Storytelling about Clair with Nico Simko
Welcome to the Use Case Podcast, episode 89. This week we have storytelling about Clair with Nico Simko. During this episode, Nico and I talk about how practitioners make the business case or the use case for purchasing Clair.
Nico is an expert in all things FinTech. His passion to build a company that allows people access to their paycheck as soon as they walk out of work—for free and instantly—really comes through during the podcast.
Give the show a listen and please let me know what you think.
Show length: 23 minutes
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Ladies and gentlemen, this is William Tincup and you’re listening to the Use Case Podcast. Today we have Nico Simko on. I went, actually went to school with a guy who’s last name was Simko. And he’s with a firm called Clair and we’re going to get into his business and learn a little bit about it. And so let’s start with that. Nico, would you do us a favor and introduce both yourself and Clair?
Absolutely. Thank you so much for having me William. Fun fact you’re the first person to tell me that you know another Simko. It’s a pretty rare name.
It is a rare name David Simko in the colony Texas. You’ve got a relative somewhere in Texas.
We might have to connect offline at some point about this. Well, William again thank you so much for having me. Nico Simko, here. I am origin, Swiss and Argentine, and came to the US I think as many internationals for college and then stuck around. So that’s my personal background. And then would it be useful for me to already start talking about Clair? Or what’s better?
Yeah, let’s, let’s jump into Clair. Practitioners always want to know, what does it do? What’s the problem? What’s the solution? How is it unique?
Yeah, fantastic. So Clair was basically built out of a frustration that I had when I got paid as an hourly worker in college, I used to be an economics tutor. And for anybody who has been an hourly worker, it’s such a mess to get paid. It’s usually on a, it’s not instant, it’s you get paid two weeks after your paycheck, if you’re lucky. Usually they start processing it two weeks out, then in my case, they were then mailing a check to me to my dorm, which was across the street from where I worked. And I kind of like, you know, being an international person. I was like, Why? Why is this even a thing.
And I kind of always had that in the back of my mind saying, this is a big problem that we could solve. And so this is the fun story. And you know, four years out of college, I always had it out of, you know, in my mind. And at some point, I saw the way Uber drivers were getting paid, which is they finished a ride and ding, they got a notification that money is available. And I was like, Okay, guys, this is the future.
And basically, I set out to build a company that enables any American to get access to their paycheck as soon as they walk out of work for free. And instantly. It’s a very bold and big dream. We can talk about why it’s hard, why you know, others have semi succeeded at it. But there’s still no really good solution for that. But yeah, that’s the story of Clair. We’re New York based, where we were founded in 2019. And we raised 19 and a half million dollars in funding.
And right now we’re focused solely on hourly, we can go industry to industry, but we’re if you’re an hourly worker, is there plans to do corporate as well salaried employees as well?
Yes, absolutely. salaried employees, we actually have some of them as well. We also have gig workers. So you know, people who gig platforms who don’t have the power of Uber in order to build their own financial services, we enable them to do that.
So why has it failed up until now, like what, and again, don’t want the secret sauce or anything. But why? What do you think? Why do you think it’s failed? I’m sure other folks have tried, right? But what do you think’s been the kind of the failure points for why this hadn’t been done up until now?
Yes, absolutely. So there’s two components. Actually, there are three. The first one is what I would call economics. The second one is technology. And the third one is the public policy around it. So start with economics, there are two ways to give people access to their wages in real-time. The first one is you go to a payday lender, the payday lender doesn’t know if you’ve clocked in your hours or not. So it charges you a big fee hoping you get the money back and most people don’t pay back. So you kind of are paying for those who are not paying back the money.
And there’s some digital platforms that offer that. Typically they have $5 to $10 fees associated with it, which if you do the effective APR is the same thing as a payday loan. There’s a second type now which goes through the employer. The beauty of going through the employer is you do have the clock in and clock out data. But the problem is paying people in real-time, for the employer is a nice to have. It’s not, it’s part of a benefit that they could offer. And so really scaling on that distribution is, is feasible to a level because the mom and pop shop is probably at the bottom of their, of their need list.
