Tech’s Hot New Market: The Poor
New Year, new attitudes, new opportunities
Do some good, profit a bit, reinvest, make some money to continue.
High tech guy takes a hard look at payday/micro loans.
But Vicki was in a bind. She couldn’t pull the money together to cover the unexpected expense. So she called Merrill, who gave her his credit card number. As the former chief information officer at Google, he could afford to foot the bill. But he was curious: What would Vicki have done if she didn’t have a well-off family member to turn to?
“‘I’d have taken out another payday loan,’” Merrill says she told him. “I thought it was unfair that she could call me and other people couldn’t.”
This is the origin story Merrill tells when asked how someone with his high-end tech credentials wound up starting a company, ZestFinance, to lower the cost of credit for so-called “subprime” borrowers like Vicki. What kind of loans? Payday loans. Kind of. Not really. But really.
Welcome to a complicated new world of smart, well-funded entrepreneurs doing what smart capitalists have always done: ferreting out an underserved market and serving it. But the market these startups have chosen stands out because of how starkly it contrasts with the privileged techie class seeking to profit off it: an industry awash in money deliberately targeting people who decidedly aren’t.
But don’t expect any apologies. Merrill and other startup founders like him see the reinvention of the payday loan as more than a good business opportunity. By shining a Silicon Valley-powered light into the dark corners of the financial services industry, they believe they can lift people like Vicki out of a cycle of predatory debt.