One of my squash partners recently joined a Fintech business called Go Henry . The company’s mission is to administer pocket money for children aged between 8 and 18. It is educational and helps to make kids more financially responsible. The account holder is the parent, whilst the kids have a sub-account, an app and a debit card. Before you cry, there’s no potential for debt.
Kids today can’t survive on cash. It may work for sweets but what they really want is online. According to Go Henry, the most popular items are purchased on Xbox, iTunes and Amazon.
Using this information, Go Henry can approach retailers for discounts, which they then share with their customers. 100% of kids’ cash is disposable income so these trends can be powerful. Go Henry have managed to break into an untapped market where previously, there was little information at all.
The company was founded by three families who were fed up with giving their credit cards to their children for online purchases. Furthermore, they wanted to teach them about money; something that strikes a chord. The business now has 100,000 customers and is growing five-fold per annum. When a child gets a card, their friends want one. The result is exponential growth driven by the network effect.
I signed up for my two children. The 15 year old is a skeptic because she already has a bank account, but the 13 year old loves it. Signing up took a couple of minutes. I am the account holder and there was no requirement for compliance checks. When I opened the bank account for my elder one two years ago, I was asked for proof of address and a passport. The bank teller wanted a utility bill, but I said she was just 13.
So the little one is a customer. I can limit her spending on a weekly basis, cap or block iTunes and encourage her to save. I can also incentivise her to carry out tasks such as tidying her room or help clear the table. According to Go Henry, the average price paid for ‘tasks’ is as follows:
Tidy bedroom £1.15
Do homework £1.06
Empty dishwasher £0.69
Make bed £0.84
Good behaviour £0.97
Washing up £1.59
Put washing away £0.87
Keep room tidy £1.51
Britain now has a price discovery system that might just make our kids do something useful. National averages and benchmarks are very helpful in negotiations. I’m delighted that I can now get the dishwasher emptied for just 69p. Wonderful!
Parents can release these payments when tasks are completed. The idea is that parents have a weekly discussion with their children about their financial affairs, which reaffirms the educational aspect. Go Henry’s intentions are good and their platform is excellent.
There are other useful statistics to keep parents in check. The under 11s tend to get £4 per week, which steadily rises to around £8 by the age of 15.
The staggering growth rate and the potential for a global footprint encouraged the founders to wheel in a big gun to manage the company. The new CEO is Alex Zivoder, who formerly headed Lynda.com, an educational platform sold to LinkedIn for $1.5bn in May 2015. Prior to that, Zivoder had senior roles at Viagogo and Expedia.
He’s a visionary and is clearly driven. I was most impressed by the fact that he had no plans to sell their unique and valuable data to retailers or investors. Kids often start trends, and I’m sure a hedge fund would love to know what was happening in real time. That data would tell us when the Xbox has run its course or highlight something new. As I said, that data will remain secret.
The company makes money from fees and retail partnerships, but the true value lies in the customers. When they reach 18, Go Henry will be in a strong position to steer where they bank in the future. I wonder how much that would be worth to the banks in due course? That is, of course, if we still have banks in their current form.
Sign up your kids!