The term disruptive technology gets used a lot nowadays, either by startups trying to become the next unicorn or old line corporations running internal incubators. The term disruptive innovation was originally defined 22 years ago as an innovation that creates a new market and value network, displacing market leading firms, products and alliances. In a minute you will read about a couple of companies I have come across that have real potential to be disruptive innovations, more on that soon.
But first, what does that definition mean?
Well, let’s do a quick synopsis, “disruption” is when typically a smaller company with fewer resources can challenge or outperform existing industry leaders successfully. The process usually plays out like this: The current industry leaders, like most successful businesses, optimize their products and services to serve their most profitable customers to the best of their ability. So by concentrating on this market segment with a higher focus, the current industry leader’s other market segments are given less attention and moved to the peripheral. So typically new market companies will target those being underserved segments and frequently will provide higher personalized, less expensive products or services that gain traction with the previous “undervalued” market segments. Now disruption occurs when the new market companies move upstream to provide the performance and service that the primary market segments require while maintaining the advantages that drove the previous success. When you have the main market segments switching to the new company products or services in volume, then effective industry disruption has occurred.
Clayton M. Christensen disruptive innovation graph from Harvard Business Review
I recently came across a couple of companies that have the potential to be disruptive innovations that create new markets and are primarily focusing on the Hispanic population. The first company is called Uulala, pronounced (ooh la la), this company is in the Fintech sector launching a mobile app in early 2017 looking to disrupt the financial services industry for Hispanics from the USA to South America.
The Uulala app is targeting what the World Bank and other financial organizations refer to as the unbanked or underbanked populations. According to the World Bank Global Findex a financial inclusion study where data compiled in partnership with Gallup and funded by the Bill and Melinda Gates Foundation, there are over 210 million unbanked adults in Latin America alone. The study reports how “financial inclusion is critical in reducing poverty and achieving inclusive economic growth. When people can participate in the financial system, they are better able to start and expand businesses, invest in their children’s education, and absorb financial shocks.”
After the report was released the following statement was made by the World Bank Group President: “Access to financial services can serve as a bridge out of poverty. We have set a hugely ambitious goal – universal financial access by 2020 – and now we have evidence that we’re making major progress,” said World Bank Group President Jim Yong Kim. "This effort will require many partners – credit card companies, banks, microcredit institutions, the United Nations, foundations, and community leaders. But we can do it, and the payoff will be millions of people lifted out of poverty.”
The Uulala platform not only provides ways for Hispanics to participate in secure financial transactions, build credit and provide remittance services but also gain access to entertainment and shopping services that were once out of reach because of their banking status. Uulala’s proprietary technology rewards users for activity, including cashback, and builds the credit history for long-term user adoption and financial benefits.
So I caught up with Oscar Garcia founder of Uulala and wanted to know how they plan to help these millions of people become inclusive with the financial services they need for stability.
ML: Why are you and your team so focused on the Hispanic market for your mobile app?
OG: We see and live the needs of the Hispanic culture with everything we do. As I was growing up, I witnessed the struggles my mother and our extended family had with finances and credit. I did not understand as a young man why some people seemed to have credit cards and fancy cars and homes of their own. I watched my mother struggle for decades just to understand how to start a bank account and to acquire credit. Later when I started my businesses and noticed that some of my clients; whose industries ranged from car dealerships, real estate brokers, hotels, and others were marketing to the Latin culture but offered them higher rates due to the lack of their financial history. This experience with some of my clients including check cashing stores impacted me. The lowest earning customer was charged more for not having financial tools to build their footprint. Fees to cash checks, to make payments, to send money on and on and on. Once I started working in the financial sector creating applications for merchants, I saw the power of the Latin, business person. We were able to improve on an old system, 70% of our merchants were minority owned and embraced anything that could give them more flexibility and options financially. Once I met my partner he told me about his problems and ideas starting forming. You see my partners helps run one of the largest music labels in the world and he needed his clients the Latin culture to be able to buy what they loved using a Visa or MasterCard. My partner asked if I could come up with a solution that will give his clients the tools they needed to start participating in the digital economy. His needs plus my passion gave us a solution that not only helps the Latin culture participate in today's digital age but also solves the generational problem of not having the credit history and financial discounts that others take for granted. We can bring millions of unbanked or underbanked individuals into the light with the right tools.
ML: What are some of the main advantages to Hispanics for using the Uulala mobile app?
OG: By integrating multiple financial systems into one app we use technology to lower cost. For example, most Latins are used to going to a check cashing location to cash out their payroll checks. With our system, they save the 5% charge they would have paid. Their money is safe in an account that they will have access to 24/7 using a debit MasterCard. The Uulala system will allow them to buy online and offline with ease. We also integrated the best solution to send money to loved ones in the United States and Mexico. Most services in this space overcharge the user with the cost of up to $15 or an average of 8% of the funds sent. With our system, we can do it for $1.90 everyday all day. Finally, we added a cashback credit building instrument. Every purchase in participating vendors like Starbucks, Subway, and other top 300 big box chains, our users can earn cash back, and with new features coming out, they will be able to acquire the entertainment they want for pennies on the dollar. All this adds up to a credit profile where financial lenders and other agencies can see that Hispanics pay their bills, are good consumers and are willing to build on a history of good behavior. So our goal is to keep more money in the hands of the Latino and give them the ability to establish themselves as a credit worthy individual for more financial access.
