- Financial freedom.
What if I told you there were people
with special needs out there
who can and should be able to live a full life
where they can fully participate
in their own financial lives,
whether it is the elderly, the autistic,
or those suffering from drug addiction,
or any kind of special need.
Those people have caregivers who wanna give them
as much freedom as possible.
What if I told you this wasn't just a big mission?
That it was a profitable business
and one of the only profitable neobanks?
Today, we're sitting down with my friend
and YC and Initialized founder, Kai Stinchcombe.
He's the founder and CEO of True Link Financial.
Today, he shares the lessons he learned the hard way,
so you don't have to.
Let's get started.
(gentle music)
(suspenseful music)
When you start out,
the most important thing is picking a unique customer
and a problem.
Some of the best startups begin
because of personal experience.
Kai's experience at True Link was exactly that.
Here's how he decided to work
on this very underserved set of customers.
- It came outta personal experience in my family
with my grandma's Alzheimer's.
As her condition worsened,
she was like really struggling to bank,
which is just like an inherent thing.
Like if you can't remember what you did yesterday,
that means you can't remember if you spent any money,
which means your budget is always full,
and that's like every person with Alzheimer's
will at some stage in their condition have that problem.
- But what happens when investors say something different?
They say, "We want you to be for everyone.
It's a bigger TAM."
I think that was one of the first counterintuitive things
Kai learned the hard way.
Just because an investor
looks for a particular characteristic
doesn't mean that is the only path to a big business.
- Our source of strength in that we don't have to go out
and try to be a better version of Chase than Chase is
which is like just really hard, you're boiling the ocean.
We have to find some stuff that Chase overlooked.
You know, Chase or whoever,
everybody else in the banking system,
which is like very easy
when you find an underserved audience
because most of their needs are overlooked.
- Don't boil the ocean.
There is a pro and a con to every decision.
In this case,
True Link selecting a specific underserved need
meant they chose a problem space
that was desperate for a fix,
and that was a very smart move.
- As a specialist, you should see
advantages in customer loyalty, in servicing costs.
You should be able to command a premium
relative to a generic provider.
You should see a distribution advantage.
There's like an intangible also,
which is it just feels really, really good
to be the best thing
for somebody who doesn't have that otherwise.
(light music)
- Once you have a specific problem
for a specific underserved customer,
you've got to totally understand what is going on
with that customer and satisfy them completely.
- The first thing we look for
in anyone that we're thinking about hiring,
especially for product candidates, but across the company,
is humility just because like if you are going
into this thinking you know all the answers,
you've just never walked in every single set of shoes.
And it's like, in order to serve our population,
we have to know about qualifying for benefits.
We have to know about checking into,
you know, recovery center for recovering from addiction.
We have to understand checking out of recovery.
We have to understand like the role of an in-home caregiver
in shopping for groceries
or what different types of residential facilities
are available to people who need different levels of care.
There's so much that we went in not understanding.
- But the payoff is huge
if you can find a scenario that makes a big difference.
For True Link, understanding recovery
means also that it can play a big role
in preventing drug relapse.
If you didn't start with a specific kind of customer,
you'd never make this kind of connection
or that kind of value for that customer.
- If you can prevent one such transaction,
where it's like somebody's like late at night
unexpectedly trying to get some cash out
and somebody gets a text message and is able to figure out
where their family member is and go like,
you know, sort of talk them off a terrible situation.
You're like, you know, there's people
who are like, "Oh my God, you like saved my life,"
which is just a neat thing to be able to say
as ultimately a financial services startup.
- That's what it looks like
when you've solved a real problem.
You can point to a concrete way
in which nobody else will do that and sometimes,
it's something so valuable,
it literally changes people's lives for the better.
That's the bar.
That's what we want.
(light music)
One of the key learnings
every FinTech investor has had at this point
is that cost of customer acquisition is king.
But again, if you have a specific underserved audience,
you can win big here.
- Especially if you're focused on an underserved audience
because if you don't have a distribution advantage,
you did it wrong, I guess.
If you are targeting the same customer everyone else is,
where you're like, oh, like we want
like affluent, two income young professionals,
and you're like, yeah, so does literally everybody,
so that's gonna be the most expensive customer
to advertise to on the internet.
And we're like, what if we want to go chase down
a million people with Alzheimer's?
Like who's advertising to that person?
How do people get in front of them?
Where are they hanging out?
Who are they interacting with?
Who do they trust and how do we build trust
with the people that are trusted by that affected community?
And that was super interesting and I think we have,
you know, some of the best,
I think we were the first neobank to cross profitability.
- The amazing thing about building products
is that when you get the target customer right,
that they're underserved and they have a real need
and you can solve it, that's priceless.
You can get in front of them for far less
and that means lifetime value, LTV, is super high
and cost of customer acquisition, CAC, is super low.
- If you think about like CAC and LTV,
ultimately it's a measure of how much value
you're able to bring to the customer
and how much they perceive that value
and how much of it you capture.
And the neat thing as a builder
and as somebody who's had this problem in my own family,
several of the problems that we solve
with different family members,
I think we provide actually so much more value
than what we capture, it's like a product that literally,
you know, has changed
hundreds of thousands of people's lives over time
and excited to bring it to millions.
- Low cost of customer acquisition, high lifetime value,
low CAC, high LTV.
If you've been following FinTech at all
in the past 10 years,
that is literally the only recipe that leads to success.
I love bringing concrete examples of startups
that illustrate exactly what you need to do
in your startup to grow.
True Link is changing lives
and they've built a profitable neobank off of this mission.
- So if you're out there watching and you have
somebody who has this problem,
if you have this problem yourself, visit us,
truelinkfinancial.com.
We solve it. We do a really good job.
We'd be delighted to help.
- That's it for this week.
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I'll see you next time.
(gentle music)