We back the purposeful.
In this episode of Building the Framework, Boyang Li sits down with co-founder of ZayZoon Tate Hackert.
ZayZoon is a FRAMEWORK portfolio company revolutionizing financial wellness through earned wage access. ZayZoon empowers employees by providing access to their earned but unpaid wages.
Listen to the podcast: SPOTIFY
Tate Hackert shares the company’s journey from its early challenges to becoming a leader in the earned wage access space. Listeners will hear about ZayZoon’s innovative business model, its partnerships with payroll providers and small businesses, and the impact it has on employees’ financial stability.
Boyang:
Hi everyone, welcome to our first episode of the Build the Framework series. In this series, we'll feature candid conversations with founders from our portfolio and beyond. Each episode will offer practical advice and inspiration for aspiring entrepreneurs, founders, or those who are just curious about what it takes to build companies. Our first guest today is Tate Hackert, co-founder at ZayZoon, a framework portfolio company and a leader in the earned wage access space. Welcome Tate, thanks for taking the time to sit with us today.
Tate:
Man, I didn't know this is the inaugural podcast. Alright, I'm honoured.
Boyang:
You are a special guest. maybe just jumping into things and so people can learn a bit about you, do you mind sharing a little bit about your background and what brings you here today?
Tate:
Yeah, certainly. This is a story I've got used to telling often, but it's always a fun one. You know, the road to ZayZoon was a long one, and it really started kind of as a teenager. I grew up on the West Coast of Canada, specifically grew up in the fishing industry, the commercial fishing industry. And as a 14, 15, 16 year old kid, I made a decent amount of money on these commercial fishing trips. When I was 16 years old, I did a second mortgage. Effectively just means that someone needed a mortgage, needed a mortgage from a private lender. They were a subprime customer. And so I gave that mortgage when I was 16 and a year later, I got a check back with some interest.
And I thought, my gosh this is a pretty cool way to make money I can just give money out and get more money back and at the time I was spending a lot of my days on Craigslist this is I'm 32 now so this is back in you know call it 2005 2006 Craigslist was where you went to you know buy and sell things and as someone that was always looking for like an arbitrage play I loved playing in that in that arena
And so naturally it just felt like, if I'm going to try to build a business of giving money out, I'll go to Craigslist and make an advertisement for that. So long story short, between the age of 16 and 23, I lent out a little over a quarter million dollars of my own capital in these short-term small-dollar loans. More importantly, though, the same sort of theme presented itself, which was that there were a lot of individuals living paycheck to paycheck needing to come to Craigslist of all places to get $1,000 to get by for a period of 30 days or so. And really it was one of those like there must be a better way. And so after researching and finding that overdraft fees and payday loans and all these predatory products that are out there to help fill that short-term liquidity gap are really the only things that exist.
And so ZayZoon was the idea of, well, can we provide that same utility, can we give someone access to their liquidity between paydays, but can we do so in a really socially responsible way? And so fast forward to today, we deploy our product through payroll companies and small businesses, and then ultimately employees choose to use our product to access a portion of their earned but unpaid wages to help get them by during the pay period.
Boyang:
That's awesome. Honestly, it's always great to hear kind of that, you know, that context, right, of why we're building where we are. And, you know, maybe going a bit deeper into specifically ZayZoon what was it like at the beginning? What was it like kind of building ZayZoon kind of those early days?
Tate:
Yeah, so my co-founders, Darcy and Jamie and I, we always talk about like the drunken walk or maybe more specifically, like the first few years, maybe the first four years of ZayZoon felt a little bit like we were walking around drunk in the dark trying to figure things out. And yeah, you know, we had this thesis that we would embed our product into payroll. And through that embedded motion, we would be able to seamlessly onboard businesses, which is important, especially when you're serving the small business space, right? And then in turn the employees would learn about ZayZoon and use our service to get access to short-term liquidity.