ML: What is your top goal for 2017?
OG: Our goals are simple to move our application forward with all the tools that Latinos want and need to save money. We will roll out features every quarter after our beta launch. We will study the responses of our users and see how we can make their lives easier with our platform and release the tools that will best help them save, send, and use their money wisely. The year will also be filled with joint venture programs between our applications and other systems that need a platform like ours to fill or bridge the gap between the customer that has the means to pay and those that want to but can't. I imagine a day where every ecommerce site, every application that targets the Latin community or the underbanked can offer our system to give their customers the tool they need to buy what they want how they want it.
Uulala looks to have the pieces in place and is poised for success with their 2017 launch and mission to empower the Hispanic market. To find out more and get on the beta test list you can visit http://www.uulala.io
This next company that caught my eye is called BCE, which stands for Bilingual Children's Enterprises. Just how Uulala is tackling a major rift in the financial services industry to support Hispanics, BCE is taking on the divide of education equality for dual language students primarily Hispanic children. According to the National Assessment of Educational Progress (NAEP), a biannual record of children’s abilities published by the US Department of Education, more than two-thirds of American fourth graders are not reading a proficient level. Shockingly, the rates of non-proficient fourth graders among children of color, and children in poverty are more than 80%.
English Language Learners (ELL) are becoming the largest “minority” demographic group in U.S. schools. Students whose home language is other than English comprise more than 20% of the nation’s young children (Miller and Garcia, 2008) and are projected by the U.S. Census Bureau to be 40 percent of the school-age population by the 2030s (U.S. Census Bureau, 2011). 1 in 3 students in Head Start is a dual language learner; the majority are Hispanics. English language learners are growing 7xs faster than the general student population. Less than 40% of ELLs are graduating from high school. Dual language learners will represent 25% of all students by 2025.
BCE is a mobile learning and entertainment platform helping preschoolers learn English, Spanish and other languages through a science-based methodology proven to stimulate language learning. I sat down with Deborah Castillero the founder and CEO of BCE to discuss her company, background, and goals.
ML: Why are you and your team so focused on the Hispanic market for your mobile app?
DC: As a first generation Latina entrepreneur and founder of BCE, we launched in 2014 after conducting research for a white paper about the rapid growth of ELLs in the US and the 30 million word gap. In our research, we also learned an investment in early childhood education leads to higher graduation rates, so I set out to address this problem and opportunity. At present, there is a dearth of pedagogically sound apps that are dual language and multicultural in scope for our growing Latino, elementary aged students.
On a personal level, I know what it's like to be a young child thrown into an environment where you don't speak the language. I'm the daughter of a Panamanian-born, immigrant, and single mom. I, like many children of immigrants, was sent to back to the homeland to spend summers with my grandmother. After three months at the age of seven, I became fully bilingual and bicultural. Having the ability to communicate with my relatives, attend school there and enjoy my time abroad all became possible after learning a second language.
My team of Latino dual language curriculum designers, gaming designers, UX managers and developers have all had a similar experience in our lives. We also know we're uniquely qualified to develop learning tools that celebrate our culture authentically. In recognizing that Hispanics over-index on mobile usage, applications are the best platform to reach the Latino, millennial parent who in many cases wants their children to learn English and Spanish.
The Hispanic market is where are heart lives, but through a dual language pedagogy, we'll also be reaching those non-Hispanic parents who understand the cognitive benefits of exposing their child(ren) to a second language early.
ML: What are some of the key benefits to Hispanics for using the BCE learning platform?
DC: Our MVP app, Tipitom©, that launched in 2015 is on iOS & Android. In the app, children will see an animated video about cognates; within the games children can learn their letters, colors, numbers, shapes; paint, make puzzles and engage in memory learning activities, all in Spanish and English. Our dual language approach (two languages presented separately) supports learning both languages simultaneously in a fun, engaging and entertaining way. In our user testing, Spanish dominant kids identified culturally sharing that, Abuela Fina looked like their grandmother while our dark-skinned testers identified with Chico, Tom's best friend.
Our little MVP got the attention of the creative folks over at American Greetings Entertainment. Now we’re building out next version in Care Bears, Facebook’s Free Basics Platform, and Kurio Tablet for Kids; Apple is one of our advisors. The next version of Tipitom will be far more robust with 15 games in Spanish and the same 15 games in English along with animated video content from Care Bears and an ebook. Since we're very focused on building upon a child's pre-literacy skills, kids will be exposed to 500+ words in each language, and we'll launch in June.
ML: What is your top goal for 2017?
Our primary goal is to build a solid product that serves to help close the word gap for English language learners and educators working with ELLs. We plan to continue to build out more features, more content and reproduce the app into other critical needs languages like Mandarin, Portuguese and Russian.
As a Latina entrepreneur, I hope to reach measurable success to demonstrate, to the predominantly male dominant and white investor community, the viability of investing in female founders, people of color and the mom market; a market they traditionally consider niche and not large enough for investment.
To connect with Deborah and learn more about Tipitom, please visit http://www.tipitom.com.
Both of these Hispanic Business Innovators are using their business acumen, passion for their community and determination to make a difference for future generations. Both CEOs are no stranger to adversity, and they both know the road ahead is a long, chaotic and full of surprises, but the passion for their people and purpose will be the differentiator for their success, in my opinion. Look for more to come from the Hispanic Business Innovators series in the coming months, as always; comment, share and keep the conversation moving in a positive direction.