How to Understand your Users with Shivani Siroya of Tala

If you're a founder, you know that fundraising is a big part of the job. What you might not know is that Carta is there to help. Carta's new fundraising suite provides startups of all stages the best tools and support to easily issue SAFEs, accurately forecast dilution, and quickly close funding rounds. Save time, money, and make your next round your best yet. To learn more or to get started, go to carta.com/fundraise. That's carta.com/fundraise. Welcome to Inked for Starters with Alexa von Tobel. I'm Alexa, a serial entrepreneur myself and founder and managing partner of Inspired Capital, a venture firm that backs fearless founders who are solving some of the biggest challenges facing humanity. Now in our 6th season, we sit down each week with one of the best founders on the planet to hear their story of guts, inspiration, and drive. Let's dive right in. Hi everybody. I'm your host, Alex von Tobel, and this week I'm excited for you to meet Shivani Soroya, the founder and CEO of Tala, the first financial platform to meet the global majority. Shivani started Tala in 2011 and has since expanded to serve nearly 9 million people across Kenya, the Philippines, Mexico, and India. Tala enables users to start and expand small businesses, manage their needs, and pursue their financial goals with confidence. Tala has raised nearly half a billion dollars in investments in debt, And the company has been named to Fortune Impact 20 list, CNBC's Disruptor 50 4 years in a row, and Forbes FinTech 50 list for 8 years running. Prior to founding Thala, Shivani held a variety of positions in global health, microfinance, and investment banking, including with the United States Population Fund, Health Net, Citigroup, and UBS. Shivani holds an MPH from Columbia University and a BA from Wesleyan University. And with that, I wanna welcome my friend, my fellow Henry Crown classmate, Shivani. First of all, welcome, Shivani. Let's start with the basics. What's Tala in your own words? Let's go back to that origin story.

Well, first I have to say, I am so excited to be here and for us just to be connecting in this way, kind of a new way. So what Tala does is we are the first global platform designed uniquely for the global majority. And through our platform, the global majority, which is about 4 billion individuals around the world, can gain access to holistic financial products all through, again, our mobile app. So making it extremely accessible for them, allowing them to be able to use their money, protect their money, and grow their money with Tala throughout their financial life.

You founded the company in 2011. Can we go back to the aha moment, the mission? Where did it come from? Give us a sense And again, back in 2011, to think about starting a company that is empowering another part of the globe, it's kind of crazy even for me to think about. How did you feel like you were in a position to start this?

To your point, I did not start because I thought I was gonna start a company or be a founder. I saw a problem that I couldn't stop thinking about and just became obsessed with it. So, you know, my background is a mix of investment banking and also working at the UN Population Fund. And I worked across 9 different countries. And over that 5-year period when I was there, I had the opportunity to interview about 3,500 individuals in person and hear their stories, but most importantly, really understand their daily lives and how they were using money and what those decisions were around. Did they save it? Did they put it towards their next day's inventory? How did they decide which bills to pay? But I became kind of like a walking QuickBooks. And over time, I one saw the tremendous amount of potential and purchasing power that these individuals had. And then I also saw, because I was alongside them, how they were turned away by the marketplace, by financial institutions, because they just didn't have same data, credit histories, you know, national IDs, these different things just to get through the process. And so as a result of not having that data or those credit histories or those identities, they were just looked at as being risky. And I saw a completely different story. And so for me, you know, the way I got started was literally just starting to lend to them myself. It was almost innate. I couldn't not do that. And so I started using my savings and coming up with different financial products for them. And it was all based on their daily life because I was sitting right there. Luckily, a friend of mine came and visited me and he said, Shivani, this is crazy. You are going to lose all your money and this is not scalable. And I would hear this also from other loan officers that would tell me, you can do this for 1 customer, 2 customers, but you can't do this for millions of individuals. And so it got me thinking about, that's right. Know, what am I doing to underwrite these customers? How am I actually believing in their capacity, in their willingness to repay? And I realized it was the daily life that I was observing. And so from there, I started thinking of it as, where does that daily life data exist and how can I gather that? The first version of this was a very simple IVR text-based tool that would allow them to give me that data themselves. Instead of me following them around and seeing it. But ultimately, a much more scalable form of that is using Android technology. And because Android is an open system, we can actually, again, build from the person up. And so our customers can give us access to key transactions that are sitting right on their device. Because in most emerging markets, when you pay your cell phone bill or your utility bill, you receive a confirmation message. As a form of an SMS that tells you how much the bill was, when it was due, what you paid, all these different things. And so there is this kind of paper trail or data trail that we can actually bring in. And then the other aspect of it is, you know, my background was in behavioral economics and game theory. And so I was able to understand that that piece around someone's likelihood to repay and their behavior can also be gathered through our interactions with them. And the kinds of questions that we can ask them to understand financial responsibility and anxiety. And so pairing those 2 things together, there was this hypothesis that we could create an alternative credit score and successfully lend against that.

You thought a lot about this problem. You actually interviewed thousands of microentrepreneurs in person as part of your role with the UN Population Fund. How has that connectivity to your user influenced your approach of how you thought about product development?

So I think the way that the proximity, or I would say this idea of user research and user insights being the heart and center of how we've done product development, I just fundamentally believe that the new kind of financial system has to be putting power in customers' hands. And the reason I believe so strongly in that is through those thousands of interviews, I saw that our customers in this segment, they make a tremendous amount of decisions and they have purchasing power. It's much more about how do we enable them to now actually have the choice and the control of how to make those actions kind of further their financial life. But it's not to say that they can't make decisions or that they're not making the right decisions. It's just that they're missing both the tools and access to liquidity as a result of that. And so today, even as we think about our product roadmap and strategy, it always keeps coming back to how do we put that power of choice and control in the customer's hands?

Over 2/3 of the global population is not covered by a credit bureau. How have you thought about using data and decisions about which customers to work with and how much credit to offer? And again, in so many ways you've reimagined credit. in credit scores, but you did it from scratch, which is pretty crazy. Tell us more about that on the product side.

Yes, completely reimagined credit scores and even the concept of how do you structure a credit product in a different way that is more fair, more flexible, putting choice in the consumer's hands. Starting with the credit score, I'll start there. I think as we think about our credit scores and the way it's traditionally done, It's, again, a bureau, and it's a lot of times data that is stagnant and that it's much more historical. And what I saw firsthand was that something that is more accurate is going to be something that's happening day to day. Again, being a part of that flow of day-to-day data was one of the key pieces that I wanted to bring in, was that, again, this customer's life, the 4 billion people around the world that don't have access today, They live very volatile, dynamic lives. And so we have to be able to be proximate to that. The second thing is finding those proxies for credit scores. And this was something that I didn't really reinvent. It was just, again, finding data that could be proxies for the 2 categories, which is one, capacity and consistency of previous payments. And then the second is, now that we know you have the capacity to repay, Are you likely to repay? And that gets into behavior, character, these other things. And that's much more determined by understanding someone's emotional state and also whether or not they value the product that you're giving them. And that's something that in some ways I decided we need to let that evolve, and that should be much more about our interactions with them. Because I think one of the best things about credit is actually it's a feedback loop. And it's this great indicator of trust both ways. And I guess the last thing I'll say on that is like why this was the jumping off point is I also fundamentally believed to get this data and to get the trust of this customer, we needed to show them that we trust them first. And so our loans are completely unsecured. And so when you think about the craziness of this, traditional banks are usually asking you to put something in first. And then they're saying, oh, and now I'll give you credit because you've already deposited money. I know you're safe. I'm going to give you something extra on top of that. But this customer has constantly been turned away. And so, I fundamentally believed we needed to give them something first before even asking them something in return. From there, it's saying, okay, we have this hypothesis, we've got these proxies, let's create a credit score. Well, let's actually make this the magic moment of trust. And so we started with very small loans, unsecured credit based on this data. And customers started telling us things like, not only is this the kind of product that we want, but they would literally say, this is the Kenya we want. That was our first market.

Wow, that's incredible. Can we— again, just because we live in the United States, we think in terms of US dollars. Can we talk a little bit about those early days and the size of loans and like how you build trust with your customer and what a loan dynamic looks like and just the scale that you start at?

Yeah. I should also mention the reason I think it's interesting is at this point we've now done over $5 billion in origination or credit delivery.

Unlocking $5 billion of credit for a totally underserved population. It's pretty cool.

Yeah. And then I think really cool is the fact that it was done initially at these $20. You know, our average loan, or I shouldn't even call it a loan anymore, it's really a working line of capital or a credit limit. So very similar to what we all now experience as a credit card. And the average is about $150. But back in the day, in 2015, it started at $20. And then from there, As we understood more about the behavior and how the customer repays, how do they engage with us throughout the app? Do they use any of our financial literacy products? How do they engage with our customer advocates? We grow that limit over time. And so customers have stayed with us for, at this point, 8 years. We have a 96% repeat rate. And so again, it's that aspect of they trust us and we trust them. And we can continue to grow with them.

