Launch HN: Penny (YC W17) – a personal finance coach

Other co-founder here:

Since we use Cordova, the entire app is a website. So when you open up the app, it launches a webview pointed to a website that we deploy to like any other website. That means we can change any client logic and it'll go out in minutes. We also have a conversation DSL that lets us make conversation flow tweaks in under a minute, and since the bulk of the app is conversations, that allows us to move super quickly.

Great question about the changelogs! Since we don't have a longer cadence between feature pushes since we're deploying all the time, we have to go back and look at historical pushes whenever we need to write a changelog. We typically roll up all the little features and announce them whenever we make a new version in the app store. On top of that, we usually announce new features inside Penny, where she'll give a little intro on the new functionality. That also doubles as onboarding to the new feature if needed.

Hey, I'm a co-founder of Penny:

Our biggest differentiators: more focus on automation and friendliness. The major pain point we discovered is that average people find finances intimidating and difficult to track. We wanted to take as much of it off of people's hands as possible as well as doing everything we can to make the experience as friendly and engaging as possible. That goes a long way to making something that people feel comfortable using. We think Mint is a powerful tool with a much steeper learning curve, and we wanted to build something that anybody can use.

Yup, though our emphasis is more on making finances as relatable and friendly as possible. The chat interface isn't just a skin on top of existing data (which some other chat interfaces can feel like), but completely dictates the entire experience. This is super relevant for our goal of coaching people to better financial health—chat is a great medium for coaching, but a traditional UI would probably be more difficult.

Great point about two-way vs one-way. We find that it's still valuable for one-way communication because our main goal is to make finances relatable and easy to understand, and a chat interface literally forces us to be simple and clear in how we explain. Certain concepts might be easy to name but hard to explain (APR, rolling average, prorated spending), and a chat interface allows us to teach those concepts in great detail.

For example, here's a excerpt from explaining how credit card interest works:

Penny: Chase charges you interest based on your <em>APR</em> (annual percentage rate).

Penny: You probably saw this number when you signed up for your credit card :credit_card:

Penny: APRs are usually about 12-24%.

Penny: As far as I can tell, your Chase Freedom's APR is about <em>{{ numeral(0.15).format('0%') }}</em>, which is about normal.

You: OK

Penny: To compute how much interest you get charged every day, divide your APR by the number of days in a year, like this:

<rest of conversation>

We also do a fair amount of two-way communication when we're understanding a user's circumstances. When Penny coaches people about investing, we try to understand the user's financial situation based on how much risk they're willing to take, how much they have that's investable, their horizon for returns, etc, all of which fits pretty naturally into a chat interface.

Wow, that's awesome to hear!

For what it's worth, we don't think the premium experience (Penny+) is a good fit for most of our users. Locking extra complexity behind a premium version was actually our way of keeping the core experience simple (and encouraging people to not mindlessly turn on extra features unless they're confident they want them). We think the simplicity of the core experience is one of the main reasons people continue to use Penny over time; complexity begets churn, even if users ask for that complexity. We eschew traditional budgets for the same reasons.

Both Credit Karma and Mint make their revenue by offering financial products that might help you based on your financial profile so I imagine that can be fairly lucrative.

That FAQ is a little out of date—I'll update right now. Once you remove duplicates, we support closer to 8-10k banks through Plaid, and we have two monetization strategies (monetization was our focus at YC):

1. A premium subscription service that gets you some power features within Penny; we just launched that today. 2. Recommending affiliate products.

It's important to note that affiliates can be a mixed bag. Mint.com was the product that turned me onto Betterment when I was hunting around for ways to invest my money; I'm legitimately thankful that they did since I love Betterment. At Penny, we think we can tastefully and in good faith recommend some affiliate products. Those recommendations fit perfectly into our coaching model too.

Unfortunately, most personal finance companies start pushing credit cards on people that don't need them because it pays the most money. We're building Penny in a way that disincentives crappy behavior like that.

Sorry about that! Since we only link to US banks, we're only available in the US. Hopefully international expansion will be a thing, but we're a little too small for that at this point.

https://meetcleo.com/ if you are in the UK. Can't vouch for it, but the product seems identical.

You'll probably find that Canada is in there for free. If you guys use the same Intuit link that Level uses, you'll probably find "Royal Bank of Canada" and "Royal Bank of Canada (US)" in the list of supported institutions. Level worked great in Canada if you went through the effort of downloading it from the US AppStore.

A couple reasons:

1. Those other platforms didn't really exist when we first launched. Messenger launched their platform about nine months after we started Penny. 2. (The real reason) We still don't think we can provide a better experience via a chatbot platform than we can with a standalone app.

To motivate that second point:

The benefit to a chatbot platform is that you meet people where they already are, and "signup" generally has lower overhead.

