New banks, Podcasts

‘Freelancers need a business and personal account under one roof’: Oxygen’s Hussein Ahmed

  • With all the banking options, freelancers find themselves with products that don't fit their needs.
  • Oxygen's CEO joins us to talk about what freelancers need from their banks and how to give it to them.
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‘Freelancers need a business and personal account under one roof’: Oxygen’s Hussein Ahmed

As more challenger banks launch, we’re seeing the emergence of more niche offerings, serving a distinct set of users with nuanced needs. 

Oxygen, a challenger based in San Francisco, recognized that freelancers aren’t being served well. These people don’t identify as businesses and yet they are in business. 

Founder and CEO of Oxygen, Hussein Ahmed is one of the hardest working fintech CEOs. He joins us on the podcast to talk about why Oxygen essentially merged a business account with a personal account to serve this demographic. He talks about building and scaling a startup using talent across geographic boundaries and what his plans are next for the upstart banking product.

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The following excerpts were edited for clarity.

The genesis story

I think starting Oxygen was addressing a personal pain. I grew up in Egypt and the UAE and ended up starting my first company back in Egypt. After that exit, I decided to come to the US. I went to grad school and specialized in computer science. I got my masters and PhD in computer science from Virginia Tech. And then up ended up in Seattle, working for Amazon for some time.

Eventually, I stumbled into this gap in the market. I was working out of a WeWork location. Basically all around you are photographers, real estate agents, UX designers, engineers, data scientists. I started seeing my experience working with banks — you walk into a branch as a senior enterpreneur and they basically look at you as an unemployed person because you can’t confirm income. You can’t get a letter from HR.

And if you go to the business side of the house, then at that point in the circle, they ask for your AR and AP, and about corporate documents and corporate credit. Those guys were asking me for like three years of tax returns to underwrite a $15k loan.

That’s when I realized this does not make sense. I think there is an opportunity here, especially given how the whole economy is moving to become more like Zack Millers in the space. These creators — from podcasters, YouTubers, influencers, designers, musicians — are basically deciding now more than ever before to lead that kind of a life. Our thesis was basically that there is a big opportunity to build financial services for this segment of the market.

Serving freelancers

The incumbents aren’t getting it. They don’t understand what you would do differently that they’re not offering. Why is the Chase digital offering or the Wells Fargo app not enough?

I think it boils down to how a freelancer identifies — do you identify as a business or as a personal account? We realized this ourselves. We tried describing Oxygen solely as business banking, and it didn’t land well. This UX designer sitting in WeWork does not really identify as a business. From high school seniors to wedding photographers, gig workers wouldn’t really call themselves a business. Many wouldn’t even call themselves a freelancer either, given it’s such a technical term. This was a big learning lesson for us from a marketing and positioning perspective.

The product

Oxygen today is the only challenger bank in the US which offers personal and business banking under one roof. If you’re still getting started out of the art academy in music and theater, you would come in and open a personal account, not a business account. And then as you progress and start thinking and identifying as a marketing agency or an influencer, you can grow into that business account. What’s kind of mind blowing is that some of our clients are actually making really good money.

For the personal account at Oxygen, you can literally answer three, four questions and we incorporate an LLC company for you on your behalf, nationwide in the US. So basically, we take you from this one woman business to basically incorporating, and now, nobody can go after you personally because you have this limited liability protection around you. You have better tax treatment as a company versus a person. Honestly, even opening LegalZoom and answering 40 page wizards is intimidating. It’s like, why would I do that? I’m just going to use my Chase personal account to run my business/personal life.

What inevitably happens is freelancers end up with this commingling of funds between personal and business. Being able to have this one button in the app, then to switch between your personal life and business life is frankly, in itself, a unique value prop. You don’t really have to have a personal Chase account and a Citi business account to basically move money over three, four or five business days between your own accounts.

Basically, a user profile is hooked up to a full personal checking account and a full business checking account. They are two completely separate accounts, yet from the app experience, it’s easy to move money between them because it’s one ledger on Oxygen.

Hiring around the world

I like the thinking about the talent and skillsets to build a company and weighing them against the cost associated with them. I think of Egypt, India, China, Israel, and Europe and how many amazing, talented people working for multinational companies you can tap at this time. If you can manage the timezone differences, we can be based in downtown San Francisco and not have to pay higher salaries to hire senior talent, hiring people from Square and Affirm. Instead, we’re poaching in Europe from Visa, from Russia and the Bank of Russia. A lot of European players like Monzo and N26 and Revolut. The opportunity comes from breaking those walls or using Slack or removing this geo limitation. You bring amazing, incredible people — super, super smart talent.

Bank partners

We didn’t misfire as much as gain a learning lesson. We launched earlier on another bank partner, another kind of banking service stack. We now had this brand promise that we’re trying to deliver, like differentiated products, differentiated experiences. But with that partner, they’re basically like, we’re gonna both end up with the same products at the end. Like it or not, this is what you get when you’re running on, building on another product.

You’re trying to solve the customer problem when the whole stack is basically outsourced, in a sense. You end up being like a marketing company, not like an actual fintech. We took the whole thing down and relaunched.

A major advantage for us now is that we get to control the experience. And definitely the second part is financially, the margins are much better. We can offer things like cashback and other perks. Otherwise, you’re gonna send your VC money over to customers, because you don’t really have enough margins to offer those kind of services.

Reaching and onboarding new customers

One of the cofounders of Patreon and Teachable invested in Oxygen. These marketplaces are like 100% our ideal customers. We have a lot of partners in B2B2C. Our selling point to those kind of partners is not just to launch a bare minimum limited account or service that our partners wouldn’t even use themselves. It’s better to partner with a properly built-out deep product than basically slap a debit card on your marketplace or offer it as an additional add on service.

You can go after this concentrated pool of people with high marketing precision without competing with horizontal players in the space.

We don’t want to bid or optimize for keywords like digital banking or free bank or free banking with no fees. Because, you can imagine right now, with all the big players with a war chest of money, it’s basically a losing fight to compete on those kind of keywords.

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