Case Study: Debbie's Users Are More Than Just Customers, But "Key Players" In The Early Stages Of The Startup
Debbie's co-founders have learned to give its earliest adopters the feeling of a tangible stake in the success of the overall startup from the beginning.
Introduction:
Frida Leibowitz is the co-founder & CEO of Debbie. She previously did credit risk + product at Marcus by Goldman Sachs. She graduated with a B.S. in Business and Political Economy from NYU Stern. Leibowitz is an immigrant, first-gen college grad, and wealth builder. She is passionate about helping others achieve financial security because she has experienced the lack of it.
Executive Summary:
Problem: Debt Is More Of A Psychological Problem Than A Technical One
Ultimately, debt is a difficult problem to solve because it requires effort on the part of the user. Like other big problems, like health and wellness, a technology solution can only get you part of the way; it doesn’t solve the human component behind why individuals get into debt.Market: Major Life Events Drive Everyday Americans Into Insurmountable Debt
Debt is a very personal and difficult topic, so going through a checklist of questions would have made it difficult to get honest answers. It was very important for us to keep the research calls very conversational and allow the responders to lead some of the conversations; we allowed folks to speak about their personal debt/finance experiences and journeys overall and layered in relevant questions throughout the interview.Solution: Build For The Community, Not Only The Individual
The starting point is always a strong community of early supporters who understand the dynamics of a startup environment. We’ve created Facebook community forums to support those struggling with debt and understand their needs and expectations regarding a product we’re buildingTeam: Maintaining A Sense Of Family As The Team Grows
We’re now a team of 11 (the team fills up a whole Zoom screen!), so it’s becoming increasingly important to actively maintain the sense of family and collaboration across the team. One of our favorite traditions is our bi-weekly “Debbie Quick Wins” meeting, where we each present our successes and cheer others on.Fundraising: Refining The Story Of The Business
During the pre-seed/seed phase, we focused more on the story of the business. While the story will continue to be incredibly important, having a wealth of metrics to support the story will be critical as we grow.Takeaway: Keep Your Users Actively Involved In Product Development
Our users are key players in our product - without their effort and involvement, we cannot possibly help them succeed. Making that clear to them and to us has been very important to how we’ve developed our product.
Case Study: Debbie
Problem: Debt Is More Of A Psychological Problem Than A Technical One
Tell me about a problem or set of problems that you’ve had to solve on your journey to product-market fit.
Credit card companies, BNPLers, e-commerce companies, and retailers have created a culture that often promotes poor spending decisions. We’ve seen credit card balances grow by $52 billion in Q4 2021, the largest quarterly increase ever recorded by the Fed, while BNPL balances have doubled in the last two years. The “new age” solutions to the problem, such as $300 cash advances, debt auto-pay apps, and debt consolidation, have had a negligible long-term impact because they do not target the underlying behaviors that lead to cyclical debt.
Ultimately, this is a difficult problem to solve because it requires effort on the part of the user. Like other big problems, like health and wellness, a technology solution can only get you part of the way; it doesn’t solve the human component. That is what Debbie aims to bring to the table.
Understanding how to enact behavioral change is one of the toughest things to do because it requires effort on the user’s part rather than building the solution in a silo.
Why were these problems so critical to solve? What was it like personally struggling to overcome these challenges to achieving PMF?
Understanding how to help people help themselves is usually much tougher than just building the solution for them; however, ultimately, the credit card/financial health problem cannot be entirely automated or solved solely with technology.
In our early days, it was tough for us to push this idea that we’re going to find folks willing to put in the effort required rather than go for something that automates their problems away. We faced constant pushback and kept hearing things like “people never change” and “those types of borrowers are irresponsible and just want to spend.” There’s a lot of bias given that most investors and operators in this space had never been in debt themselves- so naturally, they tackle the problem in a pragmatic / non-empathetic way that ultimately doesn’t work.
We went on a long and difficult search to find the right people who understood and believed in behavioral science/psychology/design. It paid off because we recently brought on the Director of Product - Growth at Noom, who’s been instrumental in helping us understand how to target and engage our audience.
Though we are still in the early stages, we have found that users are drawn to our message self-select as having high intent and motivation; in essence, they WANT to change or are already in the early stages of change.
