Interview: Founders of Midas | Cash-based loyalty rewards
Blazer Interview Series
In this episode we interviewed the founders of Midas. Midas is a cash traceability platform that gives reward points to cash consumers while receiving information on these purchases that enables producers and retailers to better navigate and target their cash markets. Their AI/Data engine provides consumer companies and retailers with real-time data on consumer purchases. The startup is currently in their pre-seed round to conclude their final software.
Please tell us about your backgrounds?
César Salas: I was born and raised in Mexico City. I graduated from the American School Foundation in 2013, and attended Tecnológico de Monterrey from through 2019 as an Economics & Finance major. I’m also a sailing instructor and a Scuba Divemaster, so I love anything to do with the ocean.
Alonso: I was raised in Mexico City. Graduated from the American School Foundation in 2018, and currently attending Tecnológico de Monterrey. I have always had a passion for innovative solutions but my passion grew while attending UCLA Entrepreneurship and New Venture Formation course.
Alfredo: I was raised in Mexico City and born in New York City. Graduated from the American School Foundation in 2018, and currently attending Tecnológico de Monterrey focusing on Entrepreneurship and Business Innovation. With a strong marketing background, I am extremely passionate for innovation projects focusing on major world problems for the development of society and emerging countries.
How did you guys meet each other?
Funny story; originally, I was Alonso and Alfredo’s tutor for their math and physics classes in high school. During these tutoring sessions we got into serious conversations about developing issues in Mexico, sharing our passion to do something about them. After they graduated high school, we became close friends and messed around with a couple of ideas before we landed on the MIDAS Technologies solution. We truly believe that we can make the world a better place incorporating new technologies and creating socially inclusive ecosystems.
What is Midas?
MIDAS is a platform that gives users an added value to their cash purchases by generating “MIDAS” loyalty points which can later be traded for more products or services. Through this process, we collect consumer information and trends, developing a clear “cash consumer” profile. Through our data engine, we are able to provide key insights on the “cash consumer” for producers and retailers, and start providing financial services to the cash (informal) consumers.
What inspired you to start a cash-based loyalty rewards program?
As Mexicans, we knew the problem of informality had always been a staple of the Mexican Economy, a problem that has gotten visibly worse this past year (as Mexico was one of the few countries that increased its use of cash during the Covid-19 crisis). As a team, we wanted to figure out WHY Mexico has such an informal economy, which led us to 2 key answers: People have a general mistrust in banks, and have an overall lack of interest in becoming part of the established financial system. While banks, have little to no interest in banking these people since, to them, they are not worth the literal cost.
By creating a platform that caters to the consumer’s preferred method of payment (and not trying to immediately implement a banking system for them, like many challenger banks try do), we are offering the consumer an added value to their cash, which no one has done before. Through this loyalty program, we provide different producers, stores, and service providers the visualization and rationalization they need to optimize processes, and keep track of this +700-billion-dollar informal market.
Most importantly, we are able to get enough information on these informal consumers to become the stepping stone towards their eventual formalization. Once we see the full integration of MIDAS active, we will see how the LATAM economies leapfrog an entire financial generation (traditional banks) and go from cash straight to fintech, thus catching up to the world trend of cashless.
Can you tell us more about the technology and components of the Midas platform that makes it function? What is the retailer standpoint vs the consumer standpoint?
Seeing that the final consumer we are targeting isn’t the most technologically or financially literate, we knew that ease of use was a key factor in our consumer platform. This is why MIDAS operates with a simple QR code reader to link any transaction to a specific user. On the retailer side, we have a quick and easy-to-install API to established points of sale (P.O.S), as well as a very basic retailer platform for any retailer without a formal P.O.S.
On the backend, we have a Machine Learning engine that generates easy to view dashboards for retailers and producers, tailored to their metrics of success for their individual products or stores.
What types of vendors/merchants/brands are you looking to partner with? Do you think that smaller merchants in LATAM will really see the benefit of this type of program?
Since small or independent producers are virtually non-existent in LATAM markets, we are looking to partner with big producer companies (BIMBO, AB InBev, Genomma Lab) that actively look for this kind of consumer information they still don’t have access to. These producers have the majority of the products cash consumers constantly buy, so by expanding our reach to the flagship products of different retail markets, we are able to diversify the kinds of products we give rewards to, and diversify the consumer image we are creating and actively updating.
As for retail stores, we are focusing on small Mom&Pop shops that will see the benefit with clear increase in store traffic and loyal customers.
What has your experience been talking/pitching to investors? What has been your fundraising strategy?
The LATAM investment community is still very traditional, meaning that pre-revenue startups will have a harder time gaining investor interest. However, we are starting to see the change, as LATAM is setting up for a tech boom. Our personal experience has been very welcoming in the sense that VC’s will listen to you and try to guide you to the point where they can invest. Yet, without a lot of traction it is hard to see real money. This speaks volumes for the startup community, as we can see how the financial opportunity in LATAM is growing in an exponential rate, and we are close to being at the point where these LATAM startups will have no issues raising the capital they need.
We strongly believe that there is a huge potential in LATAM, and we have no doubt we will see many more unicorns emerge from these markets.
What does the roadmap look like going into 2021?
As of December 2020, we are in our beta testing stage with 2 different dollar-store-type retail brands. Planning on releasing in Mexico City in April 2021, expanding to another 7 states by autumn and having partnered with over 400 P.O.S’s and have products in 8 different retail markets.
Any plans to apply to Y Combinator? Or other accelerator programs?
We applied to the W2021 batch of Y Combinator, receiving some great (and much needed) insights and guidance while we prepared to apply. But, YC also asks for a little more traction for LATAM startups (seeing their volatile nature). Nonetheless we also applied and got accepted to the 4thly Accelerator Program, created and run by Bret Waters. This program gave us the footing to start establishing ourselves in the market we are trying to penetrate. We also have plans to apply for the S21 YC Batch.
How do you keep yourself motivated every day?
As a Mexican company, this problem hits close to home, as Mexico and LATAM are being left behind in this fintech revolution due to the percentage of informality these countries have. We know we have a great opportunity to become a disruptor for these markets and take the fintech revolution straight to the people that truly need it. That is what gets us up in the morning.
Have a particular startup you want to hear from? Leave a comment down below with your thoughts on this interview and any interview requests that you have in mind.
