Fizz wants to be the AI financial advisor in every young adult's pocket — starting with the first debit card that builds credit

Yes. Yes. So, so I went on X and I posted uh, you know, the big Teal Fellow question that uh, is on every application for the Teal Fellowship is what important truth do you do very few people agree with you on? What is something you believe that very few people agree with you on?

And I said, I believe it's possible to interview the entire Teal Fellowship class on a single podcast episode. It could even happen today. They said it couldn't be done. They said it couldn't be done, but it's happening. Here we are. So, we have our first Teal Fellow, our first guest of the session. We have Carlo.

How you doing, Carlo? Carlo, welcome to the show. Hey, I'm doing great. Thanks for having me. How are you all doing? Do you have the color match? Oh, yeah. The color match is fantastic. The market's up. We're very excited. Everything's going well though and the IPO window is slowly cracking open.

So, uh, get your prospectus ready. Get your S1 filed confidentially because I'm sure you guys are going out. Yeah. Yeah. To to what we work on at Fist. So, that's super exciting to see. Okay, cool. Uh, yeah, break it down for us. Give us a little introduction. Yeah, happy to.

And and maybe I expand a little bit because what we're working on is actually super relevant to what Brad talked about earlier with Invest America.

So at Fizz um the company that I founded now three years ago, we're essentially working to make society more meritocratic and return some amount of optimism to young adults in the US. Right?

Today we have all these 17 and 18 year olds who need to make decisions over taking out hundreds of thousands of dollars in debt um to go to school with limited market incentives being exposed to them. It costs the same to study nursing than it costs to study I don't know complit, right?

Um, and then there's financial products um that you get signed up to that actively encourage you to pick up bad financial habits in terms of no or zero APR offers uh initially.

So at FS we um build financial products that give um college students and young adults a line of sight towards financial independence and we do that with an AI financial advisor um that we shipped earlier this year as well as with financial products that we don't just sort of rebrand like a debit card just with a different design but fundamentally rebuilt.

Uh in 2023, we launched the first ever debit card that builds credit. Um which gives you a real-time credit limit that updates based on external account balances, has daily autopay, and neither requires um essentially a a co-signer, a credit check or a security deposit. So, how does how does the credit score thing work?

I feel like it's such a weird thing that you can build credit with a debit card and it's such like a legacy system that I'm glad you're hacking it, but it feels like the hacking is the right term.

Um but but is is is this something that people just didn't think to do or was there a regulatory or technical change that allowed this to happen now? Like why are people building credit with debit cards now?

So super interesting question and I think what this gets at is like for 30 years people have largely been using the same financial products. What fintech has really been doing is it's been expanding access to financial products but it hasn't necessarily spread sophistication yet.

like the average person is still extremely confused about how to navigate their path to financial independence or like use these financial products in such a way that they work for them rather than against them.

Um, and part of that is definitely regulatory capture and the incentives of sort of the incumbent banks, right? How they built their their revenue models.

When you look at companies like Discover, Capital One, most of their money comes from revolving interchange, they have crazy large legacy tech stacks um and banking cores that you can't really innovate on top of.

And then Bas came in and essentially made this exact tax stack accessible to to fintech companies and everyone sort of built their own version on top of what already existed. But there's been fairly little innovation when it comes to the core flow of funds mappings.

Um and what people I don't think have done sufficiently is instead of just looking at oh these are the financial products that exist how can I make them marginally better looking at the code and looking at the regulations and the law to see okay what does the law actually allow you to do and what doesn't it allow you to do and turns out you can indeed um build credit with a debit card if you work with all the stakeholders work with the bureaus and um are willing to to um sort of go through the process of building the underlying infrastructure.

So with the whole ledgering and underwriting systems and so on and so forth and that's definitely a pain, but I think it's the type of innovation that we need in in finance more than yet another N plus1 um when I was your age, I actually destroyed my credit entirely with about $5,000 in credit card debt. It was awful.

And I had to I I I had to rebuild it using a secured credit card. So you have to put down like $1,000 and then it acts like a credit card, but it builds your credit back up. took me like years to get back in a reasonable territory. It was a mess. I think it's super common experience, right?