Debt is an incredibly complex problem - solving it is not just about getting the numbers and interest rates right but also dealing with the emotions and motivations of spending behavior. We understood that this human-centric approach was necessary, so we decided to explore which personas Debbie could most effectively target in the early days. Initially, we bet on personas who recently went through a big life change where their finances would be upended (ex: recent college grads, young moms). We came up with messaging directly related to their specific feelings/motivators (starting to build wealth, saving for your kids’ futures).
We still cast the net a bit wider to test our hypothesis; we saw some of those personas on our waitlist, but we also saw others we didn’t expect, like young men looking for side hustles to pay off debt faster. We ultimately identified three key personas based on who was interacting with us on social media and determined the pain points for each one separately based on the waitlist questionnaire responses and our 1:1 interviews.
Market: Major Life Events Drive Everyday Americans Into Insurmountable Debt
Let’s get deeper into the pain point or points you were trying to solve. Imagine I’m a customer thinking about using your product or service. How do you go about understanding my pain and creating a solution to address it?
Our customers have several pain points:
Stress around their finances/avoidance, often exacerbated by a major life event (graduating college, starting a family, job loss, divorce)
Not fully understanding their financial situation due to the avoidance mentioned above.
Being stuck with crushing debt and poor credit, continuing the vicious cycle and ultimately barring them from achieving financial security
To address these problems, we want to help users feel like we’re here for the full duration of the journey and that we will help them believe in themselves again. It’s important for us to sell them a process rather than a one-time solution, as they feel more invested in the journey rather than upset that the destination (being debt-free) is far away. Folks who have tried spot solutions will know they work temporarily, only to see themselves back in the same situation.
We spent a good deal of time interviewing folks in the debt freedom community to understand these pain points and what they have used to solve their problems. Ultimately, we realized most of them were distrustful of “debt freedom” products and opted to take this journey alone. This is not necessarily in the users’ best interests, though it does make marketing more difficult for us.
This is a similar path to the weight loss market, where fad diets abound and people feel frustrated with the options. Building a brand whose primary value is having the user’s best interest at heart and evidence-based is almost equally important as building a product that solves their problem.
Assuming you’ve managed to address the pain points I face as a customer, what additional information did you discover in your journey to PMF that there’s a large market in need of a solution to the existing problem?
Assuming you’ve managed to address the pain points I face as a customer, what additional information did you discover in your journey to PMF that there’s a large market in need of a solution to the existing problem?
We discovered that despite the plethora of products and services claiming to help folks get out of debt, people still feel like they’re going at this alone. Borrowers don’t trust the less tech-enabled services because they often cost a ton and can’t promise results, while information is hard to gather because debt is often a hidden problem.
As a result of the dearth of real solutions, consumer debt is a large and growing problem - last quarter saw the largest increase in credit card debt balances in over 20 years, while buy now pay later loans to continue to grow at a massive clip. Fintechs are trying to find more “embedded lending” opportunities marketed as consumer friendly but ultimately don’t help people make better spending decisions.
We see Debbie as a motivator and accountability partner to those in debt, without the high fees.
How did you narrow your scope of what portion of the market you wanted to tackle first? Who did you decide would be your first beachhead customers and why?
This journey was two-sided; we initially started by embedding ourselves in the debt freedom community on social media and primarily targeting the millennial/later gen-z market. As we grew, our target demographic selected us; we started getting a lot of interest from young moms, marginalized communities, and many first-gen wealth-builders who related to our story. Many of our early adopters have already tried other debt-freedom products and are excited by the unique approach that we’ve taken.
Debt is a very personal and difficult topic, so going through a checklist of questions would have made it difficult to get honest answers. It was very important for us to keep the research calls very conversational and allow the responders to lead some of the conversations; we allowed folks to speak about their personal debt/finance experiences and journeys overall and layered in relevant questions throughout the interview.
Our research sessions were half therapy/catharsis and half-probing for answers. Once we got people on the phone, we found they were very open about their financial situations because they were reaching out for a shoulder to lean on, even if it was to vent. We made sure to keep the most engaged Debbies in the loop by sending them company-branded merch.
Solution: Build For The Community, Not Only The Individual
How did you build your solution to maximize its relevance with the customer and ensure product-market fit? If you haven't found PMF yet, what have you learned? What are the blockers for getting to PMF?
