Active credit building, with Sho Sugihara

I’ve recently moved and now I have an electric stovetop, the old-fashioned type that stays hot for ages. When I inevitably place a stray hand on a still-hot plate, it’ll take my nerve impulses about 15 milliseconds to reach my brain, add a bit of processing time and allow for the return journey, and in under a fifth of a second, my hand will move away. The process is so fast because the brain wants to give my arm the instructions it needs while it is still useful to do so. Pave takes a similar approach to credit management.

Allow me to quickly repurpose that hotplate scenario: if you take an action today that will unknowingly harm your credit profile, it will take the ‘credit nerve impulses’ two to three months to reach the credit bureau, another month for the impact of that action to be reflected in your credit score for the first time, another couple of months to notice the downward trend, and then more time for you to investigate the true cause - so maybe six months.

That’s not fast enough to be useful, because even if you make a complete u-turn, you’ll have six months of negative impact still in the bank, as it were. So for the next sixth months, you’ll just have to trust that the compromises you’re making are paying off. That takes a lot of discipline. And it is worse than that because most of us have to follow a trial-and-error approach to credit building, so for many they’ll make the right change, see no impact, and try something else.

Sho Sugihara built Pave to try and fix this, providing credit feedback fast enough to influence outcomes, supported by human credit experts that remove the guesswork, and credit products that actively stop you missing a bill payment. Join us to learn more about the hows and whys.

You can learn more about Pave at https://www.paveapp.com/ (you’ll find a link for potential partners there, too, while their quite excellent blog is at https://www.paveapp.com/blog)

Or if you prefer the big social media platforms, they’ll be at LinkedIn / Instagram / Facebook / Twitter

And if you want to speak to Sho directly, you can find him on LinkedIn or email him at sho@paveapp.com

If your heartstrings were tugged, you can learn about The Big Issue here, while if it was your ambition that got all riled up, you can find Entrepreneur First here

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), while you can find my action-adventure novels on Amazon, some versions even for free.

If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Regards,

Brendan

The full written transcript, with timestamps, is below:

Sho Sugihara 0:00

The rocky four or five years macro-economically that we've gone through, in some ways that's forced us to stay super close to our customers, learning about the kind of generational psychological attitude towards credit that had changed. When we spoke to our customers, many of them would say things like, 'look, this data is helpful, but I don't really know what to do with it' or, 'frankly, I'm too busy and I just want to be told what to do' and then a really interesting one, 'when I actually do something, to improve my situation, I want recognition and no one gives me that'. And I think that's a really powerful insight, actually.

And as soon as we have been able to open a credit line to protect your bill payments, that data gets reported to the three major credit bureaus in the UK. And so that way, we're helping to improve our customer's credit utilisation and credit usage and history as well. We wanted to make it really easy for someone to start showing and sharing positive credit data through a product that you're comfortable using.

Brendan Le Grange 1:04

Give a man a fish, and you will feed him for a day. Teach a man how to fish, and he's still going to be hungry until he has a rod and bait. Welcome to How to Lend Money to Strangers, with Brendan Le Grange.

I love talking about tools that make credit information more accessible, more transparent, I really do think they can help consumers avoid expensive mistakes. But providing the information alone is not enough, which is why I'm excited by Pave and how they're closing the gap with active credit management tools that span the theoretical and the practical. Plus, with more responsive rewards for positive credit behaviours, we can hopefully keep momentum going long enough to overcome the inherent delay between credit action and any noticeable change in the credit score.

Sho Sugihara, co-founder and CEO at Pave - who are out there looking to create the world's best credit builder - welcome to the show. The cynical side of me when I see someone as ex-McKinsey is to visualise a certain type of corporate-minded person, usually in a suit. And I say the cynical side of me, it's no doubt clouded by the fact that they never offered me a job after my interview with them 22 years ago... but anyway, the point is that your background is very different to what we might think of, when we think of a typical big three management consultant, very diverse, and involves a lot of social engagement. So before we talk about how that social mission is embedded in the Pave app, could you start by talking about your background, and some of the projects you work on that maybe inspired the work that you do today?

