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GOODCOMPANY VENTURES AUGUST 2016 _______________________________________________

CASE STUDY : PROPEL

Defining who pays for a food stamp platform

CASE STUDY :

Jimmy Chen, Founder & CEO of Propel Defining who pays for a food stamp platform

Jimmy Chen is a problem solver with entrepreneurial DNA. But he did not set out to be an entrepreneur. Jimmy graduated from Stanford and joined Facebook’s Product team, where he gained exposure to the latest in user experience strategy and design. He had the dream job, but saw a gaping need for user experience improvements for under-privileged populations receiving government benefits. When Blue Ridge Labs offered him a fellowship to explore solutions to this problem, he left Facebook and began prototyping a platform that would allow prospective food stamp recipients to check their eligibility, enroll, and receive benefits via their mobile devices. Each year, $80 billion is distributed on Electronic Benefit Transfer (EBT) cards to about 55 million Americans. But the user experience of the EBT system doesn't measure up to the standard set by the private sector. Fortunately, Jimmy realized that 90% of the problem was at the UI layer, and that fixing user experience directly could have a significant impact on government benefit recipients.

JOINING GOODCOMPANY With a prototype in production, Jimmy was accepted into the FastFWD program, a

GoodCompany partnership with the Wharton Social Impact Initiative and the City of Philadelphia to develop and pilot innovations that creatively address public safety and civic issues. He expected that, given access to the City of Philadelphia, he would secure a logical buyer for his platform. The city or state ought to pay, since they manage the Supplemental Nutrition Assistance Program (SNAP) and should be motivated to optimize the UX of their beneficiaries. This is a common assumption among entrepreneurs who set out to better serve populations already served by or eligible for a social service. Almost always, however, it is a faulty one and bad business decision. Our challenge was to discover who could and should pay for Propel’s delivery, such that it could go to market at scale. Jimmy could take a cut of the funds made available to eligible recipients by his platform, but given the financial situations of his users, this option was not viable. We then considered charging the state, but with no incentive structure for effective delivery of social services, they have no motivation - or budget - to pay. Finally, we looked at secondary or collateral beneficiaries and built a model around them.

____________________________ This is a common assumption among entrepreneurs who set out to better serve populations already served by or eligible for a social service. Almost always, however, it is a faulty one and bad business decision.

____________________________ There we found the solution: grocers. Grocers stand to gain significantly if their patrons have more money in their pockets.

CASE STUDY: PROPEL | 1

Jimmy Chen, Ram Mehta, Stacy Taylor and Jeff Kaiser of Propel, by The New York Times

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We worked with Jimmy to identify a set of metrics the grocers can use to decide if the platform makes sense for their business. Jimmy then took to the streets, talking to shoppers at grocery stores in low income neighborhoods to test the mechanical feasibility of enrolling in a grocery store, and whether grocers would pay for a platform like this. He found the approach to be highly effective. Upon graduation from FastFWD, the city offered to pay for the development of reenrollment features to address the 20% of SNAP recipients who accidentally lose their benefits each year. His pilot with the city allowed him to start moving in the direction of being the

government benefits management platform, unlocking vast revenue opportunities.

____________________________ Once he saw the impact he could not quit: he could create 100x social benefit over revenue.

____________________________ The GCV team worked with Jimmy to identify how much social impact was possible if he could bring Propel to scale with our Social Impact Projection model. Once he saw the impact he could not quit: he could create 100x social benefit over revenue. He won a spot in the Center for Financial Services Innovation (CFSI) FinLab program, beating 300 other financial technology startups, and closed $250,000 in funding. It was his Social Impact Projection that gave him the compelling, hard facts that moved

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the judges and the confidence to claim that the significance of his work.

____________________________ This app makes things so much easier, especially when you’re in the middle of a store and need to remember how much you have left. It's amazing. Thank you so much.

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PROPEL'S PROGRESS Propel has since closed over $1.1 million in its seed round, has seen user downloads grow over 50% per month totaling over a 100,000 with over 55,000 weekly active users, and has now surpassed consumer finance staples like MINT to join the Top 20 most downloaded finance apps in the Android store. Users love the Fresh EBT product. One applauded the platform's convenience: "This makes things so much easier, especially when you're in the middle of a store and need to

remember how much you have left. It's amazing. Thank you so much." Another, "I love this app. It helps me out a lot. Thank you to whomever created it." Jimmy has been successful because he has been obsessed with user experience: meeting his users where they are, understanding their pain points, managing what features are valuable to them, and iterating repeatedly. With the help of GoodCompany, Jimmy was able to create tremendous value among a vast and underserved market and surpass user expectations without making them pay. Because he has developed a business model to support the delivery of his innovation, he can provide it to more people without relying on grant funding, or navigating the misaligned procedures and timetables of various state governments. This is the work we do. We think it’s the most effective___________________ way to solve big problems. Jimmy Chen, left, with his team in Propel’s Brooklyn office, by The New York Times

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GoodCompany Ventures’ in-depth work with entrepreneurs identifies paths to enter, serve and commercialize new social markets traditionally managed by public actors. The Propel Case Study is the first of many we plan to publish that offers a sampling of the entrepreneurs we work with, the new social markets their innovations target, and the discoveries of novel paths to scale.

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