00:02:04 · Doug Ricket
[00:02:04] S1: Yeah, so we invented the concept of the smartphone as collateral, as digital collateral. And normally collateral, the way people have had done this before, uh, like a pawn shop, you could leave something, you could leave your smartphone at the pawn shop, borrow a couple hundred bucks, walk away, use it for some emergency use case or something, and come back. And the pawn shop wins either way, right? Either they keep your phone or and they sell it, or you pay them back with interest. And so Pedro's invention was digital collateral with software. We can secure the phone. And so in case of delinquency, we can say, please pay your bill, right? We can lock up the phone and say, please pay your bill, it's due. You owe us, you promised to pay last week and you haven't paid. So come on, it's time to pay. And uh, you know, that may sound like obnoxious and debt collector and evil, right? But for our customers, it really lets them manage their money. Like I was inspired by uh mobile minutes in Africa. I was a Peace Corps volunteer in Africa a couple decades ago, and you would buy these scratch cards for minutes. You know, you'd buy a hundred minutes scratch card for five or ten dollars, scratch it, scratch it off means there was a little wax covering it, and you'd get a code. You'd enter the code in your phone and it would say, you now have 100 minutes of talk time. And at the end of every call, it would go down, you now have 82 minutes of talk time, 54 minutes of talk time, and then zero, and then you can't make any phone calls. And that perfectly fit how our customers wanted to manage their money. They know how much it's prepaid, they know how much they have left, they can watch it as they go, and uh and they can balance things. So if our customers need money for something else, if they need to fix their leaky roof instead of pay for their phone, they can do that, they can come back at a later time. And uh I'll I'll just stop with an interesting statistic we found. Most of our customers at some point will encounter that lock that says, stop using your phone, please pay your bill. And most of them reach fully paid and pay 100% of what they owe us and build their credit history.
00:03:59 · Doug Ricket, Oliver Smith
And then uh by reporting credit, uh, they're actually getting into the modern credit economy often for the first time, and they can in the future get more access to credit products. We get them, we help finance the phone and we get them a credit card for the first time in their life. They can shop online, they don't have to carry cash. So that's how we're solving it. Interesting. [00:04:20] S0: Interesting. Um, you haven't mentioned the B-word yet, um, blockchain. I'm guessing, based on the title of this podcast, there is an element of on-chain in the in this solution. How does how does that work?
00:04:33 · Doug Ricket
[00:04:33] S1: Yeah, so it's interesting. I'll mention uh, you know, all the way back in the ancient history of the previous decade, uh, we had an investor in this fund we set up uh who kind of came from the blockchain world. We put out a press release, and I got all these calls about, oh, you're doing crypto, you're doing blockchain. Like, let's talk about that. And it was really uh, to be honest, there was almost nothing there. You know, it was a blockchain crypto fund had invested into the Payjoy asset fund. Uh, and so let me talk about what that is and then how now in 2026, we're really we're actually doing something real with blockchain. So the payjoy fund, so we lend to our customers, right? They're buying a smartphone, they're getting a credit card, they can use for anything. Where does the money come from? Great thing here is uh we don't spend out of our equity. We don't lend our equity to our customers. We found other sources of basically debt capital, and we have this cool fund uh that we started with high net worth individuals writing, you know, half million dollar checks, one million dollar checks. We grew it to about $50 toward $100 million. And then we started adding institutional investors writing $20, $30, $40 million checks. And so now it's grown to over half a billion dollars, uh, probably heading toward a billion in the next year or two. And uh this fund is the majority of how we finance our customers, of how we that's the money that we lend to our customers. Uh and I'm I'm really proud of it. Our CFO joined a few years ago and set this thing up, and uh it's it's humming along beautifully. And there were a couple of pieces with it though that gave me pause in the last year or two. So one was, I think it was 2025, there were a couple of scandals in the private credit market. And if if you follow this little segment of finance, um, you know, there was like an auto parts company that went bankrupt, and some of the lenders got stiffed. And one of the ways they got stiffed was uh there had been double pledging. So this lender, this auto parts manufacturer, you know, would uh I guess they were like invoice factoring. Uh, you know, they're selling their parts, they're getting paid a little early. Uh great, like this is well understood. But not if you show the same invoice to two different people for the same parts.