Sho Sugihara 2:56

Yeah, absolutely, and thanks, Brendan, for having me on. Yeah, I'm Sho co-founder and CEO of Pave. As you mentioned, I've been really lucky to have quite a multicultural and diverse upbringing. I grew up in Japan - my mum's English, my dad's Japanese - so I was kind of instantly in a diverse family situation growing up there, until I was 16.

From an early age, I think was quite engaged with more social initiatives and activities. And so my my first job in Japan was helping with The Big Issue, which was actually a British firm or British NGO, they had their first international office in Osaka City, which is quite near where I grew up. And so I was helping magazine vendors who are homeless, kind of get back into the financial system by selling these magazines, which is the Big Issue's approach to inclusion. And that really helped me understand the importance of finance at its core to help society and anyone to be included into the system.

And after that experience, I went to a Canada to do my high school, or I guess sixth form if you're in the UK. Right after that went to Brazil. And I wanted to continue this track that I was on: using finance to encourage inclusion as much as possible. And so I worked there with an NGO working with underprivileged citizens in San Paulo city. And there I was involved in social work, but also delivering some of their conditional cash transfer programmes - so helping families keep their kids in school in exchange for zero interest... well, cash transfer, so it wasn't even really a loan. And again, that really just opened my eyes up to what finance could do.

I then went to university, but of course, you know, one has to take on a little bit of debt to get an education. And the primary reason for me joining McKinsey and Company, I would say, was - it is an incredible firm, and as you say, there are stereotypes around this, but what's amazing about McKinsey, I think, to shamelessly plug them a little bit here, is that the people that you meet there are some of the most inspirational/ entrepreneurial people you'll ever meet and it shows in startup unicorn founders, a lot of them are ex McKinsey, and I think there's a reason for that. I was there because I wanted to be part of that community ut also - frankly, I needed to pay off the debt and save up a bit of money to do my own venture, which I knew I wanted to do ever since Brazil when I was working for that NGO, and was inspired by the founder of that NGO.

And so yeah, I left that for three years, I learned a ton and co founded Pave back in 2017, to I guess, actualize my own take on how I think financial inclusion could happen. But this time in the UK, so yeah, that's my background.

Brendan Le Grange 5:30

Thanks for that. Yeah, I always like to start with a background question just for the general context, but in your case, I think it's doubly valuable to really talk about that social engagement, because I think it is such a key a part of what Pave is. But before we talk about what Pave is, maybe we could expand a bit on why Pave is - what was the big vision behind that?

Sho Sugihara 5:52

Yeah, I think the various things. I think one of the things actually was I needed to save up money. So that was a big part of it. But also, as a consultant, you don't get to 100% of the time work on projects that you think are maximal impact, or have always got a social inclusion motive to them. I did spend a lot of time in financial services and healthcare at McKinsey, because I did think those areas were most interesting for systemic change. Now, that said, I took the jump, once I had enough money to like sustain myself for about two years, which I thought would be enough to get the startup going and raise a bit of money.

But what was really interesting is when I met my co-founder at an incubator called Entrepreneur First in London, and where it really clicked. I didn't actually have a very good idea when I joined, but this is what Entrepreneur First specialises in: pre-idea founders. But I just knew broadly that I wanted to do something in financial inclusion, this sort of aha moment came when we had a hypothesis. This was 2017/ 2018. So, you know, Deliveroo was growing rapidly at the time. And we thought, interesting, let's chat to some gig economy workers. And so we used to mill about the areas in London, where there's a lot of restaurants that take deliveries, and we were approaching some of the riders and interviewing them and asking them about all their financial troubles.

And none of none of them trusted us initially, because they were like, 'who is this random person taking up my time'. So I actually ended up riding for Deliveroo myself, to get one of those jackets, so I could wear it and become part of the crew. And when I when I got that, we were able to interview a lot more people. Anyway, I started talking to this one guy in Shoreditch, and turns out, he was Brazilian. And it was super interesting to hear about his problems, because a lot of them were things like, 'it's a pain to do my tax return, it's a pain to manage my income volatility...' but it just brought home to me this point that actually, although a very different environment, and therefore a different persona, there's a lot of similarities between the financial exclusion I was seeing in Brazil, where there's a huge informal economy - that was actually my dissertation for university, I looked into that - but the same problem I could see being replicated in the UK. Just that in this case it was about people being invisible from a credit file standpoint.

