FinTech First: Interview with Sean Grossman, co-founder of Momo.credit

Listen to an interview with the co-founder of Momo.credit, Sean Grossman. Learn about the inception of his consumer FinTech startup and how he, together with his co-founder, scaled it from 0 to 1.

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The interview has been edited for clarity and brevity.

Eugene 00:00

Sean, welcome to The podcast. Today we are going to talk about mobile credit and how you found it, your path over the past year and a half. To start with -- can you share more on how you started Momo? I know that you are working on it very hard with your co-founder. And you recently had a ProductHunt launch and a bunch of other things. So how did you start the company in the first place?

Sean 00:29

First of all, thanks for having me. It is really awesome. And I really appreciate this.

I graduated from college a few years back, got really, really deep in the world of credit cards, and all my friends around me thought I was losing my mind. I was spending hours reading subreddits, analyzing most recent up to date rewards, and just getting really, really down to the gritty of it, where I'd say my friend was about to pay with a debit card and  pull back their hand and I'd be "wait a second, you have a credit card that's giving 3% back this month, let's use a different card".

And they got really annoyed. 'What are you doing?'

But what I realized with credit cards, and for a lot of my peers, what they didn't understand was just the way that we talked about credit cards. Right now, there's a lot of stigmas around them. We have this rise of debit cards that are credit or credit cards that are debit cards that act like debit cards, and we see this whole new journey of things, all of it coming to market, and what it really plays on are people not being financially literate enough to understand the benefits of credit cards, which was a really scary trend that we were seeing within the industry. So I built it using Microsoft Excel spreadsheet that you would upload your statements into. And that's what I did for all my different credit cards that I had, in that first year opening all these cards, I opened about 17 different cards.

Sean 01:52

So after I did that I was sending around this Excel sheet that all my affiliate links, because I recognized that the second way to capture money on credit cards was having friends sign up for them.

I sent around this Excel sheet where they clicked my link, and it told them which of the credit cards that I had, would be the best one for them.

And what I was doing at all - I was simply translating all these gamified rewards into quantitative numbers and hard dollars so that they can understand if you open this card, you would make this much money. And that was the genesis of Momo. And like you said, we've been at this for a year now.

Eugene 02:26

How does it feel one year later working on this idea?

Sean 02:29

It feels really good. There was a lot of learning very early on and a lot of hard lessons that we've learned and we're still learning and still learning to undo. But it feels great. I don't think we've ever been in a better spot with the company.

Eugene 02:41

What was the easiest part going from the excel to an actual mobile app?

Sean 02:46

So actually, there's one step before we went to a mobile app. When we launched Momo 1.0. It was this Black to White gradient web app at the time.

Eugene 02:57

I remember the TestFlight app, but I guess it was before?

Sean 03:00

I think The TestFlight came out in December. This was around maybe, June of last year. So even before we went full time on it was this black to white gradient screen which said, "give us all of your bank account information". People are 'Well, wait a second'. Nobody went through. I think we sent about 50 invites to our friends and we maybe had 13 responses.

They said, 'Allright, do you guys have any security practices in place, right? You're not just storing a user and password somewhere in the open, please let me know if I need to change my banking accounts'.

Then we realized that you can't build a consumer FinTech tool without design being at the very, very core of it. It was essential to the problem that we're solving,

Eugene 03:43

But did it work?

Sean 03:44

So the webpage did not work at all. We got about 13 users that went through after sending about 50 invites to people. But we realized that design was imperative. And then that the other trend that was happening in the industry was that more credit card applications were coming from phones and tablets, then they were from desktops at this point.

We decided that we're going to capture that trend. And we saw a huge opportunity to be on the mobile first for finding your next credit card.

Eugene 04:13

Nice. Let's go back for a second. I know that you have a co-founder Austin and he actually lives in Austin. So it's a great coincidence and I'm curious, how did you guys meet in the first place? Was it before the company or during the company's launch?

