Debt Management with Bobby Matson

Unknown Speaker 0:00
Come on

Unknown Speaker 0:11
What do I put this is George G. And the time is right. welcome today’s guest struggle powerful Bobby Matson. Bobby, are you ready to do this? I’m ready to go. All right, let’s go. Bobby is the founder and CEO of pay it off their venture backed team, automating every aspect of debt management. They’re doing it for fintechs and workplace providers. Bobby excited to have you on tell us a little bit about your personal life more about your work and why you do what you do.

Unknown Speaker 0:38
Yeah, so my personal life, I’m a drummer, a father, I, you know, got into a very focused on company building. This is my second company.

Unknown Speaker 0:52
Actually, the original, the first company I built was in the music tech space about 10 years ago. And, you know, focused a lot of my career on working at companies like Fandango group on Stitch Fix, as a tech leader, engineer, software engineer, and so got exposed to the student loan and problem in general, because my wife and I had six figure student loans that kept us from starting a family and that, you know, had a lot of credit card debt to navigate as well. And this a really kept us from achieving a lot of the financial goals that we had.

Unknown Speaker 1:26
It’s just such a complex debt. And it’s very different than other types of fixed payment loans. So I got really kind of frustrated by the fact that I had worked at all these apps, you know, helping scale infrastructure to millions of users, helping users make complex decisions with software, and have it be a simple process. And there wasn’t anything like this for depth. There wasn’t any pathfinding algorithms being used, there wasn’t any, you know, simple way to get an A be contextual to me as a user. So I just started working on that, you know, built a little engine for my wife, and I codified all the regulations in the space, what our options were as a borrower, as borrowers, and that led us to saving 10s of 1000s of dollars. Now, we have a three and a half year old, you know, we have a house now, like all the things I never thought were possible. So, you know, realize that we weren’t the only ones dealing with that problem, about four and a half years ago went full time and to pay it off. Today, we, like you mentioned automate every aspect of asset management for financial apps. So we do everything from sinking your loan accounts, to automating guidance, and enabling action on the guidance like making extra payments or refinancing, or enrolling in federal programs that say bar was money. So that’s what we’re doing today. You know, about a about 20 folks in the team now. And we’ve been growing like a weed. So it’s been an exciting time. Nice. Well, certainly congratulations. And I always appreciate when people have a problem. And then they start a whole company to solve that problem. And, you know, then through that, solve all kinds of different problems as well. So how’s the drumming? Going with a three and a half year old Bobby? Oh, yeah. It’s interesting. It’s, uh, well, I do have for the first time like, because we’ve had the house almost two years now I have like an area for my drum set that doesn’t like disturb a whole apartment building. So it’s nice to have a little man cave.

Unknown Speaker 3:19
You know. And so that’s, that’s been great. She actually loves it. She pops in when I’m drumming sometimes, and I feel like get get her headphones, because I don’t want to mess up her ears. But she likes to play. So that’ll maybe get her a little Kitsune. Love it. I think that that’s awesome. All right. So

Unknown Speaker 3:40
I’m sure there’s a million different use cases, walk us through some of the most common some of the, you know, where you’re seeing a lot of success.

Unknown Speaker 3:48
Yeah, we’ve seen a lot of success in a lot of workplace opportunities. So student loan benefits, we power a bunch of student loan benefits platforms, we, you know, power basically any lot any financial app that is working with employers who wants a student debt module or wants to offer student loan benefits, what we do is we facilitate the verification of those loans and facilitating the contributions from the employer. So making the payments to the servicer, you can think of us as the connective tissue between any application and the servicing layer for student loan land. So that’s where we saw a lot of success early on was being the rails for the you know, workplace benefit providers that want to be able to offer student loan benefits to their employers. And so that’s a use case that we see commonly another one we see very commonly is more direct to consumer financial apps, where essentially the student debt button that can help them you know, enable auto pay from the student loan accounts, enroll in federal programs, saving them to 40 a month. That was one of our first use cases was the federal programs because they’re so important half of borrowers benefit financially.

Unknown Speaker 5:00
From them, so you really can’t ignore it if you’re in the space.

