Alex Zivoder On Raising $70 Million To Teach Your Kids Money Skills

Alex Zivoder has been involved in building and scaling several companies. His latest venture has already attracted tens of millions of dollars in capital and is proving incredibly popular with parents and their kids. His startup, gohenry has raised funding from top-tier investors like Muse Capital, Citi Ventures, Gaia Capital Partners, and Edison Partners.

In this episode, you will learn:

• US versus UK investors
• Ryan Holiday quotes
• Alex’s top advice before starting a business

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About Alex Zivoder:

Alex Zivoder is the CEO of goHenry, a London-based start-up that provides vital financial education to children. Under Alex’s leadership, goHenry will make the next generation of young people better at managing their money than the last.

Keywords: e-commerce, B2C, B2B, disruption, scaling, Internet, international, FinTech, education, learning, ticket marketplace, online travel, mobile and fixed telephony, integrated card processing, Europe, France, Luxembourg, Russia, statistics, economics.

Connect with Alex Zivoder:

• Crunchbase
• LinkedIn
• Twitter

Read the Full Transcription of the Interview:

Alejandro: Hello everyone, and welcome to the DealMakers show. Today we have a founder, an entrepreneur that will definitely teach us a thing or two on the operational side, especially about zooming nowadays and how he has gone to building and scaling his company, going over 100 pitches when trying to secure his own Series A. I find that you’re all going to be very, very inspired with what our guest is going to be sharing today. So without further ado, let’s welcome our guest today. Alex Zivoder, welcome to the show.

Alex Zivoder: Thank you, Alejandro. I’m very pleased to be here.

Alejandro: Originally born in Nice, and as they say, the product of the French Republic, so what does that mean?

Alex Zivoder: Yes. I’m French, and my parents are not from France. I don’t have French DNA. They are immigrants from the country that doesn’t exist anymore, Yugoslavia. Being born in France, I was raised by the French system, and my parents, of course, and I made it all the way through to today, and we can talk about that in more detail. France, like the U.S., is a great melting pot taking everyone coming in the country and doing something unique out of that. That’s beautiful, and it’s one of the rare countries that do that really well.

Alejandro: In your case, you were born with seeing the good, the bad, and the ugly of entrepreneurship because your parents were in it. What did you learn from that? That was probably the seed that was planted for you.

Alex Zivoder: Probably, yeah. My father was an entrepreneur. He had a small business in the construction industry, which is a difficult industry. It has a lot of ups and downs and problems that you have to deal with, so he had to be resilient. That’s one of the first things I learned was resilience. The second thing I learned from him was willpower. Anything that you really want to do, you can do it if you really want to do it. It’s all about how committed you are to whatever is in your mind and then go after it. These are two things that are incredibly useful for any entrepreneur because you would need both full power and resilience, for sure.

Alejandro: In your case, you study economics, and then you did statistics. So it was like a switch from going from Nice to Paris. But why statistics out of all things?

Alex Zivoder: Well, I think I discovered when I was in my early 20s that I had a love for logic systems, numbers, quantification, in general. I was in economics, but I branched out into statistics because I’m basically an engineer, and that’s something that I thought would probably be too late in my life to do. Being an engineer and thinking of the world as [04:11] systems and stuff you can control and tweak to improve, etc.—that’s my mind. I found that in statistics, you find all of that. Statistics is not just a bunch of numbers. Statistics is really understanding these numbers and getting insights and generating insights out of that, which is quite tough. That’s how I transitioned from economics to statistics, but I actually came back to economics. When I was working later in my life, I started working in my 20s. While I was working, I also did a Ph.D. in economics. That’s how crazy I was. So I still love this discipline.

Alejandro: Then you travel quite a bit around Europe. What were you doing while you were working on all of these projects?

Alex Zivoder: I traveled a lot in my 20s and 30s. I traveled all across the European Soviet Union, and then I went eastward. I traveled to all the European countries, the former Soviet Union. For eight to ten years, I was helping, first, the European countries and then these countries in the area of statistics [05:30]. It was more like a policy job [05:33] and helping the former Soviet Union countries transition towards European status. So a lot of what we call technical assistance, training, and these kinds of things.