And in theory, that's really beautiful. In practice, that's a B2B2C business, B2B2B2C business. And it's incredibly difficult to execute on every step of that funnel. And so I think throughout the journey, there was a ton of learning for us trying to figure out where our key leverage points were. Is this thesis that we have actually a good one, or are we chasing after something that is maybe incorrect?
But we're just so hard-headed in our idea here that we want to make it work. And so I think a lot of those learnings in those early days and a lot of the sort of trials and tribulations were really built around and still continue to be built around our somewhat complicated go-to-market and how we can affect the most points of leverage at each part of that funnel.
Boyang:
Right. Right. I mean, I think, you know, we've spoken before, right? Before on the journey that you guys have been on and just kind of building the original building blocks, like getting those relationships and proving it out to the payroll providers, proving it out to employers. If you didn't you didn't always see the results on a day-to-day basis. You had to be patient, if you will, right, to kind of build it a bat out all out to get to a point where you can kind of scale the way you guys have.
Tate:
Yeah. I think it's important to note as well that Earned Wage Access was an industry that we pioneered. We invented earned wage access a decade ago. And so it's hard enough building a business in general. Now when you try to build a business and actually shape a new category and bring people along for their ride. It's incredibly difficult. And so even though the concept is so simple, like, well, I worked today, I should get paid today. Why isn't this always the case? Like, why do I get paid every two weeks? That makes no sense. The concept is so simple. But again, when you try to apply that to everything that you need to make work in the business, it's incredibly difficult.
Boyang:
Right, right. And if we fast forward to now and, you know, it's been what, like close to 10 years for you guys? Now on this journey, where are you guys now? Can you give a sense of maybe traction or kind of size and scale of where you guys are?
Tate:
Yeah, it's been more than 10 years from idea. It's been 10 years technically, or just over 10 years technically from founding. And it's been probably, you know, seven years since we started doing this in earnest. And I would say it's only been four or five years since we really knew like, this is working, there's something here. And so it's taken a long time. Yeah, so size-wise now we're 185 people, 35,000 business locations across the US that offer ZayZoon to their employees as a benefit. And we just launched in Canada and have a number of locations here now that have been onboarded as well.
Yeah, we've raised in part, in a big part, thanks to FRAMEWORK. We've raised over $50 million now, or just under $50 million, in real US dollars. Yeah, does that give a bit of a sense of size without going? to tune to the numbers on my end?
Boyang:
Yeah, yeah, that's perfect. That really helps the audience understand what kind of size and scale we're talking about and probably gives a better sense of not only Zayzoon, but also where EWA adoption is in terms of the relative adoption curve of the overall market. But kind of going back to one of your early points, you know, the idea around ZayZoon and kind of combating, you know, predatory payday loans.If you had to look forward and kind of beyond just financial outcomes, like how are you measuring success for ZayZoon
Tate: I think, so I think success for ZayZoon if I look at Tate 10 years ago, compared to like, and what I thought ZayZoon would be then at this point versus what it is now – we've exceeded all my thoughts of what success is. And so to me, like, yeah, of course, financial outcomes are a thing. We've always thought of ZayZoon as being a double-bottom-line business. It was really important to us to provide a socially responsible product to the workforce. Our mission is to help 10 million employees save $10 billion, and we do so today by way of earned wage access and helping them save money on what otherwise they'd spend on overdraft and payday lending fees. So for me, where I see success the most or where I get like, maybe I'll reframe success as like proud and I feel accomplished is sort of in two buckets. One is when I get to talk to our customers, it's just such a great, incredible thing. I never get tired of it. It's so, so cool being able to meet someone in person and hear how they interact with the product and how we help them in a pinch and whatever else. It's really neat. And then the second thing is, we're almost 200 ZayZooners now. We actually just got back from an offsite that we held in Arizona a couple of weeks ago. And so we held the offsite. We've held it now for three years. This is our third year. And our first year we did it, there were 25 people. Our second year it was 65 people. And this year there were about 150 that showed up. And I mean, that is cool. Being able to see everyone so tied into that mission of helping 10 million employees save $10 billion and so like is representative of our core values. And honestly, just like people that I want to hang out with, but want to see succeed and like to see them succeed in a fast-growing startup. That's a really cool thing because like the best of the best like it derives to the top. Right. And there's always an opportunity to go bigger, faster, and stronger for those people who are really hungry within a company. And so for me, like seeing some people that have been with us for five, six, seven years, like starting from a customer support role and wanting more and then getting more and now being a manager in some part of the business completely separate from customer support, that's really cool growth. I think to me that's a success but like it's a really proud moment.
