Why
Of the 7 billion people on this planet, an incredibly tiny fraction of us have the opportunity required to work on humanity’s hardest problems and push the world forward. Almost all of us are just trying to scrape by. Just trying to survive.
The vast majority of humans are born poor and stay that way year after year after year. Why? The answer is not that poor people are dumb — they aren’t. Research shows no correlation between raw intelligence and economic station, let alone any causation.[1] The answer is that when you’re poor you don’t have the luxury of spending the majority of your time and mental energy becoming what society considers “smart,” because you’re spending the majority of your time and mental energy just getting by.[2] As a result, our planet has an unbelievably large and completely untapped pool of smart and creative humans, who simply haven’t been given the opportunity to be smart and creative.
The problem is that not having money is really stressful. Neuropsychological research suggests that living in a constant state of stress upsets the chemical balance in your brain. Your brain becomes severely impaired in its ability to think and make decisions like a normal human, because it’s essentially operating in “fight or flight” mode all the time.[3] Try making good financial decisions while you’re being mugged at gunpoint. At the chemical level, that’s what trying to get un-poor is like.
Unfortunately, poverty is a neurochemical trap. And it is nearly impossible to escape.
Today, something like 0.1% of humans have the economic opportunity required to get “smart” enough to work on things like sustainable energy and affordable healthcare. Imagine if, instead of 0.1%, just 1% of the world’s population had this opportunity. Ten times as many bright minds, free of the trap. Where would we be today?
That’s Even’s goal. To put 1% of the world’s population in the position to work on our hardest problems by helping millions and millions escape the poverty trap.
So how the hell do you start? What tools do people need to escape poverty and gain economic opportunity?
For the last 50 years research has consistently shown that the way to escape poverty is to build liquid assets — or, in its simplest form, to save money.[4] This seems obvious, but saving money is incredibly difficult when you barely make enough to get by. In our research, we often ask people if they’re able to save money when they get paid. Frequently they laugh in our faces:
But let’s say you could somehow set $5 aside every month. Unfortunately, saving $5/month isn’t very useful when the bank charges you a monthly $8 low-balance fee, wiping out your savings and then some. Millions of people can’t afford the modern methods society has developed for saving money, and even if they could afford them, the vast majority of financial products aren’t available to them because they don’t make enough money or have subprime credit.
This “banks don’t help people who don’t have money” problem is an enormous one. In America, 77 million people spend $100 billion every year just to make ends meet. $100b for things that purely extract value. Things like payday loans. Overdraft fees. Low balance fees. Late bill fees.[6][7] Do the math, and you arrive at a startling realization: the average working class American loses 10–20% of their income to these products.
It is expensive to be poor.
Over the next ten years, our goal is to turn that fractured, predatory, $100b industry into something beautiful. A new type of bank. One that automatically manages its customers’ finances to help them escape the trap. Pays their bills. Balances their budget. Saves and invests. And at the tip of the iceberg, gives each and every customer a weekly paycheck of purely disposable income. Relieve burden, and what remains is opportunity.
We will do all this with a business model that aligns our company’s financial incentives with helping people, so when we grow up we don’t become that which we set out to replace. This is going to be quite hard, if I’m honest. Our path forward is lined with the gravestones of our predecessors. We might fail.
But does that mean we should not try?
Jon Schlossberg
Product designer & CEO
Even
References
1 — Poverty, Privilege and Brain Development: Findings and ethical implications. Department of Psychology, University of Pennsylvania
2 — Poverty Impedes Cognitive Function. Science
3 — Why Zebras Don’t Get Ulcers: An Updated Guide to Stress, Stress Related Diseases, and Coping Robert M. Sapolsky
4 — Why Assets Matter: An overview of research on assets and their effect on financial stability and economic opportunity. Corporation for Enterprise Development
5 — 2014 Global Financial Development Report: Financial Inclusion The World Bank
6 — 2012 Financially Underserved Market Size Study Center for Financial Services Innovation
7 — Nearly Half of Americans in Major Cities Are in State of Financial Insecurity The New York Times