Alejandro: After that journey, you went into business. Obviously, you did multiple companies before landing on the company that you have that you’re operating today, goHenry. As part of this process of now being an operator and building goHenry up, I find that you’ve probably learned a lot during these experiences when you were either launching products or ramping up certain things or helping on the integrations of different companies, but what I want to do here is, because you have multiple experiences, and I like to really go as fast as possible into your experience with goHenry because our listeners are really going to enjoy that. But out of all these experiences on the professional side, leading to goHenry, I’d like to ask you what was your role, and what was your main takeaway during those experiences. Let’s start with the first one, with Tele2. What was your role, and what was your big takeaway?

Alex Zivoder: Tele2, a great, great company out of a Swedish group called Chimeric, and we actually had a word for these experiences as a first starter, the Chimeric Academy. I don’t have an MBA, so I learned business there. My first and the one that I will remember as important, too, is the importance sales in the market. This was a phenomenal selling machine. I have not found better. Actually, a lot of the stuff I’m doing today are still inspired by these days where, basically, it was: keep it simple, go straight, explain as simply as possible to the largest base of prospects what you’re doing, why you exist on the planet, why is it better to [07:32]. It’s always the same. Simple things work very well when they are scaled, and you know what to do. That’s what I learned. Then I moved to Expedia. I launched Expedia in France back in 2006. Then I took over the four European countries of Expedia, so that where I learned eCommerce. It was the beginning of Google, etc. This is where I ran into all this new stuff. Then I moved to a company called Viagogo, which is a ticket exchange. There, I was the #2 to the founder, Eric Baker. Here, it was four or five years of huge scaling. I’ll just give you one number. When I joined, we were in one market, the U.K. When I left, we were in 52 markets on five continents. That’s product scaling, a huge digital marketing scale as well. Then, after a break of six months, I joined a company called Lynda.com as a VP and EMEA. Lynda is an online learning platform. I was there to help them build internationally, starting with Europe, which was the strongest internationally. After 18 months of doing that, the company was acquired by LinkedIn back in May 2015 for $1.5 million. That was one of the largest segments in this space. I left on the day of the close of the company together with the founders and the [9:06] C-suite in the U.S.

Alejandro: Obviously, that led you into what you’re doing now, which is being the operator of your baby.

Alex Zivoder: goHenry, the approach was interesting. How did I get to learn about goHenry? The moment it happened was interesting. I still remember the day. It was May 2015, a few days after I had left Lynda.com. I was in the kitchen pinning on the whiteboard in my kitchen the list of chores for my second daughter. As I was pinning this, I got a call from a headhunter who talks to me about goHenry, and as I’m looking at my own chart, she’s telling me basically what I’m doing here. It’s all built-in. I said, “Hold on a second. That’s interesting. There is an app for what I’m doing now manually? Let’s look at that.” So this was very interesting, and also, at the same time, extremely attracted and also afraid of the idea because as a parent of two, you understand that there’s nothing more precious than the children on this planet—nothing.

Alejandro: Yes.

Alex Zivoder: When you want to build a business, that is not only dealing with your children, but with your money. I was saying, “Wow. This is a challenge.” Because I like challenges, I’m always the type of person who goes after the unusual idea and challenging common sense. I said, “Let’s dig into that.” I started digging. Then I invested in the company. Then I became the CEO. Then I continued investing, etc.

Alejandro: You’re not the typical founder. You’re like a re-founder, which is the one that goes in and builds things up from a very early stage. I’ve seen this multiple times. In this case, when you joined, how many people were in the business?