Unknown Speaker 5:04
And so yeah, that was really a lot of our early use cases. The goal, though, is really clarity borrowers, you know, even in student loans focusing on those use cases for a second 15 million student loan borrowers changed servicers in the past year. So you’re talking about almost half of all student loan borrowers having a different servicer. And you know, that’s a lot of change. And borrowers really need clarity and like their best next step. And so that’s what we really step in and help to, we help basically automate that best next step. So any app using us doesn’t need to know a thing about debt. Repayment doesn’t need to know a thing about student debt, in order to have a meaningful outcome for the user and for the business.

Unknown Speaker 5:48
And that is because you and your team, the software, understand everything about student loan program. And so you just need the borrower borrower to enter in their information. And then based on that, you’ll be able to say, here are the different ways and options you have for paying off your loan.

Unknown Speaker 6:10
Right. And even beyond that, and we can show the options that are based on their situation say that the process is usually I linked my my servicer accounts, I give permission to access that data. And then we will I asked, we asked me a question or two, and then you get guidance on are you eligible for federal program? What loans should I refinance? So the questions that I really had trouble answering for my wife and I back, then it’s the same kind of things. No one was saying, Should we refi? Is it dangerous to refi? You know, what’s the Can I see the cost comparison relative to my repayment? Those are still difficult questions until we came to market and just focused on solving those.

Unknown Speaker 6:53
So yeah, we basically are really, really focused on the guidance piece, that’s where I think you know, the most need is because that activates the borrower to do something that benefits them financially. And that activation is powerful for the businesses too, it means they can set up auto pay from their XYZ bank account, it means they can make that extra payment in your app under your brand. They can’t they don’t have to call their servicer again, you know, they’re able to do everything with a couple button clicks. And that’s extremely powerful. Yeah, there’s no doubt about that. That’s super powerful. I’m just sort of thinking through my family’s personal experience, and probably not dissimilar from what you described with student loans. And

Unknown Speaker 7:41
I think that just being honest, felt like there’s really not that many good options out there. And I probably could have dug deeper into it, but we just didn’t. So just knowing definitively, these are your choices, and then okay, great, now that I have that information, I can make a decision and really get started moving towards beneficial, consistent behavior. Right? And the truth is, like, it would take a lot of effort to get those answers, right, everything’s fragmented for a bar, they maybe have a credit card over here, they have a personal loan over here, maybe they’re delinquent on an auto loan that they didn’t know, because they never like got the paperwork or something like that, all the all the things they need clarity on.

Unknown Speaker 8:24
It’s really as simple as, you know, having access to that data in a central place. And I think, you know, instead of having to track all this in spreadsheets, or manually through like mentor, like, YNAB, or whatever, you know, you can just source the data, have it be a live feed that you manage, and I think those are things that honestly empower a borrower to make the best decisions and, you know, have actual like control over it, where you will recommend, hey, look at refinancing these three loans based on a heuristic this is, you know, going to be a good outcome for you. And here’s the loans, you shouldn’t refinance, but if they want to refi all of them, you know, and that’s, that’s their decision, you know, no one should stop them from doing that, you know, they can toggle on Toggle the other option and refi, all versus some. So it’s about like giving them what the math says what the simulations we run, say, and then allowing them the agency to make whatever call is best for them. Amazing. So the user experience is I can plug in all of my debts, and it will give me suggestions, guidance, clarity on different paths to take like a Choose Your Own Adventure book. Yeah, I like that. Yeah, that’s a good way of putting it. We have most of our use cases have been in student loans over the summer we have a liabilities beta we’re really excited about will be a lot more public money 2020 about what that looks like. But we’ve got a lot of exciting things in the works for basically any debt vertical. We have a very strong list of coverage that we’ll be announcing soon. So

Unknown Speaker 10:00
Uh, yeah, definitely exciting things. They’re coming down the pipe. Nice. And so how many different companies are there? You mentioned the student loan benefit platforms. But about 10 years ago, there were none. And now there’s probably lots.