And therefore, if you're a gig economy worker with volatile income, not getting access to credit, or only having access to quite expensive credit.

And that was the first insight that led us to thinking okay, how can we build products that work with the existing credit system, but try to make people less invisible. And so that was the, I guess, continuation of the journey, and also got me excited that this is a massive space that I would be very happy solving for however long it takes to build a really successful company in the space.

Brendan Le Grange 8:25

Yeah, I mean, the credit that's available is very expensive but it's also often exclusionary, in that traditional lenders, cheaper lenders will see somebody took a payday loan, and mark that against him. So even where they do appear on a credit file, coming through that route, it's often then the end of the road anyway. So there definitely needs to be that routine - I think that's a theme I've spoken about quite a lot.

You founded Pave four or five years ago, those four or five years have been very difficult for everyone. Hey, you mentioned gig workers, I think probably hardest hit when you think the the chaos of lockdown and what that's meant for a lot of people. I guess the good news or the silver lining there is that you've had those years to build up the offering. And now you're actually live in the market and helping as we hit this next crunch period.

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You talk about a 'proper path to good credit', and creating that for these 'invisible consumers'. In practical terms, what does that look like?

Sho Sugihara 9:34

So yeah, to kind of summarise our mission: we want to improve the credit health of millions of people by building the world's best credit builder.

And so how do we do that? We want to make sure people are on the proper path to good credit, which is our tagline. And I think when we started talking to customers, and first of all our customer base tend to be quite tech savvy Millennial or older Gen Z. And when you chat to them, many of their parents have gone through the 2008 financial crisis and credit crunch. And from that very traumatic experience, those parents have educated their kids to say, 'don't trust credit cards' or 'be wary of any form of interest-bearing products'. And it's very endemic in the mentality of that generation. I think it's 50% of this segment of the population don't trust credit cards.

So that's a really interesting insight. And what we wanted to do was then think about, well, people still want mortgages, right? Our customers still have long term financial aspirations, what can we do to design a product that feels fair. And so we first of all thought, okay, let's make a subscription-fee-based credit builder. That pricing choice was very deliberate. So that's kind of one way that we think we can bring more fairness and transparency to the system. But then specifically, there are two areas that we help you build your credit by. One is, we combine open banking data, which you know, the UK is at the forefront of that tech, which has been a great reason why we've built out the product here first, but we use open banking data to help you monitor your bill payments, and generally stay on top of cash flow. And we combine that with our app UI, but also a bunch of CRM, and helping you manage your bills, because if you're late on a bill payment that can damage your credit score - as a really good foundation. So trying to instil good habits as part of this sort of first value proposition subject to approval.

Of course, we are a regulated consumer lender ourselves, but instead of giving customers an unsecured line of credit where if they use it and are late on payments, we make money, we kind of turned that model on its head and what we do is, if you pass our affordability and credit checks, we will open a credit line that you can only use to top up your account if you're about to be late on a bill payment. And so a credit line that has really aligned incentives with your job to be done with building credit. And as far as we know, it's the world's only credit line that does that.

So that's our first approach, right? Just bills management, making sure you pay anything that is commitments on time. The second thing we do is we have a partnership with TransUnion to visualise your credit file and credit score insights. And we do a quite a bit of analytics ourselves on this data to help you figure out which actions you should take to most efficiently improve your credit score. And we visualise that in our app UI. But we also have a team of who we call credit experts who are based in the UK, they're online seven days a week. They're an incredible team that I'd say are absolute experts when it comes to credit building. And they can help you make sense of this data and take the right actions that you need to build most efficiently. And we're actually developing some additional products with this team at the moment, which are going to take that to the next level as well. So more more to come. But that's how our product functions today.