Boyang:
Yeah for sure. I mean it really just sounds like you know funny enough that you know we work in obviously in the tech space but it really comes down to people right? Your customers and your employees like that's where you can really measure the impact and the influence that ZayZoon is really all about.
Tate:
Yeah I think that's a really important point like we work in a tech space sometimes tangibility can be difficult, especially in a predominantly B2B framework. It's difficult because you don't actually get to see your product in real life or see the fruits of your labor in real life like you might with Uber or something like that where you're actually interacting with it all the time.I think that tangibility is super important. And we try to, we try to bring those two things together, our customers and our team, we try to bring them together, you know, constantly. And so we have a couple of people that are full-time on the road ZayZooners visiting clients, having interactions with clients and their employees. And then they bring in other ZayZooners for those trips as well. And so that acts as like really amazing team building, really great connection to the business, and then a really good feedback loop for how our product can be improved upon and kind of that all goes back to home base to be worked on.
Boyang:
Do you want to share about your RV trip?
Tate:
Yeah so I mean like what we do now is kind of a direct
What we do now is, as in like the client visits, is sort of a direct output or inspiration from this one big marketing stunt that we did in 2022. So two years ago, we took a RV, branded it with ZayZoon, wrapped it all up and embarked on a 75-day road trip where we went to 21 states 21 states visited you know hundreds of clients and and and thousands of Zayzoon's advocates' thousands of employees that use a ZayZoon in and we brought 41 or 42 ZayZooners along for that journey. So it was really cool. We drive and the RV would be in Houston for three days and we'd have a couple ZayZooners owners parachute in we drive around the Houston region to all of the businesses that use ZayZoon stop by and run little you know community activation events, bring in food trucks, just show our support for the community, show our support for the employees using us. And again, like those ZayZooners got to have real life conversations and interactions with those people at work. then you know they'd get shipped back home. Myself and another individual would drive that RV to the next city. So from Houston to, I don't know, maybe Dallas. And the same thing would happen again. We'd have a whole other, you know, three or four ZayZooners fly in and do it all over again. And yeah, that was a 75 day crazy fun, amazing learning experience for myself and a bunch of us.
Boyang:
That's awesome. I think that's back to what we're talking about. It's about the people, right? Great opportunity to connect the ZayZooners with the customers and also just build that brand.
Tate:
The concept, what I always try to do, what I always try to do at ZayZoon or always try to have the team flex their thinking on is how can we accomplish three or four things at once? I say how can we get three birds stoned at once is actually what I say. But the point is, if you're going to do a marketing thing, if we're trying to do some sort of marketing campaign to accomplish whatever more throughput of the funnel in some area. How can we do that marketing campaign in a way that also connects the team and also connects the team to the customer and also grows the business? And so now all of a sudden we've taken one thing, but we've gotten three separate things out of it. And I think that's really important in a startup that is always or in any company that is trying to do more with less is like how do you pick one or two things that actually represent three or six things.
Boynag:
Yeah, and for sure. And on the idea of how you get the most, call it bang for your buck, because that's how you need to operate a startup. A lot of VCs and founders talk about something, a term called the inflection point, where just after a bunch of hard work, a bunch of know, time and effort to things, suddenly you just see this kind of hockey stick growth or this kind of momentum that really accelerates. Do you think ZayZoon's had that moment already and can you speak to it? Or do you think it's still ahead of us?