Sean 04:25

So me and Austin actually grew up together. We're both from Eastern PA. He was my childhood best friend. He went to school at University of Maryland. I went to school in Pittsburgh, the summer of our junior year in college we both moved down to DC I guess he didn't really move too far but I moved pretty far. Moved from Pittsburgh to DC and we lived together. We both knew we kind of wanted to start businesses. We didn't know the problem we wanted to solve but we knew a really bad way to start a business was to have no problem whatsoever. So we were waiting for the right problem to come and we were bouncing ideas off each other for about a year

Eugene 04:58

Was it during the pandemic or before?

Sean 05:03

Before the pandemic. Long story short, we are childhood friends, then he went to become an engineer for Airbnb in Seattle. I went to a Microsoft spin-out in Seattle. And then we were like, 'look, you know, it's time to take this thing to the next level'. And we went full time on Momo.

Eugene 05:18

Can you talk more about the decision going from the previous corporate job into the full time founder role?

05:24

Absolutely. There are two sides of it, the company was moving really slow. And it's really hard to iterate. We hired two interns that summer, and the interns were working really hard, but we didn't have enough direction for them. And by the time they were done, at an early-stage startup, things changed so quickly. So there was just the project, and we saw an opportunity here, we wanted to capture it, we wanted to be the tool that was doing this, and we just weren't moving fast enough.

From the decision to jump full time to jump full time on Momo on and what that really looks like from a personal level. We saved aggressively to be able to do it. We were bootstrapped. And we went full time on Momo entirely.

Eugene 06:06

Did you use your own product to save money?

Sean 06:09

Yep, we used my own product. In the first year of credit card churning, I made about  $10,000 in rewards, which was great. So it definitely helped being able to go full time on Momo. And so from the personal side, Austin was then working at a YC startup, getting more clarity on what he wanted to be in the startup ecosystem. I was trying to launch a startup partner program, an early partner program at Microsoft spin out, a company called Accumatica. And I loved what I was doing. And then one day, we had the interns out in Seattle.

And I remember I was just sitting there, 'wow, this is what I really want to do, I'm kind of wasting my time doing other things'. So with a lot of privilege and a lot of hard work, I was able to get there.

Eugene 06:51

Exactly, you are actually doing it now. So how different does it feel compared to what you were thinking before? Back when you were working the corporate job.

Sean 06:57

I thought back then I really knew business. And now I recognize I know absolutely nothing about business. And it's a learning curve, a very steep learning curve. But it feels great.

I would recommend to anyone who feels they're kind of stagnating at work to just find what is the most interesting thing they could possibly doing at the time and go after that.

And for me, that was starting a business and starting a business in the credit card space. It was a space that was super important to me personally.

Eugene 07:23

And they should use your product to save money to go.

Sean 07:26

Absolutely. They want to check it out for sure. It's available on the Apple App Store and the Google Play Store.

Eugene 07:34

I saw you did a ProductHunt launch. How did it go? I saw the app that you pushed up to the App Store. Looks like you are getting some early traction? Can you share any numbers behind the scenes?

Sean 07:46

So I won't go into raw numbers. But what I will say is that the ProductHunt launch went very well, we ended up getting featured in the newsletter. One of our biggest concerns prior going into the ProductHunt launch was we'd have a relapse of the same thing that happened when we launched that black light green screen where we would be sending it to people and no one wanted to link their bank accounts.

But we actually saw about 85% of our users linked their bank accounts and complete onboarding through Momo.

Eugene 08:12

Oh wow, that's really great!

Sean 08:13

Yes. Great numbers. It was our largest individual day of credit card signups ever in company history, too. So it is a massive win. And we're getting ready for the next step too, another launch coming up.

Eugene 08:24

Can you share more details on the next launch?

Sean 08:26

So what we're gonna be doing for the next launch is going to other forums that are common in the credit card space. Our thought process behind it started with Brocton, we wanted to start on those that are close to us.

We did a LinkedIn launch, a month back. And that was our most immediate network.

Then we went to a ProductHunt launch, which was a lot of startup founders who understand the startup ecosystem, understand what we're trying to achieve. Understand that sometimes buttons don't work exactly the way you want them when you click them.