We asked users what they felt they could stand to gain from Debbie, and the #1 answer was “tracking my debt payoff progress.” In the debt-freedom journey, there is no real “starting point,” so many folks find it difficult to benchmark their progress. It was important for us to create that clear sense of “starting point” and progress.
Most debt trackers today charge a fee, so creating a very slick interface that allowed folks to merely track their progress was an important first step to getting the user. Beyond offering the basic PFM capabilities, we are building the engagement layer necessary for long-term habit building.
What are some of the things you did that “didn’t scale” to shape your solution today?
In the very early days of Debbie (and mid-pandemic), before we even fully fleshed out our solution, we ran a series of debt freedom support group sessions. We would host small groups of 10-15 folks for 1-hour long sessions where we all shared our stories, dreams, struggles, and wins. It was very important to us to participate as fellow members and let the conversations progress naturally during those sessions. That approach helped us ensure we weren’t “leading the witness” and that we were listening rather than assuming. Those sessions were super valuable as we began to shape our product vision.
Although we can’t scale that format exactly, our goal is to eventually design a community model that can give our users the support they need and that also helps us keep listening and learning.
What did you learn to best engage with your customers? How did you build a tight feedback loop with your customers to rapidly improve your solution to their problems?
The starting point is always a strong community of early supporters who understand the dynamics of a startup environment. We’ve created Facebook community forums to support those struggling with debt and understand their needs and expectations regarding a product we’re building. We are constantly open to chatting with our users - they may schedule a quick chat with us at any time and get free merch to help us on this journey.
We’ve made ourselves available via multiple channels- some users will email, some will DM us on IG, and some will post directly in our FB group. We recognize that the communication with customers these days must be hyper-personal, so we take the time to respond as ourselves. Recently, we have also brought a financial therapist on board to make sure we help our customers to the best of our ability and personally support them on their journey to debt freedom.
Our initial strategy was to test different messaging to see what would have a low cost/high conversion rate without targeting specific demographics. The one problem was receiving potential customers who weren’t a good fit for one reason or another (not the right type of debt, not the right risk profile, etc.). Rather than just collecting contact info at signup, we also had folks fill out a questionnaire that gave us insight into their debts to combat this issue. This way, we could measure which messaging led to converting the right kind of users and hone in the marketing this way.
Besides more of the data-driven approach, we found that most of our users were looking for advice on Facebook and Instagram, so we began to shoot educational Reels to increase our viewership. Reels have continued to perform very well for us with minimal cost.
Walk me through how you landed your first few customers as you were building your product or service.
Over the last few months, we’ve built a 10.5k+ waitlist, where over 50% of users came to us organically. In February, we opened our platform to first testers, initially friends and family. We slowly expanded to those from the waitlist who are most engaged in our community forums and expressed their excitement about the product.
We’ve recently launched the Debbie Green Pass giveaway, where we encourage users on the waitlist to complete a short quiz and join our community forum to bypass the queue and join our app earlier. That way, we’re also identifying power users who will help us shape the product through their early engagement.
As we progressed, it was super cool to see some of our top supporters from the debt-freedom community become our most engaged users and remain excited about our product.
Team: Maintaining A Sense Of Family As The Team Grows
If you have a cofounder, walk me through a time that you two had a conflict. What was it about? How did you handle the situation? What was the resolution, and how did it impact your working relationship with your cofounder?
We often disagree about product feature prioritization. Rachel manages marketing and is often closer to the customer conversations than Frida/Maxime, though they run point on product. Whenever this happens, we always defer to our Debbie community.
I’ll share a bit of a sillier example, but one that is representative of how we typically roll in these situations. At one point, we had some disagreement on the color scheme of the app. We posted a poll on our IG story and got a very clear response from our followers. We now use a similar approach anytime we’re at a crossroads.
The beautiful thing about this democratic approach is that it doesn’t step on anyone’s toes/diminish anyone’s opinion since we all agree that the user’s voice will always win.
What key qualities did you look for in key early hires to increase your chances of discovering product-market fit, and how did you prioritize what types of hires you needed to make first?
We ultimately looked for folks who were deeply aligned with our mission and cared about the user’s problem. As long as we maintain “long-term debt freedom and wealth-building” as our north star, we feel confident that we will find a solution that works for users and the business.