Tate:
I think both. I think we can name a point in time, and I will here, but I can name a point in time where we really felt it was working.But I also know that like we're very much so just getting started. when you look back on our, actually we did this at our offsite a couple weeks ago that I speaking to, where when you look at sort of our growth on a chart over the past five or six years and you keep zooming out, zooming out, zooming out on that chart, it's incredible. Just to see where we thought we were doing great and we're like, my gosh, like this is amazing. And you zoom out and you look at the next year and we're like, my gosh, we had that much more growth. And so yeah, I think it's very much ahead of us still. But I remember specifically at the start of 2020, and we all know what happened in 2020, of course. But at the start of 2020. My co-founder, Jamie, who kind of does a good job , like myself, Darcy and Jamie, Jamie's our CFO, Darcy's CEO and myself as president. Darcy and I always kind of have this like back and forth overly optimistic excitement. And Jamie always does a really good job of wrangling it in, in a really nice way. And at the beginning of 2020, Jamie goes, he says like the most optimistic thing that I've ever heard him say in his life, right? He goes, “guys, I think, I think we got this figured out.” I've never felt so great before. Like I've never felt so good as I do right now about the business. And then, you know, fast forward like a month later, COVID hits. And of course, you know, shelter in place occurs when people aren't working, they're not getting paid and when they're not getting paid, we can't give them wages early, right? And so our revenue overnight dropped by 60 or 70%. And the rest of 2020 was spent clawing our way back up to where we were at the beginning of 2020. But that was an inflection point, certainly. Like we knew that it was working at that moment. We had a bunch of different parts of the funnel, the payroll companies were buying in, the businesses were buying in and the employees were discovering us and using us. And so it was firing. And we continue to try to improve that at every step of the way. But that was the first point where I think all of us were like, yeah, there's actually something here.
Boyang:
That's awesome. That's great to hear. And it's definitely one of those things where sometimes when you think you're facing the biggest law possible to the company in your journey and you reflect back and maybe that was the callousness for something even greater. And I gotta say – I've known Jamie now for quite a bit and yeah, could not see him actually saying those words. I feel like he regretted it afterwards, just timing wise, given COVID was just a few months after that.
Tate:
Absolutely. And you know what, they say like, what's the saying? Never waste a crisis, is that how it goes, right? And so COVID for us was really great because it allowed us to just focus hard on improving a lot of our, I hate the word like processes, but like improving a lot of our processes internally. And we actually didn't do layoffs or anything during COVID, we actually ended up hiring people. Because even though our growth wasn't there, we did exit the year higher than we started, which was great. But even though our growth wasn't there, we were able to improve our gross margins immensely during COVID because we just tightened up a bunch of things. And so it gave us a bit of room to sort of take a step back and go, right, like, what's the root cause issue of a lot of the problems that we're starting to see creep up as we've built this business? And as we're seeing that inflection point a little bit, and how can we use this as an opportunity to, know, as we're not growing, to really like nail these problems head on right now, so that when we do inevitably grow into the future, this isn't something we need to worry about, at least for a bit of time.
Boyang:
Right, right. And look, I mean, you've shared a lot of your experiences both before ZayZoon and the journey throughout building ZayZoon. Any specific advice you give kind of founders out there, ones that are either looking to start a company themselves or in the midst of scaling one themselves?
Tate:
Maybe probably just double down on the theme of talking to your customer. I think that customer obsession is that there might be some cliche in that. I think Amazon's very famous, Jeff Bezos is very famous for talking about having that customer obsession, but I think truly living that and not having it be a check the box item in a customer discovery process or whatever other product marketing and other terms that it can kind of fall into. Ultimately, it's like you need to just have curiosity and a customer obsession always. If you're building a company in the payment space, I mean, I still do this today, like every time I sit down at a restaurant, I'm trying to ask the waiter, like, hey, like, do you get paid early? interesting, what do you think of your POS system? Did your POS system have automated tip outs available? it does? you don't use it? How come? Like you just need to be on 24-7, and you need to be super obsessed with the problem you're trying to solve. I think if you can match that, if you can combine that customer obsession or that problem obsession, which inevitably falls back to the customer, you're trying to solve the problem that they are having. So if you can match that problem obsession with a really good intuition and vision, then the middle sort of comes together. You just keep having that forward momentum. You keep trying to solve problems and you'll build your own vision and your own outcomes along the way.
