Devengo - Looking for gold among the ashes

1. Devengo Looking for gold among the ashes Aitor García Rey - @_aitor – aitor.is
2. 2019 In Spain, almost 6 out of 10 people fail to save ANYTHING each month. (5 years later is still +44%) Source: “Las pensiones y los hábitos de ahorro en España", October 2014 & November 2021, BBVA
3. Dissaving 2005 2008 2011 2014 0 10 20 30 40 50 32.5 30.7 34.5 29.3 Source: ”Economic and material wellbeing”, October 2018, The Social Observatory of La Caixa Foundation. % of people who live in households whose expenses exceed their income
4. Over-indebtedness 2005 2008 2011 2014 0 5 10 15 20 5.8 9.5 8.5 7.8 Source: ”Economic and material wellbeing”, October 2018, The Social Observatory of La Caixa Foundation. % of people who live in over-indebted households (spending +40% of their income on repaying debts)
5. LechazoConf 02024 5 How do people deal with debt? * Friends & Family * Micro-loans with outrageous interest rates * Revolving cards * Public subsidies & social programs
6. Salary Advance Providing liquidity to workers by leveraging their own earned wages as source of funds.
7. LechazoConf 02024 7 Why were advances not being used? * Obsolete payment flows * Complex authorization processes * Shaming culture * “Unwritten” company rules
8. LechazoConf 02024 8 Our value proposition * Real-time payments, 24×7×365 * 100% process automated process * Private, software mediated requests * Available for free to all workers
9. ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── │ ───────────────────────────────── ╭ ╮ ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──┼──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ │ ───────┬─────────────────┬─────── ╰ ╯ ╰ ╯ │ │ │ │ ────────────── │ │ │ │ ╭ ╮ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─│─ ─ │ │ ╰ ╯ ────────▽───────────▽───────────────▽─────────────────▽─────── ╭ ╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯
10. LechazoConf 02024 10 Sounds like a plan! * July 21, 2019 – Initial commit! * December 28, 2019 – iOS and Android apps approved. * January 2020 - Onboarding first customers * And then…
11. COVID-19
12. Lesson One Timing (and bit of luck) IS important.
13. ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ │ │ Devengo ├──────────▷ Customer ├─────────▷ Worker │ │ │ │ │ │ │ └─────────────┘ └─────────────┘ └─────────────┘
14. ─ ─ ─ ─ ─ ─ ─ │ │ ─────────── ────────── ┌──────────┐ ╭ ╮ ╭ ╮ │ │ │ Payroll │ │ │ │ │ │ Devengo ├────▷ Outsourcing ─────▷ Customer ├────▷ Worker │ │ │ │ │ │ │ │ │ ─────────── ────────── └──────────┘ ╰ ╯ ╰ ╯ │ │ ─ ─ ─ ─ ─ ─ ─
15. ╔ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ╗ ║ ─ ─ ─ ─ ─ ─ ─ ║ │ │ ───── ───── ────────── ┌───── ────┐ ╭ ◆ ╮ ╭ ╮ ◆ │ │ │ Payroll │ │ │ │ │ │ Devengo ├────▷ Outsourcing ─────▷ Customer ├────▷ Worker │ │ │ │ │ │ │ │ │ ─────────── ────────── └──────────┘ ╰ ╯ ╰ ╯ │ │ ─ ─ ─ ─ ─ ─ ─
16. Lesson Two B2B is hard. B2B2C is even harder.
17. ┌─────────────────────────┐ │ │ ┌─────▷ Banking Regulations ◁─────┐ │ │ │ │ │ └─────────────────────────┘ │ │ │ │ │ │ Devengo │ │ │ │ │ ┌────────────▽────────────┐ ┌─────────────▽───────────┐ │ │ │ │ │ Privacy Regulations ◁──────────▷ Labor Regulations │ │ │ │ │ └─────────────────────────┘ └─────────────────────────┘
18. Lesson Three Playing in a space subject to multiple regulated markets is a recipe for suffering.
19. LechazoConf 02024 19 Follow the money * We wanted zero disruption of cashflow for our customers * Funded the advances when our own capital * Recover the funds (+ service fees) at the end of the month * More success meant more fund sourcing problems
20. Lesson Four Working capital-intensive business models are constantly worsening traps.
21. ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── │ ───────────────────────────────── ╭ ╮ ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──┼──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ │ ───────┬─────────────────┬─────── ╰ ╯ ╰ ╯ │ │ │ │ ────────────── │ │ │ │ ╭ ╮ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─│─ ─ │ │ ╰ ╯ ────────▽───────────▽───────────────▽─────────────────▽─────── ╭ ╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯
22. ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── ╭ ╮ │ ───────────────────────────────── ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──|──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ ╰ ╯ │ ───────┬─────────────────┬─────── ╰ ╯ │ │ │ │ ────────────── ╭ ╮ │ │ │ │ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── ╰ ╯ │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─ ─ ─ ╰ ╯ │ │ ────────▽───────────────────────────────────────────── ╭ ────────╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯
23. Lesson Five Enterprise customers have massive gravitational pull and can easily transform you into a consultancy.
24. LechazoConf 02024 24 A reflection moment * Spent 2 years building the product… ½ * …just to discover that it took us in the wrong direction. * We were doing all the heavy lifting in multiple fronts (banking, labor & privacy)… * …and deploying it (too early) in a very narrow niche.
25. LechazoConf 02024 25 Time for a change! * Pivoted to Payments Provider on 2022 Q2 * Providing infrastructure to build upon * Harder challenges, more scalability * Special focus on EU and Instant/Real-time A2A payments.
26. LechazoConf 02024 26 Pivoting * “Changing the engines while flying the plane” * Wearing our customers’ shoes * Much more work than simply “starting again” * Finishing the process THIS summer
27. Lesson Six Pivoting is hard but it can truly be an opportunity. Do NOT burn bridges.
28. LechazoConf 02024 28 Promising signals * Moving a promising numbers: * Volume: Hundreds of thousands of transfers per month * Value: Dozens of million euros. * We are getting a PI license by Bank of Spain this summer after +2 years of process. * Doing it with a tiny team (7 tech members).
29. Thank you! 𝕏 @_aitor / aitor.is 𝕏 @devengoapi / devengo.com