Revisionary exercise in startup strategy — Part 1/5
I like thinking about thinking. I’m a Blue-White-Green kind of person. I’ve come across many interesting thinking frameworks, like System Thinking, Design Thinking, Lean Thinking etc. I found all of them to be necessary — but not sufficient, to develop strategic thinking as an early-stage founder.
As a thought-provoking exercise, I’m applying a clever strategy framework to our own startup, Touco, to see how different directions could have panned out for us and which one we chose. I’m surprised that not many founders I’ve met know about this framework. I learnt it in Strategic Management of Entrepreneurial Ventures, a module taught by an outstanding MIT-trained visiting professor, K. Ching, at the UCL School of Management. This analysis is my own but I’m thankful for revisions from my esteemed professor and my co-founders.
This is the first of five posts and it’s an intro to set the context of the business. The remaining posts will explain this particular strategic framework. If you already know about Touco’s mission, feel free to skip right to part two.
I enjoy both theory and practice. I found that, despite all the advice and frameworks available, there aren’t one-size-fits-all strategies in real-life startups. The strategies that work (or don’t) are discovered by trying them.
Touco’s mission and vision
We officially launched Touco (previously Toucan) as a tech-for-good startup in early 2019, to develop better financial products for people in vulnerable circumstances. We felt that both traditional financial services and novelty fintechs simply leave out these customers because it’s a hard, complex problem to solve and doesn’t come with a clear profit guarantee.
Over the past two years, we’ve created new digital tools and research to help people in temporary or long-term vulnerable situations: being over a certain age, having certain medical conditions or simply going through a rough patch.
We wanted our tools to create new ways of delivering financial and wellbeing support at multiple levels. We imagined them as concentrical circles. Each circle has a different kind of access and control, based on the level of involvement into a person’s financial life.
- The first includes the immediate family.
- The second one expands to extended family and close friends.
- The third covers temporary or long-term carers.
- The fourth brings in financial services, service providers, charities, the Government etc.
We call them a Third-Party Financial Access Framework.
We looked and found no good financial and legal instruments to easily delegate financial control, partial or total, temporarily or permanently, to a support circle, without losing independence. Power of Attorney does it in a bureaucratic and intrusive way.
Our vision was that with the help of Touco, everyone would manage their financial situations in a dignified way, without being stripped of control in a vulnerable circumstance.
It’s an important and costly societal problem that’s only going to become more and more visible as we develop longer lifespans.
Then Covid-19 happened and proved to be yet another use-case where a solution like ours is absolutely necessary.
A complex societal problem with a tough revenue model
We knew this was going to be a complex challenge. Part of its complexity lies in the number of stakeholders involved: end-users, financial services, service providers like utility companies, charities, care homes and agencies, etc.
We also realised that the best revenue model for a social impact venture like ours would be a B2B2C. In the future, after demonstrating enough value to our users, we’d potentially consider a freemium B2C model as well.
Not a single proposition, but a spectrum of solutions
We designed our value proposition as a spectrum of solutions for our end-users first.
We wanted to have rigorous research validation, so we sought input from the Money and Mental Health Policy Institute, the Open Banking for Good programme, the CoCreate research group at Northumbria School of Design and many other experts acknowledged in our published report (see below).
The start of the spectrum is a light-touch money alerts system, triggered via Open Banking when we detect signs of vulnerability in day-to-day financial transactions. We were amongst the first to look into this. My co-founder, Bailey, created a semaphore alert system and won a fintech hackathon in early 2018, which kickstarted Toucan (now Touco).
The end of the spectrum is a Zero-Balance Care Card*. This card can is used by the beneficiary or their carers to pay bills and groceries. The beneficiary and their family has full visibility on transactions and spending control.
*Zero-balance means that no money is actually held on the card until the transaction happens. Touco unlocks the money at PoS and can block certain types of payments on the fly, to prevent misuse and fraud.
We built the software for all three solutions on the spectrum, including the Care Card. We tested the first two versions with our users. They loved it. You can read more about their experiences in the report we published last year.
We couldn’t release the card publicly because of upfront costs and long sale cycles within financial services. The decision to stop working on it was a tough one.
This is the first of five posts and it’s an intro to set the context of the business. The remaining posts will explain this particular strategic framework. Next, I’ll write about entrepreneurial strategy and the paradox which affects it, with concrete examples from our journey at Touco.
