Christo Davel is a veteran of our local internet community. He made waves with his 20twenty virtual bank startup more than 10 years ago and now he’s back helping consumers understand their spending habits – enter 22seven.
Click play below to watch the video interview. Full interviewÂ transcriptÂ below.
Charl: Christo Davel, welcome to Bandwidth Blog video.
Christo: Thank you.
Charl: For the readers of Bandwidth Blog, before we get into 22seven I just want to talk about one of your previous companies. Along time ago you started a very innovative company called 20twenty which was just an online bank right in the dot com boom and bust. tell us a little about that.
Christo: 20twenty launched in 2001, so it was you right, it was right in the flux of the dot com boom and bust. The idea was to create a bank that people would ultimately love, um, using tech to make that possible. The challenge then was to convince people that banking online is a viable option. We had to convince people itâ€™s safe, that you donâ€™t have a branch so it shows you how long ago that was. But our backer was Sambo Bank and Sambo went into curatorship six months after we launched. So the truth is that 20twenty was only alive for six months. I stuck around, we were committed not to let our customers lose any money, and eventually sold to Standard Chartered Bank, 18 months later so that was quite a fascinating journey.
Charl: You built such massive street cred in such a short period I mean six months, I mean the confidence from the consumers. I remember there was a lot of hype you know it was very good.
Christo: Yah, you know it was. The product was smart. It was almost like, we tried to get a three-in-one product so it was a product for the person in the street but choosing like the same principles that was used in private banking. Why couldnâ€™t we offer that to a normal person in the street? But that wasnâ€™t the gaps the real thing was that we really care for the users, for the customers, so I think the fans that happened out of, the customers that became fans of 20twentyÂ was because of the unbelievable service they experienced. We had the service staff was called Wired Warriors and they were obsessed about keeping customers happy and that just translated into the loyalty. They, when Sambo went into curatorship the fans started their own fan clubs or rather the customers started their own fan clubs so that wasnâ€™t seen before. Itâ€™s a pity it happened so quickly you know, if we survived a bit longer than six months I think we would have been able to sustain that.
Charl: 22seven, youâ€™re back. When was this idea born?
Christo: Woah, probably about 10, 11 years ago. You know when we…in the 20twenty days we had this idea of pulling things together for, for people as far as their moneyâ€™s concerned. We wanted that. We said we have no real idea what weâ€™re doing with our money. But, and bizarrely so, Yodlee who are the aggregators that we now use who are the biggest financial services aggregators on the planet, they just launched in 2000 so we met with them then but the tech wasnâ€™t advanced enough to do what they are able to do today so it wasnâ€™t this eureka moment in the bath you know that you wake up and you have a brilliant idea. It was just like the team of people kept on thinking about this, and tech just kept up with that and whatâ€™s possible today about aggregating financial information wasnâ€™t possible 10, 11 years ago. And having the ability to host stuff in the cloud you know we built massive data centres when we launched 20twenty. Thatâ€™s all hosted in the cloud now so you can, the idea is more how smart you can have a team of people think about solutions. So yah, not an idea that was born over night. Itâ€™s come a long way.
Charl: Funding. You mentioned Sambo pulling down 20twenty. How have you set up your funding differently this time around?
Christo: Well the first lesson we learned was not to have just one funder. Um, you know who would think having a bank as a funder, youâ€™ll have a problem. It was a bit of a lesson we learned so. We have a range of funders from the one side we have Hasso Plattner Venture Fund, who is one of the funders, the Hollard Group is a funder and we have a bunch of angel investors. So this time I have a diverse group of funders who are all weight to the idea that this is a long term play. We hope to be around for quite a while down the road, down the line.
Charl: Massive hype when you launched. Did you expect, you know, the hype, the consumer confidence?
Christo: Well we hoped that weâ€™ll get some acknowledgement but we were blown away by what you call the hype. I just call it, there was unbelievable readiness in the market for something like this. I think also the banks in South Africaâ€™s initial responses just fueled debate. If you looked at social media that first two weeks was just buzzing about â€œThe banks like usâ€, â€œthe banks that donâ€™t support usâ€. But for us it just fueled the realization that what weâ€™re doing is trying to solve a real world problem. You know, consumers out there donâ€™t really have a handle of how to look after their normal expenses, after their normal money. The relationship that they have with money is not as smart as it could be. So, um even though, I have to say we are a bit embarrassed with the accolades we had because the product is just really in its infancy, which is starting with this thing. So yes but the hype was, you call it hype I just call it there was a huge response.
Charl: Why didnâ€™t you talk to the banks before launch?