In terms of prioritizing who to hire, we know that we have limited skills in different areas. At the point that we all have taken ourselves to the edge of our ability in a particular area, we hire someone to take over in that key area. For example, Rachel ran marketing for the first six months despite having no prior marketing experience. When she felt the marketing operation could be professionalized and up-leveled, we brought on Matt Balcerek, our current Marketing Lead.
We’re now a team of 11 (the team fills up a whole Zoom screen!), so it’s becoming increasingly important to actively maintain the sense of family and collaboration across the team. One of our favorite traditions is our bi-weekly “Debbie Quick Wins” meeting, where we each present our successes and cheer others on. This helps increase visibility into what everyone is working on + creates a natural motivation to complete certain high-impact projects.
The other important aspect of scaling is delegating ownership - especially since we are three co-founders. We try to avoid delegating tasks but rather delegate the full deliverable or even full ownership of a specific area.
On a personal level, it’s been a super interesting journey as a young first-time founder. In all honesty, I’ve never managed a team (unless you count my four younger siblings, who were practically my little tribe); I have to learn to set clear expectations, push when needed and let go when it’s not. At the same time, I act as an honorary member of each team and am there to pick up whatever tasks are needed and help the rest of the team achieve our goals.
If there was a potential employee of your startup reading this Case Study right now, how would you convince them that joining your team is the next best step in their career?
We are a mission-driven company looking to solve a very large problem. Because we care deeply about this issue, we have high standards for ourselves and opt to move quickly. This allows us to gain feedback quickly and adjust.
We are a young and hungry team and offer flexibility that others do not - our team is distributed between Miami, Austin, LA, and Argentina (though we consider our main hub in Miami). We have diverse backgrounds and opinions and value creative and outlandish ideas, even if we don’t necessarily implement them. We are a consumer brand first, fintech second.
Bonus: we love to do team escape rooms and roasts (like most recently, for Maxime, our CTO’s birthday).
Fundraising: Refining The Story Of The Business
How did you set expectations with investors at seed and Series A? What is the main difference in those expectations as your company grows from one stage to another?
We previously raised a pre-seed round from venture investors and had promised several things by the time we raised a seed: 1. Growing the waitlist to a sizable amount, and 2. Launching the beta. We have achieved both of those goals thus far.
During the pre-seed/seed phase, we focused more on the story of the business. While the story will continue to be incredibly important, having a wealth of metrics to support the story will be critical as we grow. Our goal is to continue building on product market fit and begin generating revenue. We plan to be far more conservative with our promises, although we have reached our past goals. We need to set high expectations internally and outperform investor expectations.
How does dilution work as you go from seed to Series A?
We expect dilution to be similar in the early stages (pre-Seed and Seed, which we will soon be raising) - the big difference will be how active we expect our investors to be in day-to-day operations. During Series A, lead investors often want a board seat and more control over the business. So far, our investors have been incredibly supportive of the business with respect to contacts and advice but have been hands-off operationally. We are prepared for this to change as we grow.
Takeaway: Keep Your Users Actively Involved In Product Development
What are the key lessons have you learned so far from your journey to achieve product-market fit?
Our users are key players in our product - without their effort and involvement, we cannot possibly help them succeed. Making that clear to them and to us has been very important to how we’ve developed our product.
What’s the hardest problem you’re facing now after solving the prior one(s)?
Keeping up fast-paced product development/ keeping up with demand. Users want to be engaged, so we have to keep putting out new features for them.
Click Here For Debbie’s Founder File:
Debbie’s Founder File Description:
Leibowitz: “When Debbie started to take form, it was important to us to put together a set of guiding principles and values that will keep us honest and true to our mission throughout this journey. Especially within an industry like fintech, where products can very quickly become predatory, we felt this guide was critical to set in the beginning to make sure we stay on course and continue to serve our users in the best possible way.”
Five Cool Founders You Should Know About:
Brian Bristol, Founder of Pigeon Loans: Pigeon Loans makes lending and borrowing with your friends and family smarter.
Jaime Getto, Founder of Bottled: Bottled allows users to send a “message in a bottle” to anyone, anywhere in the world.
Benjamin Quaye, Founder of OctoCredit: OctoCredit is helping folks build credits through recurring payments.
Ruben Izmailyan, Founder of Quiltt: The Quiltt platform empowers anyone to launch modern consumer fintech experiences, no backend required.
George Georgallides, Founder of Basis Health: Basis turns your wearable data into real-time, personalized insights.
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