By Daniel Van Oudenaren
Ever filled out paperwork for a mortgage, apartment, or credit card and been asked to state your income? That question can be tough to answer for freelancers and contractors whose income is variable and unpredictable.
Joust is a new financial technology (“fintech”) company that is building a banking service tailored to gig economy workers. The company relocated here in October from Denver led by CEO Lamine Zarrad.
In an interview, Zarrad said that the idea for Joust originated in part in a conversation with a rideshare driver: “After a conversation with my Lyft driver, who was denied a mortgage by his bank, I dug deeper into the world of freelancers and self-employed workers.”
Sometimes called neobanks, fintech companies like Joust operate software interfaces that look and feel like an online banking app. But neobanks don’t actually have a bank charter and don’t have a balance sheet that looks much like a bank’s.
Instead, neobanks partner with existing banks to offer the traditional banking services that underlie their technology. Joust launched a beta version of its app a year ago and plans to launch a new version later this month. Thus far the startup employs 18 staff and contractors and has attracted $4.6 million in funding.
Joust recently announced it would relocate from Denver to Austin. What factors drove that decision?
When Joust was raising its seed round of funding, we knew it was time to make a decision about where to put down roots and grow our team.
We went through the list of startup friendly cities, and Austin immediately rose to the top for a variety of reasons. The city has a lot going for it — with its thriving startup culture, amazing talent pool and factors like good weather and a creative culture. Another, lesser-known advantage is that the city is an important financial tech hub. It hosts many fintech companies including one of our partners, Q2, a digital banking software leader.
Of course, I’m also a University of Texas at Austin alum, with family and several connections here. That has made this transition particularly smooth as well.
How long has Joust been around and how did you come up with the idea?
I came to the U.S. as a refugee from Azerbaijan, joined the Marines and then spent years building up an expertise around banking and regulation. Through these personal and professional experiences, I was naturally interested in financial inclusion and understood the importance of having financial stability and economic vitality.
After a conversation with my Lyft driver, who was denied a mortgage by his bank — I dug deeper into the world of freelancers and self-employed workers.
There are currently 56.7 million freelancers in the U.S. which amounts to about a third of the U.S. workforce. In 2027, this number is projected to rise to more than 50% of the U.S. workforce, yet current banks are not addressing the unique financial concerns of these workers. So in 2017, I co-founded Joust and launched its first beta app in January 2019.
What investment do you plan to make in Austin in terms of relocated jobs and hiring?
Since we moved to Austin in summer 2019, we’ve been focused on growth. We’ve hired a number of employees to help launch our fresh new app, which will be launched in late Jan 2020.
We also have a pretty ambitious roadmap going forward, not only through hiring, but by focusing on marketing and connecting with potential fintech partners in the city.
Your marketing is targeted at freelancers and gig economy workers. What are you offering that’s attractive to them?
Freelancers and gig workers have a unique set of financial concerns — which includes client non-payment, income volatility, setting money aside for employment expenses (like retirement, benefits and taxes), and getting a merchant account to accept client payments.To top it off, they often have to reconcile more than 10 separate financial products to run their day-to-day business.
At Joust, we provide one, all-inclusive banking app for freelancers and the self-employed. We have an FDIC-insured bank account combined with a merchant account to accept all types of payments (including credit card payments).
Our star product is our invoice guarantee tool, PayArmour™, which is the first ever product to provide immediate payment on unpaid client invoices. It allows users to send quotes and invoices to anyone, anywhere, and get paid by Joust upfront.
Other key features include a Visa debit card, invoicing tools, customizable savings goals, and automated bill pay.
What are some of the fees that a freelancer might have to pay in order to use the Joust platform?
It is free to sign up for Joust and set up a bank account/merchant account. We collect a small percentage to use some of our services — like when you receive a credit card payment or when you utilize the PayArmour™ product.
Starting in 2020, we will move to a freemium model in which higher tier users will not have to pay for processing fees.
My understanding is that you don’t have an actual bank charter but rather partner with an existing community bank. Which bank is that and why shouldn’t a freelancer simply open an account with that bank directly?
Yes, we partner with a great community bank, nbkc, to open FDIC-insured bank accounts, but Joust goes well beyond just banking services; we give independent workers one financial app to run their day-to-day business.
We address a range of their specific financial pain points and cover the entire payment process from beginning to end.
For example, a Joust user can create a client invoice, protect themselves if that client doesn’t pay (and get funded on that invoice instantly). They can also accept payments from their clients and customers, whether it is an ACH or credit card payment.
In addition, they can manage their money to pay bills, plan for retirement, savings, benefits, and more.
Is there a lending component to what you’re planning to do, and if so, how significant do you think that could be in terms of expanding your balance sheet?
We do not have a lending component yet, but might plan to add this in the future. However, today, PayArmour™ functions like a credit product by extending access to much-needed capital that’s normally tied up in in the invoice.
What does your growth trajectory look like thus far and where do you see it going?
We launched our pilot with approximately 3500 business users and plan to release the public product in January 2020. In addition to our mobile apps, we are releasing our API that will allow us to embed Joust features in third-party platforms that serve SMBs and freelancers. We expect the API strategy to accelerate growth since we will be able to prequalify and onboard thousands of users virtually overnight.
Austin isn’t historically a big banking town compared to, say, Dallas. Do you foresee that changing at all?
One of the reasons we moved to Austin was because of its rich and growing digital banking landscape. Not only is Q2 located here, but also amazing companies like Kasasa, Kony, and many fintech startups solving similar problems.
That being said, Austin is a fantastic place for banks to be — the inherent creativity of the city can invite more out-of-the-box thinking, something the banking and finance industry has historically lacked.
You’ve lived in Texas before. What do you appreciate about being back?
I have a great relationship with Austin — I went to grad school here and even have family here.
I think what I appreciate the most about being back are the intangibles. Relationships that smooth the way are letting me put more of my attention into the company and less into little tasks, like getting a recommendation for a trustworthy plumber.
I’m also really excited about building my connection with the University of Texas to cultivate student talent.
