Why we all love Wonga ... all who know it that is.

Image via CrunchBase

Wonga.com (Wonga = English slang for cash) is a web phenomenon. It started offering small cash loans on the web 2.5 years ago, setting out to solve an important and pressing need that many have for emergency or instant cash in a very simple, clear, open WYSIWYG way - in fact, in a way which is entirely culturally compatible with the internet.

The regulations surrounding financial services are quite correctly stringent but have evolved for a very different era. They require all loans to be expressed as an effective APR (Annual Percentage Rate)  - even if the loan is for 14 days - or 7 or 30.
It also includes any application fee (Bank's generally call these 'arrangement fees' - in commercial lending) and transmissions fee (for same day - or in Wonga's case, instant transfer) to be included as interest within the APR.

An example. if you borrowed £100 to tide you over for 14 days, you'd pay back £120. Wonga charges £20 to process the loan, transmit the cash, collect it and take the risk of non-payment - all for £20.
Wonga explains the APR question nicely on its website.

This APR issue has made Wonga a controversial brand - loved by many hundreds of thousands but misunderstood by some - and an easy target for those not ever likely to use the service.

I have gotten used to the visceral reaction of some on the social web to seeing the Wonga TV ads (latest version is below) and the APR in the thousands - but every now and then I notice people from the tech industry rushing for the moral high ground and shouting foul.



Why is Wonga one of the stand out successes of the internet?
[Europe's fastest growing company, according to GP Bullhound's Media Momentum Awards and still growing at around 500%]

• It solves a very real and large problem - not solved elsewhere with the speed, convenience, flexibility and honesty that Wonga does.
• Its customers really love it!  With a NPS of around 79, there are very few brands that match it. I have been involved closely with some brands that elicited great loyalty and affection from its customers - none quite like this. 90% of respondents who had used another lender agreed that Wonga was a better service (30% ‘better’ and 60% ‘significantly better’).
• The product is backed up by a determined customer service ethos which strives to be open, responsive and flexible to the needs of the customers - via a multitude of channels. 
• Lending decisions are made in real time referencing over 3500 data points and analysed in Wonga's proprietary risk engine.
• The technology which makes all this possible is world class.

Little known facts about Wonga.

• To be a customer of Wonga, you need to have a bank account.
• 99.7% of Wonga's customers own a mobile phone. 
• 17% own an iPhone
• Wonga sponsors Blackpool FC in the Premier League

Errol Damelin, Jonty Hurwitz and the team at Wonga are building a business to be proud of. I, for one am proud to be its Chairman.

Image by Wonga.com via CrunchBase

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Graze, Naturally Viral

Nature Delivered Ltd (trading as Graze) has just announced a funding round of £2m led by Octopus Ventures.

We wrote about Graze in February
drawing attention to the truly innovative and potentially disruptive approach that Graham Bosher and his co-founders have taken to the distribution of food by post. Graham doesn't have deep food technology or distribution experience but he has leveraged his intimate knowledge of significant experience of designing, developing and running complex operations which give customers complete control and provides great customer service.
This was acquired in his initial development of DVDs on tap and later LoveFilm.

The business is experiencing very rapid growth and strong loyalty to the service.
Graze is naturally viral, with people showing others their Graze box at the office and handing out trial coupons.
All web marketers strive for virality or a way to promote it. In this case (like with Moo) the product itself is naturally viral - in the real world. Of course, Graze are pouting petrol on the viral flames and encouraging the blaze.

Now delivering over 80,000 boxes a month, Graze has the backing it needs to build a serious business. William Reeve is taking the Chair and the shareholder register includes DFJ Esprit, Arts Alliance and ourselves.

Certainly one to watch in my view.

If you are in the UK and want to try the service quote this code QKX412R and get a free box.
[from 20th to 24th July, 2009]

Another founder creating a potentially great business by thinking completely differently about an established way of doing things - and not being an insider in his industry - is Errol Damelin at Wonga.

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Its best to know nothing ...

When you are setting out to change completely the way in which an industry works, sometimes its best not be an expert in that field.

Experts sometimes know too much about how things work, how things are done, how its been done for years.

When Errol Damelin first set out to change the way in which unsecured lending was done - he started with a blank sheet of paper.
It was case of "what if customers could apply for a loan, be verified and risk assessed in real time and the money transferred to their account instantly?" And of course, the service operates 24X7 from anywhere. If that could be done, wouldn't this meet a need and be an awesome service?

This is not easy - even now, no-one else does it.
Jonty Hurwitz joined him and they set about building this. Still not a banker in sight.

Since the funding round for Wonga was announced a couple of days ago, people have been asking - 'how does a company that's been trading for just less than a year raise $22m from some of the world's leading VCs - in this market.

The answer clearly is that Wonga have built some impressive technology, is serving its customers exceptionally well (they get a net promioter score in the 80's!) and is addressing an enormous market.

Errol and Jonty have built a great team too - dedicated to ensuring that their product remains cutting edge and obsessed with great cusomter experience and service. Congratulations.

Of course the APR debate will rage but its clear that this is an entirely inappropriate measure for the very short term loans which they make.
For my part, if the customer needs and loves the service then Wonga are doing a great job.

Some press coverage of the funding round:
Wall Street Journal
Financial Times
Telegraph
PaidContent

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