Dave Inc DAVE, the Los Angeles-based neobank targeting demographics ignored or charged excessive fees by bigger banks, just logged a 50% or so rise in revenues during the fourth quarter of 2022.
Though the company’s fourth-quarter EPS came in negative and worse than expected, the company’s founder and CEO Jason Wilk is optimistic the company will reach profitability in the next six quarters or so.
Benzinga chatted with Wilk to learn more about Dave’s path to profitability and the prospects of it disrupting big banks.
Benzinga: Care to start off with an introduction?
Jason Wilk: I started my career in entrepreneurship and built my first business in college. It was called One Day Sports, a brand solving a consumer pain point around expensive golf equipment.
It was a website people could access deeply discounted golf gear through with the catch being that the product was available only for one day.
Ultimately, I sold that business and, in 2009, I got associated with Paul Graham and the Y Combinator program when it was just the likes of Airbnb and Dropbox. That was a great place to meet investors like Mark Cuban. I ended up building an advertising technology business called All Screen which had some moderate success; it was a top 50 Inc. 5000 business helping media companies distribute content. I sold that business in 2015.
Following All Screen, what did you do next?
I had a bone to pick with overdraft fees. I got charged with many of them throughout my journey as an entrepreneur. I thought it would be unique to monitor people’s bank accounts and alert them about potential overdrafts that may hit their accounts and, as opposed to paying your bank fees, we would actually loan you a small amount of money. This idea attracted a ton of members really quickly. Within two and a half years Dave turned into a unicorn business with some really high-quality investors backing the vision to ultimately transition to become a full-on neobank.
Why come to Dave versus the competitors?
We have the best overdraft protection products in the country which we call ExtraCash. That product will advance somebody up to $500 per paycheck with no interest and credit checks. The message that we can spot you between paychecks resonates and drives a lot of customer acquisition. People love it and we have a 4.8-star rating on Apple’s App Store.
What’s your relationship with customers and how do you interact with them?
The company is very mission-driven and is in touch with customers. We do weekly customer engagements and listen to the stories about how people are using Dave, how we help them with their side hustles and saving them extra money with our Goals account.
2022 was a tough year for many of your competitors. Was 2022 any good for you?
Our 2022 was all about getting the public transaction done. That gave us a significant amount of capital we could use to grow the business while the economy was in a challenging place and valuations dropped. What’s most important to us is that we have the money that we need to grow our business, and we won’t need to raise any more to execute our business plan.
Can you talk a little bit more about that business play you have funds to execute?
We’re trying to save people money and provide them with a better banking experience. Through our debit card, customers can stop paying overdraft, minimum balance and customer support fees. With our overdraft product, ExtraCash, people can advance money without fees and save hundreds per year. That makes a material difference in someone’s ability to afford emergency expenses or save up for important life events.
We feel strongly about that part of our business and our focus is to make Dave's banking products the best in class. We’re within reach of our revenue targets if we can keep attracting millions of customers per year.
Any new products you may have lined up?
We just really released the Goals savings feature that helps people set aside money for major life events. We also recently launched a Round-up feature. Every time a purchase is made using our Dave debit card, the transaction is rounded up to the nearest dollar and the spare change is transferred to your Dave Goals account.
Separately, we’ll be launching higher interest rates on those Goals accounts, and we’re really focused on making our credit or overdraft offerings best in class. We want people to have liquidity when they need it, without the big fees.
In what ways do you keep people engaged on the platform?
We have tools to educate our users and keep them up-to-date about the implications of their spending habits. For instance, we can tell you about the bills that are coming up that may send your account negative. That’s helpful for the average person who has trouble keeping track of all the things that are tied to their credit card.
Does Dave have any relationships with external platforms?
We definitely lean into our partner ecosystem to enable faster growth and lower headcounts. Plaid is one of the companies we work with closely when it comes to connecting to external bank accounts, and it’s a pretty key element for our AI engine which helps with underwriting. We also use platforms like Socure to do KYC on members as well.
What are some of the features you’re most excited to have?
With Side Hustle, which we launched in 2018 when there was a big explosion in the gig economy and there were all kinds of opportunities out there from Instacart to DoorDash, we give people a marketplace they can use to see what job opportunities may exist for them to earn a bit more income. That way, they don’t have to rely on short-term lending and can avoid overdrafts for expenses that may be coming up.
How do you know if you’re on track with the business plan?
Our data team makes up a significant portion of our headcount. They’re building dashboards and things that alert us to our financial progress, as well as metrics around retention and conversion. If we see things aren’t going well, we can quickly pivot and hone in on certain areas.
What are some big goals you have looking out five or 10 years from now?
We desire to have all the products you would come to expect from a bank while providing far better access and pricing. We’re set up very well to do that in the next handful of years by using our technology to drive down costs.
I’d love for us to continue to disrupt other areas like banking, just as we did with overdraft and debit cards. That’s where I’d like to see the company go and have millions more customers.
Separately, a big focus for us is profitability, and we see that happening up to six quarters from now. That seems very achievable.
How confident are you that Dave will disrupt some of these big banking players?
Any time you see others following in your footsteps, you’re doing a good job when it comes to disrupting. Some of the bigger banks have tried to emulate by reducing their fees, but it really comes down to banks being disadvantaged due to their heavy footprint, headcount and legacy infrastructure. It would not be profitable for them to match Dave's pricing.
Therefore, we think we’re pretty well entrenched. We feel like we can keep a lean operating infrastructure and use our technology to develop some awesome products at a fraction of the cost and headcount.
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