Brendan Le Grange 12:43

And that's really what caught my eye when we first started talking about this - that it's not just presenting the data, it's presenting the data and the solution, and the tools to make it make it right. So you do have a great blog and extensive credit library, so lots of material on there for people to read up on their own, but it's backed up by these credit experts. So it's not just here's your credit score and here's some things you can read. It's here's some people that can guide you through this, and some products that can make it right.

And my background is in the credit bureau world, when we started rolling out the service to see your own credit score, there were two options, there was the traditional route where you would come into the offices, you would sit down face to face with somebody and they would print out your your credit report, and they would go through it with you. They weren't at the level of a credit expert, you know, they weren't tasked with helping you plan your finances, somebody just explaining what it was how some of the data had come through, maybe what sort of product was generating it, just the basics. And the alternative was to use one of the many apps that would just tell you your score for free and maybe give you a few pointers, but it would be on your phone and for you to read. And even with that small difference - so not even at an expert level yet, just a helping human hand - we could see that two people with the same risk, the one who did it with the face to face performed way better than the one who got the score in an app; now the person who got their score in an app did better than someone who didn't have a score at all, so there's still lots of value adding, but it really does help to complete the picture.

And you know where you're building out is on that side more and more products to close that loop. So this I think is what makes Pave special is that here's how you can make it right, any of these clever credit lines that can actually stop you from missing the payment getting that black mark that might take a few years to fade away that might incur all sorts of fees, and then we'll help you correct those behaviours so it doesn't happen.

As you said, the mortgage, I think every interview I do when we talk about alternative credit., that's the big one, cost of capital so cheap at the banks, they're always going to be a part of our lives for that mortgage, which is one thing you know, almost all of us want so we do need to play into the system a bit. And I think Pave is an exciting way to do that. I assume then that was a very meaningful philosophy behind the sort of data and support approach, this wasn't just a bit of luck that it came up like that?

Sho Sugihara 15:04

Absolutely. And I think one thing I'm very proud of is that throughout the rocky four or five years macro economically that we've gone through, in some ways that's forced us to stay super close to our customers, given the high volatility that they're facing, to make sure we don't take any insight for granted over time. One of the insights that we uncovered was of obviously, there's a huge amount of apps out there like Credit Karma, ClearScore, etc, that are very successful businesses and help you make sense initially of what's on your credit file. When we spoke to our customers, though, many of them would say things like, 'look, it's helpful, but I don't really know what to do with this this data', or 'frankly, I'm too busy and I just want to be told what to do' and then a really interesting one, 'when I actually do something, to improve my situation, I want recognition and no one gives me that at the moment'. And I think that's a really powerful insight, actually. So beyond having an extremely intuitive UI, it sounds like people still need a large portion of education and bite size ways to encourage them to engage with this data. And of course, content is one way to do that. And I think NerdWallet in particular, is really good at this. And it's a kind of a publishing powerhouse. And I think you can achieve some degree of success from that. And also, you know, SEO benefits come with that too. But our approach was, well, there are ways to use one to one credit expertise to also help customers continue to engage with their data that doesn't have to be super expensive from a cog standpoint.

And so we have channels of communication like WhatsApp and email, we don't do calls except for, of course, customer interviews. And using those channels, combined with credit expertise, you can do a lot of education effectively. And we thought, okay, let's double down on this and differentiate our products, but also help our customers make sense of the data that they have and take action. And we're also, of course, you know, it's not just the credit expertise side, we're constantly developing solutions. And this quarter, actually, there's products coming out to like, make actions more bite sized, and help people feel rewarded by taking good actions for their credit health as well. So there's more to come on that front, on the tech side as well.

Brendan Le Grange 17:12

That's actually a really interesting point. Because, I often talk about credit scores and how it may be that people have become a bit fixated in the stress and feeling like they have to fine-tune and manage their score down to the individual point. But that glosses over some of these things that maybe you have missed a payment - how do you get rewarded for fixing your behaviour. And the fact is, sort of the maths of it, if you've got a recent missed payment there's very little you can do and see now that will be reflected in your score. There are these involved delays in the system. So your credit score today is calculated off of data that's two to three months old, going backwards. So even if you start changing your behaviour today, it could be a minimum of three months before it's even reflected in the data. And then because of the way the data works, six months, 12 months before you see the meaningful change, and you're into the prime sectors again. So it is a really good point that it's not naturally rewarded, it would be very, very hard to see unless they had, you know, 12 months of really disciplined behaviour.

