Dave: Hey everyone, Dave here with another episode of the Philly Tech Connect podcast. Today I’m speaking with Samara Andrieux, she is the chief customer officer of Funshine, a financial wellness platform focused on helping individuals get rid of their payday loans in exchange for one with a significantly lower interest rate and also supporting them with financial literacy. As she notes, there’s a lot of data linking financial instability and poor health outcomes, something she learned as she progressed getting her Masters in public health. So, Samara, how are you doing today?

Samara: I’m good, thank you very much for having me, Dave.

Dave: It’s my pleasure. Thank you so much for being a member of the community. Funshine is a really interesting product. It’s an industry that I don’t know so much about, and I guess I’m fortunate to be somewhat ignorant of it because it means that I haven’t taken out one of these types of loans. But can you tell us a little bit about the state that the customer is in when they would potentially come to Funshine, what a payday loan is, and why they take them out?

Samara: Sure, I’m glad to hear that you don’t have one. What Funshine does for these customers is we help them get out of the cycle, this cycle that they’re in, the cycle of debt that they’re in by being in these payday loans. So, what a payday loan is, is a predatory loan that has a high-interest rate, an average of 400% and can reach up to 800%. These loans have a short time period in which customers can pay back that initial principal and interest rate, usually within a two-week time, and that is not a sufficient amount of time for customers to pay back that loan with that high-interest rate, which keeps customers in a cycle of debt. What Funshine does is that we buy out that high-interest payday loan and revolve it, actually excuse me, turn it into a revolving line of credit bonded with our program called Funshine Freedom Circle, which provides tools, products, coaching, and support to help our customers toward their financial needs. We’ll be saving our customers over 60% in savings and over $2,500 in interest when they come and they choose Funshine as a solution. We’re actually the first company to refinance payday loans at scale.

Dave: That’s great and congratulations with that. I’m so surprised because it seems like such a problem that needs to be addressed. Correct me if I’m wrong, but 400% interest feels beyond predatory. And if somebody is in need of a loan, the likelihood that they would be able to pay something back within a matter of weeks seems very unlikely, right? Because they obviously don’t have the money right now; otherwise, they wouldn’t be asking for a loan in the first place. What are the circumstances that somebody would take out a payday loan? Why does anybody even sort of voluntarily sign up for something like this?

Samara: There’s several factors to this. It affects over 17 million Americans annually, and those individuals take out these loans because of unexpected payments or to pay off regular expenses. Unexpected payments could be a medical bill, an unexpected car repair, or rising utility costs, including rent, their mortgage, their car, things like that. And what happens to these individuals is that they’re not offered proper financial services in their area or where they’re from. They are only offered these predatory payday loan lenders that are in their areas, and they offer quick cash, fast, no credit check, and people flock to them because it’s quick cash that they need now because they’re in a dire way in which they need quick cash. And many of them don’t read the fine print or understand what they’re signing, and they end up trapping themselves in a cycle of debt to these lenders, and it’s almost impossible to pay off. And these predatory lenders know that they’re exploiting members of this community because they know that the demand is high and they know that they won’t be able to pay for it. So, how they make money is by keeping people in debt.

Dave: You know, it sounds like—I hate to say they have no other choice—but you, so do you get hit with an unexpected bill that is more than you really have on hand, and they are sort of not qualified, so to speak, for other options that other people might be able to kind of get in such a situation? You mentioned that a piece of Funshine’s sort of value is in the financial literacy, which I think is really cool because, in some ways, you’re trying to educate people to not be your customer again. And you don’t see a lot of businesses take that approach. But you kind of think for the greater good. What is sort of the literacy sort of arm of Funshine? How are you guys approaching that?

Samara: As I mentioned before, we have a program called Funshine Freedom Circle, which we will be launching in mid-year of this year. And what it does is we provide expert coaches, one-on-one coaching sessions to help customers through their budgets and create action plans where we can help them set up things like an emergency savings fund. Research has shown that over 60% of Americans didn’t even have a $400 emergency fund, and when in terms of COVID, that was even more prevalent and very much needed at the time. So that’s one of the things that we’re also going to be working on with our customers. We’re also going to be providing other tools and products, and one of the things that we’re going to be offering is peer-to-peer support where we’re able to set up our customers with other customers within Funshine to get to know who are similar, who are in a similar space, who have similar interests. We set them up, and they can get to know each other and maybe learn more about some financial tips and tricks that this customer knows that this customer wasn’t aware of. We’re trying to build a community. Funshine is what we’re trying to build here, a community of people and a community of education to teach each other. We grow as a community, as you grow as a nation, you grow as a community first. You start off as a community, and you become a nation.

