Friday, November 20, 2020
Interview with Joe Bayen, Grow Credit
For today's interview, we spoke with Joe Bayen, the CEO and founder of Los Angeles-based Grow Credit (www.growcredit.com), which runs a fintech startup which allows you to pay your subscriptions through a free Mastercard, as a way to boost your credit score. The company's venture backers include Mucker Capital and Commerce Capital, as well as angel investor Minal Hasan, of K2 Global Ventures.
For those not familiar with Grow Credit, talk about what your service does?
Joe Bayen: Grow Credit is the first platform to allow consumers to establish their credit, for free, using their subscription payments for services such as Netflix, HBO, or whatnot. We soon plan to let our users also build credit with their cell phone plan, whether that's AT&T, Verizon, Sprint, or T-Mobile.
How long has the service been around?
Joe Bayen: We launched the platform officially, with our free version, in December of 2019. Last week, we released our premium plans nationwide. That's a big event for us, and our performance has been fantastic. We also completed a partnership with Mastercard, where we signed a cobranding partnership with them this past August. Mastercard will support us with growth as we expand nationwide.
What's the difference between your free and premium plans?
Joe Bayen: The free plan restricts consumers to $15 a month that they can use towards their Netflix or their Spotify accounts. They use that plan to pay for subscriptions. What's interesting about that, is we are reporting those as installment loans, so over a year that's a $180 loan reported to the credit bureaus. Our service operates exactly like a charge card, like you would an Amex or other card, where a user must repay that amount on the 10th of each month. The premium plan increases how much you can charge, our $4.99 plan lets you charge up to $50 a month, and our $9.99 plan lets you charge up to $150 a month, and we apply those funds directly to your cell phone or cable bill, or other subscriptions. We also plan on adding DirectTV next month. The distinction between the plans, is the amount you can charge on them is more restricted in the free version than in a premium subscription.
How do the credit bureaus view that loan reporting you are doing?
Joe Bayen: We are a financial inclusion platform, which is why we partnered with Mastercard. They have a pledge to help minorities, and in particular they have an effort to help the Black community. That's where we have a common vision. We were created, primarily, to help assist students, millenials, and underprivileged populations in the US. Howe we operate with the credit bureaus, is we operate in between a secure credit card, and an unsecured credit card. We are extending an unsecured loan, which is delivered via a virtual Mastercard. The distinction between that, and a platform that reports rent, or something like Experian Boost, is those platforms are just reporting repayment history to a credit bureau, which has a pretty minimal impact on the credit scores that lenders are looking at. There is no loan extended to those consumers, so it's impossible to see if a consumer would overextend themselves. Because we are an actual loan, and extending credit to our users, there's a direct, and profound impact on their credit score. Under a four month plan, 81 percent of our users improved their credit score by 30 points. Experian Boost only delivers around 13 points. We found that over time, users with no credit history whatsovere see their credit score increase over nine months to between 620 and 720. We are observing that users who switch to our premium plan are seeing their credit score rise even higher than those on the freemium plan. We are the first, free platform which enables consumers to have a credit score on all three credit bureaus, which is different than something like Experience Boost, where the impact is only 13 points, and only impacts their score on one bureau, Experian. Our service impacts a user's score on all three credit bureaus.
Are users who use your service those that typically don't already have a credit history?
Joe Bayen: We have all sorts of users. Before COVID-19, there were a hundred million users with no credit files. That's actually increased dramatically since the coronavirus crisis. We are seeing all sorts of consumers with no credit, who are trying to build their credit score to buy a car or home, and consumers who are coming out of bankruptcy trying to rebuild their credit, as well. There's a wide audience of over 100 million consumers who need to grow their credit.
How did the Mastercard partnership come about?
Joe Bayen: It was a long process. We have been engaged with them for about a year. The reason we completed our partnership, is they saw us go through an enormous amount of hurdles to launch our platform, and partner with all three of the credit bureaus. We also make sure, from release, that we would be working with multiple bank partners. We partnered with MRV Bank, we completed our partnership with Blue Ridge Bank, we extended our service nationwide, all of those were solid validators to them. We were able to demonstrate that we could execute in what is a highly reglated environment, and partner with multiple banks and all three credit bureaus. Over the past year that they've been following us, we've essentially demonstrated that we could execute and complete partnerships, which solidified our position with them and made it easy to seal the partnership. It was a long, hard fought battle to get such a large brand supporting our initiative. Because financial inclusion is such a big part of what we are doing, it was a major victory, because it really helps us with getting consumers to trust our brand, and grow at a faster pace.
How much has the pandemic impacted your business?
Joe Bayen: We're very unique, I'm sad to say, in that the pandemic has been good for our business. We have a lot of consumers who are unemployed, and they still need to maintain their credit score. More importantly, is that it's now been demonstrated that during the pandemic, although most industries, such as spending on movies went down, music streaming and video has had usage which has gone up. Customers might be cutting their cable to same some funds, but they're not cutting Netflix or Disney Plus. Our platform enables them to build credit with their subscriptions, a major plus, and it makes a lot of sense during the current crisis.
Finally, what's next for you?
Joe Bayen: Conquer the world! (laughs). Actually, we will be launching a graduation credit card with MRV Bank, a $500 credit card to our users who have been with us for a year. That will be available to them as both a physical and digital card, with no restrictions. The difference between that and Grow's card, is ours is restricted for subscriptions. This one will be a full blown physical and digital card, which you can use at any store, online or physical. Next year, we'll be partnering with lots of corporations to offer Grow Credit as an employee benefit too. Those companies can offer Grow, and their employees can also upgrade to our premium plan, and receive a 20% discount. It's a win-win solution for the employers and their employees, allowing their employees to boost their credit card very efficiently. We are are planning on extending pretty aggressively next year, with large corporations, as well.
Thanks, and good luck!