And I think it's also interesting to hear you've got UK-based humans getting involved. And for me, that's also very pleasing. I hate a chatbot experience, but I understand that it's really cheap, and can probably clear out a lot of requests that clog up the system traditionally, but you've not gone the easy route of saying, well, let's just get some AI in and send out a few automated WhatsApp messages, you've got people in there and you've found a way to do that cost effectively.

If I spin on that a bit, usually the product will be sold on 'here's a free tool for you to help fix your credit, and because it's free, your data is the product'. So they may be selling you as a lead to somebody who issues a credit card or a personal loan. And they might have the best intentions. And they might work very hard to make sure the product they recommend for you is the one they think's best suited for you, but it creates this temptation to start getting bonus payments from providers. Or they're giving you this free data, it's useful to you, but they're also trying to sell you a product through that. And the Pave approach seems quite different to that - you've got very delineated businesses where you're serving the consumer on the one hand, and the consumer's paying you for a service and you provide that service to them. And then you do also help businesses but it's entirely different, you're not placing products in the marketplace and providing an opportunity for your credit card to sit on top of the offering.

Sho Sugihara 19:45

Yeah, so as you mentioned, there's there's a lot of insights around - I think at the foundation, and why I started with our pricing example - you have to design products that have incentives that are aligned with your customers', especially in FinTech. I think increasingly the next generation and next wave of consumers is going to demand higher and higher standards from their providers. And so yeah, we take that really, really seriously.

And so pricing is one thing, but also what you just mentioned around some consumers have expressed to us that a credit score plus lending product marketplace model doesn't quite sit well with them not because just you know, the insights are sometimes insufficient for them to take action, but also because consumers are savvy, right, they know what's happening, they know that someone is making money somewhere out of them by introducing them credit products, and they often don't like that experience. If you've got bad credit, you've signed up for one of these products, and someone's trying to sell you more credit, tat's not a terrific experience as a consumer.

So I think it's all about a foundation of trust. And we go as far as saying, if we can't build your credit score after 12 months, which, you know, is quite a short time for credit building, it's a multi year journey, but yeah, if we can't, then we will refund you the money that we've charged you. So we go as far as that. And then from the conversations that we have with customers, we developed out the solutions based on those insights. So the personalised credit fixes is one component of what we do, which is the component that, you know, we provide the personalised actions prioritised to your credit file coupled with credit coaching, because we know consumers need support that is a step beyond just showing pure insights. That's the first thing. And then of course, I didn't mention this earlier, but we do have a phrase internally called 'active credit building' which is thesecond component of what we do around that bills, tracking and opening that credit line. And as soon as we have been able to open a credit line to protect your bill payments, that data gets reported to the three major credit bureaus in the UK. So that way, we're helping to improve our customer's credit utilisation and credit usage and history as well. That's the second thing, we wanted to make it really easy for someone to start showing and sharing positive credit data through a product that they feel comfortable using.

And then yeah, finally, the thing that we also have been working on is just ongoing bills, management, and CRM around open banking data insights to power our products overall. And those are the approaches that we've taken based on the understanding that we have about a particular customer base and what they want.

Brendan Le Grange 22:11

And in terms of the response you're seeing there, how that's changing people's scores, how it's giving them access to cheaper credit, how it's, I guess, just building that confidence. I think there's the problem of access to credit. But there's also the problem of the way that it can feel quite personally judgmental, people avoiding conversations that they should be having with their banks, that they could be having with their banks, because they're unsure, they're unconfident. And so I think there's a lot of spin-off benefits. Have you had any customers tell you how Pave has improved their financial lives?