In my experience, I didn't even get a credit card because I'm from Germany originally. I came here for college, right? I didn't have a co-signer. I didn't want to put down a large security deposit. And the FICO score, I mean, it's data science from the 80s, right? It was introduced in 1989.

We actually don't have that many cohorts um that we can look at in terms of how it impacts social economic mobility in the long term because 30 years in the greater scheme of things is not that much data, right? Um, and it's a system that hasn't been questioned or changed since.

Um, and I think it's it's really due uh for for substantial change because it's so upstream of the types of results and the relationship that people get to develop with their finances. Talk to me about the go to market. Uh, Peter Teal, obviously founder of the Teal Fellowship, also founder of PayPal.

PayPal used the like give five get five referral program. We've seen that used for Dropbox and Venmo and all these different products.

Has that been something you've been working that was also used by a very high-profile fintech company that raised a ton of money and I think they they ran into the hard problem of if you give money away you just attract like some of the worst customers that can happen just will download the app to make $5 and then never Yeah.

And I mean PayPal ran into like crazy scammers and stuff. So what's working on the go to market side and what problems has it kind of caused I assume? Yeah, for sure. And and I think what you just mentioned is really important in our industry, right?

Consumer quality really matters and it's it's kind of an odd concept to grasp because typically like you set up your mix panel dashboard and you just want the number to go up. The number of customers, right, really doesn't matter. That's not necessarily the case in finance.

Like a lot of it is long-term LTV capture, how are you able to attach additional products to these cohorts? Um, and you are taking on risk, right? You're taking on credit risk, you're taking on fraud risk, you're moving money. Um, so there is uh a heightened sensitivity that's required in terms of customer quality.

We think we're capturing the most exciting customer in personal finance, right? Young adults that are hopefully optimistically striving toward towards whatever their goals for the future are.

And there's a ton of like sort of this exponentialization and demand for essential services that some that these people experience between the age of 18 to 25. Um, in terms of our go to market, um, what's been working, um, we've built a lot of content.

Uh shout out to uh Lisa and and Kyle originally in our team who who built a a terrific content engine for us. Um and then we go campus by campus, right? U most of our customers are indeed college students and there's a sort of inherent virality.

you can almost win the college space similar to like RAMP won the um sort of startup credit card space um by means of there being word of mouth dynamic um uh that that unfolds within the community and sort of a lot of mind share um yeah let me let me ask you about the uh the the like the the super long LTV question because I've always had this you know Parker Conrad talks about building the compound startup at Ripling and on day one having not just an HR product but also an IT product and building all these things simultaneously and that's something I feel like I haven't seen with the neo banks generally like there is yet to be a startup that I've seen that's launched that just is day one you can buy stocks but you can also have a debit card you can also get a mortgage we'll also do a car loan we'll do all the things that a JP Morgan Chase does but on day one as a neo bank is that just too hard or is there some fundamental force stopping you and are you thinking more about it as let's just do incremental wins one product after the after the next.

I mean I think functionally like the sort of pragmatic limitations just have have kept that from happening and and then in the US I think there there's some other dynamics in terms of like um the strength that incumbent banks really have and and the capital position that they have right um that have maybe prevented even like um the latest stage players like Cash App or or um like a chime to fully realize that vision either.

Um but if you would want that you would need to back fintech companies like you back um sort of healthcare startups right biotech companies where you give them hund00 million up front to acquire the licenses build up the legal team get access to the amount of warehouse facilities um and and really take a large shot and that's simply not how fintech investing has has been done thus far.

I think we've we're going to see more and more of that as people are learning that sort of the incremental copy of another product is having a really hard time with distribution and and what matters is are you able to differentiate their products and that's by that's inherently more expensive to develop right licensing fent over a million dollars of of our seed run on licensing and legal um because we launched a new product you can't really do that and um uh uh if you're launching more products right unless you're getting really substantial cash um from from the get- go.

Maybe regulatory landscape changes, but it's not. I'm sure since the uh new Teal Fellowship class got announced and you were in it that investor appetite has been insane, but what had it looked like for maybe the year prior in a time when fintech has come back to some degree.

