Dave.com CEO Jason Wilk joins Yahoo Finance Live to detail the company's business model and why it was founded.
- The fintech startup Dave.com is one of a wave of so-called neo banks that are looking to disrupt the traditional banking model. The banking app is set to go public this quarter through a merger with a special purpose acquisition company valued at $4 billion. Joining us now is Dave.com CEO Jason Wilk.
Hey, Jason. Good to see you. I know that you have garnered a lot of goodwill with customers by helping them avoid those overdraft fees, those pesky fees. I'm curious how you're turning those folks into longer term customers who will look to your platform for all of their banking needs.
JASON WILK: Hey, great to be here. Thanks for having me. So we're going after the biggest pain point that we found for customers in this country, which was overdraft.
Everyone knows that pain of the $34 fee you get charged when you have that $5 cup of coffee when you didn't have enough money in your bank account for it. We just thought that was completely unfair for customers. They're paying $30 billion a year or more for access to a basic service to go buy everyday essentials.
We looked at that around the industry. The so-called challenger banks did not offer overdraft at all, and the big major banks were making billions of dollars off these fees. So we flipped the model on its head, and we said that we're going to create a banking service that gives overdraft for free. And we underwrite customers for up to $250 of additional spending power to go buy gas, groceries, put food on the table, and not pay these crazy fees. We find that drives long term value for our customers, and ultimately, we think is a great way to build relationships who offer more financial products in the future. And that's where we are today.
- What are some of those products that you're looking at being able to offer in the future as you expand and look to go public?
JASON WILK: Well, right now, the focus is on overdraft, which is about $30 billion a year of market size. But if you look at where are consumers, and mostly, our target market, which is those that are living paycheck to paycheck, there's about 120 million people in this country that fall into that category. And they're paying about $300 billion in short term credit fees, so there's so much room to grow from credit cards, installment lending, investing, wealth creation, and really to try and create more financial opportunity for folks by eradicating the huge cost to be in the basic financial system.
- I'm curious how you are positioning Dave.com, and by the way, I believe the name comes from David versus Goliath, right? The little guy versus the big banks. How are you pivoting the business for the future of work?
JASON WILK: So that's right. The name really stems from Dave versus Goliath. We're going up against these massive banks. We were three guys that were fed up with overdraft fees with no experience in financial technology space at all, but you know, this is the American dream to create something that can be so disruptive if you really put your mind to it. So this is definitely that story, and the Dave versus Goliath mantra really is a great part of our mission of the company.
As far as what we're doing to live up to that name, we've offered some amazing products within the ecosystem. Particularly, one called Side Hustle, which is helping our members apply for work at places, like Uber, DoorDash, Instacart, and about 35 other partners to help our members make money on the side. And we've now helped our members earn upwards of $300 billion in additional income just by surfacing these opportunities that they didn't even know existed.
So that's something that's really been great. Additionally, we have a free credit building solution, where customers who have a direct deposit with Dave and pay their basic utilities and rent payment with Dave, we actually report those payments to the Bureau. And, on average, our customers without incurring any further debt can boost our credit scores upwards of 50 to 60 points just by paying their basic financial transaction through us.
- What is the business model here, though, Jason? How are you guys making money? So we have a $1.00 a month subscription, which is helpful. Additionally, we make money on our interchange fees from Mastercard. So every time someone swipes their debit card, we make about one to 1% to 1.5% of those swipes. That can add up pretty significantly from a revenue perspective, and then on our overdraft product, we have a very unique model, where we don't charge any mandatory fees. But we let our members give us an optional tip.
So if we helped you avoid that $35 fee at your bank, what's that worth? And customers can give us a tip of anywhere between 0% and 15%. And to make that offer even sweeter, we pledge a meal to Feeding America for every tip that somebody gives us, and today, I think we pledged about 14 million meals to them. So it's a very feel good company. We have a very equitable business model that we're driving great top line, great gross margin, but also, we're on the same side as the customer, where we're truly helping our customers at the same time. And that equitable model is something that we're super proud of as a business and one we think can continue as a public company, while having great growth.
- Yeah, and I want to very quickly touch on becoming a public company. You've got that SPAC deal with VPC impact acquisition. You have some big time investors backing you, including Mark Cuban, and the institutional investor, Tiger Global. Do you have a date yet for the SPAC deal?
JASON WILK: We do not have a date yet. We should have one fairly soon, so we'll certainly keep you all posted. But, yes, we have a powerhouse group of investors. When I started the business, I thought there was no one better to join forces with around disrupting big banks and overdraft than Cuban.
Mark was an investor in my previous company, and he's just been a huge advocate for the business. He's been a board member for the last five years, and he himself knew the pain of overdraft. Because he was the guy sleeping on friends' couches and selling computers out of the trunk of his car, until he hit it big with broadcast.com. But ultimately, he knew this problem, and he's been a great investor for us.
Tiger Global, obviously, the most preeminent private fintech investor in the space. We thought it was incredibly validating that they thought that we should be a public company. They're the ones who helped us put a value on the business and wrote $150 million check. So that, we felt we had all the validation we wanted, and our SPAC sponsor does not get much better with Victory Park. They've known the company since before we started it.
- Yeah, well, that is certainly confidence in the business model, for sure, from those guys. Jason Wilks, CEO of Dave.com, thanks so much. We'll be keeping our eye out for that SPAC deal and hope to talk to you then.