So when I speak about the first term, which is economics is the first one, you have to charge a lot. The second one is it’s not really a scalable business in the long run, meaning, you know, really being like building an enduring company is tough. The second one is on technology. We live now in a world where it’s much easier to build financial services. And what I mean by financial services is digital banking solutions on top of FDIC insured banks. And everything is not you know, any more driven by mainframe architecture, things are built in the cloud, as well as a lot of time and attendance.
And HR partners are willing to work via API’s. And so the technology has really evolved, I think, especially on the time and attendance side and scheduling side where, you know, mobile has started really kicking off in 2010. And then since then has been growing. And, and this is incredible because when you start having a direct relationship that is interactive with employees, you can stack up new products. So this is the right time for them now to start thinking in terms of technology, what’s next.
And then finally, it’s public policy. There has been, I think, a push, rightfully so by regulators to say, wait a second, you know, the providers, if you guys are charging $5 fee, for $100 advance seven days before your paycheck, that is basically a 365% APR. So regulators in multiple states are saying, Hey, you know, slow down, like, we want to look at this, which I think is great for the consumer. And so we were, I think, one of the first ones, the first one to say, Hey, we’re going to build this completely for free for employees, because we know we’re going to give them better financial services than anybody else. So we’ll monetize on that, instead of monetizing on charging them fees. So economics, technology and public policy are the drivers.
So let’s say I want to ask you to share advice on is when I look at economics, I see float with employers, right there, they’re using that money and, and in holding that money and possibly gaining interest on that money until they then have to pay it out. And that’s probably a jaded or maybe even a paranoid way of looking at things. Is that a part of kind of what you’re seeing on the economic side?
Absolutely. There are, you know, providers who give one wage access, like payroll providers, who require the employee, or the manager, the business, to actually pay the money instantly, you know, instantly to employees. Which is not feasible, if you think your restaurant, get paid by the credit cards that your customers paid with two days later.
So you cannot pay your employees right now and get your money back today, there’s just there’s some limit to what’s possible. So that’s why the way we function is we actually are the ones advancing the capital on behalf of the employer. So for some employers, it’s even better because sometimes, as I say, between a weekly pay cycle, a biweekly pay cycle. We help them give the benefit of instant pay, with also the ability to keep as much capital as necessary during the two weeks.
I love that. Okay, thank you for clearing that up. So first thing is, who do we sell to right now? Who’s Clair, when you go into a deal? Are you going into procurement, finance, OPs, HR? Where is your kind of best in road for Clair?
Yeah. So this is this goes all the way to the top to the board, to this to the C suite to the CEO. And let me explain why this is great. But also difficult, usually, usually, for us, if we usually really do a good job at selling our product, when we meet with a workforce management scheduling Time and Attendance payroll provider, who’s asking themselves what’s next, whether they’re high growth, VC backed business, or they’re very stable, you know, 50 year old plus provider.
There is a phase in the development where most of the low-hanging fruits have been having already, you know, caught and now they’re thinking about how do I win. And in that, usually we sit down with them, and we talk about why it is that FinTech and HR tech is the new wave in innovation and that multiple people are thinking about it, few are reacting on it.
But if they want to be ahead of the curve, especially as McDonald’s is paying $50 for you know, associates to just come and have an interview. Paying people in real-time is really something that that moves the needle. So to answer your question briefly, it’s highly strategic questions that need to come from the top.
So I can see this being a tool for both engagement of employees where a company has changed a philosophy. You know, we’ve just gone, you know, we’re going technically still going through COVID. But we’ve learned how to work differently. And now we can kind of think about how to pay differently. But you’re right, it’s a strategic decision. But I could see this being a mechanism to help retain employees, right, you’re retaining retain talent.
I can also see it being as a mechanism to help recruit talent, you know, in job postings and on job ads saying, you know, we have Clair, you can get paid, you know, daily, or, you know, whatever the bit is. You can get paid in a different way, we’re not living in the 20th century or the 18th century or whatever.
We have a different way of looking at paying and compensation in general. Have you had those types of discussions as you get HR and TA and maybe, you know, maybe even a higher level? Or have you had those types of discussions with folks?
Absolutely, I think you’re hitting the nail on the head here. There are a few fun things that I’m seeing on the streets even right now there’s, there’s a restaurant chain that is trying desperately to hire, restaurants have a hard time hiring these days. And, and they just put a huge poster saying, come work for us, we pay you in real-time.