Uh there's some great businesses that have been built, but generally it sounds like the company was started kind of in the right before the fintech kind of dark ages. Yeah. Yeah, that that that's that's the right observation. Um, look, I think um we don't have to kid anyone, right?

Like consumer fintech is not not necessarily riding on a high in terms of investor sentiment at the moment, and it wasn't last year either. Um, TBD, what happens when when Chime goes out now, where they're going to be priced, TBD, what happens with Clana?

Um, I hope that we see Revolute enter the markets and and I think these are three companies that do show the scale that can be achieved. I think if you take an optimist, take a a sort of realistic view into where have returns come from in consumer venture investing, right?

A lot of it is fintech and and investors should remember that and and hopefully place some bets here. I also think that like the tech community should hold itself accountable towards the outcomes it drives society, right? Like are we actually like improving the experience of existing in this society?

Are we bringing optimism to people? Are are people experiencing joy? One of the most direct lines to having that type of impact um is uh to build better financial products and I think it will come ultimately from from consumer fintech companies and consumer companies in general.

Um I'm actually always kind of concerned that um amongst people my age like when I talk with people from Harvard or Stanford or whoever right like who are considering dropping out everyone wants to start a B2B company like the biggest multiplayer that you can can create right now still I think is building consumer technology and and I hopefully we'll see more of it and also more investing behind it.

It's it's way less than 50% of venture investing. I think that's a problem.

It is funny too because historically I mean only a decadeish ago everyone wanted to build a consumer app because everybody was a consumer and they had ideas but nobody actually had good it's hard to have good ideas Instagram well it's hard to have good ideas for what B2B SAS to build if you've you've had one three-month internship very very surprising to see that being a trend amongst students I mean I think everyone is listening to all the shows right and everyone's trying to derisk ultimately and and find formulas and and nothing is quite as formulaic as as B2B sauce, right?

Um and uh consumer is always more speculative. It's it's harder to gauge. It's easier to build faster horses, right? All these types of things. But um uh I think it's extremely rewarding.

Um and we we need to see more of it and I think we need to hold each other accountable sort of as a community to hopefully um reenter around consumer use cases. Again, last question, we'll let you go. What uh what is the one financial product that young people should be avoiding these days? Um please don't say options.

Please don't say angel investing. Jordy will have a conion fit. I think I think options might be closer to what I would say, but the the worst thing that that I think is is ticking up at the moment sports betting, right?

Objectively, you you see it in the data like the number of bankruptcies amongst young men in states where it's legal has shot up.

Um, like I think there's a real flip side is that I'm very directly pulls money out of the like it's like sports betting unless you do what I recommend which is dollar cost average into the sports get betting platforms. Well, if you explain everyone what dollar cost averaging is, then maybe we can can get started.

Instead of putting $20 down on that parlay, $20 grit of draft king stock, you're good. That might be more reasonable. Good financial decision. Not not financial advice though, but uh you get the idea. The house always wins, so invest in the house. Anyway, this has been a pleasure. Thank you so much for stopping by.

Good luck. Enjoy meeting all the other people. It's It's awesome. The the teal class is awesome this year. Yeah, it seems like a great class already. Uh we'll talk to you soon. You're the man. Bye. Congrats. Next up, we have Stephen coming in the studio.

Yeah, I think we have to ask people what important truth do very few people agree with to everyone. Feel free to let it rip if it comes up in the conversation. I mean, I feel like we got it out of we got it out of Carlo. He he believes that not enough people are focused on consumers consumer. Yeah. Yeah. Yeah. Yeah.

That's a good one. Uh yeah. For a lot of people the the the contrarian question is the company that you're building. Like for a long time mine was like nicotine is is not as bad for you as people think. It doesn't give you cancer. That was contrarian. Now it's pretty consensus.

Anyway, if you have a really good contrarian idea, you should put it on a billboard. You should go to adquick. com. Out ofome advertising made easy and measurable. Out ofome advertising little bit of contrarian move for a lot of people, but it works. It works. And with AdQuick, you can say goodbye to the