Picto Diary - 24, 25, 26 November 2015 - Thanksgiving at Granny's
Above: Wesley Smith speaks to La Societe Deux Magots (LSDM) about his new venture, Ayudafin. Wasatch Bagel, Park City, UT. 24 November 2015.
Wesley Smith last visited LSDM on 05 July 2013 to talk about WAVE, an attempted actualization of induction technology to power municipal bus systems. WAVE is still alive. However, the founding group was unable to raise sufficient money to keep the venture alive. WAVE has since been purchased by an outside investor. There are $20MM worth of pending contracts. The new investor kept the tech staff.
Note: Note taker is fallible. Wesley Smith is invited to make corrections/clarifications to these notes.
Above: Wesley Smith explains Ayudafin to LSDM ROMEOs. Wasatch Bagel, Park CIty, UT. 24 November 2015.
Wesley was invited to LSDM to explain his new business venture, Ayudafin, a lending concept directed towards American residents who don't have access to the credit system.
Ayudafin Market
There is a huge cash economy in the United States. Most of the participants in this economy have no access to legal credit. They are not listed in credit bureaus. Professor Hernando DeSoto, of the University of Chicago, has noted that 1/3 of the global economy "flies under the radar."
12MM to 18MM undocumented Latinos... 70% of whom are from Mexico.
20MM documented people with no credit history. Not educated on how credit can help them.
The undocumented segment can be identified via consular card. Virtually all undocumented aliens visit their home country consulate to obtain a consular card after their arrival in the United States. 80% have smart phones. 90% have a bank account. 80% have passports.
It is not widely known that there are millions of undocumented Asians living in the United States. They entered the country legally and stayed after their visas expired.
People in this market segment are not payday loan candidates. They are savers. They send, on average, $12K per year back to their home countries.
I believe these people are good credit risks... by their nature.
Ayudafin Strategy
Payday loan companies don't care about repayment. They're looking for roll over.
Our lending strategy will have a repayment, no rollover policy.
We will be extremely low overhead... use social media, crowd sourcing, big data, and education through community organizations... like Holy Cross Ministries.
Interestingly, our market segment are heavy users of Facebook. The Wall Street Journal had an article some days ago on the "Uberization" of finance. Our MO plays well with the Uber theme.
We believe the perceived credit risk in this segment is overstated. Culturally, our segment is very conservative.
Marketplace players
Banking business, which relies on credit bureaus to screen creditworthiness. Bureaus use only two or three data sets.
Payday loan business. High rates. Anybody sans a felony record gets credit. Rollover desired, not repayment.
Alternative lending business... Lendup.com, TrustLeaf.com, Kiva. These businesses don't do a good job in the segment where we intend to compete. Kiva, for example, lends mostly to businesses.
Funding
Funding will be provided by "social impact investors (SII's). SII's will invest from between $25K to $100K.
Business Model
We charge 13% for a loan repayable in 90 days. Max loan amount $250.
SII takes 8%... Ayudafin takes 5% for overheads and profit. We hope to get that down to a 2% spread in future as the business grows.
Our first test is coming up.... We are working through Holy Cross Ministries and the Utah Hispanic Chamber of Commerce to help source customers and provide a venue for education on credit.
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Q and A
LSDM: Isn't the drainage of money from America to home country a bad thing?
WS: No. We have a free trade agreement with Mexico... where both countries benefit from increased trade and economic activity.
LSDM: Are you concerned about some of your prospective borrowers not being legally in the United States?
WS: This is not about an immigration problem... its about people in the United States who live totally outside of the credit system.
Thank-you
LSDM thanks Wesley Smith for his presentation on Ayudafin. We look forward to a progress report down the road.
La Societe Deux Magots (LSDM) is a non-partisan ROMEO (retired old men eating out) group which meets daily, at 7:00 AM at Wasatch Bagel in Park City, UT. LSDM members are the rightful intellectual heirs of a group of authors (Hemingway, Sartre, Camus, deBouvoir) who met daily at Cafe Deux Magots, in Paris, France in the 1930's.)
Above: Teacher Drums. Student Cat. Treasure Hollow ski run. Park City. 24 November 2015.
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Above: Delhi PJ's and Drums. Park City. 25 November 2015
TIMDT and Mwah have known Delhi PJ's since he was 13. Now he's a grandpa...15 or so grand kids.
Retired from HP, Delhi PJs is now a Park City resort ski instructor. Also grows at home multiple varieties of Japanese apples.
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Above: Park City Ski Resort. Singles line (beyond the main grouping, right center of image). 26 November 2015 (Thanksgiving).
Have never seen such a long singles line. To be sure, the singles line runs about twice as fast as waiting in the main line area... but, of course, you don't get to chose your lift riding partner(s).
Hoards of skiers with only one major lift open... Payday. Drums and I did two runs and then left. Minimal runs open (Home Run and Treasure Hollow) were too crowded *read dangerous) and line wait at the Payday lift was too long.
I would have thought, knowing about the hoards of skiers coming for the holiday, Vail would have opened up the Bonanza lift, thereby doubling the skiable terrain this early season.
On days like this, the absence of Fast Track (pay more to jump the line) is a real shock to one who had grown used to it on busy days.
Where's John Cumming when you need him?
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Above: Over the river and through the woods, to grandmother's house we go. Thanksgiving. 26 November 2015.
Left to right: Grrrr, X, Cat, Drums, Tucker.
Above: Cat and turkey leg. Thanksgiving. 26 November 2015.
Thanksgiving at Granny's house, Park City.