Update: March 2021

Dear supporters,

First of all, we hope that everyone is healthy and safe.

The last two months have been especially hectic here at Crédito Social, with various pitches and presentations. These challenges, which required we summarize all we have done and are doing in just a few lines or in one- to five-minute presentations, — beyond being great opportunities to demonstrate the resilience and potential of Brazil’s microentrepreneurs — were important moments of reflection. We found ourselves reflecting on the value we are offering our microbusiness clients and how CS should best deliver that value.

In my previous message, I mentioned that we’d been collecting data on our clients use and behavior in relation to our system of business data digitalization. Of our twelve microentrepreneurs test-users (eleven of whom are women), seven developed the habit of sending us their sales and expense data daily. We consider this the primary indicator when evaluating our current system.*

In my financial behavior research, I found this habit of noting all cash-flow movement is one of the most difficult to foster. Nevertheless, it is a fundamental habit for microentrepreneurs to effectively manage their business. Thus, us fostering this particular habit is of utmost importance.

Beginning the pilot, I defined a 50% rate of habit development as “very good,” so I consider a 58% rate as a real success. That said, what really matters now is the understanding we gain from the experiment. Particularly, we need to know:

1. What about our current system and its components facilitated this 58%;
2. What is the profile, or persona, of those who are most likely to develop this habit; and
3. What was missing for the microentrepreneurs who, while seeking to strengthen their businesses, were unable to change their behavior.

Tech adoption life cycle

Points 1 and 3 remain open questions, but we already have a clear vision of point 2. We must recognize that this first iteration of our app will not meet the demands and needs of all 17 million microentrepreneurs at once. Naturally, there will be an adoption distribution, which starts with the early adopters. This 58% offers the first clues as to who these early adopters will be.

In this case, we discovered the following commonalities among this early adopter segment. We have named this persona Bia to make our archetypal early adopter more concrete.

And, Bia:

• Is between 24 and 44 years old;
• Already had experience in the industry in which she now operates her business;
• Completed high school, having on sometimes some college education;
• Is tech savvy; and
• Believes that there is a better way to manage her business, a more organized and strategic way.

This pilot also affirmed who our primary competitor is: a paper notebook.

Time for your digital notebook?

It is with Bia and the notebook in mind that we build our initial app. The app is essentially a digital notebook, allowing microentrepreneurs to capture their sales and expenses with their phone.

Of course, this sort of app in and of itself is neither innovative nor hard to find; however, we know that Bia is unlikely to develop the habit of registering transactions if it takes more than a few seconds — a problem that competitors other than a paper notebook do not solve. Other apps can take up to 120 clicks to register a sale. Bia simply does not have that time and will not risk losing the next sale because she is distracted registering the last one.

Our app currently takes between 5 and 8 clicks to register a transaction, and we already see how we can further reduce these points of friction. For Bia, our app is how she can finally organize, visualize, and digitalize her business’s data for financial inclusion. And, the CS team is her guide over the course of this digitalization and inclusion process.

For the months of April and May, our goals are to:

1. Connect our app to our database,
2. Pilot a new mentoring program with our clients,
3. Begin developing a financial and entrepreneurial education blog,
4. Develop an initial evaluation process to identify which potential clients appear like early adopters,
5. Grow to 20 clients, and
6. Answer the open questions 1 and 3 from our first experiment above.

As always, none of this work would have been possible without your support. We thank you for the opportunity to strengthen Brazil’s microbusinesses and facilitate more opportunity for the people who most need it.

Abraço,
Nathaniel

creditosocial.net
Instagram
Facebook
Twitter
LinkedIn

* For those who may not remember, our objective is to digitalize microbusinesses’ data to help microentrepreneurs better manage their businesses and access affordable financial services. As such, our first pilot has aimed to identify the steps in this digitalization process we can automate. Identifying these steps early, we will more efficiently build a scalable technology for Brazil’s 17 million microbusinesses. In this case, our system has essentially been our clients writing down their sales and expenses in a paper notebook and sending photos of the pages to us via WhatsApp, which I then update in spreadsheets for each business. These spreadsheets automatically feed business intelligence dashboards, which Fernando builds and which provide the data and results in visualized formats to maximize microentrepreneurs’ understanding.