And now what we're doing is getting ready to gear up on our Slash credit cards for a launch there. It's a community with about 825,000 people, and we'll be launching there at the end of this month.

Eugene 09:02

Congrats! Sounds like an amazing opportunity.

Sean 09:05

Yeah, I'm very excited about that. Very exciting.

Eugene 09:08

Okay, can you give advice to other FinTech founders in the consumer space? What kind of channels did work for you when you launched your product? And you mentioned LinkedIn, ProductHunt, Reddit, and others.

What worked well, what didn't work as you expect?

09:19

Absolutely. What works well is solving a real problem that is a hair on fire problem for people, if it's not a problem that people are actively looking for a solution for they might tell you, 'Oh, this is really cool. I'd use this. This is a really cool way to think about how much I'm spending on Starbucks every month', but it's not like they're actively looking for a solution in this space. It's, you know, unfortunately, just not going to make it because, it's not enough of an issue for someone to go to an app store download link. And then go through and utilize your app.

In terms of channels, what worked well for us - there was no single channel to be honest, and a lot of companies in the consumer FinTech space. And this is one of the earliest misconceptions I had about starting a consumer FinTech was that you're building this company that works for a certain person. But really what you're building is a brand, and so much that comes to every single brand having a different channel that works.

We can take, for example, Sequin, they were a YC W21 company that over Africa offered premium benefits for credit cards charging female audiences. And at first glance, well, this concept doesn't make sense to me. Why would you have a credit card that is simply offering, you know, its audience, females, and then I was thinking about it a little bit more.

And what I realized is that the way that credit cards are so often branded, is they're not towards a female audience. Even in our audience, we're seeing 88% male.

To summarize, building a product that specifically has a distribution search strategy, and feeling that resonates with a specific demographic is so essential.

Eugene 11:01

Yeah, we've seen the same thing with a bunch of neobanks especially in the consumer space.

Sean 11:05

Absolutely. You see, a lot of these neobanks come to fruition that have this background specifically, within a certain specific demographic in mind.

Eugene 11:13

Awesome. What is the next product expansion? In your case, you obviously got the footprint right, in a small part of the market, and you are growing. Also you are going to do this launch with the Slash and their 800K+ community next.

Can you share more, where you want to grow further, feature wise, product wise?

Sean 11:27

Absolutely. We want to get to the point where we are the most accurate way for you to get a credit card in there. And I would say by the end of this month, we'll be there. I feel very confident and transparent, saying that, right now we are the most accurate way to figure out which credit card will be best for you and your goals.

But we're not there just yet. We can tell you all this information. But we have not achieved the part where our users understand exactly why we recommend making the recommendations that we are.

If you just opened a credit card last month, why are we telling you "do not open a credit card this month", it's not very clear at the first glance, what your goals are, opening a credit card will be detrimental to them.

There's the right time for that. And so the next feature that we're looking to build out are those that help you understand what Momo is recommending. And so you can actually understand your finances and have this visual walkthrough because I don't think that's something that a lot of companies do well yet.

Eugene 12:18

Interesting. So can you explain this from the consumer's point of view? How would they go about it? How would you do a walkthrough? What do you think is gonna be the next thing?

Sean 12:28

Absolutely. So the walkthrough that we're implementing is very similar to the Spotify wrapped tour for the end of the year where you see all your music that you've listened to, you've seen how many hours you spend.

Eugene 12:40

That's smart.

Sean 12:41

And we want to give you that exact same feeling with your credit cards, and where you're spending your money, we want to tell you 'look, you spent $3,000 at grocery stores last year, this might be a card, an area where you want to prioritize getting a credit card that supports rewards in because right now, you're only making this much, or we want to tell you that, look, you've opened three credit cards in the past 12 months, right now, it might not be the right time for you to do it. Here's your most recent application. Here's how if you were to open a new credit card, we imagine it'll affect your credit score'.

Eugene 13:08

"Spotify for your credit cards".