Unknown Speaker 10:17
Yeah. And so just talking about that industry for a second. There’s a secure act to Dotto that is passed the House bipartisan. And you know, we’re expecting this year, we’ll see, you know, knock on wood, you know, actually seeing it go through the Senate floor. What’s exciting about that is that that treats student loan contributions very similar to a 401 K contribution, according to the IRS. So I think that would open up this industry as a core benefit now is instead of a fringe benefit, which is still classified as so that’s a big tailwind for the industry. And so now we’re talking about, you know, not just powering student loan platforms, or maybe tuition assistance, and five to nine providers who want to offer the benefit. Now, it’s a just a core benefit that goes into any 401k platform, any payroll platform, you know, I think we’re going to see an evolution with this regulation that we haven’t seen before in a long time for benefits. Yeah, I think it’s super exciting. And the potential of it

Unknown Speaker 11:23
is, is

Unknown Speaker 11:26
I think it makes all the sense in the world think that the more data you can provide somebody in a way that’s easy to understand, will then to everything you’ve been talking about, really empower them to be able to start making good beneficial decisions.

Unknown Speaker 11:40
So I’m sure that the government will, will will, will act appropriately and make a good decision. But we’ll just have to wait and see on that one. So yeah, definitely. Nice. And

Unknown Speaker 11:53
do you have a sense of, of how

Unknown Speaker 11:59
of cutting, reducing the amount of time or interest that it takes if you are optimizing debt repayment or student loan repayment?

Unknown Speaker 12:11
Yeah, so it’s interesting.

Unknown Speaker 12:13
What I mentioned before, half of borrowers benefit from federal programs, which actually are our programs where most of your payments are pegged to your income. So those programs allow for you to pay based on your income, there’s subsidies the government pays for. And then there’s a forgiveness event after a set term. So you can you most borrowers, you know, benefit from these types of plans in the long run to instead of like some of the there’s like 14 federal programs, right, there will be a 15, that’s coming out in the next year or two. So there’s all these different programs that people qualify for based on their situation. So that’s where we’ve been an expert in for many years, you know, how to surface the plan for the borrower and help them enroll in it digitally, the

Unknown Speaker 12:59
side that you’re saying is around 31% benefit from prepayment, that maybe weren’t pre paying before. So those are scenarios where you know, you’re contributing 100 bucks a month, and you’re paying down your loans four or five years faster. Those, especially in the private market, if you don’t qualify for a refi, those are the best decisions for you. So these are the types of things that you’d see using our system, as you know, as a partner app using R Us, you wouldn’t have to know any of the things I just described to get the outcome to say, Oh, now we have a recommended prepayment amount. One thing we commonly hear is how much should I prepay. So we run that simulation based on will add $1 at $2 at three and do all the math around the best, you know, sort of bounds for the borrower. So those are the types of things where the outcomes are based on you know, tailored to that that borrower but it’s yours off in prepayment, it’s usually four to five years off of your original term. And if you add a refi to that it’s even faster. Nice. That’s super exciting. Love it. So how do how are you partnering with with apps, companies? Providers?

Unknown Speaker 14:08
Yeah, so what we do is we are an embedded solution. So we live within the app under their brand, we have pre built UI that they can just snap into their existing experience and be able to drive those outcomes. Typically, there’s some incentive to say perform an action, like, you know, signing up for an account with a neobank or some, you know, value creation event that we focus on. Other times, it’s about engagement and just being the center of that bar was attention. That is the outcome. So there’s a lot of ways that we’re state helping apps the stickier because we are a b2b company, you know, we are similar to a plaid in the ecosystem. We’re more of the, the, you know, financial data layer. And but much more than that, we’re all

Unknown Speaker 15:00
So the decision layer and then the action on that decision. So I think that’s where we’re seeing the environment go is, you know, instead of just sourcing data with plaid or other, you know aggregators, and that being a cost center to you, there’s some ROI working with a pay it off or similar provider who’s going into the insights and action portion of the industry. Got it? And is there a reason that somebody that has an app, or is providing this type of service wouldn’t reach out to you

Unknown Speaker 15:35
now that I can think of unless they’re just not focused on debt at all, the you know, because I think if you look at use cases, outside of student loans, I we touched on a lot of the student loan ones that we’ve been in market with for a long time, but we’re uncovering all sorts now with these other debt verticals, balance transfers, like digitizing that process, instead of mailing, you know, traditional banks or mailing checks to a million spending millions a year, millions a month sending checks in the mail. So digitizing that you can better track conversion, you get better engagement. So these are the types of proof points, you know, our use cases that we’re seeing a lot more of, is just better automation in places where it’s very manual, still, we’ve seen it with refinancing, like automating payoffs, verifying the loan account helping the lender get the refi done and not have to call the servicer or anything, these are all things that are that are, you know, we’ve done in student loans to some degree, and we’re expanding into other debt verticals. And that’s just like tip of the iceberg. We can talk about, you know, if the best next step is consolidating three credit cards and the one save on it, or consolidate into a personal loan and lock in a fixed rate, while interest rates are rising. There’s all there’s so many use cases that that can be derived from, you know, what our tools do? Yeah, yeah, I can. Everything you just said makes all the sense of the world to me. So how do you all make money.