00:06:52 · Doug Ricket
Uh you know, great, I can get paid a little early by this person. What if I got paid double by showing that invoice to someone else? Uh, that's a problem when all the when the house of cards fell down. And so the first thing we're doing is uh preventing double pledging with the power of the blockchain with an attestation protocol. And so what this means is, you know, with our uh lenders, whether it's our Pedro Asset F or we've done bilateral deals in addition uh over the over our history, um, we will show them a loan tape of all our loans. And the tape is like the the historical record of customer payments. You know, we originated this loan for $200 on March 15th, and then on April 1st, the customer paid us $20. On April 20th, they paid us $15. That's the loan tape. Here are all the loans. Here's the history of it. Great. And they they kind of have to believe us, and we let them in to audit. But uh, it's a lot of work to audit something like that. And so with the attestation protocol that we're setting up now, uh, we publish our loan tape, or we take the loan tape that we would show to any of our lenders. Uh, we now hash it to produce a unique crypto signature. We publish that to the blockchain, we sign it uh using our key. Uh it's published. And we're adding actually a third party, even verifying it, and they add a second signature on the blockchain. And this does a couple things. One, uh, it's immutable. So we can't go back and change it later. Uh and there's only one of it. And you can get there from the page.com website. So it's the same one for everyone. I can't show you one loan tape and show someone else a different one. Both of you, you know, will say, hey, go to pageroy.com, uh, you know, click through in the about us, find the investor page, find the uh debt attestation. And uh, you know, here's the crypto signature hash. And it tells you how to, you know, go on the Ethereum blockchain and look up, and you can find um you'll you'll both find that same hash of the same loan tape. And we do this every month. And so it becomes immutable. The historical record becomes immutable. We can't say, oh, actually for March, you know, we want to change what we had. And we can't double pledge. So that's the first half of it. Uh does that make sense?
00:09:07 · Oliver Smith
[00:09:07] S0: Yeah, it does. It is so it gives your investors kind of absolute confidence in in what's happening. They they can see the kind of end-to-end of that. But but no, tell me the second half.
00:09:17 · Doug Ricket
[00:09:17] S1: Yeah, and and I love that because you know, I'm I and a bunch of our management and board, we've been investors in the pageway fund. But I'm thinking in the future, you know, I could be gone from PageOI and what would give me confidence and you know, not reading the news last year. Um, and so really uh I just I love setting this stuff up right now because we are the good guys, but how do we prove it? How do we let people know that we're not cheating? And so I love raising that bar because you know, the less honest people will not be able to meet that bar. So the second half, and and I feel like these two are just coming together into a beautiful uh pancake recipe or something. Here's the syrup. It's the cash in side. So historically, this thing has been all um traditional. And you know, some of it we have to follow securities law and KYC, our investors, uh, on the debt side to make sure there's no money laundering and everyone is legit, no one's on the OFAC list and all this kind of thing, uh, which is a fairly heavy process, uh, and we're keeping that. But um we also have redemption on the fund balanced quite nicely, where the normal flow, people can basically tell us in Q3 they want to take money out and they get it out in Q4. So it's pretty close to liquid. Uh if you want to take your money out to go buy a house or something, like you can plan that a quarter in advance. Um, but it it gives us a little bit of stability. So I think the fund is really well balanced. But then what we're doing with the crypto side, or the blockchain rather, is connecting to the blockchain crypto world. So when people bring cash into the fund, uh they now get a token. And then that token is tradable to others who have passed the KYC barrier and are in this kind of walled garden. And so that means now instead of, you know, you instead of you want to take money out on October 16th, oh well, we're early in the quarter, it's Q4. So, you know, we've committed to getting your money out in Q1. That could be by the end of Q1, that could be March 29th. It's actually still a ways from now. Because it's a tradable token and we have uh, you know, a couple hundred investors in the fund already, boom, you can get liquidity tomorrow.