326: Safwan Shah: Providing Faster Paycheck Access for American Workers

Subscribe: RSS

Why Does the Richest Country in the World Have a Third World in its Belly?

Safwan Shah

As PayActiv’s founding CEO, Safwan Shah is inspired every day by the transformative impact that PayActiv can bring to the lives of millions of people living paycheck to paycheck.

An engineer by training, payments expert by experience and entrepreneur by accident, Safwan’s last job was at TSYS after the acquisition of Infonox – a payments company he founded and bootstrapped.

His previous stints include being a rocket scientist at a NASA Center where a number of his experiments were part of the space program.

Besides science and entrepreneurship, Safwan has also taught at Haas School of Business, UC Berkeley and Baskin School of Engineering at UC Santa Cruz. Safwan is a graduate of the distinguished Stanford Executive Program and has a Masters/Ph.D. from UC Boulder.

What We Discuss With Safwan Shah In This Episode

Why millions of American workers are in financial crisis
The positive side of capitalism and where conscious capitalism fits in
How changing when people get paid is more fair than our current system
Transformation and how your primary assumptions about the issue change everything
Sage advice from an accidental entrepreneur who chased purpose rather than passion

Episode Transcript Highlights

I’ve never had a proper job in my entire life. It embarrasses me for some reason because when people come to me in the workplace and we’re testing whether they’ve done something before or have experience. I think, well I didn’t have any experience in this before, so who am I judge anybody else?

A Ph.D. program is not transactional, it’s transformative. When you enter the doorway you may think you know everything. When you come out 3-5 years later, the one is thing you know is that you don’t know anything.

I came to Silicon Valley because that’s where every engineer came. I got some job opportunities but nothing really worked for me. One thing led to another and I became that person that friends would say, he’s around, he’s available.

Everyone in Silicon Valley has ideas but they also have jobs. They don’t want to jump completely out of their job and do something. It’s scary right? So my friends would say, “you don’t do anything that is important”, so they offered to help me start something. I had nothing to lose; I was an educated derelict. So for the next 15 years, I would start – and partially succeed – I never failed. I don’t believe anyone fails; they partially succeed because there’s always a lesson.

Then about 10 years ago, I had achieved everything that I had set out to do. I retired and said “I’ll never work again.”

Finding Purpose

2 years passed, and that was when PayActiv was born. It was like a second life.

I always say to entrepreneurs, you know your idea is good if you can explain it to your mother or your grandmother – somebody who’s not going to take in your words and then not ask your questions. If it’s understood by people and makes a heart connection with them, then any investor in the world will invest in you. Because things that work are understood.

So when I was looking for something that would make me leap out of bed, instead of looking at technology and trends, I looked at the human condition. At the end of the day, everything comes down to whether it adds value to the life of a person.

That change in thinking was profound. Instead of thinking, is A.I. going to work? Are smart cars coming? Start thinking, what is there that this world needs? Perhaps there is a gap or blind spot.

About 2009 I started reading that lower income people were living paycheck to paycheck. People were left in a financial ruin. 90 million people are living paycheck to paycheck. X number of people did not have $400 in an emergency.

How is it that the richest country in the world has a third world in its belly? What happened? What is the problem here? Everyone seems to be quite wealthy and rich.

150M people go to jobs – they are the employables. That means 60-70% of our workforce are living paycheck to paycheck. What is the reason?

It turns out that millions of Americans, while waiting to get paid, in that two-week cycle are paying enormous amounts of money to late fees, overdraft fees, and high interest credit cards – if they get credit, many don’t. Then there are emergency products that many people use like payday loans and legacy products like pawn shops, and then title loans. People are paying $170-$200 billion a year in fees for these things.

I asked myself, “Why isn’t anyone trying to do something about it?” Everyone is trying to figure out a new lending product. I remembered back to my university days. I didn’t have money. The problem was never how much I earned; it was when I got the money.

I can’t change their wages or their taxes, but there is one variable that nobody has talked about and that is when you are paid. Who controls that? Your employer does.

Lower income people don’t have credit, so they pay overdraft or late fees or get a payday loan and end up paying 7-10% of their paycheck to these fees.

