Slide 1

Slide 1 text

Devengo Looking for gold among the ashes Aitor García Rey - @_aitor – aitor.is

Slide 2

Slide 2 text

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

Slide 3

Slide 3 text

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

Slide 4

Slide 4 text

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)

Slide 5

Slide 5 text

LechazoConf 02024 5 How do people deal with debt? * Friends & Family * Micro-loans with outrageous interest rates * Revolving cards * Public subsidies & social programs

Slide 6

Slide 6 text

Salary Advance Providing liquidity to workers by leveraging their own earned wages as source of funds.

Slide 7

Slide 7 text

LechazoConf 02024 7 Why were advances not being used? * Obsolete payment flows * Complex authorization processes * Shaming culture * “Unwritten” company rules

Slide 8

Slide 8 text

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

Slide 9

Slide 9 text

─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── │ ───────────────────────────────── ╭ ╮ ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──┼──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ │ ───────┬─────────────────┬─────── ╰ ╯ ╰ ╯ │ │ │ │ ────────────── │ │ │ │ ╭ ╮ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─│─ ─ │ │ ╰ ╯ ────────▽───────────▽───────────────▽─────────────────▽─────── ╭ ╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯

Slide 10

Slide 10 text

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…

Slide 11

Slide 11 text

COVID-19

Slide 12

Slide 12 text

Lesson One Timing (and bit of luck) IS important.

Slide 13

Slide 13 text

┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ │ │ Devengo ├──────────▷ Customer ├─────────▷ Worker │ │ │ │ │ │ │ └─────────────┘ └─────────────┘ └─────────────┘

Slide 14

Slide 14 text

─ ─ ─ ─ ─ ─ ─ │ │ ─────────── ────────── ┌──────────┐ ╭ ╮ ╭ ╮ │ │ │ Payroll │ │ │ │ │ │ Devengo ├────▷ Outsourcing ─────▷ Customer ├────▷ Worker │ │ │ │ │ │ │ │ │ ─────────── ────────── └──────────┘ ╰ ╯ ╰ ╯ │ │ ─ ─ ─ ─ ─ ─ ─

Slide 15

Slide 15 text

╔ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ═ ╗ ║ ─ ─ ─ ─ ─ ─ ─ ║ │ │ ───── ───── ────────── ┌───── ────┐ ╭ ◆ ╮ ╭ ╮ ◆ │ │ │ Payroll │ │ │ │ │ │ Devengo ├────▷ Outsourcing ─────▷ Customer ├────▷ Worker │ │ │ │ │ │ │ │ │ ─────────── ────────── └──────────┘ ╰ ╯ ╰ ╯ │ │ ─ ─ ─ ─ ─ ─ ─

Slide 16

Slide 16 text

Lesson Two B2B is hard. B2B2C is even harder.

Slide 17

Slide 17 text

┌─────────────────────────┐ │ │ ┌─────▷ Banking Regulations ◁─────┐ │ │ │ │ │ └─────────────────────────┘ │ │ │ │ │ │ Devengo │ │ │ │ │ ┌────────────▽────────────┐ ┌─────────────▽───────────┐ │ │ │ │ │ Privacy Regulations ◁──────────▷ Labor Regulations │ │ │ │ │ └─────────────────────────┘ └─────────────────────────┘

Slide 18

Slide 18 text

Lesson Three Playing in a space subject to multiple regulated markets is a recipe for suffering.

Slide 19

Slide 19 text

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

Slide 20

Slide 20 text

Lesson Four Working capital-intensive business models are constantly worsening traps.

Slide 21

Slide 21 text

─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── │ ───────────────────────────────── ╭ ╮ ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──┼──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ │ ───────┬─────────────────┬─────── ╰ ╯ ╰ ╯ │ │ │ │ ────────────── │ │ │ │ ╭ ╮ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─│─ ─ │ │ ╰ ╯ ────────▽───────────▽───────────────▽─────────────────▽─────── ╭ ╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯

Slide 22

Slide 22 text

─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ╭ ╮ Customer │ ─────────────────── ╭ ╮ │ ───────────────────────────────── ╭ ╮ │ │ │ │ │ │ Embedded Clients ◁──|──┤ Users / Workers │ │ │ │ │ │ ─────────────────┬─ ╰ ╯ │ ───────┬─────────────────┬─────── ╰ ╯ │ │ │ │ ────────────── ╭ ╮ │ │ │ │ │ │ │ ───────▽─────── ───────▽─────── ╭ ╮ ╭ ╮ │ │ Payroll │ │ │ │ │ │ │ │ Systems │ │ │ Web frontend │ │ Native apps │ │ │ │ │ │ │ │ │ │ ─────△──────── ╰ ╯ │ ───────┬─────── ───────┬─────── ╰ ╯ ╰ ╯ ─ ─ ─ ─│─ ─ ─ ─ ─ ─ ─ ─ ╰ ╯ │ │ ────────▽───────────────────────────────────────────── ╭ ────────╮ │ Devengo Salary Advance API │ ────────────────────────────────────────────────────────────── ╰ ╯

Slide 23

Slide 23 text

Lesson Five Enterprise customers have massive gravitational pull and can easily transform you into a consultancy.

Slide 24

Slide 24 text

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.

Slide 25

Slide 25 text

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.

Slide 26

Slide 26 text

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

Slide 27

Slide 27 text

Lesson Six Pivoting is hard but it can truly be an opportunity. Do NOT burn bridges.

Slide 28

Slide 28 text

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).

Slide 29

Slide 29 text

Thank you! 𝕏 @_aitor / aitor.is 𝕏 @devengoapi / devengo.com