Alex Zivoder: I think we were about 15 to 20, something like that, and we had probably 30,000 customers. What I found was a company that had built a great product, Richard Jones, who was my predecessor to the CEO role and who is my CPO today. Richard built something unique, something that didn’t exist at the time. You have to remember back in 2015, when he did the app back in 2013-’14, there was no matching example to look at. They were simple in the U.S., which have been sold to BBA. That’s it. He actually created from nothing the app, which was then copied. He was the source of inspiration for quite a few other apps in this space. So kudos to him on that. I found a company that was just beginning to find its feet on one marketing channel, which was [12:23]. That’s it. Coming in, the first concern was, guess what? Cash—fundraising. Then we started fundraising for the company, and that was one of many fundraises. The second thing that had to be sold was a word that did not exist in the vocabulary when I joined, which was unit economics.

Alejandro: Right.

Alex Zivoder: The company was product-driven. It had some marketing but no unit economics. The problem is that if you don’t have unit economics figured out, you cannot scale, or it will cost you an enormous amount of money to scale. So we had to figure these two things during the first few months: unit economics and fundraising.

Alejandro: So that the people that are listening and watching get it, what ended up being the business model that we know of goHenry today?

Alex Zivoder: That’s a good question. goHenry was, I believe, probably the first—I can look back in historical research, but probably the first card that was coming with a subscription. The co-founders of the company had this idea that rather than giving a card to children that would be charged each time they use the card—and that was the modern way that was prevalent at the time. They said, “Make it simple and go the Netflix or Spotify way and create a subscription.” So they created the subscription for the card. That was an innovation, which, to be honest, if I would have to bet at the time, what would be the success of that, I would have to put it up very high. But it worked. Again, it’s back to simplicity, as I said earlier. It’s simple; that’s why it works. And, of course, it was at the forefront, and then it has been copied today. Many, many, many do that in the individual c-space, but back then, it was innovation. The trick of unit economics of a subscription model, which you charge a recurring fee for a service. In our case, a financial indication service. You have to find the right buttons between basically the revenue stream that you get every month from the subscription fee and the cost to acquire your customers. It’s called the unit economics formula. So the things have to match so that whatever you invest to a current customer, there is a payback time. That payback time has to be for what you and your shareholders are comfortable—not five years—more like one year. That’s the hill we had to go down when I joined them. We figured it out with the team. It was a great few months of fun and hard, hard work about getting that down to the unit economics. Once you get there—once you get to a point, which in our case was 1.5-year payback time, then we could start scaling.

Alejandro: When you joined, there were still the very early stages. How much capital had been raised at the point where you were joining?

Alex Zivoder: Probably no more than £10 million. I’d say probably even less. Maybe £6 to £7 million. I should go back and look at this.

Alejandro: In this sense, when you joined, it was pretty much like the Series A financing cycle, or where were you guys there?

Alex Zivoder: We didn’t give leverage to our fundraises until our first institutional raise, which was last year, until the second payment was launched. What we did, we looked at my joining in 2015 to 2020 was a succession of fundraises. The first one I joined, of course, I came with my family and my friends, and they contributed to the fundraises. Then, we get to [16:24] very quickly. Then we tried something, which, for us, was a total novelty, and we looked at crowdfunding as, “Let’s see whether this can ensure and whether we can top-up from our known sources with the crowd, that would be good. We tried crowdfunding on this first fundraise, and I have to say we were flabbergasted by the results. We did the campaign. We are a B2C company, and the product is easy to understand. We wanted our customers to be involved, and we wanted to give them a chance. We opened the campaign for the weekend exclusively to our small customer base; I think it was 60,000 customers at the time. They could invest from any amount starting from £10. That’s it. We were looking for £2 million. We got the £2 million over the weekend, which, for me, was really news, so much so that when we came on Monday morning, we extended the round to anyone [17:45]. One of the first questions we got was, “You already have your money. Are you keeping it up, or are you closing it?” We left it, and we said, “What’s the maximum you can raise?” At the time, the maximum was £4 million. That was the Euro regulation on how much you can raise from the crowd, and we hid these £4 million. It was back in the days when the largest fundraise was done by a company getting money from the crowd was pure equity worldwide.

Alejandro: Yeah.

