Darcy Tuer is CEO of ZayZoon. He started the company with co-founder Tate Hackert.
What is ZayZoon and what does it do?
Tuer: ZayZoon is a socially responsible, financial technology and employee wellness company. We partner and integrate with payroll companies to provide employees with the ability to access their earned wages any time rather than having to wait for payroll.
The problem we’re working to solve has manifested due to that fact that 78 per cent of Canadians and Americans are living paycheque to paycheque. More than 38 per cent of employees say financial stress affects their workplace productivity; furthermore, employees who are troubled by their finances are twice as likely to be in poor health.
Our goal is to improve our customers’ financial health from when they first use us to when they no longer need our benefit. Our distribution strategy focuses on partnering with payroll providers to surface our benefits to the employees that they pay.
Accessing employees through payroll provides us a way to offer ZayZoon to a large population where there are certainly people who need our service as they may already be caught in the debt spiral caused by payday loans and egregious banking fees.
Most of us can empathize with people undergoing financial stress as it’s such a pervasive issue. Everyone at ZayZoon is dedicated to working with our customers to provide a way to handle unexpected expenses while reducing financial stress and improving our customers’ financial savvy. There are few things more stressful in life than not being able to make ends meet.
What’s the history of the company. When, how and why it started?
Tuer: In 2014, I was introduced through a mutual friend to Tate Hackert, who had recently moved to Calgary from Victoria. Tate had been investigating and experimenting in the short-term lending space while he was in university. His curiosity led him to learn that over 10 per cent of the workforce uses payday loans that charge upwards of 600 per cent annual percentage rate. In Canada and the U.S., 18 per cent of bank account holders incur three or more overdraft charges a year, resulting in over $30 billion in fees. On top of that, there are more payday loan stores in North America than Starbucks.
As a way to combat this epidemic, Tate started offering low-cost loans on Kijiji as an experiment and wanted to scale the concept after deploying more than $250,000 of his own capital. As a serial entrepreneur, I knew that great companies were built on solving interesting problems and Tate had certainly found one that looked like it had traction. Tate and I decided to partner up, create ZayZoon and take the concept to market in Canada and the U.S.
We know ZayZoon is commercially an exciting business, but just as importantly it has a second bottom line that we monitor just as closely as the first. That second bottom line measures how much money we save our customers compared to alternative products. Our investors, employees and board are all motivated by our social impact and it’s an important part of our DNA. In fact, we think this altruism is a key differentiator that will lead to more commercial success as it engenders trust, engagement and retention with our partners and customers.
Give me a sense of how much your business has grown since inception and what your reach is today?
Tuer: Tate and I spent the better part of 2015 conducting market research, building a minimum-viable-product (MVP) and finding our first payroll partner. We launched in late 2015 with our first partner and used that success to raise capital and build our team. At that time we brought on Jamie Ha, our third co-founder who rounded out our team with his deep finance and capital markets experience. As a financial tech company, we knew we needed financial expertise and Jamie brought that along with the right core values and tremendous grit – key ingredients when you’re looking to add a co-founder or any employee, for that matter.
Our first launch opened up ZayZoon to about 20,000 employees, which was unbelievably exciting and terrifying for us. Since 2016, we’ve added about 40 payroll partners, which represents close to 3.5 million employees. We continue to add and onboard two to three payroll partners a month. Over the last year, we have consistently seen 25 to 40 per cent month-over-month growth, which is exciting and has forced our team to focus on scale while also trying to maintain an awesome customer experience.
We currently have 25 employees in Calgary, an office in Scottsdale with a few amazing business development staff along with some dedicated customer success personnel. Our concept is to keep the organization very lean by leveraging technology so we can maintain an optimized cost structure in order to keep our fees low for our customers.
What are your plans for the company?
Tuer: ZayZoon has started to migrate from financial tech to HR tech. This is important to us as we believe there’s a tremendous amount of running room in HR and employee benefits. We interact regularly with thousands of customers that have come to depend on our services and we’re just starting to understand the impact that we’re having on employee health and productivity.
We are tirelessly focused on evolving the product in ways that continue to improve our customers’ financial health. We started out with a thesis centred on the benefits of providing employees with access to earned wages. This has been a tremendously successful product for our customers but it doesn’t go far enough. In 2019, we’ve added bespoke content for users based on their demographic, industry and characteristics from their on boarding process with ZayZoon where we walk them through a financial health assessment. On top of that, we’ve implemented machine learning algorithms that notify customers when they’re in danger of an overdraft or NSF with their bank.
ZayZoon is currently operating in Canada and the U.S. We see significant opportunities in other markets and are exploring them in earnest. With the democratization of services such as payments and infrastructure, we are excited about making ZayZoon accessible globally.
What is the best piece of advice you have ever received about being an entrepreneur?
Tuer: The most impactful wisdom I’ve received was from an investor and it has informed many decisions since. He said, “I’ve seen mediocre teams with great ideas achieve mediocrity but I’ve also seen great teams with mediocre ideas achieve greatness.”
I’ve started and scaled four companies in my career. In the early days, it was always about a novel idea that would result in significant value creation for all parties willing to jump on board. After many years and many mistakes, I’ve learned that the team is often more important than the idea. Surrounding yourself with people smarter than you is paramount at all stages of running a business.
My advice: find the best people you possibly can who could likely go out and start their own company. Convince them that your pursuit is worth their opportunity cost and compel them to stay through incentives such as ownership, a great culture and purpose.
Interviewed by Mario Toneguzzi, a Troy Media business reporter based in Calgary.