Boyang:
Right, right. And then maybe as an extension of that, so let's say, you know, a founder has that problem obsession, kind of found that called problem market fit, product market fit and now you know they're looking at scaling and they're out to market looking to raise some capital. What kind of advice would you give to founders who are right now thinking about fundraising when maybe specifically thinking about how to run a good process, how to select a VC, things like that, any kind of high-level feedback or suggestions there?
Tate:
Yeah I'll talk about our relationship with FRAMEWORK. For us, it was super important and this is across the board in like not just investors but like partnerships that we do in general. Our team dynamics who we bring on as new hires really do lean on our core values. Our core values certainly are not just these things; they can flash it up on a wall. We do really really instill those and probably a conversation for another time but we have tactical ways that we talk about our core values on a daily basis. So we do really have those core values that drive a lot of our decision making. With FRAMEWORK, it was very clear that core value alignment was there. And it was shown. Like one of our core values is hustle and I don't mean hustle in the way of like doing a lot of work. Doing a lot of work is just table stakes at a fast-growth, fast-paced company. Hustle is like the ability to do more with less and look at problems in a different way and pull analogies from life, pull analogies from other experiences to find leverage points of how to execute something better. And going through our discussions with FRAMEWORK, like it was very obvious that hustle muscle was there. And so for us that really hit home. The other thing is, like, your investor needs to be someone that you enjoy having a conversation with. Like, they are going to be a big part of your business for, you know, hopefully, years to come. Beyond core value alignment, you kind of just got to enjoy the person. And then of course, there's a lot of the other things that come with it too that I would say are maybe more. Maybe more table stake from the investor front, but can be differentiators based on the industry that you're in. And so like I know with us, I won't name names maybe, but with us in FRAMEWORK specifically, like some of the LP base that you have, the ability to call on those LPs, what that means for our connections into certain areas, like that's all very helpful. And so you wanna pick the, I think you want to pick the right VC that has the right LPs and you know not just do they have those LPs but are they willing to connect you with them and what does that connection database look like I guess and how valuable can that be for your company so does that answer?
Boyang:
Yeah that was super helpful and for the audience that was not prompted in terms of feedback on FRAMEWORK but that being said like I think just echoing you know our earlier conversation about
it still comes back to the people, right? Some of the value add that VCs provide, I would say some of its still table stakes, but it still comes down to people. Is this a person that you can work with long-term? then really where does that come from is those core principles or values. So.
Tate:
You know a lot of that in your gut. And as soon as that sniff test is just a little bit off, Yeah, don't, just don't go there,
Boyang:
Tate, I really appreciate you taking all the time. I'm just gonna leave it with one more question. Looking forward, what's the future vision of ZayZoon?
Tate:
So, yeah, without giving away too much, I suppose: We believe that earned wage access is just the beginning. The value of what ZayZoon has done really lies in our partnerships with payroll companies and our distribution through the small business. And so we believe that there's a ton of value that can be provided to small businesses to better connect them with their workforce and keep a better pulse in the financial health of their workspace. And we know that a healthy, we know that a financially healthy employee is an employee that will stay longer, be more productive. If we can execute on that mission of helping save 10 million employees, $10 billion and do so in the workspace, we know there's a ton of value that can be created for all of our personas involved.
Boyang:
Yeah, I'll leave it there. Awesome. Thank you so much, Tate. And that concludes today's episode. Again, thank you for joining us today and thanks for everyone for listening in. If you would like to learn more about FRAMEWORK, please visit our website, FRAMEWORK.vc. Thank you.