Sean 13:12

Yes, pretty much. So that's the next wave to be. Spotify does a great job of telling you where you spent so much time on the app and where you're listening to your music. And that's something that we need to recreate. Because, until users can understand, and people can understand where they're spending the money -- why would they enter their credit card?

Eugene 13:29

How did you come up with this idea to actually show the breakdown on their spending? Did you do the interviews? How did you get this insight?

Sean 13:41

The way we got the inspiration for that was a lot of users would come onto the tool, there's actually one of my good friends:

Hewent through Momo. And the way that we're unfortunately conditioned to look at credit cards in the industry is they're just advertisements, right? You see a nerve wall ad, 'here's 60,000 free points'. And you think, 'is that even for me? Can I get approved for that? And we've sort of conditioned this industry in every consumer, to think that these ads are just lies.

That's what we've found was that when we were making these recommendations, we weren't showing the user how they were going to earn this money. We were just telling them, they would earn this money. And we need to help them understand how they're going to make it happen.

Eugene 14:21

Oh, that's interesting. Do you think you could change the perspective of seeing those ads and seeing those slides to actually getting actionable insights on what to do with the credit cards?

Sean 14:31

Absolutely. That's our goal. Our goal is to be placed as your bank. Right now banks have misaligned interest. They want to make money on fees, they want to make money on account balance, etc.

Eugene 14:41

On everything, yeah.

Sean 14:42

Yes, and we don't want that. We want you to make the most of your money. We'll charge the user a subscription for this. What we'll do is we'll help you become financially optimal without ever having to think about it.

Eugene 14:53

Let's go deeper on the business model. How do you plan to make money? You have  mentioned the subscriptions. At the same time get lots of data too. Also you other companies use ads on the other side. What are the channels you are considering to go with for the long term?

15:06

In the long term, yes, it's a user subscription. If you're going to pay $500 for a premium annual fee card, we charge a fee to make sure that that annual fee card that you're at least using it, and it will be worth it, and you're making money on it! And same as with the Truebill, to cancel your subscriptions, they charge you there. Same with us, we help you become financially optimal, we charge there too.

Eugene 15:31

Sounds like an Amazon Prime, where you need to have a buy-in to actually benefit from it and use it.

Sean 15:35

Absolutely, exactly.

Eugene 15:37

Do you have any aspirations to move into actually creating a credit card product later?

Sean 15:41

It's not something that we haven't talked about, but it's a big business within itself. Three years down the line, I won't be surprised if we have one. But in the next two years, I won't expect something like that.

I think the way that we'd actually go about it, is we would probably go down the debit card offering side, I don't think interchange is going to be something present here for many years. And I think even Visa and MasterCard are beginning to pick up on this trend. As we move towards DeFi which is coming in, I'm not certain that this will be the continued way to pay.

Small businesses don't need to pay 2.5% for using a credit card, that's something that we should. So I don't think interchange is a sustainable business model in the long run. But I think lending against your balance is, and that might be something we're interested in a few years, but again, not today.

Eugene 16:28

You talked about building a brand, right, and you have already a bunch of consumers sign up in the waitlist and using the app, congrats! What is the main common denominator between all those users who signed up and are using your product so far?

Sean 16:44

The common denominator that we're finding is from a demographic perspective, they're users that are financially literate, they understand their finances.

Starting with someone that needs a lot more coaching before isn't necessarily the earliest adopter of your product. It is where we want to get to, but not where we're at today.

Other common characteristics are the users who know that credit cards can make a lot of money, but they don't know how and investing hours to learn about it, it's just not what they want. You know, if you can get a recommendation that just shows you this is the one with the highest number in this earning and most rewards, we believe that's the kind of the future that they're leaning towards, as long as the users can understand.

Rather than reading this NerdWallet article, watch that YouTube video, or read this deep Reddit thread, that talks about all the different ways you can transfer these points. It's not what they want, the information just needs to come to you. And that's what I think a lot of our users are looking for.

Eugene 17:38

Last time we spoke, you have been talking about the Gen Z generation, about college students and so on. What is the average age of the user so far?

Sean 17:48

So the average age right now is about 28 y.o. We have about 60% male 40% female users. And we are looking to move towards Gen Z a little bit more.