Sho Sugihara 22:46

Yeah, so obviously, this is the best part of the job, right, getting direct feedback. And we've received like quite long emails from customers explaining exactly how we've benefited them. And those really are just the best parts of doing the job. One recent example I can share, I can't share the name but there was a student who was very proactively building their credit score for someone that age - which actually we see a ton of, Gen Z are super financially aware and actively and proactively trying to prepare their finances for any future purchase - and the student was working with us, he was a subscriber to our products and we managed to boost his credit score to, on the Experian gauge, to be above 900 after a few months of usage. And basically he was building his credit score, because he saw a lot of his friends get rejected from credit cards. And actually, he then managed to get access to a relatively low APR credit card as a result of using our services, which we were super proud of.

And there's many, many more stories like that, that we've managed to play a part in. And then in our Trustpilot reviews, there's loads but the ones that make me really happy, and I've got a few here, are the ones that are clearly feedback on the differentiators that we have right, like the ones that talk about how I can give you one quote, "they have great helpful and professional customer service representatives". We we take pride in that, right, that not many people say the same of other providers in the market, I think and that's great, right? It's just a clear differentiation. Another one that I really liked. "I'm now far more financially aware and look forward to another great year of credit building". Like, who says that?! That makes a ton of difference when there's evidence there that we've made a difference in terms of consumer awareness. It takes a lot of time and building expertise to achieve that. So we're very proud of that. It's not just about relaying information, it's helping customers make sense of it and then create habits on an ongoing basis.

Brendan Le Grange 24:36

I guess in the past, we've just accepted in the credit world that yeah, consumers will sort of work out what's happening, but it takes a lot of work to build a score simulator. I've been involved in a few projects in the credit bureaus, where we built a score simulator to say, if you take a credit card out for the £1,000 limit, this is how your score will change. That involves a lot of our scorecard builders thinking very, very carefully about how they're going to work that out, because even the experts couldn't easily tell you 'this one behaviour will have this impact' because it rolls-up weighted impacts of previous histories, taking out a product might have a certain impact on you, but then having more credit limit available has a different impact, all of these things bump into each other, and we just leave it to the machine and it does its job. But when you're trying to encourage credit building, if you say... well, there's some obvious ones, like pay your bills, but other times consumers are going to see their scores go up a bit, go down a bit, go up a bit. And I can see people losing the motivation, because you could keep three months of really good behaviour and it's not impossible your score goes down nonetheless.

So what you've done is create, with this information, a much clearer link to these are the behaviours to do, here's a path towards it, here's a timeline to track over, you can build rewards of that behaviour that work better than the credit score, so that that behaviour keeps up long enough for the credit score to catch up as a credit score will reflect that behaviour, but it might take it a year.

When I think there's been this transition driven by the likes of Credit Karma, where the awareness, the public awareness of a credit score and managing the credit score spiked up very quickly. But us in the credit bureau industry, didn't really change how we did business. So yeah, we made the score available to you to look at, but it's still calculated in the same way. And the way it's calculated isn't necessarily a perfect way for the modern world. I know that you use a lot of Open Banking. But yeah, providing that wraparound data providing that wraparound care for the consumer, I think is something that perhaps should have been done in the past. But obviously, it's really good that it's happening now because as we said, we just right in the teeth of a cost of living crisis, you know, fuel prices are going up, we'll probably see interest rates go up at food costs are higher travel costs are higher housing is significantly higher than it was just a few years ago.

So really good to see that you've got a tool to help these young Gen Z and Millennial consumers to get on top of this, so that they're not wasting money, they don't need to waste on excessive APR on costs or late fees. And in building pay for consumers, you've obviously learned a lot about open banking, about credit data, and how to interpret that a lot of very valuable insights that you've generated internally within the pave team. And what I like, as I said earlier, was you are now serving business consumers as well, but in a delineated fashion. So it's not obviously the focus of today's discussion, but how have you turned that expertise that you've built handling credit data into a tool for businesses?

