What It's About
Two brothers create an app to help graduates pay down debt.
Business Model
Skills Required
Complexity
Profit Potential
Words of Wisdom
You should always start with an MVP (Minimal Viable Product). This means building something that functions, to test, get feedback from people that tested it, and make improvements until you develop a product that people are willing and want to use. While we beta tested we had under 100 users but this gave us the ability to control the environment, get feedback, and improve the product.
Fun Fact
As of 2018, a total of 44.2 million borrowers now owe a total of over $1.5 trillion in student debt. That equates to almost $34,000 in debt per student. With that many potential customers, owing that much money the sky really is the limit for products servicing this market.
Notes from Chris
Episode 1034
A few years ago, brothers Dan Stelmach and Nick Sky were living in Chicago working sales jobs. They’d graduated from college a few years earlier and were hoping to pay down their student loans—all while trying to live fun and enjoyable lives. Their story isn’t unique. In fact, seven out of ten graduates in the USA leave college in severe debt. The average loan amount is now aound thirty seven thousand dollars, which ramps up to sixty thousand once interest payments are included over a decade or more … yikes! For Dan and Nick, the situation was even more grim. The brothers had over one hundred thousand dollars in combined debt. And that’s after they’d taken significant steps during their degrees to keep the debt low. They’d both worked part-time jobs and had multiple side hustles to help them along. Still, the number cha-chinged its way into six figures. Student debt had become a national epidemic. They began brainstorming ideas of how to eradicate their loans quickly, and by proxy, everyone else’s. Eventually, they settled on something they thought might help… spare change. Yes, really! After turning their pockets inside out, and then asking their friends via a quick survey, they realized that the average accumulation of spare change was around fifty dollars a month. They figured, if they could devise a simple way of redirecting that excess change to their loans they’d save not only thousands of dollars in interest, but years of their lives. They liked the idea for a couple of reasons. First, it didn't require any major changes in lifestyle, they could go about things as normal. Second, the whole process could be automated using technology. They envisioned an app, linked to a users credit card and bank account that would round purchases up to the nearest dollar, and place the excess directly onto their loan payments automatically. For example, if they bought a coffee for three dollars and fifty cents, the app would round it up to four dollars and put the extra fifty cents right onto the loan. They named the app ChangEd. A few months later, in January 2017, the first version was ready for beta testers. The app needed to have tight security as it linked to users credit cards and bank accounts. For that reason, it was difficult getting downloads at first. Dan and Nick tested it directly with their friends and family. Soon enough, things rippled out beyond their direct network to give them just under one hundred beta users. The small group allowed the brothers to pay close attention to each person’s user experience without growing too fast. So, after a year of iterating and growing the user base the brothers put in an application to appear on SharkTank … and were accepted. Through that appearance, Mark Cuban himself offered to invest in the app, seeing its potential. His investment enabled the brothers to quit their full-time jobs and focus on ChangEd. Since then, they’ve introduced a $1/month user fee, scaled to over forty thousand users and have helped direct over four and a half million dollars into paying off student loans. There really is a lot of spare change lying around.MENTIONED IN THIS EPISODE:
- ChangEd: spare a minute to learn more about Dan and Nick's app.
- Shark Tank: The hit ABC show Dan and Nick appeared on landing a deal with Mark Cuban.
- Young Analyst Turns College Debt Into $100k Profit: While struggling to pay his student loans, this enterprising graduate finds a way to “round up” his spare change to a six-figure side income.
- Side Hustler Gets Paid to Run 7 Ultramarathons on 7 Continents: After getting hurt on his first of 7 ultramarathons, a long-time side hustler builds an app to help other injured runners recover.
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