And so this is how, is there’s another partner who does work with nurses. And if you go on the front, on the website, the second bullet is you will get paid immediately here. And this is, you know, for some people, it’s not clear why because some are saying, Well, you know, people should budget better. But the truth is that most Americans work paycheck to paycheck. And so it says about their ability to budget better is just things happen, price of gas goes up, or they have an unexpected medical expense.
And, you know, they don’t really have access to any credit. And so 60% of Americans, at some point going after manager, can I get a wage advance? So this is already something that’s happening. There’s just not good services out there.
Yeah. And it’s, again, there’s kind of a moral and ethical thing that’s being levied against people. And it’s like, Listen, if they’ve done the work, it’s their money. Like, I know that historically. I mean, I used to laugh at people when they would talk to me about terms like net15, net30, net60, or whatever. And I like, does that work in a grocery store? Like that a whole concept that you have, like, you go through, and then you just get to the checkout? Oh you know, what, in 60 days, I’ll pay you for these things. No, it doesn’t work, like you’re paying for the stuff you’re about to buy.
I noticed that you mentioned at the beginning that you inside the US. And so I don’t know if that was purposeful or not. But I did want to ask you, are we still looking at the four corners of the US? If not now, are we thinking about outside of the US?
Oh, yes. There’s 400 million people in Latin America who don’t have access to banking services. Yeah. Period. Right. In Europe, there are still many employees who are paid on a monthly pay cycle. They are, it’s even harder to get access to credit cards in certain parts of the world. Ultimately, and this is really core to the mission of Clair is we never ever charge people for wage advances. And so we are always optimizing their ability to save because that fits our business model, but also giving them the ability to have money. In case I would say this really proves the point for why there is an enormous opportunity to go only in the US but also abroad.
So tell me a little bit more about that, that helping them and assisting them. Because you know, we’re not I’m not sure how your schooling was. But here in the US, you know, we weren’t taught personal finance, if not at home by our parents or whatever. It’s not like we’re in we didn’t go through middle school or high school, and have classes that taught us those things. How to save, how to have great credit, you know, things that we probably should have been taught, A, but well we weren’t. But I really kind of keyed in on something you said about helping them save or giving them some tools and resources in which they can do a better job of saving. Tell us a little bit more about that.
Yeah, I think what’s happening in the US is the case all around the world. You know, there’s some people say, you know, in school and middle school and high school, you can learn what is it, microbiology and geometry, which I really liked. But nobody really helps you save and understand how taxes work and how what a 401k is.
I think most of everybody in the US unless they had extremely good parents, you know, went to their first job and they said you want to sign up for a 401k? And they think what was that? The 404 error we get on pages? I mean, a lot of people just refused, you know from day one. And so what we see here is what we said a little bit with great power comes great responsibility, which is we offer something very simple and the People we think are going to be wanting to sign up for.
And we sit every day with a number of people who sign up for our platform by telling them, Hey, come here and get paid whenever you want, you know, like, you will be notified that your money was available, withdraw it for free instantaneously into a card where you can spend. But then we know that, that that really is attractive. But that gives us the importance for helping people save.
So we asked them how much they want to be automatically saving every month, we also give them savings tools in order to determine you know, how much their rent is going to be or any bills, so that they can plan for that. But at the end of the month, if they were throwing money early, they’re still gonna have enough to pay rent. And then for gig, you know, gig workers, we don’t offer it directly, but some of our partners do, we help them prepare for the 1099 filings.
It’s actually a lot of work to file for your own taxes, and a lot of people just cannot afford, you know, accountants, and there is software online to do it. But why couldn’t your bank do it, since they already have all the data or at least portion of the data? So that’s where I’m going with like, you know, helping people understand finances. Yeah.
And again, you’re doing it’s a cap, it’s a capitalist play, but you’re also doing something to help people right. So there I mean, you know, let’s, let’s, I love that, I love when you can kind of blend the two together. I want to ask, buying questions that you get asked pretty much every day like when people see Clair, they’ve heard of Clair, maybe they’ve demoed Clair like, what are the typical questions folks ask you.