Sho Sugihara 27:24

Yeah, great question, and a really exciting one and timely as well. I can share as much as I can, at the moment, some of it's a bit confidential, but I'll give a give a sneak peek. So I think, as you mentioned, right, the last four or five years have been quite volatile for consumers. And what I've learned as a relatively young entrepreneur, in terms of my journey so far, is that when you see these types of extreme events, there's it's a cliche, but there's always opportunity. And to give you an example, before I answer your question, when we sat down February or March 2020, right at the start of COVID. And we were thinking what on earth, how on earth is this going to impact our product? We did a ton of customer interviews, and over the next few months learned that actually a lot of our consumers had more cash than they ever had before because of furlough and working from home. And that this was an amazing moment for them to be able to think over the long term about products like a mortgage. And actually there was super high demand for credit building, much higher than it would have been without COVID. So that was a super interesting insight that helped us grow our business.

Now, when we look at the income volatility that is going to happen, energy prices doubled here in the UK, and week and a half ago, it's probably going to go up another 50 to 70% in October. The obvious challenge becomes consumers to manage their finances but also when we look at our customer credit files, the number one reason for them damaging their credit files is missing that payments. The number two reason is missing bill payments - so utilities, etc. And what's really unique about our products is we have been working with credit file data and also open banking data since its inception. And then finally, as a lender on record, we have our own outcomes data from having helps people protect build payments through our through our own lending product.

When you when you combine those three datasets, there's some extremely powerful real time affordability and cashflow insights that you can generate. And to be honest with you, Brendan, we weren't going to do this until a little later but we have started developing B2B solutions that use this technology to help the overall financial system assess and treat and build customers in a much more fair fashion than, let's say, was possible before. And we're starting to productize these and yeah, I hope to have more to share soon enough with you, and you'll be the first to know. But it was always our strategy to start with B2C focus products and learn about what are the biggest problems, this customer bases, and then think bigger. If we want systemic change, what else can we do? And now we're at the cusp of launching this as part of our 2022 strategy. Sorry, to be a little cagey there...

Brendan Le Grange 30:42

No problem at all! Yeah, I'm excited to be keeping an eye on it. Sho it's been a pleasure talking to you, you've got one of those stories which I really liked, where entrepreneurs that have gone out and have spent a lot of time understanding the community and then built what they think is the best product for their community and, and built a business on top of it - and you've done it to great success.

If I look at the growth that you've already seen, and sort of the plans that you've hinted to, if you were to look back at that journey, and the four years you spent building Pave, you've got hundreds of thousands of customers, obviously getting great feedback from those customers, so you're doing something right. If somebody wanted to follow in your footsteps, if there was some smart, ambitious youngster sitting in the financial services, or I guess anywhere today listening and thinking, well, maybe they should take that leap and build a product for their community. Do you have any advice for them?

Sho Sugihara 31:40

Yeah, for sure. I mean, with the caveat that, you know, I think I have done a good stint as an entrepreneur but I'm definitely not the most accomplished out there, as of yet. I think there's a few things that really stand out if I were to reflect on my journey, I think the first one is: I wish I'd started sooner. I actually almost didn't go to university, and thought about launching what probably would have been an NGO, but staying in Brazil, and I had a job offer to do something like that, and to start creating new businesses for the people I was working with. And part of me wonders what would have happened if I'd done that, you know, Latin American Fintech is booming right now. Perhaps, perhaps the impact that we could have had would have been even bigger, who knows. I think it takes a lot of courage to do that. But I don't think there's been a better time to be an entrepreneur, it's just incredible how quickly you can get solutions up and running now. And the risk is so much lower than, I think, it was before. It's like an established career path now are the most ambitious people to go after. Just try it. There's minimal risk these days, I think.

And, you know, as you're doing that, definitely, we could have built our solution even faster and had much more impact had we just spent loads more time talking to customers. It's a mantra, that's cliche, but I really think it's an important one, you just have to follow your customers everywhere and understand their real time changing needs. And it just helps you build better solutions quicker.