Christo: [Laughs] Um. Thatâ€™s probably mostly a competitive thing. you know we, South Africa is a small market. The financial services industry is small in South Africa so. And financial aggregation is not new. Itâ€™s been going in the States for more than 10 years and we were also aware that the banks themselves were looking at personal financial management tools for their customers so we reckon it wouldnâ€™t have been smart to go to banks and lift our skirt and this is what weâ€™re about to launch with. At the same time the aggregation component is done by Yodlee so they are the people that do the back-end tech, that aggregates all the information from the data so that was, it was purely a competitive thing. We didnâ€™t think it was a smart thing to go to potential competitors and offer them information about what we were planning on doing.
Charl: That makes sense. Tell us about 22seven as a company. Your staff complement you know the mix between managers and developers and product people.
Christo: Um, itâ€™s in the early twenties. Weâ€™re about 24, 25 people at the moment. Mix a small team of, in house developers. I think we have 10 developers in total. Itâ€™s a tight team, the lead team are people that were with me at 20twenty so thereâ€™s a lot of old trust that came along that makes the journey a lot easier. Yah, so its like thatâ€™s the size of the business.
Charl: We allow Bandwidth Blog readers to ask questions via Twitter before the interview. @paulcartmel had this question: Are there any financial specialists like actuaries or financial mathematicians or behavioural psychologists that work for 22seven based on the behavioural economics pitch you know that you guys were touting?
Christo: Well, behavioural economics is probably the foundation of the service right. We um, we started off working with Dan Ariely at Duke University in the States. Dan is a bit of a rockstar in the behavioural economics field. He um, he wrote a book called Predictably Irrational. Thatâ€™s where we picked up on him, watched a TED talk of him, so we worked with his team of PhD students at Duke and I, I think what people see in the early years, iterations of our product is fundamentally informed by a group of smart behavioural economists in the States.
charl: Tell us about the platform. Why is the front end flash and whatâ€™s behind the flash?
Christo: Um, I get asked the Flash question by techies all the time. Weâ€™re not a flash shop. The flash decision was a purely a tactical decision for us to get traction in the market size, the small size of South Africa we had to take into account one of the most common browsers , if itâ€™s a browsed based version, browser based version and we had this um, almost romantic idea that weâ€™ll do every HTML 5 because thatâ€™s were the features are gonna go, and we think it will be smart. The fact is it just gave us such a small market segment to go to. So flash was a tactical decision. We will migrate to HTML 5. The mobile versions of our service will obviously not be flash so that was a tactical decision.
Charl: Traction so far. Can you give us any info on how many users have registered and how many active users and how do you even define an active user?
Christo: Um, we made a call not to publicise our numbers purely because of the hype around what we doing and the banks playing with us and some banks not playing with us. All I can say we were embarrassed with the response in the beginning. Embarrassed in the sense that the service wasnâ€™t structured properly to handle that. So we exceeding our expectations. An engaged customer for us is somebody who links their accounts and come back on a frequent basis. The fact is we, itâ€™s only two months after we launched so I think any indication be it as positive as it is. I think the real test will come when we get out of beta and we will charge people a subscription fee to see if they really see the value in the service. I think thatâ€™s going to be our first real test.
Charl: You mentioned scaling. What was the environment like in the office when you guys went live and you had some scaling issues. I mean, were the devs running around like crazy?
Christo: Of Course. You know the um and it was, people asked me well if you have the infrastructure in the cloud how can you not just switch off, flick a switch and have a bigger infrastructure which we can. Itâ€™s more our own thing. We werenâ€™t structured properly with all the concurrent calls it was running wasnâ€™t tested to the volumes that we had at launch so we thought having about 150 testers would be quite cool for us to understand how robust the system is. It wasnâ€™t. So that took us a good two weeks to restructure whether the data bases did the calls and Iâ€™m happy to say its humming now. Itâ€™s been sorted.
Charl: Benchmarking pre-launch is always tough.
Christo: Thatâ€™s right.
Charl: Ok, Are you trying to build a sustainable annuity revenue business here, long term play or if the moneyâ€™s right letâ€™s say from one of the banks you know would you sell to them?
Christo: Iâ€™ve also learned in my life never to say never but I, we committed. As we sit right here we committed to build an independent brand. To build a brand thatâ€™s trusted in this space is a big challenge especially when you do it from scratch but that excites us. We think we can do that right. We think by offering a service that has real value for people, we think the time is definitely right, people have this need to get some sense of what they doing about their money thatâ€™s not tied to somebody pushing them something, not tied to somebody trying to sell them something so for us that independence is quite sacrosanct at the moment and I think that is a sustainable model.