A PEER-TO-PEER LENDING AND SAVINGS PROGRAM
Prida Bay was left with a ton of beauty products she couldn’t sell, so she opened up a beauty salon to try to use them for a service instead of selling them as a product. And that is where she got her next idea.
She hired 15 women and trained them to work in her salon. But when it came time to pay them, there was a problem. “None of them had bank accounts,” she says. “I opened the bank accounts for them. But they wanted to be paid in cash. So every Saturday I would pay them in cash.”
The women would turn around and participate in a practice referred to in Mexico as a “tanda.” A tanda is essentially an agreed upon peer-to-peer savings and lending system. A group of 10 women might agree for 10 months they will meet once a month and each put $100 into a pot. Each month, one woman gets the $1,000. If one woman needs it more during a certain month, she can take it then, essentially as a no-interest loan. And the system is certainly not exclusive to Mexico.
A CONCEPT THAT TRANSCENDS CONTINENTS AND SOCIO-ECONOMIC CLASSES
“According to the World Bank, 1.5 billion people around the world are involved in tandas,” Prida Bay says. “They are just called different names in different countries, but all over the developing world, this is the way people save.”
Indeed, it is estimated there are 200 different names for the concept depending on what region of the globe you are in. They are called “susus” in West Africa, “kyaes” in South Korea, and “juntas” in Peru, and in Pakistan they are called a “kitty.”
“When I started studying it, I couldn’t believe that people in the Philippines use this exact same mechanism,” says Prida Bay. “It’s sort of like the pyramids in Egypt and Mexico, they were both using the same concept but didn’t know about it.”
Prida Bay also found the concept transcended socio-economic classes. “People in India from the highest class would be using it but the difference was they would put in higher amounts,” she explains. “They will actually set out teas and cakes and make it a huge party because it’s a group of friends.”
‘YOU NEED TO DEVELOP THE WHATSAPP OF SAVINGS’
However, there are some obvious potential flaws to the system. Like, what happens if someone loses the money or is mugged? And that’s exactly what happened to one of Prida Bay’s employees. “She was crying and I felt horrible,” recalls Prida Bay. “I gave her the money back from my own money but I told them, ‘It’s because you’re still using cash. You have your bank accounts but you’re still using cash.’ But they don’t have laptops in their homes and they never will. So doing the kitty in a wire transfer just wasn’t going to happen.”
In another instance, one of her employees got married and was moving away but still wanted to participate in the tanda. Prida Bay proposed the idea of a tanda app to the group. “They were the ones who told me, ‘You need to develop the WhatsApp of savings,’” she says. “They all have their Android smart phones and Facebook, and this they could do.”
Eventually, Rubio Nava’s job led the family back to London and Prida Bay thought she really wanted to pursue the tanda app but needed some help doing it. She soon found the Sloan Masters in Leadership and Strategy program, which is offered at MIT, Stanford, and London Business School. Prida Bay was accepted to the Stanford and London versions of the program and decided on London, attracted to the city’s financial technology sector.
“I wanted to do fintech,” Prida Bay says. “And while tech is here in Silicon Valley, I think London is really where the ecosystem for fintech is. So I decided on the Sloan at London program. And it has been the most rewarding and incredible experience.”
CLASSMATES FUND MORE THAN $150,000 FOR NEW APP
Prida Bay cites her fellow classmates as one of the reasons the program has “surmounted” her already high expectations. “Imagine you get advice from 55 top-level executives for free, every day. And not only is it advice, but each one has introduced me to someone else who has given me something,” she says.
Another aspect of the Sloan program Prida Bay has found unexpectedly helpful was the Biography class. “You self-reflect and you self-analyze and then you have to really dig deep and find out what it was that got you to Sloan and then present that to the class,” she explains.
What’s more, her classmates chipped in more than $150,000 in her first round of seed funding for her tanda app, which she has dubbed Kitty10. The app works like Venmo. Users may link a bank account, debit, or credit card to their Kitty10 account and join a group. Members of each group have to be in each other’s cell phone contacts. When it is time to pay, the user receives a push notification and has to approve the payment.
INCENTIVIZING THROUGH PUBLIC SHAMING
If the participant does not approve the payment, everyone in the group receives a notification, their name appears in red on the app, and the organizer of the group receives a notification to send a text or email reminder. If the next pay cycle comes around and the member still hasn’t paid, the organizer has to make the payment for the one who hasn’t paid.
The app is scheduled for launch in the U.K. by the end of August and in the U.S. in September. A recent partnership with Stripe, the online payment processing provider, which is essentially a Paypal for developers, has helped accelerate the start dates.
It seems the result from a failed beauty salon might be the next spoon-selling venture for Prida Bay. And she might not have had much choice.
“This idea of digitizing tandas always stuck in my mind,” Prida Bay says. “I swear I didn’t want to be an entrepreneur anymore, but it just draws you back and there’s nothing you can do about it. After the failure with the beauty salon, I swore I would never be an entrepreneur again but I just couldn’t get away from it.”
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