While I was doing some research for my article “Frugality for College Students – 13 Ways To Save Money While In College” I asked my Twitter friends for some suggestions. One of the replies that popped up was from Mike Ferrari at SmartyPig.com suggesting his website as a way for students to save towards a goal of theirs whether it be for books, a spring break trip, a new camera, a trip, or whatever. So after taking a browse through the SmartyPig website, I decided to give it a shot and test out the system. Because the sign up process was so easy and the site is easy to navigate in it self, I thought it was a great idea. I got in contact with Mike again via Twitter to see if he would be interested in doing an interview for Dorm Room Biz. With that being said, the following is an interview we exchanged via multiple emails. I hope you enjoy!
Start off by telling us a little bit about your background – where you went to school, what you studied, etc.
I’m from Ohio, originally. Bowling Green and Dayton. I moved to Des Moines when I was 15. I went to DePauw University, in Greencastle, Indiana. Graduated in 1993 in Psychology and Business Administration. Went into advertising right after college.
What sparked your initial interest in entrepreneurship?
Always had a thing for coming up with business ideas. You know the routine. You come up with this great idea and ultimately end up talking yourself out of it. I became quite good at it. Drove my wife mad. But one day, almost four years ago, I had this idea that I found really hard to blow holes threw. That idea was and became what is known as SmartyPig.
Almost four years ago, my wife and I had our first child, Charlie. I remember thinking how important it was to start a college savings program for him. I remember starting his 529 plan a few weeks after he was born. We started putting a hundred dollars away each month. And after 5 or 6 months, I remember logging into the 529 site and seeing his savings build. And more importantly, remembering that feeling of “responsible saving”. It was like I hadn’t even missed the money. Automatically taken out of my checking each month. We just became accustomed to not having the money. Soon after I was in Phoenix playing golf with some old college buddies. I had just dropped them off at the airport and I went back to my hotel to kill a few hours before my flight back to Des Moines. I grabbed my computer looking for a site that would help me save up for other things in my life. I wanted to save up for a trip for my wife and I (some day) to go to Italy. A lofty goal I knew would take years to save for. And I also knew I wanted a new road bike next year. Was training for Ride The Rockies with some friends… So I just assumed there was a site out their that was all about “goal savings”. When I didn’t see it, I guess you could say I had my “light bulb” moment. Started drafting a business plan right then and there. It was all I thought about. Trying to shoot holes in the idea from every direction. I spent the next few months flushing out the idea and showed it to a friend of mine, Jon Gaskell. It wasn’t long before the two of us quit our jobs and became the co-founders of SmartyPig.
What is SmartyPig, how did you get involved with the project, and what role do you play now?
So what is SmartyPig you ask? Well, simply put, SmartyPig helps you save for specific goals in your life. Be it a vacation, a wedding, a big-screen TV, a home remodel, etc… Anything! It’s the only banking application that is truly social, allowing you to make your goal “public” so your mom, dad, family and friends can contribute to your interest bearing savings goals. In addition, if you know what you are saving for, SmartyPig has partnered with almost 20 retailers around the country (like Amazon.com, Best Buy, Sears, Home Depot, etc…) that will give you up to an additional 5% cash boost to your savings. SmartyPig goals are FDIC insured and accrue interest (currently 3.9% APY). It really is a 21st century piggy bank.
We really don’t have titles here. We wear a lot of hats. Spend a lot of my time talking and listening to customers. Jon and I are copied on every customer service email and many times, find ourselves emailing back and forth with a customer. It’s great to hear what our customers are saving for and about how passionate they are about SmartyPig. I work closely with the developers to ensure the site delivers on a positive customer experience, brainstorm about future enhancements and services and I oversee the daily operations of the company.
When did SmartyPig open its doors and launch?
SmartyPig was founded in January 2007. We were in BETA for the first few months of 2008. We officially launched in April of 2008.
What advantages do you see SmartyPig having over other competition in the area of online banks and savings accounts such as ING direct? What would make someone want to switch to SmartyPig from another service?
Well, in all reality, we see us competing more with credit card companies than traditional online savings companies. We’re really trying to reverse the “buy now, pay later” mentality. The beauty of SmartyPig is that we really aren’t asking people to change banks. Keep your existing banking relationships. Save for retirement. Save for your 529. But when it comes time to save for specific things in your life, we believe there is no better way than SmartyPig. It’s fun. It’s social. And most importantly, it’s rewarding. Wouldn’t it be nice to own that vacation on the plane ride home? Not have to worry about paying it off for the next 20 months?
We also see SmartyPig playing a big role with parents and kids. Wouldn’t it be nice to finally sit down with your kids and talk about the importance of savings? SmartyPig let’s parents do just that. SmartyPig is using the latest in Web 2.0 technologies, including blogs, Facebook, a comprehensive widget platform that spans over 20 social networking sites, Twitter and Get Satisfaction.
Get Satisfaction: http://getsatisfaction.com/smartypig
I don’t know if your willing to tell but, I figured I’d ask: Since launching SmartyPig, how many registered users have you had? And is there any way to follow how much money has been saved (or an estimate) with your service?
I can tell you that in two short months, we have customers in all 50 states. And as you suggested, SmartyPig has some pretty powerful metrics. We know what users are savings for, how much they are saving and when the are going to reach their goal.
What are the growth plans for SmartyPig? Are there goals that you are trying to reach over the next few months, year, etc such as a certain number of users, etc?
Each day I get to work, I think about how we can make SmartyPig better. We listen to our customers and react quickly. With that said, we are humbled by the response SmartyPig has been getting around the country and around the globe. We are looking at a number of opportunities for SmartyPig to expand globally. We believe the concept of savings resonates everywhere.
What has been your largest road block/challenge that you and your team have faced with launching a web 2.0 company such as SmartyPig?
There has not been one specific road block that comes to mind. Our biggest hurdles were in regards to the barrier to entry to the online financial services space in general. We worked very closely with our banking partner, auditors, state and federal regulatory groups. Our biggest challenges frankly stemmed from the fact that no one had ever seen a company like SmartyPig do what we set forth to do. And that is to build the only true banking application that is social.
Entrepreneurs who are still in their start up phases usually have some pretty good advice for younger entrepreneurs or students who are thinking about starting a business or may have just started one. What are some words of wisdom that you would pass along to help them out? Possibly things you wish you had known/thought about, etc.
Believe in the idea. And believe in yourself. I can’t tell you how many times I heard someone say “well, that will never work”. Just because someone has never done it, does not mean it can’t be done. Don’t take someone’s word for it. Do your own research and find the answers yourself. And most importantly, don’t be afraid to get outside your comfort zone. It’s usually when the best thinking occurs.
Being an internet based company, I am sure you spend a lot of time on the computer. When you get tired of looking at your own website or have some down time, what websites do you check out, what forums do you participate in, or what blogs do you read?
I have a few favorites. LinkedIn. Twitter. Mashable. TechCrunch. Crave. Facebook. Mint. I spend a lot of time (primarily at night) on the web just interacting with sites. Seeing how people are using things like AJAX and other techniques to enhance the user experience. I also love following what our friends at Happy Cog are up to. Granted we were a client, I think they’re all geniuses.
Finally, can you tell what the most saved for item or event is with the current users of SmartyPig?
What I can share with you is that the top 5 categories for savings on SmartyPig are as follows: saving to save, travel, electronics, home improvement, and weddings.
Thanks again Mike for working with me to put together a great interview! Also, for our readers, look out for a great prize coming soon (as in a few days) from SmartyPig to encourage you to sign up and start saving!