Unknown Speaker 17:01
So we make money on usage sometimes will align on a value creation event like a refi. And split that kind of thing. Depends on the use case, but typically will charge for usage like a plaid, like we’re not, we innovate on the tech more than the business model. You know, we’re we’re an API provider. You know, we do have a lot of prebuilt, low code and no code modules that we offer. But you know, we’re focused on driving the ROI. And the business case is always built on that ROI. So we’re really aligned with the partner on that. And we won’t do anything that doesn’t benefit the borrower financially. That’s the key. That’s what I think a lot of folks in the space miss, especially the parts of the world is that if you focus on the financial health of that end user improving, it unlocks tons within the value chain, the partner benefits, obviously, the borrower benefits definitely, you know, we’re in the middle with the partner and sharing that value. And then the servicer has more borrowers in repayment without driving additional costs. So you’re looking at, you know, every a win across every aspect. So yeah, that’s kind of the way we think about our place in the in the industry. I love it makes total sense. If you had said the opposite, obviously, we probably wouldn’t be having a conversation because you wouldn’t have a successful company. So I think that’s great, man. I think it’s I’m super excited to see more and more people get this in their hands and just start, you know, creating more beneficial habits. So love it. Lobby, the people are ready for that difference making tip, what do you have for them?

Unknown Speaker 18:36
Yeah, so there’s a couple things I think the first one that comes to mind is,

Unknown Speaker 18:41
you know, there’s a quote that always sticks out to me as early in my entrepreneurial journey that I heard this, but I got to meet this person named Richard Ward, who used to be the CEO of Lloyds of London.

Unknown Speaker 18:51
And he told me, I asked him for his thoughts on company building. And he said, Well, there’s two things. The first is treat investor money, like your money, which I still to this day do.

Unknown Speaker 19:03
And the big one, though, is don’t take a risk, you don’t understand. That one really stuck with me. Because, you know, the reality is, people take lots of risks all the time.

Unknown Speaker 19:16
If you might be more risk tolerant than others. Sometimes it’s riskier to have a full time job. Like for me, I felt that way I was growing out of my sort of engineering role. And where I saw myself going was hey, it’s riskier to have a full time job. Like I have more upward mobility here if I just build from scratch the team. And you know, I do think I understood that risk really well. You know, and I understood the problem really well. And you know, if you’re looking to maybe start something or go into a, you expand your career possibilities, those types of things like you just got as long as you understand the risk, you’re, you’re better suited to execute it. Well, I think that that is great stuff that definitely gets back

Unknown Speaker 20:00
Come on. Bobby, thank you so much for coming on. Where can people learn more about you? How can people get in touch with you and pay it off?

Unknown Speaker 20:09
Yeah, so the best way is to just go to pay it off.io. If you’re a borrower, we have a list of a lot of example partners. So if you’re looking to use apps that leverage our technology, definitely go check them out. A couple of notable names

Unknown Speaker 20:23
are scaly, candidly, chipper, of origin, a few other names like that. I think the other way if you’re anyone who’s a product leader at a, at a, any sort of financial app, financial tech company, even financial institutions, many we’re working with a lot now, more so than we were a couple years ago. Then, you know, just paying us and we don’t we’ll talk to you about our tools and how they can help your business. And yeah, we’re here to help in in student debt and beyond. Love it.

Unknown Speaker 20:55
If you enjoyed as much as I did show Bobby appreciation and share today’s show with a friend who also appreciates good ideas, go to pay it off.io And check out everything that they’re working on and keep an eye on everything that’s coming out in the future as well. Super excited to track your progress and congratulations and everything, man.

Unknown Speaker 21:14
Thank you so much. Appreciate it. Thank you again, and until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai