Five years ago, my co-founder Claire McDonnell and I founded True Link Financial, and did two things that that were totally unorthodox for the time.
First, we didn’t build a startup for teenagers.
We built it for seniors. (We’re a financial services firm that offers debit and Visa cards and investments management for aging Americans.)
Secondly, we charged our customers actual, real money for what we had built.
This was not common practice at the time. Around 2012, we and a whole cohort of other startups — Simple, Plastc, Swyp, Coin, Final, Stratos, Clinkle, and others — were getting card-issuing companies off the ground.¹ We also launched a Visa card — but our goal was to protect older folks from fraud, a $36 billion problem that affects millions of Americans, including my grandmother. Our cards would automatically decline scammy transactions so seniors like my grandmother would be able to still carry a credit card, preserve their independence, and spend their own money — and in order to decline the transactions we had to become the issuer of the card.²
The other companies offered a no-fees, high-end products with attractive features like extra security for online purchases, easier access to customer support, or perks and rewards. With expensive technology and support costs, we knew the companies offering free cards were losing money on every card they issued.³ In contrast, we charged $10 a month for each card.
With splashy videos and tons of press, some of our peers had waiting lists of 50,000 customers or more by the time they launched.
That wasn’t us.
When we launched our product we probably had a waitlist of 50. If you took me, my roommate, my mom, my dad, my co-founder, and my best friend out, it was more like 44. By our first year in market it had grown to about 1,000 customers — about 2 percent of where competitors got to before they had even launched. The two VC funds we wanted to work with the most said, “True Link would be so great if you just knew how to get customers,” and even better, “So, how come nobody wants it?”
Garry Tan, one of our first investors, sent Ash Rust over to our office to deliver a message: “You need to raise more money now, not later.” He thought that our strategy was going to be a long slog and that we didn’t have room to cut it close.
Charging for your product instills discipline
We made the case to our investors and potential investors that what we had done was actually more difficult and more impressive. Just ask the promoters handing out energy drink samples at the BART entrances: getting 50 people to accept something for free is easier than getting one person to pay $10 for it. If the other companies asked everyone on their waitlist to pay for their product, how many would stick with it? We argued that our 1,000 customers were better signal than the other companies’ 50,000 customers.
“We didn’t want to teach ourselves how to find money-losing customers.”
Right or wrong about the signal, what was more important was the discipline it created internally.
We didn’t want to teach ourselves how to find money-losing customers. We wanted to teach ourselves how to find customers that would sustain the business. We knew it would be harder and we would have to try more things. But while huge backlogs of money-losing customers might be good for raising capital, ultimately we wanted to build a product worth purchasing — and, a business that could last. Issuing and servicing cards actually costs money, and it doesn’t help either us or our customers to sign them up for a money-losing business and then disappear.
We found that what other card startups were doing — press, Facebook ads, and punchy video content — didn’t generate paid signups. It was enough to generate weak interest — “Sure, I’d try that” — from early adopters, but not enough to generate strong interest — “I’ve decided to close my other credit cards and use this instead.”
The people with the massive waitlists, it turns out, hadn’t really sold their product yet, they just convinced people to take a free trial. And not only does this not build a sustainable business, but the impact we were looking to have — protecting seniors from billions of dollars of fraud — required people to close their other credit cards and use ours instead.
In contrast, we found that word of mouth convinced people to actually buy and use the product. If someone you trust says it worked for them or someone they know, you’re ready to believe it’s a real solution, worth paying for. Everyone wants viral growth, but building for referrals is a very different thing — and it sometimes means foregoing paid channels that produce quicker results.
Without charging, we would have built the wrong company
Today, 95 percent of our cards and investment products are set up as a result of an in-person conversation — either with a family member, friend, or trusted professional like an in-home care provider — who already has experience with the product. And remarkably, in 85 percent of those cases we know whohelped the customer sign up and how that person heard about us. We can trace dollars of revenue, for example, back to conferences we presented at to find experts in the aging market, and how those influencers spread the word.
Everything internally looks different as a result. Because our existing customers are our marketing engine, we’ve found from internal surveys that our customer support has a 99 percent satisfaction rating. Our customers are the primary way that we grow.
We’ve built software to make it easy for different types of key players to start the on-boarding process. And our marketing relies on a detailed set of referral analytics tools that few other card issuers have.
Suppose, early on, our twenty word-of-mouth customers had been thrown in with a thousand free customers coming in off a good Facebook video ad. Would we have built marketing tools to find more word-of-mouth customers?
The point is, if we’d built for an audience of free customers rather than an audience of paying customers, it would have been a different marketing strategy and team, different technology, different support, different analytics, different everything. We would have built the wrong company, and when it came time to make money we would be starting from square one.
Instead, we built the right business
We always believed that the marketing experiments we were running were tougher but more valuable. There is no dodging the fact that it sucked being compared to companies with a waiting list a thousand times longer. Some days, the early successes felt like tiny sparks, but over time we found we could turn the sparks into fires. Most things that could generate unpaid sign-ups failed to generate paid sign-ups, but we doubled down on the exceptions and iterated rapidly, quickly setting aside what wasn’t working.
We’d planned all along to do something different and more difficult than everyone else. Matt Karls, our board member from healthcare-focused venture fund Cambia, told his coworkers about how we put lines of tape across on the floor every month to show how much of our rent we were paying out of revenue and how fast that was growing. To us, it was obvious — companies that can’t pay their rent cease to exist. And at True Link, we wanted to keep existing.
Our cards division hit profitability earlier this year. Just three years after we were getting beat up for not having the traction our peers had, we were the first among them to break even — and by a huge margin. If we’d been selling a thousand free cards a week, we probably would never have noticed the twenty customers that actually cared enough to pay for our product — the customers who ended up making True Link a sustainable, long-term business.
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 Note that some were issuers and others were wrappers around other issuers, and some mixed a little of both or were using one as a launchpad into the other. We’re friends with people at Simple, Coin, Final, and Plastc. Each of them — and likely the others we don’t know — are great entrepreneurs, we shared our lessons both ways freely and openly, and hopefully they learned from us just like we learned from them. Simple got an awesome acquisition and is still growing, Final has just finished launching a credit product as a startup which is an incredible feat, and Coin and Plastc did amazing hardware innovations and each gave us really valuable advice. I’d love to see each of them write a blog post like this one about the times they got kicked in the teeth and bounced back — their stories are at least as good as ours and in some cases better. Nothing in here is intended as a knock against anyone. Except for Clinkle, which, I mean….
 An important technical distinction: these startups do not issue the card, but rather manage the card issuing program.
 For context, credit cards make money in four ways: monthly or annual fees, usage fees (like at ATMs, or for overdrafts), interest, and what’s called “interchange” — when you swipe your credit card, merchants get 97¢ on the dollar and interchange is the one cent that the card issuer gets. Mature card issuers carefully model their revenues to exceed their costs on average at scale — for example, for high-end cards, points and miles almost equal revenue from interchange, credit defaults almost equal the revenue from interest, and the issuer gets a tiny slice of both and makes money on the annual fee. If you omit an annual or monthly fee, you’re banking on a slim, slim slice of interchange adding up at scale, and if you are a debit card (no interest) and don’t charge overdraft fees (for example) you are betting on a miracle level of scale, as well as patient and plentiful capital to get there.