That's amazing. Again, unlocking a part of the economy, which is really what you're doing, is pretty wild. Can we talk a little bit about the fact that you have a global business? And as you said, you started in Kenya. Can you give us a sense of the scope of your business today globally?

Today we work across 4 different countries. We started in Kenya. From there, we decided to go to the Philippines. Then we went to Mexico and our newest market is India.

Can you tell us a little bit about how you think about picking a country? How'd you start with Kenya? Why then the Philippines, Mexico, and India? How do you think about unlocking these markets for Tala?

The first thing I'll say is that when I think about, again, the markets that we go into, part of that is now, I think, less intense in some ways because we do now have a global footprint. And so for me in the early days, that was the first thing to prove out is that this is not a Kenya-specific model or the credit score can work across all markets. And so that is thinking both globally and locally. And what I think most people don't realize about Tala is that ultimately we are a data and technology company. And while we have this B2C brand, and again, really I would say, stay close to our customers and really focus on that relationship, we can only do that because of the platform that we've built that is both global and modular. And so going from a Kenya into a Philippines was extremely necessary for us because the Philippines looks completely different than a Kenya. There is no national ID system. There are 17 different forms of identity that are accepted. Wow.

Wow.

And so doing something like a KYC is very, very difficult. And so we had to figure out, okay, well, how do we make that scalable? How do we make that cost efficient? And so we built automated KYC and facial recognition into our supply chain and built it ourselves. The second thing was the data availability in the Philippines is different than a Kenya. There's no kind of dominant mobile money system like an M-Pesa in Kenya. And so we had to then think of, okay, how do we integrate across all these different payment providers, which are all in person? And so we ended up doing direct integrations with traditional banks, remittance centers, bill payment centers, and retail chains like 7-Eleven. And now again, that has served us as we went into these other markets because 85% of the world is cash-based. And resembles the infrastructure available in the Philippines. And so once we had KYC credit scoring, these interoperable payments integrated into our system, then we could say, okay, now we're ready to go global. And so once we proved out the Philippines, we entered Mexico. And so as we think about country choice now and our scorecard, we have the capability to actually go everywhere. And so now it's really a matter of, OK, what's the size of the market? What's the demand or kind of need in terms of the underserved segment? What's the competition like? But it does allow us, I would say, to really focus regionally and also in markets where a lot of other people may not go. And so actually being able to prioritize small markets that have a very high underserved population.

I love that, which is you're going Where people are the most underserved. And through the process of building what you're building, you're building incredible technical and competitive moats because finding a way to manage 17 identities for KYC for the Philippines is really hard. Really hard. Let's talk a little bit about your business model. So many people could have thought about your business as a nonprofit in some ways, but it is not. It is very much a for-profit business that has wild future potential, and it's quite big. Can we talk a little bit about your business model, how you make money, and how that's evolved?

So I would say our business model falls into currently 2 categories. The first is on the credit side, which is still our core offering and the product that every customer does need. We all do as well. And the way that we do that is we think of it, you know, I would say pay-as-you-go credit. So we offer them a limit and based on what they take of that limit and how long they keep it out, the price changes. And so this is the other thing is that again, putting that flexibility and choice in their hands is very hard to do because you are trying to create something dynamic and in the moment. But ultimately it's a fee-based approach as opposed to a traditional accruing or compounding interest rate. In addition to that, we do not make money if this customer does not pay us back. And so there's nothing here where, again, it's auto debit or that we penalize the customer with penalty fees and again, compounding penalty fees, which is what we see in traditional credit. This is very much a, hey, you use this amount for this amount of time, pay us back, and then you have access to the rest of your limit and your limit continues to grow with us. The other way that we make money is now we've evolved the product offering beyond credit into a full financial account. And so again, getting very close to the essential needs or payments that our customers have. And so for those kinds of transactions, bill payments, money movement, these other things, we charge a transaction fee.

I want to talk a little bit about the data side of your business, because again, you are amassing this huge dataset that really is foundational to banking. AI is coming. It is here. It is dramatically changing. I have a belief that we will see small amounts of change in the next 2 to 3 years and profound change over the next 5 to 10 years. Talk a little bit about what you see from your perch around what the future of global finance will look like because of AI.

