:42:56] and it's 25 to 37

[01:42:57] on a Galaxy A55

[01:42:59] is this percent.

[01:43:00] You can never have that.

[01:43:01] Anyone can get

[01:43:01] the credit bureau data,

[01:43:02] but the internal data

[01:43:03] is,

[01:43:03] Fair Money is not

[01:43:04] going to give you that.

[01:43:05] That's their whole

[01:43:05] super special spice.

[01:43:06] Your point is only

[01:43:07] valid for third-party,

[01:43:08] but first-party

[01:43:09] is more important

[01:43:09] than third-party

[01:43:10] because third-party

[01:43:10] is publicly available.

[01:43:12] Why should Fair Money

[01:43:12] give you their data?

[01:43:13] Why are they in business

[01:43:14] if they give you their data?

[01:43:17] Yeah,

[01:43:17] if you assume

[01:43:18] that that is true,

[01:43:19] obviously,

[01:43:19] that's the only way.

[01:43:20] So,

[01:43:20] that's the only way

[01:43:21] to happen.

[01:43:21] If you assume

[01:43:22] that there's some,

[01:43:23] I mean,

[01:43:25] I remember this company,

[01:43:26] Juno or something.

[01:43:27] Everybody says

[01:43:27] they do risk scoring,

[01:43:29] AI risk scoring

[01:43:30] or something like that.

[01:43:31] It would have all

[01:43:31] the signals,

[01:43:32] right?

[01:43:32] Basically,

[01:43:33] offer it as a third-party API.

[01:43:34] That's fine.

[01:43:35] That plus the bureau is fine.

[01:43:37] It's still not enough

[01:43:38] because you still don't have,

[01:43:40] like,

[01:43:40] that's why Fair Money

[01:43:41] is an interesting position.

[01:43:43] They're able to raise

[01:43:44] enough money

[01:43:44] to build enough

[01:43:46] credit payment risk

[01:43:47] to get some profile.

[01:43:49] Cura is an interesting position

[01:43:50] because they have

[01:43:50] a salary account.

[01:43:51] They're interesting

[01:43:51] from different angles,

[01:43:52] but what's less interesting

[01:43:53] is,

[01:43:54] Bankoli saved $40,000

[01:43:56] last year

[01:43:56] and they give them a loan.

[01:43:57] What does that have to do

[01:43:58] with anything?

[01:43:58] What if you say $40,000

[01:43:59] because his aunt's

[01:44:00] giving them $40,000?

[01:44:02] Okay,

[01:44:02] let's talk about competition.

[01:44:03] Let's talk about competition.

[01:44:04] This is an interesting chat.

[01:44:05] Let's talk about competition

[01:44:06] and their options for exit.

[01:44:08] Anything else?

[01:44:09] Okay,

[01:44:09] cost structure,

[01:44:10] I mean,

[01:44:11] the same as every other,

[01:44:12] I think we can skip that part,

[01:44:14] just technological

[01:44:15] and for cost

[01:44:16] and then salary cost.

[01:44:17] I don't think there's

[01:44:17] anything special

[01:44:18] about their cost structure.

[01:44:19] In fact,

[01:44:19] the only thing I would say

[01:44:20] that makes it easier

[01:44:21] is because it makes it lower

[01:44:22] than other comparable companies

[01:44:24] is.

[01:44:25] They may not have

[01:44:26] as much infra cost

[01:44:27] as other people

[01:44:27] because the entire business model

[01:44:29] seems to be partner-led

[01:44:30] in that

[01:44:32] they're a marketplace

[01:44:33] or they're doing

[01:44:34] net interest margin

[01:44:34] and they may not even be

[01:44:35] taking that much risk

[01:44:36] themselves.

[01:44:37] It's basically just

[01:44:38] a lot of partnerships.

[01:44:39] All right,

[01:44:40] competition.

[01:44:42] Competition,

[01:44:43] options for exit.

[01:44:43] So competition is,

[01:44:44] if you've listened

[01:44:44] to any of our episodes,

[01:44:45] this is going to sound

[01:44:46] very similar.

[01:44:46] I'm going to break it

[01:44:47] into direct and indirect.

[01:44:49] We're going to start

[01:44:49] with indirect.

[01:44:50] I think the biggest

[01:44:50] competitor is actually

[01:44:51] just indirect competition,

[01:44:53] which is status quo,

[01:44:55] physical piggy banks,

[01:44:57] colos as they call them,

[01:44:59] informal savings methods,

[01:45:01] agile,

[01:45:01] all these weird,

[01:45:02] informal,

[01:45:03] shitty things people do.

[01:45:04] And for the audience

[01:45:05] who's not familiar,

[01:45:06] so colo is like a,

[01:45:07] it's like a piggy bank,

[01:45:08] but it's like a traditional

[01:45:09] when people use

[01:45:10] an actual physical thing.

[01:45:11] Agile is a bunch

[01:45:12] of people,

[01:45:13] like five,

[01:45:14] six,

[01:45:14] seven people,

[01:45:15] all saying,

[01:45:16] we'll contribute

[01:45:16] money and then

[01:45:17] each person will

[01:45:18] get it eventually.

[01:45:19] It's like a group

[01:45:20] savings plan

[01:45:21] where everyone invests

[01:45:22] X money every month

[01:45:23] and then by month X

[01:45:24] we'll get the total.

[01:45:25] So let's say,

[01:45:25] for example,

[01:45:26] there's six of us.

[01:45:27] I invest 5K,

[01:45:28] bank will invest 20K,

[01:45:29] 30K,