Interview: CEO of Yotta Savings on introducing prize-linked savings accounts to the US
Blazer Interview Series
This is a new interview series where I interview startup founders & investors to share the impact that they are making in the startup ecosystem.
You can listen to this interview on Anchor.fm , Spotify, and Youtube.
In this episode we interviewed Adam Moelis. The Founder & CEO of Yotta Savings, a consumer finance app that aims to empower individuals to save money through prize-linked savings accounts (.20% APY). Backed by Slow Ventures, Founders Club, Y Combinator.
Transcript from Interview with Adam Moelis
This transcript has been edited for clarity.
What is Yotta Savings? How does it work?
We’re a savings account basically where instead of earning interest on your deposits you earn the chance to win prices. We also pay a small base interest rate but most of the value comes from prizes. So for every $25 you save you get 1 ticket on a recurring basis, it’s a weekly number drawing and each ticket you pick 7 numbers on. We release seven winning numbers each week, so the more numbers your tickets match, the more prizes you can win.
What made you want to start this company? What experiences led you to making this decision?
I came across something called premium bonds in the UK. It’s a savings account there where instead of earning interest, people get the chance to win a prize every month, ranging from 25 pounds to 1 million pounds as the jackpot. I’ve always been really interested in behavioral psychology in personal finance and the interception between the two. This program in the UK is the number one savings product in the whole country. 33% of the population saves through it with over $100bn in deposits. I got really excited about the concept….I had never about anything like it. I know in the U.S. half of the country doesn’t have any savings but people spend 80 billion a year on the lottery. It seemed like this type of program can really help people save.
Who are Yotta’s Customers? Are you targeting the younger generation? Older?
Our primary target customer is low to middle income and the younger generation like 20s & 30s millennial/gen z. We have some older people as well but the bulk of our customers are younger. I think it’s mainly because young people trust financial apps more than older people. Obviously they are more technology savvy. And then in terms of like low-middle income, this is really a demographic that buys a lot of lottery tickets and savings for them isn’t that motivating so if you put $20 away every month you don’t really see the value of it.
How may users do you currently have on the platform?
Over 40,000.
What does the roadmap look like for Yotta? Any new features/financial products in the future?
On the product app side itself we’re looking to make the app more of a social experience. Some big features coming up would be the ability to share tickets with friends and together. That’s a big one. Other things on the roadmap are becoming more of a complete bank offering. Right now we are just a savings account, we want to have a checking account, a way to spend the money with a debit card. That’s really what we have planned for the next 6 months or so.
Yotta works with Evolve Bank & Trust to store customer deposits, what was that process like? Do you have any advice for future fintech startups looking to score a strategic partnership with a bank?
We partnered with Evolve through another startup that basically connects startups with banks. It’s called Synapse. It’s actually a popular one that a lot of fintechs use. They make the process pretty easy. We chatted with a lot of banks early on but when you own a product and you don’t have traction, it’s really tough to go directly to a bank and get them to take you seriously. It’s a lot easier to start with one of these companies that are in the business of connecting small startups with banks and I think that’s probably the smart move for anyone just starting out. Until you know you have something that works you want to get it market (GTM) as soon as possible. You’d rather get something to market so you can see if it’s actually working, then later on you can figure out what bank is the best for you in the long run. I would say do whatever you need to do to get up and running ASAP.
Do you have any long term plants to obtain a banking license in the future?
I wouldn’t say we have plans for it necessarily. I think at some point we get to a scale where it makes sense. So yes, once we are big enough to where it makes sense. But right now the fixed cost of dealing with all the regulatory stuff is just not worth it. Way down the road, I could see it.
You recently raised a $3.3 million round of funding, what do you hope to achieve with this round of funding? Hiring? Marketing?
Both of those things. Marketing, getting the product in front of more people, penetrating new demographics. We have so many things that we need to build. It’s just been me and my co-founder up until this recently. We need to move faster, we need to build out a team to be able to do everything that we want to do and not have it take a long time. We want to get all this stuff to our users as soon as possible. So yes, marketing and hiring.
Is there a story behind the name Yotta?
We started with the name Benjamin. It was our initial name and then we realized that as a new financial product, a lot of people are going to google you. So it was going to be really tough to rank for a word like Benjamin. Even if you have press articles and stuff like that. We wanted something unique that we could own and build a brand around. We wanted something that was pretty unique and rare. Yotta means 10^ the highest metric prefix. Like 10²⁴. And in some ways the idea behind the company is the psychology of winning big. So you know it’s the biggest metric number basically. That’s kind of the story. It’s a bit random but it also implies a huge amount.
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