Alex Zivoder: That was quite astonishing. Then we did it again in 2018, where we raised £18 million. Let me tell you something else, which was even more astonishing. Before we did the crowdfunding, we went to our customer base and without giving them any detail; it was just a simple survey with two questions. We asked them, “We are thinking of doing a crowdfunding, and crowdfunding is where anyone can participate, and you become a share. We would like to give access to our customers. Would you, as a customer, invest? If you would invest, tell us how much.” We gave them a range from £10 to £100,000. Then we also put a box, which was free text saying, “If you do or don’t want to invest, please write something.” We get about 3,000 replies. When we analyzed, 80% of the people said yes, they would like to participate, which was a good sign. Then I started digging into the 20% who said no. We said, “Why?” We looked into the whys, and guess what? Thirty percent of the 20 who said no said something along the following lines: “If I had £10 to invest, I would.” I paused, and I said, “Hold on a second. These parents are paying us today a membership fee, which back in the day was 1.97 or 2.49, so £2.50, and they say that they cannot find £10 to become a shareholder. That, to me, was massive news because I thought, and everyone in the company thought that this product was a middle-class product, an upper-middle-class. Actually, no. We discovered here that it’s anyone who, as a parent, wants to help their children become financially literate and wants to be a customer. That was, for us, very big news. That opened up, all of a sudden, the top of the market much wider. We realized this is much bigger than we thought, initially, the founders. That was great. I still have goosebumps when I talk about that.

Alejandro: That’s amazing, and I’m sure that the transition from getting money from the crowds to getting money from the sophisticated investors was quite a big transition because, unfortunately, nowadays, investors tend to look at online platforms as an adverse selection. They think maybe companies are launching there because they couldn’t find the money in the traditional sources. In this case, you guys have your own journey, and there are exceptions, but did you find that transition challenging from going to the crowds to going to the sophisticated players?

Alex Zivoder: I would say yes and no. It depends on which way you look at it. You never know when you have good luck. That’s the thing, and that’s one of these stories. Between 2015 and 2020, I have seen at least, probably, 150+. I stopped counting at some stage. There were a lot of noes, a lot of no replies, or a lot of yes/maybes, a lot of “Come back later.” We did have a few conversations that ended up in a term sheet that we turned down because the partners were not the right ones or the term sheet wasn’t good enough. But the most difficult in this journey was believing in your idea because on one side, we see this huge amount of support from our customers. The referral rate was incredible—5 stars everywhere. The customers writing to us when their kids get 18 because our product is offered for parents with kids ages 6-18. When the teenager gets to the age when he/she can handle the journey, can you imagine that parents are writing to us in email to say thank you? “Thank you for having been our financial indicators, supplier of great service during these years.” Which bank receives mail from customers saying thank you?

Alejandro: Yeah.

Alex Zivoder: On one side, you have this huge love from your community. On the other, you have the, I would call it, c-community that struggles. It struggles with a few things. It struggles with the fact that this is a space where you are dealing with children. For some reason, some of them don’t like it. Then you are dealing with short cohorts. We talk about, as I said, our lifetime typically is six, seven years. We would like to have it longer. Then you are dealing with some funds that don’t want to have an ability to tackle x—they prefer to have double-x. Some want to have higher growth, so for various reasons. Then the story became even more complicated after we launched in the U.S. in 2018/2019. We thought it would be easier because we are going to the U.S., and it’s the biggest market on the planet, etc. Actually, it made it more difficult for us because we had quite a few founders saying, “No, this is too risky. We’ve seen many companies from the UK sink in the Atlantic, so we don’t want to take that risk.” Right?

Must Read: Sridhar Ramaswamy On Becoming Google Ads Boss And Then Raising $77 Million To Create An Ad-Free Search Engine

Alejandro: Yeah.

Alex Zivoder: For all these reasons, we had troubles. Then, I would say the change was COVID-19, which is quite interesting. How come such a dramatic moment in the history of humanity leads to something positive for our company? This is the interesting thing. In March/April, and after we had seen all these funds in Europe, I was studying with Dean, one of my co-founders who is in the U.S. [24:45]. We stopped talking to European funds. Now, “I just want to talk to American funds. The European, I know them. We’ve gone through that. Let’s change.” When we crossed the Atlantic, and we went to the U.S. funds, and we only did a U.S.-oriented fundraising campaign, this is where we found some interest. In the middle of COVID-19, we started in April 2020, right in the middle. Probably because we were resilient, so our business was growing very well during COVID, our product engagement was increasing, etc., maybe that, plus the fact that American businesses and American VCs are more open to risk and less conservative. We found quite a few funds, and then we selected some excellent partners and lead investors.