Dave: I do love that. The emergency fund is such a big one, too. I found as I’ve gotten older that these unexpected charges are surprisingly more expected than you realize. It’s not always the same charge, but there’s always something, like, every month that is unexpected, and yet it’s regular. So, you can kind of start to expect that the unexpected is going to happen. Tell us a little bit about how you found yourself in this space because you had mentioned that your background comes from public health, which obviously has a connection, and I think you’re going to talk about that with the financial literacy, but it’s not so obvious. So, tell us a little bit about your background, how you found yourself working on Funshine.

Samara: During my Master’s Degree, I saw data linking financial instability with poor health outcomes, and that really intrigued me. And I felt like I wanted to do something about that, but I didn’t have enough experience to do so. But while working in my career field as an epidemiologist, I saw data linking at firsthand. Now, I saw that with my patience, and I said to myself, “I want to do something about this. Something needs to be done here.” And this is what really kind of ticked me off because I said, “This can’t continue to happen. Something needs to be done.” So, I decided to solve for the root cause of the problem and not continue to treat the symptoms. I wanted to really focus on what was causing the issues of these poor health outcomes in terms of stress. Stress is a big killer, but other chronic conditions like diabetes and things like that, other factors factor in with that, with the food deserts. But again, that also ties in with finances. Financial stress is a big form of—it’s a big stressor in all communities. So, this is the reason why I decided to focus on that problem.

Dave: Love that again because it’s not just the financial literacy, which is so important throughout our lives, but also the health aspect, and you’re just solving, you know, at least working on solving two major problems at once. You know, I don’t know much about financial Tech in the industry per se. I’ve never really had a lot of direct work, although I did used to work for a credit card company, so I guess I know a little bit. I used to work for Capital One for a couple of years. But so, but not doing predatory loans, don’t worry about that. But you know, it’s my understanding that a piece of this business model is built on sort of risk modeling and kind of understanding who is a good candidate for Funshine and understanding who has a high likelihood of being able to pay you back because, you know, it is a business. You’re obviously trying to make a profit to grow and help more people. So, is that something that is a behind-the-scenes part of Funshine, or maybe it’s in the works? Like, how do you approach determining who to bring into Funshine, who not to?

Samara: We have created an algorithm in which we are able to, it’s called cream skimming, so we can help all 17 million Americans, but we can help those who are most in need and who are most likely to pay off these loans. So, it is something that we do behind the scenes, but it is well known throughout our pitch that we do use a process where we do income verification in which we determine your income, and then we set up payments based on your income, and then we help you from there. So, we definitely focus on the customer and what they’re able to pay and create an algorithm that helps us achieve that. So, we’re not taking a massive amount of money from a customer’s paycheck, and they’re not able to live their life fully.

Dave: It’s nice that you, it sounds like there’s a holistic approach to understanding the individual. You know what their goals are, why they find themselves in this situation, but then there’s like a math component as well to make sure that the math works based on their income, what is their ability to pay back, you know, and hopefully you can kind of find the right balance there. Very cool stuff. I guess what, so what is, you know, oh, I guess I had, sorry, I had one more question here. You had mentioned in the Slack chat that you were sort of looking to target people in the Midwest, if I’m not mistaken, and I’m curious why that particular demographic? This seems like a problem that, you know, is fairly national and also would be no more or less prevalent in any particular area, so I’m kind of curious.

Samara: Currently, Funshine is launching in the Midwest due to us gaining lure in those states. So, that’s why we’re going to be working with other platforms like Atomic for income verification and SEO, which also provides that lure portion. But at this time, we’re not working with them, but we will be in the future. But at this time, we’re applying for licenses individually state by state. So, Missouri and Arkansas and Maine, we’re currently in those states because for Maine, it’s easier to launch, and they’re able to get at least five customers in that state, but it’s easier to launch in those states for now as we start gaining our final license.

Dave: It’s interesting. There’s always a lot of regulatory aspects of businesses in the finance space, and it’s one of the challenges, I guess, that you sort of have to launch state by state because you can’t just sort of open these things up to everybody. I run a marketing agency, so we can kind of just work with whoever, wherever. It’s very easy, and these are things that I’m not accustomed to. So, I’d love to hear what is next for Funshine, and in general, if people want to learn more about you and what you’re working on, where should they go?

Samara: They can go ahead and go to funshine.com. You can go to the “How it Works” page or “About Us”. We’ll be updating our customers. You can go ahead and join our waitlist, and we can send out some newsletters on what’s up and coming and if we’re going to be launching in your state. Yeah, we have some great things coming up. We’re actually currently in the Plug and Play Visa accelerator, and we’re doing a lot of great stuff.

Dave: Awesome. I’ll be curious to hear how that accelerator goes for you guys. Definitely keep us updated in PTE. I hope to see at some events and also taking part in the Slack group.

Samara: Yeah, absolutely.

Dave: Thank you.

Samara: Thanks, Dave.