There's a macro one, which I'll just plug because I think the other thing that you do hear a lot in startup is solve your own problems, because they're usually real problems. I think it's a great mantra, but I kind of add a qualifier to that: which is great if it is your own problem as well, but in a society where we're facing a lot of volatility and economic struggle, there might be problems that really matter that you yourself may not have experienced, but that are socially extremely important. And to solve for those solutions is much, much harder, because you have to understand the customer in a lot more depth and build empathy. But I think it's a much, much more meaningful angle to pursue. And so yeah, that's my twist on my slightly contrarian, I don't think it's actually always the best to solve your own problems, other people's problems can be really important, too. But it's a push that I'm trying to make for the next generation of entrepreneurs.

Brendan Le Grange 33:47

Well, I think that's a great message, because I think it also talks where these gaps get left. If I think about my career, and you know, you're working in a big corporate, you're getting promotions, you're getting nice salaries, all the traditional stuff you need. So if I look and think about access to credit, it's no problem because I can go and easily get a credit card. And okay, maybe somebody's got a kid who struggled to get their first credit card, but doesn't matter. We work in the bank. So you know, sign for little Johnny to get a credit card with you as a surety or to get their student loan. And that means you just naturally not going to bump up into some of these bigger problems. And it does then need that step back, and that bit of empathy you talked about, to say 'what about people who have problems that I don't have? What in the status quo that's so comfortable for us, what problems is it generating?'. And just because we've all got a credit card that we've had for a long time, doesn't mean everybody should follow in the footsteps and have to open a credit card to build a credit history to buy a house in the future.

Yeah, talk to the customer. I think it's a another great message because clearly you did that going as far as joining Deliveroo and embedding yourself in the community which is more than many would have done but really to try stet you've got, I guess, the problem solving abilities to do that, and not focus too much on the tech and really give yourself the time to do it to take that approach. And I think those are really good messages to people. And that confidence underlying it of there is this. Yeah, almost career path that now exists, there is a way to make it happen. You've obviously got lots of exciting plans yourself, you've obviously got big ideas in your in your head still, if people want to learn more, and they want to participate in this growth, we just want to keep an eye on what paves doing reps, the first one to talk about is just consumers, if consumers would like to benefit from your help in building their the good credit, where can they go to engage with payment, and to learn more?

Sho Sugihara 35:47

Yeah, 100%. So www.paveapp.com is our main website, it's definitely the best place to start. We have - I think I haven't seen anyone do this - but we benchmarked hundreds of people's data (with their consent, of course) to try and see for each credit score band, what kind of options and pricing you would get, and we just updated this. So there's a cool calculator, you can check to see how building a credit score can help you save money that just generally needs to be more transparency around what this could be. So stuff like that is all on our website. We're across most of social media channels as well - Instagram, Facebook, Tik Tok, etc. - so yeah, any consumer kind of related information is on our website. And also feel free to reach out to our team at paveapp.com. Our credit experts can also answer any questions.

Brendan Le Grange 36:34

Great. And then lastly, as I said, you've got some really great content on your website, you're working with a lot of affiliates and publishers and content creators to bring that pave message to the market. So if anyone from that world is listening, and they're interested in partnering with you, what should they know about getting involved?

Sho Sugihara 36:54

Yeah, we're always happy to work with people who share our sort of mission and values. We have our dedicated sections on the website for publishers or affiliates or creators to reach out with. If it's more on b2b services that I kind of hinted at earlier, feel free to just DM me, I'm on sho@paveapp.com. And we'd love to chat further as well.

Brendan Le Grange 37:13

Great. Sho thank you so much for making the time today. It is one of the more exciting projects I've spoken about for a while. So I'm gonna keep an eye on Pave's growth in the next year as well. So yeah, hopefully catch up again soon once some of these new products are rolled out. But good luck for all of that and great chatting to you as well.

Sho Sugihara 37:32

Thanks for the opportunity. Brendan, pleasure to connect.

Brendan Le Grange 37:34

And thank you all for listening. If you enjoyed that, please do rate and review on your preferred podcast platform and share widely including on LinkedIn. And while you're there send me a connection request. The show is written and recorded by myself Brendan Le Grange in Brighton, England and edited with assistance by Kane Hunter, show music is by Iam_Wake and you can find full written transcripts now in several languages, show notes and more content at www.howtolendmoneytostrangers.show. And I'll see you again next Thursday.