There’s a few typically is like where’s the trick? Because they’re like, okay, so you’re advancing money, I don’t have to pay anything. Employers don’t pay, the employees don’t pay anything. So then the first thing we have to explain to them is something called Durbin Exempt interchange, which is very, very complex words, to say that MasterCard every time, or Visa or Amex, they swiped at a point of sale, which is a restaurant, a grocery store, charges fees, not to the person who’s swiping the card, but to the recipient, which is the retailer, the restaurant, and that is usually around, call it 2% it oscillates around this.
And the thing is because we have a partnership with MasterCard, we generate that, that that interchange a portion of that just comes back to us. And so that’s, that’s the first, How is this possible? The second thing they say is, okay, who else does this? And and and, and when they ask who else does this? Usually we show them that the most tech advanced companies are doing it.
And that whenever we speak to anybody else, they’re either have already triggered with us or they are on the verge of doing so. And so they want to see how they compare to their competition. And then the third thing he says, Okay, great. This makes all sense. I think this is a great add-on. I actually, I’m, I’m I was late with our call because I was on the phone with another provider who said, okay, and how do we do it?
And then you just have to walk them through the technicalities, they realized that there was a tiny bit of switch on their side, they need to put a button so employees can self sign up. And then they need to go into Okay, so how does that fit within the product plan? Once all of this is done? Typically, it’s very, it’s fairly simple. But these three questions do take a while. And we do have to repeat it a few times to the entire organization for them to be signed off.
The flipside of that is what are questions that you wish folks asked, that you really probably eventually get around to answering it without them even asking, and but what do you wish you know, when you first showed a demo, and you show them Clair and you show them the ease and customers using it, and this and the other? What are you What do you wish that they would ask you?
Yeah, I think ultimately where their interest and ours lie is on retention and attraction. And attracting workers. I think a lot of providers go deep into the technicalities without necessarily taking a step back and saying wait a second. Why in the world, would we do this versus changing the design of the app. And I think there’s a lot of arguments here where the number of applicants increases. There’s papers by Harvard Kennedy School that proves that once you have something like this, you can increase retention. And I think spending more time there and saying we will figure out the how but let’s talk about the why. First. And I think a lot of people jump into the what and the how before really spending time on the why.
And I see the same thing. From my perspective, that you know, they jumped so far into one side of just how we’re going to do the technology. It’s like Well, you know what, let’s, let’s figure out a philosophy, first. Let’s agree as a board, as a C suite, etc. like, is, is this a good deal? Is this a good idea? Do will our employees and candidates that we want to attract? Will this help with both of them? the retention of top talent and also the attraction of top talent? And the answers? Of course, Yes, it will. Success for Clair let’s just go short term, 18 months. What does that look like for you?
Success for us is we, I genuinely want to live in a world where—it has nothing to do with our business—it has to do with you think the social impact we have. Which is I live in front of a payday lender. And I see lines on roughly the 25th of the month or five days before paycheck arrives. People just need advances. And I just want to live in a world where I wake up in the morning and I don’t see a line in front of them.
It’s not that I think actually payday lenders solve a good problem because people do need cash and they just don’t have many options. I just think there’s a better way in innovation to do it. So that’s really what success drives at the end of the day. And so I think more tactically, what this means is, I think they will providers Time and Attendance providers need to realize that they hold the keys. Going back to the very beginning of the conversation when we talked about, you know, what’s, what’s difficult about a product where others haven’t succeeded is that to go direct to employers don’t care enough.
If you go direct to employees, you don’t have the data, you’re gonna have bad actors. It’s going to cost everybody an arm and a leg to do this business. So for me, success is getting this entire industry seeing that they’re the ones who are going to be able to drive the change and that they don’t have to do it alone. They have partners who are there to help them. That’s it.
I love it. Absolutely love it. Where can folks find Clair?
They can visit us I think if they just type Clair C L A I R on Google to find us. If not, they can get on just on the URL and type getclair.com and you can find us on LinkedIn. They can find us on Instagram. They can find us I think virtually, we’re not on TikTok yet, or Snapchat right.
Coming soon coming soon. There you go. Nico thank you.
I know you’re busy brother. I absolutely appreciate you carving out some time and educating us and the audience on Clair. I love capital L love what you’re doing. And I can’t wait to see those lines go down as well. So thank you for what you’re doing. And thank you for the time today.
No, thank you so much. Will, you have such a great channel here and it was a pleasure spending some time with you.
Awesome. And thanks to everyone for listening to the Use Case Podcast. Until next time.