Gen Z is going to go through this part where they right now have I believe, 1.8 credit cards, two credit cards, on average, and they're going to be moving away from their student cards, they need a card, they're right there ready for their first rewards cards at the very beginning of Gen Z.

So I'm 25 right now. And they're going to be looking to get into the first premium rewards card, the card that pays them for when they're traveling for work as a consultant, or in tech, you know, and we want to help them find their next credit card.

Eugene 18:27

Interesting. So this positioning, how is it going to impact your launch and growth strategy? You're going to launch on this huge channel with 825,000 people, right? And then moving forward, how do you plan to utilize this knowledge while addressing this need with your audience?

18:43

Absolutely. So in the long run, we'd hope to be the only FinTech app that you need to install on your phone.

18:48

Oh, the "super app".

18:48

Yeah, we want to replace your JP Morgan Chase app, we want to replace your Discover app, we want to replace your Truebill, we want to replace your Credit Karma. And we want to offer all this, you know, personalized information in the wrapper of Momo. So all this information for you and bringing centralized to us.

Eugene 19:14

Well, it's exciting and it has lots of potential. You already mentioned privacy aspects. I'm curious what are the next tech challenges that you've seen coming your way, building the product, the growth, scaling and other parts?

Sean 19:33

In terms of privacy we'd leave your data as your data. So we don't sell your data. We don't monetize your data. That's not our plan.

We're at an angle that we're really looking to take and I don't think it's the one that will age well either. So I think you know, the current companies that do that are in for a rude awakening. And then sorry, what was the second part of that question?

Eugene 19:55

Yes, as you scale your product, you're going to face different technical challenges kind of like the ones in the very beginning. I assume you are using Plaid and a bunch of other similar tools. And you are going to accumulate more and more data with time. At the same time you are on a great mission, to personalize the experience for the end user.

So my question is: 

What kind of challenges do you anticipate in the long run?

Sean 20:13

So there's some scaling costs when we're looking to integrate with Orem, I describe Orem as Bill Pay for plaid or plaid for bill payment, which will allow us to move money between your accounts. So there's some scaling costs there, we're in the process of becoming credentialed by the Bureau (CFPB).

We will have all this raw data, and we'll be able to see, okay, here's your history of credit cards and allow our recommendations to be much more accurate. We'll see if you have downgraded from a card previously, we won't recommend you the ones you won't be approved for.

And there's a lot of scaling cost of the data and acquiring that data. I think in the long run, there's an opportunity for us to rebuild some of that infrastructure in-house. But that's a five year plus mission.

Eugene 20:52

Yeah, that makes sense. And in the near term, do you see yourself working with B2B, or with other banks, and forming more close relationships, and actually letting users use credit cards?

Sean 21:02

Ah, no, I think we see ourselves in the long run as a consumer product. It's the niche that we're building out. I think maybe there's a B2B distribution angle that we could consider.

A famous example is Dropbox. Dropbox started as a B2C company. And then the founder realized the best way to build a B2C company was to have a B2B distribution model.

So I think there's a way that we can partner with employers to make sure that their employees aren't financially stressed, and anxious, worried about if they're going to be able to pay bills in between? And can they afford daycare? I think there's an angle for us to partner there. But no, not necessarily.

I think there's a lot of organic channels that we can continue to build on and we really like to get to this referral strategy, where people are referring their friends to the mobile app after they get value from the tool.

Eugene 21:50

So you mean a word of mouth? Or would you actually incentivize them to refer?

Sean 21:54

Incentivize, very similar to Morning Brew style.

Eugene 21:57

Exciting. It's funny that you mentioned the morning brew.

You have a huge competitor, a NerdWall and a bunch of other smaller ones, and they are all doing lots of different content, and you are really great with the product, technically, and you already have the traction.

Could you share more on your plan, and if you're going to step in the same kind of field with the content?

Sean 22:17

So the way these competitors make money is by removing clarity, that's not our goal, they have a lot of unnecessary information, in blue, that makes it really hard for you to decipher what actually is relevant to you.

Imagine, you just graduated college, and you're trying to figure out whether you should invest money first into an IRA, or you should move money into a 401K, and you read an article online, and it says a 401K is best thing in the world, and then you read a Reddit thread, and it says you need to be doing an IRA, or else you're going to mess up, and you'll never be able to retire.

We don't want to do that. That's not our goal. Our goal is to tell you, 'if you do this, you will be financially optimal and move your money in between your accounts'. So very much If This Then That for money movement will be a goal of ours.

Eugene 22:56

Interesting. So in the long run, do you see them optimizing this financially optimal state? Or is it going to be all AI/ML driven on your end?

Sean 23:05

Definitely some AI and ML driven on our end, absolutely, our model continues to grow, like you said, with the data that we're using. And we'll be able to see back from transactions as we get more access to bank accounts data.

We'll see and confirm that we're making the right recommendation and provide a positive pointer to our users legally.

Eugene 23:23

Awesome. I think we've touched on all the main points. Also last time we spoke you were doing the fundraising for your company, how did it go?

When will be the next round?

Sean 23:35

Oh, that's a good question. It's something we're not thinking about right now. And, you know, with our previous round, we realized that what we need to do is to build the company.

We had our successful raise, and I think we'll probably gear up to aim again, maybe at the end of the year. But it's really once we have the confidence that this is the right product in the right direction, and users, but short answer, maybe end of the year.

Eugene 24:01

Makes sense. Well obviously, you've seen what's happening in the FinTech space, in general, with the valuations, pre-IPO companies. What is your take on this whole situation?

Sean 24:10

It's not exclusive to just the FinTech sector. So at the stage we're at, it feels like valuations are a lot more art than they are science.

Eugene 24:25

That's a good one.

Sean 24:27

Later stage, definitely,  it's more of a scary time to be at, series A, series B FinTech companies, taking these valuations. I think, you know, we are seeing a market adjustment where maybe Klarna was super overvalued. And, you know, I think that's okay.

But then in terms of what we're doing even our end before we actually close the round, we decided that we really wanted to make sure that our earliest investors appreciable return multiples, so we actually decreased the cap in which we were raising it right before the Broncos game retroactively gave our investors the best price.

We want to be well positioned to go into this no matter where our clients

Eugene 25:05

And you did the pre-seed or seed?

Sean 25:07

Pre-seed.

Eugene 25:08

Great. So what are your recommendations to other founders in the consumer FinTech space, who are raising, let's say, this winter. What would you advise them to do?

Sean 25:18

Focus on metrics. I mean, if your business can't survive without metrics, it's going to be really hard to or without millions of users. That's the kind of the path where you have to build this FOMO business where you have all these users and no real metrics, and no real signs of growth, it's going to be really hard to raise.

But for those that are building these businesses that start by making $1,000, then move up to $10,000 and move up to $100,000. There's going to be someone that wants to invest in you now. So focus on the metrics, that's a big piece of advice I have for them.

Eugene 25:56

Great answer. I'm curious, in your case, do you track these metrics in the background? Do you have any special dashboards if it's more of a manual process when you go through the numbers?

Sean 26:06

In terms of how we're looking at our numbers, or our users?

Eugene 26:08

Kind of. How do you track your metrics, you obviously have lots of different data points, right, the MRR, the use of track should be obvious and basic ones.

Can you go deeper than that?

Sean 26:19

We use Pride to track our financials and our burn tool right out of the box, you see all the key metrics you need about your business. And in terms of user interactions, something that we would, it was one of the biggest mistakes we made with Momo, we didn't have very great tracking, even up to our product launch.

After the launch, we installed some great tools to help us understand our users a little better.

But previously, what we're doing is calling our users, they would get a text message from me. So even today, they're getting text messages from me where I'm just saying: "I really appreciate you checking out the tool, can I buy you a coffee for 15 minutes of your time?"

So I'd recommend every founder does that, too.

Eugene 27:00

That's the best way to talk to the users. Did you go with Google Analytics or something more specific for the tracking?

Sean 27:06

For tracking, we're using Mixpanel. We used Google Analytics. We're using Segment, we're using HotJar, we're using this awesome startup right now called Airsnap as well for mobile session replay. So I really recommend it to anyone who's starting in the mobile space.

Eugene 27:24

When users sign up, I checked out your application on the AppStore, the new one. And it looks like there is always, you know, with all the consumer FinTechs, you have to opt in right with the data point. I'm curious, do you utilize the analytics to understand that kind of final better, where in flow do they fall off and where do they continue to opt in?

Sean 27:42

Yeah, of course. Right now we are only focusing on the top of the funnel for someone to go all the way through with credit card science is something a little bit too far for us.

I think, starting with the top of the funnel is essential, especially for early stage FinTech founders. Get people to download your tool, once they start downloading your tool, get them to sign up for you, create an account. Very early with Momo, we actually saw people were downloading tools on our LinkedIn launch day, we had maybe a little under 100 downloads on post. And our conversion was about 30% from creating an account, and we were, 'well, what is going on here?'

Eugene 28:31

Wow, that's still really good for LinkedIn.

Sean 28:33

Yeah, we had sort of go all the way through sign up, download, and then they got to create an account and they just weren't doing it. And now we optimized that, we reworked how we were displaying information there. Now we're seeing all the way through the credit card sign, which is a few steps down, funnel even, or not starting our credit card account linking, which is a few steps down funnel we're seeing 82.5% of our users or about 85% of our users.

Eugene 28:58

Sounds like your strategy about the UX pays off.

Sean 29:00

Yes, absolutely. And being design-first, especially in the consumer space, is incredibly important. I'd recommend for early stage founders to just really, really understand the jobs to be on framework.

There's a book I'm actually reading right now and it's replaced my Zero to One as my best and favorite startup book. It's called When Coffee and Kale Compete by Alan Klement.

And anyone that's building in the B2C FinTech space should absolutely read it. It'll make a lot of sense so you know why I'm saying there's some total a giant market for sick when a month ago I was saying I don't know why someone built this company,

Eugene 29:33

Awesome, I'm going to include this in the description for the podcast.

Sean 29:37

Awesome.

Eugene 29:37

You mentioned Klarna and obviously their problems are not our problems which we are lucky not to have. But I'm curious about their product the BNPL - Buy Now Pay Later. It seems like you could have been perfectly positioned at some point to get in the same market.

There are a bunch of founders who have different opinions about this market. What is your take?

Sean 30:00

I really dislike the Buy Now Pay Later market. I think we are just marginalizing people that don't necessarily cut under pet stamp payments. And it's just what we're seeing for the market that led for Buy Now Pay Later even to exist was the requirement for having more flexible payment terms. There's, in my opinion, no reason for a company to exist solely to offer Buy Now Pay Later.

I talked to a founder in space a little while back. And you know, the original benefit that he talked to me about was the speed in which they can do the underwriting. So they don't need to do a full background check. They don't need to use a credit score, which was interesting.

But now, I mean, a few months later, we see what they're talking to the CFPB. And they're oh, you know, it would be really cool if we have zero data. We'd love to be more poor when people don't pay. So that argument kind of fell flat. Financial literacy is dwindling in the US. In 2020 or 2021, FINRA did a survey to analyze financial literacy. And we saw from people ages 24 to 35, I believe for that entire age range only about 17%, were able to pass a financial literacy quiz.

And then to offer a tool that makes it easier to overspend. It's entirely against what we're working for with Momo.

Eugene 31:11

Yeah. Sounds like you've picked the right mission.

Sean 31:14

Yeah, I mean, the consumer debt crisis is one of the biggest problems that you know, we're just not focusing on these banks that are making money off it.

Eugene 31:23

Let's go one level deeper then, what do you think about the upcoming recession? And then how can your product enable people to do better during these times?

Sean 31:31

When I actually started Momo, the pandemic first hit, I was working in federal sales in Washington, DC.