Transforming Lives and an Industry

So I said, let’s make a company and go to employers who have large factories where 80% of employees are shift or hourly workers. We did, and said, “What if you gave us the time data of your employees, and we let them take half that many hours as PayActiv and then on the day of payroll, you make us whole? But I will not go direct to your employee, you have to offer it to them as a benefit.”

Today there are about a 1000 companies that use us. It’s now called “earned wage access.” When you go to earnedwageaccess.com you come to my company. It’s become an industry but it didn’t start out that way. It took transformation on many levels.

There are 2 types of leaders – transactional and transformational.

You cannot transform anything until you first transform yourself. For me the time 10 years ago was very transformative, because it gave me the time to think. The one distinction I made is that the one thing I won’t chase is passion. I’ll chase a purpose instead.

Passion could be football, basketball, or golf, but purpose is perpetual – it burns all the time, every second of the day.

My passion could be music, but my purpose is to improve the human condition. So even through music I will improve the human condition.

Imagine a printer that has a lot of ink, but has run out of paper. The moment you put in paper, all those beautiful words will come out.

So in their life, one has to ask themselves, “Are they missing the printer, ink, or paper?” For me, I had a lot of ink – I was young enough. The printer was working. What I was missing was the paper on which I could put those words.

With an iPhone you type something and it autocompletes. There comes a point in your life – it could happen in your 30s, 40s, perhaps never, but you come to a point where you say, there is no autocomplete left. I have fulfilled the wishes of all those people who set standards for me. For me it was: get educated, work hard, be honest, have the decency to be a productive member of society, and have enough money to be financially independent. When all those things are done, what’s left? The human condition is left.

So then there is the question of capitalism. Capitalism got us where we are today and it is capitalism that will help us too. A surgeon’s knife and an assassins knife – it’s the same knife right?

Hope is necessary. Humans need to pursue opportunity – it is ingrained in us. Whether you’re in Bangladesh or the Amazon Jungle, in some form it drives towards survival of some sort. All that’s missing is opportunity. Opportunity is part inside, and part the environment.

Capital Is The Solution

I ask different questions like, “Why is there a third world in the belly of America?” It’s every American’s responsibility. Do not abdicate yourself from the responsibility. I have been across the country. I live and breathe the life of the people we serve. I say serve because we are there to serve them.

If we can solve their day to day problem without gouging and exploiting, and monetizing the lower income worker – that is the only way it will work.

My company makes sure the $12-15 an hour worker has access to the money they’ve already earned. They are the one giving a loan to their employer. You pay your landlord in advance, you pay your vendors upon delivery, and your customers pay you immediately. You got your latte and you paid for it right away. What about the person behind the counter? Why do they wait two weeks to get paid?

In asking questions, the assumption you make changes everything.

I don’t even think of capitalism as conscious. I think capital will solve this problem. There is no other way.

Now my belief – that I am willing to debate – is that America should not be seen as 50 states. America should be seen as 5 million businesses. How do we take these 5 million businesses and empower them? By transformative leaders, consciousness, and human condition.

Episode Resources

It’s About Time Book: ItsAboutTimethebook.com
It’s About Time Film: itsabouttimethefilm.com
Conscious Capitalism 2018 CEO Summit: https://www.youtube.com/watch?v=BF01dG-ikug

Learn More About PayActiv and Connect With Safwan Shah

Website: payactiv.com
Twitter: twitter.com/payactiv
Facebook: facebook.com/payactiv
LinkedIn: https://www.linkedin.com/company/payactiv-inc-
Safwan’s Twitter: @safwanshah
Safwan’s LinkedIn

Listen on Apple Podcasts, Spotify, Pandora or Stitcher.

Did You Enjoy The Podcast?

If you like this episode let us know! Reviews for the podcast on iTunes are greatly appreciated. This helps us reach more entrepreneurs seeking to make a positive impact in the world. If you received value from this episode, it would mean so much if you could take a moment and leave your 5-star rating and review. You can do that by visiting here. Thank you! Together we can make a difference!

Additional Episodes You May Like

Tags:

Why Does the Richest Country in the World Have a Third World in its Belly?