So I'll say I think it's going to change dramatically. One area that I'm super excited about when it comes to AI is this idea of It taking action for you, right? And we've talked a lot about it as AI can help us save time. It can do these kind of tactical things for us. But when you again think about the underserved customer, right? And this kind of willingness to ask the questions, whether it's, I'm a food stall owner and I want to think about which menu items are actually working better for me. I think the traditional approach would have been, oh, they have to be a part of an NGO or a grassroots organization that's working on skill building and business education. But what if it was possible to actually just send that question in, right? And so I think what AI does, especially around financial services for me, is that I think it creates even more accessibility in terms of those entry points and the enablement to actually, again, seek opportunity because you are asking the question, but then digesting the information to the individual. And then, you know, the future of that is Hey, do we have the right kind of experiences, whether in an app form or other forms, to then help take the action on behalf of the customer? I actually think it just speeds up that entire value chain.

I love that a lot. Are there any parts of it that worry you?

I think the biggest thing that we also see in financial services is a lot of people are now entering the market. I think on the one hand, I'm very excited about it. This is a massive problem. And so I inherently believe we need more people working on it, more solutions, but I don't know if everyone is entering the marketplace with the same ethos that we have, which is how can I actually, again, make a lot of money, right? And they're not necessarily looking at what is the long-term outcome of this customer as a result. So I worry a little bit about scams, fraud, these kind of mis— use cases. But again, I think that there is a way to create such a strong foundation and baseline that even when it comes to things like fraud detection and these things, again, if I think about some of the work we're doing around that already with governments, I think we will be able to enable both governments as well as individuals to be able to spot the things that are not right for them.

And we'll be right back after a message from our sponsors. Alexa here. Not only do I get the opportunity to speak with all types of founders on For Starters, but I'm a repeat founder myself. We all know how vital fundraising is to a startup. Carta knows this too. That's why they had founders in mind when they created their fundraising suite, providing tools and support to take the friction outta fundraising. They save founders time and money, allowing you to focus on your goals, not the admin work needed to close a round. From simply issuing SAFEs to quickly receiving funds, Carta Fundraising Suite helps their cap table customers raise a better fundraising round. To learn more or to get started, go to carta.com/fundraise. That's carta.com/fundraise. I wanna transition a little bit to you, especially since I've gotten to know you. You obviously grew up in New York and India, and one thing I really like to kind of go back to is if you think about your childhood, Does there seem to be something that's sort of a straight line to helping build you into who you are today?

When I think about it, again, I never thought I was gonna be an entrepreneur. The thing that has stuck with me though, and my parents said this to me, so I don't know if it was intentional. I feel like they used to say it as if I wasn't focused on the right thing, they would just literally passively be like, well, whatever she is focused on, she will do. And I think it stuck in my mind. As just this thing that's when we find the things that we are obsessed with, that we are aligned to, it's not to say it will figure itself out, but I think I've always had that belief that I will figure it out if it's what I want to do. And I think that again, going after a massive problem like this or being an entrepreneur or these things, it all goes back to both the belief in ourselves to figure it out, but also partially why I do this work is that I don't know if the 4 billion people around the world are still able to believe in themselves. And so it's both the practice of doing it for myself every day, but also being able to help others do it.

I know that you've shared before that your mom's career as a doctor really shaped your value system. Tell us a little bit more about how.

My mom, she's one of these individuals that sees the world very much in, it's either true or not true. There's no gray area for her. And I think service is actually the thing that drives her. I saw it every single day. You know, I used to get annoyed as a kid that patients would always call our house and pull my mom away from me. But what I would see is just her light up.

Right.

Right? And I think it was just that seeing that dedication, that commitment to someone who needed her help, it didn't really matter what else was happening. And I think that just kind of has stayed with me as when you are committed, you commit. And I see her do that still to this day, as she wakes up every single day, and she's got her routines, her things, but she's deeply committed to the work and the profession that she's in. And it is really such selfless in some ways. And so that has always inspired me. And it's also kind of shown me that when you're passionate about it, it looks easy. Like, she just does it and it comes from her heart.

I'm smiling and laughing a little bit here because when you really love something and are passionate about it, it actually does look easy. And it's such a simple sentence, but it's so true. And I actually think that is the magic of you and Tala, having watched you. You really set out to solve a problem, not start a company. Tell us a little bit about the moment when you really realized, I am building a company, because obviously you had a full-time job. You started this part-time on the side. When were you like, I guess I need to go do this more full-time, and it's really a powerful business that has the capacity to raise half a billion dollars?