The downsides are many, though. Most platforms don't allow for things like securely submitting username and passwords, e.g. when connecting a bank account (although Messenger is starting to allow webviews, which can be repurposed to handle this). Browsing your aggregated transaction history, changing the category of a transaction, viewing your balances, etc. are all poor fits for a chat interface (again, Messenger has only recently started to address this). Pre-populated responses aren't first-class citizens in most chatbot platforms. We get more control over the UI, e.g. when displaying animated graphs, in a standalone app than we do within chat. There is/was no way to lock individual chatbot threads behind passcodes to protect your privacy... and on and on :)

Finally, there's also the problem of discoverability, which no chatbot platform has solved in a convincing manner. Downloading a standalone app is a pain, but once you get over that initial hurdle we think the experience is still significantly better than delivering Penny over a chatbot platform.

I'm surprised your friends feel that way, because I was the exact opposite! I was wary of using Mint until I found out it was by Intuit, which I trust far more.

To add on to this, even with the reticence many of us approach Mint with, it has the reputation of Intuit behind it. What can you say to alleviate these fears?

(directed at Penny)

Hey, co-founder here: I'll be the first to say that the chat interface isn't for everyone. If you'd prefer to get the facts with minimal extra stuff, Penny might not be for you. What we've found from working on this from so long is that the chat interface goes a long way towards making finances relatable and easy to understand. For most people, the biggest barrier to personal finance literacy isn't education; it's motivation. So celebrating wins like paychecks coming in actually helps a lot—feedback says people love being told they got paid and celebrating.

The idea of someone talking about my personal spends would be really annoying. But I can see how useful it could be for other people, it would be like a personal finance consultant giving tips.

Just looked back at my notes.

That first Show HN post sent about 700 unique people to our website, of which about 100 clicked the download button and roughly 40 signed up. That may seem like a small number, but it was huge for us at the time. It gave us a lot of new information about where people would fall off in our funnel, uncovered some edge cases we hadn't accounted for, etc.

It's so great to see Cleo expanding and hiring people.

I remember first seeing Cleo way back when it was just the two founders (didn't they meet each other at some startup hackathon type event?) and they were rolling out cleo as a SMS based money assistant.

Looks like you guys shifted towards the Messenger platform. We (http://dispatch.pm/) looked in to the messenger platform but found it a bit restrictive for our purposes. How is it working out for you guys? Do you see yourselves sticking long term to messenger?

I've had a project on the back-burner for a while which tried to embrace this notion that most of your day-to-day transactions are outside the scope of optimization. Instead of importing all the transactions into view, it only showed transactions in categories where you were trying to change (or measure) spending behavior. If, for example, I don't intend to change my home water consumption... then in the context of personal finances I really want that left out of my tool.

Yup, Penny tries to focus on your discretionary spending since that's where you have the most agency. She tells you both your non-bills spending (assuming bills are mandatory) and your total spending, so you can get a sense of your spending that isn't basic needs. We also have spending goals which are curated to be mostly discretionary spending (eating out, department stores, etc).

Whoa! Great catch. We'll need to record a new animation. Thanks for pointing it out.

Back when I was working on a fintech product (this is around 2 years ago) what pushed us away from Yodlee was the appalling pricing.

They wanted us to pay a hefty initial sign up fee ($XXXXX), pay monthly fee per user ($0.XX) and also they had minimums. Being students at the time we were just shocked and disheartened until we saw Plaids great pricing (free whilst in development and $500pm to set the product live) and tried to convince them to come to London which they told us was only 6 months away. It's been 2 years and they're still not here lol.

But there are a few more options in London now. I bumped into Steve Graham way back at HN's London event and he was working on Teller (https://teller.io/) which is now in beta and works pretty well from my testing.

There's also Saltedge (https://www.saltedge.com/) which is used by a few London fintech apps and I believe they have a startup package that a few apps like Cleo (https://meetcleo.com/) started on.

Some new startups still choose Yodlee though like moneybox (https://www.moneyboxapp.com) but they raised significantly more that we had (we had a very very small grant from our University).

100% agreed. Yet another benefit of a single endpoint is that we rarely have to worry about backwards compatibility. It's a huge tax on engineering time to support those few users who're using a client that's six months old. We don't have that issue.

You don't have to type. You choose pre-determined answers.

We built everything by hand. Cordova is our glue to the native side, but React is what really makes the chat stuff tick.

As for the Ruby/JSON stuff, that was also built by hand (actually the very first thing we built before we even had the UI in place). Whenever a conversation is started, the client gets the entire syntax tree from the server and evaluates it to make the conversation happen. We actually thought that pushing the state to the client actually made things easier since the server no longer has to manage the status of many concurrent conversations. It also means faster responses in poor network conditions.

I think the main reason for chatbot platforms to push things to the server is out of necessity because they work across many clients (Messenger, etc) where they don't control the client, and because they may be doing some heavy lifting with NLP that can only be done on the server.