Alejandro: Nice. In total, how much money has goHenry raised to date?

Alex Zivoder: About $70 million between $30 million friends and family and the crowd and $40 million from Series A round and with some partners, Citi Ventures, and Gaia Capital Partners, a French fund.

Alejandro: $40 million, Series A. My gosh! That sounds more like a Series B, Series C-types of rounds.

Alex Zivoder: Yeah. It is. That’s why I say, back to your first question, you don’t know when you have good luck. I have to say that our story of capital formation, which is a bit strange, actually might be our strongest asset because it has ingrained in us that we have to build the product for our community, for ourselves. We’re all parents, so we are product-focused, product-centric, but we are also very mindful of the PNN. We are very mindful of the unit economics. This tension that we had between the amount of money we had on the bank account and what we wanted to achieve for our customers was always present, and we always managed the growth, having in mind these two things: product and band on one side, because you cannot succeed building any business, but in particular, a B2C business if you cannot build trust; otherwise, forget about it.

Alejandro: Yeah.

Alex Zivoder: So, trust and then shareholder value and unit economics. These two things together have helped up grow a business that is what it is today, and now we are ready to scale with the Series A money much faster and much bigger in the UK, and especially in the U.S.

Alejandro: How big is goHenry today? Anything that you can share in the number of employees or anything else?

Alex Zivoder: In terms of the number of employees, we are getting close to 200 approximately now. I think, from memory, roughly 140 of them are engineers, marketers, and the like. The 60 are customer service agents, so we have our own customer service team in-house to serve both the UK and the U.S. That’s the size. We have 1.5 million customers worldwide between the UK and the U.S.

Alejandro: That’s amazing. So imagine that I put you into a time machine, and I bring you back in time to that moment where you actually made the decision of jumping on board to take the reins at goHenry, and you had the opportunity of giving yourself one piece of business advice before taking on goHenry, what would you tell your younger self, and why, given what you know now?

Alex Zivoder: It’s always difficult and always biased to look at hindsight. Right?

Alejandro: Yeah.

Alex Zivoder: Always. That’s not the way life is built. Life is the life of the moment. You want to survive another day.

Alejandro: Right.

Alex Zivoder: But I would say probably, even though I am already by nature someone who is action-oriented, I would probably have told myself just do it. Life is short. Don’t wait. It’s never a good time; there will always be obstacles. So change your perspective so that you transform the obstacle in front of you as a way to progress in your life. There is a very interesting book, by the way, from a guy called Ryan Holiday, who is writing [29:25] stories. He has this very interesting sentence. He said, “The obstacle is not in your way. The obstacle is the way.” Actually, you have to use the obstacle as a way to progress. That struggle to actually accept that tension, what is in front of you is actually is what has to help you go to the next stage. I think this is advice that I’m trying to practice every day, but sometimes, I catch myself forgetting about it, so I will definitely remind myself of that. There are a few instances that I would have liked not to equivocate, not think too much, not overanalyze it. Just do it.

Alejandro: That’s amazing. Alex, for the people that are listening and watching, what is the best way for them to reach out and say hi?

Alex Zivoder: The best way is—I’m not big on social media, so the best way to find me is LinkedIn. Or you type CEO goHenry, and you’ll find me. Then from there, you can get to LinkedIn, and I’m happy to have short conversations with people who are interested to build businesses. I think I have a very eclectic experience, which could serve in many different instances, so I’m happy to help if I can.

Alejandro: Amazing. Alex, thank you so much for being on the DealMakers show today.

Alex Zivoder: You’re welcome. Thank you very much, Alejandro, for giving me this opportunity. Thank you.

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