I will say, luckily, my boss at the time also figured out that I was doing the song side and jokingly was like, when I Google you, Shivani, the first thing that comes up is not your current job, but it's Tala. He jokingly also said, it's almost like you have another job. And so he kind of gave me that moment of just one, solidifying that for myself, of realizing, wow, I am doing this. And this is taking a life of its own. But what he also said was that kind of decision moment of saying, I need you to kind of get your head straight and stop this little hobby you've got and kind of recommit to work. And it allowed me the space to kind of make a decision. I mean, I'll say that again, as a woman and maybe someone that didn't have the means to just go all in without a savings. I had been saving for 12 months, and so I knew that I could commit as well. And so I have an amazing advisor. She stayed with us even before Tala started, and she told me this thing. Her name is Beezer Clarkson. She's a really prolific investor in the space as well.

And Beezer's fabulous.

And she said, Shivani, you can't go all in if you can't live. And so she really said it as like, figure out what you need to be able to go do this. And so I had 6 months of rent in the bank. And again, I was very, very fortunate because I was working full-time in investment banking while I was doing this. But the point was that when I had been given that question by him, I was able to go all in and experience what it really felt like to immerse myself in it without being afraid.

I love that. My last question before we go to the quickfire round is, Stress is real. Running a company is hard. You are at this now almost 14 years. How do you manage stress? How do you keep the endurance?

Stress is real. I think it does go back to this thing, though, of what's driving you. Is it fear, or is it your passion? And, you know, again, when we talk about it as when you're going in, in some ways naively, really focused on the problem and the why you're doing it, Sure, things can be challenging, but they are not necessarily stressful. Stress, in my opinion, really starts when you are not centered, when you're unsure, when you're allowing the pressures to come in. And so for me, I think the times when I've been stressed, it's because I'm so worried on, I think, comparing or worried on not achieving something or getting to this next thing. And I always have to kind of bring myself back, which is the work on being like, how lucky are you to be even going after this massive problem and doing it with other people that are so passionate about it? And so I think when I think about stress, I have a favorite quote that I always come back to, which is, you can always begin again. And that allows me to get rid of the stress because I always kind of have to remind myself If this doesn't work out, and I say that in quotes because in some ways it has, right? It's inspired other people. It has created jobs across our markets. It has helped customers. I can go become a financial analyst again, and I will have a job and I will figure out how to take care of my family. But I have to kind of keep on thinking about the bigger order thing and the problem and the passion for it, as opposed to Letting the fear set in, which I think is what causes stress.

You can always begin again. It's pretty beautiful. I think I may put that on the wall in my house, actually. You can always begin again. It's a really good one, Shivani. I wanna transition to the quickfire round, even though I just wanna actually keep talking about you for another hour here. If you think about a book that's left a, I'm gonna call it a dent in your mind, it can be a book of any kind. What is it?

My favorite book that I have read many, many, many times is Siddhartha by Hermann Hesse. And my dad gave me that book, I think, when I was 10. And so just continued to read it over again.

I love that. What's one thing you wish you knew before you started?

I think it's kind of reflecting back on what I just shared, which is I wish I had more tools around how to manage that fear, that anxiety that comes up. And I think it's not burdening yourself to hold all the problems on you and keeping it all on your shoulders. But the reality is, like, the best part about building with people and a team is opening that up. And so, I wish that in some ways, instead of just focusing on talking to people in the early days about developing the solution and talking to experts in finance, in the World Bank, in development, all these things, I actually wish I had talked to more founders and entrepreneurs about what the journey is like.

I love that. I also wish I talked to a lot more entrepreneurs before I started. Similarly, just fell in love with the problem and just kept going. What is an interview question you like to ask to really get to the heart of who somebody is?

I'm worried about sharing it on a podcast, 'cause I always love asking candidates this question, 'cause it kind of throws them off, but maybe I'll find another one. I always end every interview with asking, what can I do, really, as your teammate, and maybe the CEO, is what can I do to set you up for success? And it's kind of dramatic how so many people are shocked, and it really kind of takes them back because they have to take that moment of answering the question sometimes as an unthoughtful way. And I can kind of tell right away, right, is, oh, I really value transparency or these things. But the people that really kind of answer the question and think about it, those end up being the right people because it gives you a chance to understand, is the environment that we have Actually right for this individual.

I love that. Shivani, I've absolutely loved watching you from afar, being a buddy of yours, and just am so grateful for you being here today. The world is better because of founders like you, and I am understating it when I say that I'm rooting for you to my core. Everybody out there, thanks so much for joining us today. If you wanna learn more, head to tala.co, and you can join us next week for a new episode of For Starters with Alex von Tobel.