And I recognized that the other option for me wasn't just to get a job as a bartender, these bars were, you know, awkward. Very quickly, to figure out other ways I opened this credit card, I went down the same path that other people go down, opened the credit card that a friend recommended to me and I didn't make any money on the board. And I was like, 'Well, what the hell?', people were making 10s of 1000s of dollars and what I did wrong here? And I became really well researched in this space.

And we're going to have to be more diligent with our money, for sure. There's going to be new market opportunities. And I think Momo is an example, one of those that were born in the pandemic, I'd say focus again, very much so on building a business that does $1,000 in revenue before focusing on a business that does a million dollars in revenue.

I think, even with companies like Fast, that's not the way to go. You know, $600,000 in revenue, you know, almost a unicorn valuation. That's not how you build a real business. And what we're focused on is building real businesses, more so than we have been in the past.

Eugene 32:40

It's a really good answer. Love it. With ProductHunt, with Reddit, with a bunch of other channels, you obviously are exposed to the global community, and there are lots of people living outside of the United States, but so far, you offer only United States credit card products. Do you have plans to expand? And if yes, at what point?

Sean 32:59

Yeah. Credit cards are different all around the world. The US is a country that has gamification to the maximum level with credit cards.

So it's a very natural starting point, because there's a lot of need to understand what these words actually mean, and what the structure looks like in other countries. In India, this isn't the same structure that we're seeing. Going international is definitely a plan for us. And you know, I think even Canada and Mexico are really good opportunities for us.

The UK had competitors, like us, already in existence. The UK with open banking was a little bit earlier than the US. So I think we're seeing some trends that can be applied to the US right now. And, yeah, going international in the long run.

Absolutely. And in a near run in the next, you know, 18 months, I don't see it as something on the roadmap

Eugene 33:47

Hm could you utilize some of the open data from the open banking in Europe to actually improve your existing US models?

Sean 33:54

Absolutely, very much so. And even outside Europe, what we can do in the US is this is a trend that's happening, and one that's long overdue. At this point, banks will not get in the way of the government for requiring this, which is good and a great transition that we're seeing.

Eugene 34:08

Oh yeah, this is an old take and a long story.

Sean 34:12

It's an optimistic take, maybe. But yeah, I'm hopeful.

Eugene 34:18

I hope that it is going to be true. Yeah.

Sean 34:20

I am hopeful. I'm optimistic that it will be. And even with Plaid, I mean, could you imagine years ago you would be telling banks that every single person will be able to sign up to the bank with any Personal Financial Management (PFM) Tool there?

Eugene 34:32

It was almost impossible to talk about this topic for years. in Europe, it was more open.

Sean 34:37

So as this trend continues to happen, there's going to be more data that we're going to have access to and more ways that we're going to be able help our users and the UK, a more mature market in the space, as shown, you know, that they're so

Eugene 34:48

Awesome, great answers. We are almost at the end of our podcast. So any last words, any recommendations or advice to other FinTech founders in the consumer space?

Sean 34:57

Yeah, so I'll take a step back from consumer FinTech founders and just go founders in general to start, you know, if you're a founder, make sure that the issue that you're solving is the biggest issue in the world to you. Cause if it's not -- it is a long journey. It has ups and downs. It's hard. So if it's not an issue that you're super passionate about, the hard days will get the best of you. And when hard days start winning, and you stop having fun with it, it becomes really hard to start a company. So make sure you're building a business that you really care about.

In the consumer FinTech space, I'd say there's a huge opportunity to replace these legacy tools that aren't aligned with current business models, even from budgeting, we see this natural adoption from users that were using Mint previously to go into tools like Monarch money and Copilot. Mint offers the same functionality. But now you're able to no longer be beholden with banks and advertise your interest with consumers, which is awesome. So I think there's a lot of other areas in the consumer FinTech space that have opportunities for this.

Eugene 36:02

Awesome. Thank you so much for your time today. It's been a real pleasure to know more about your business and how you're growing. Definitely good luck with your next launch and thank you for your time.

Sean 36:11

Thank you. Great talking to you.

Eugene 36:14

Awesome. Thank you Sean!