Tony Aguilar Transcript
Clint Betts
Tony, it's so great to have you here to talk about everything that you're working on. Man, you've had some incredible, incredible experiences. Tell me about just how you got to where you are. I would just love to hear, to start your background and how you've built this thing.
Tony Aguilar
Yeah, how far back should I go? From the beginning? I think I'll start there, because it really kind of gives a foundation of what I'm working on today. I like to say I was brainwashed as a kid. That's really kind of like the catalyst of how I'm doing what I'm doing today, but I really was brainwashed, I feel like, from my parents, that made me believe I could do anything. And so, it was a huge blessing to have parents that just made me dream big.
So anything I ever thought of doing, even when I was a young kid, thinking I was going to be an NFL running back, and obviously, that didn't work out, but to make me believe that I could do that was incredible. But the foundation really started where I grew up. I grew up in a small town in West Texas called Pecos, home of the world's first rodeo. That's our claim to fame, but it's a very humble place, 5,000 people, but everybody feels like family there. Because it's just a small town, and everybody really just takes care of each other. And so, just being in a culture where you're just willing to help everybody around you, that's just the type of culture and place Pecos is.
And coming from humble beginnings, I've really had to, I hope I can say, work my ass off to get to where I'm at today. So having this combination of just this grit and having to work really hard, but also willing to help anybody around me succeed or get back on their feet, I think, was this amazing blessing that I had, that laid out the foundation for me.
And with that, going into entrepreneurship, this idea of just you could do anything, I think you have to have that as a founder, this unwavering confidence in your abilities to succeed and to just tackle any challenge that you face building your company. And so, that was really the foundation to help me become an entrepreneur and then, start attacking one of the biggest financial epidemics that we're facing with student debt.
Clint Betts
Yeah. So you went to, as I understand it, you went to college and you came out of college in major debt, as we all do, who go to college. It's something that really wasn't ever taught to me. Nobody ever taught me that, "Hey, you probably shouldn't take out a ton of student loans for an English degree," or whatever. "I don't know how you're going to pay that back." And so, I think we're waking up to it now, but the problem that you're trying to solve with Chipper, I'd love for you to go deeper there and just the genesis of the company and the problem you're trying to solve.
Tony Aguilar
Yeah, it really comes down to I feel like I was lied to. This American dream that my parents kind of painted in my head of like, "Hey, you get good grades, you work really hard, you go to a good school, you get a good job, and then, this American dream is there." And so, that was the pursuit. That's the pursuit for most people coming out of places like Pecos, where you're just trying to reach upward mobility.
But going through that process, and my parents didn't finish high school, so the financial aid process of applying for schools, scholarships, grants, all that stuff was just brand new to us. And we didn't know what we didn't know. And so, I had to finance almost every penny to go to college. And then, when I left, I had over a hundred thousand dollars in student debt.
And I went to undergrad in Indiana, and I didn't know out-of-state tuition was just so much more than in-state. And I didn't even apply to Texas schools, because I wanted to get away and just experience a new culture for a little bit. I knew I'd be back to Texas, but I just didn't know it was three times as expensive. But this idea of, "Hey, you go do these things. Life is going to be perfect."
And then, moving to Austin and having an entry level job, my student loan payments were over 1200 bucks a month, and I had three or four different servicers. And I just got behind on my loans, and I tried to call my school. My school couldn't help me. They're like, "Call your servicer." And I would call my servicer. My servicer's like, "Well, we can help you with these loans, but we don't know what else you have, because we don't have them. So you're kind of on your own there."
And so, I just felt like the system really failed me. And then, going into financial advising afterwards, ironically, that's where I saw it was impacting everybody around me. It just wasn't me. Student loans don't discriminate, so it's really this cloud that's been hanging over people's head over the last 10, 15 years, that has essentially delayed our life, from buying homes, starting families, investing, all the things that we're supposed to do, when you get a college education and a good job.
Clint Betts
It really is an epidemic. I love the way you put that, because I'm the same way. I think I was the first in my family to go to college, and you're filling out the FAFSAs and all these various grant programs. And you don't really know. I actually didn't even really know, this is a me thing, I didn't even really know why I was supposed to go to college.
Tony Aguilar
I didn't have a choice. I didn't have a choice. I remember I got into an Ivy League school, and when I showed my dad, he was just like, "Cool." He's like, "I don't care where you go. You could go to this school or you could go to the JC down the road. I don't care. But you're going to school. As soon as you graduate, you're out of here and you're going to get an education, whether you like it or not."
I'm like, "All right, I'm going." And then, getting to college, it's like, "You want to go sign up for classes? Well, go to this office and then, sign this piece of paper. And then, now you can go sign up for classes." And not realizing that I'm signing up for $10, $15k every semester to take these classes.
Clint Betts
The numbers they let you borrow, and it's really easy, that's another kind of crazy thing about it, is it's pretty easy to get that money. And then, the hard part is how are you going to pay it back?
Tony Aguilar
Yeah. Well, you don't realize it. You're 18, 19 years old. You're just happy to be there. You want to have a good time, learn a little bit, meet some friends. You're not realizing the long-term impact of pulling out all that debt's going to have.
Clint Betts
Oh yeah, it's crazy. So tell me about Chipper. How did you start that?
Tony Aguilar
Well, let me start before Chipper. So previous to Chipper, I launched a company called Student Loan Genius. It's now called Vault, where we pioneered the student loan benefit. So if you've ever heard of a company paying down debt for employees, we were the first company in that space, and it was an incredible journey. Built it over four years, had incredible investors, like Prudential, John Hancock, some of the biggest financial firms in the country, and then, working with amazing companies, like New York Life, Pinterest, all these amazing organizations, helping their employees pay down debt.
So that was my first big swing at solving the student loan epidemic. And it really originated from one of my financial advising clients asking me, "I have all this money in my 401k, it says I can use it to pay down educational expenses. I want to pay off my student loans with it."
And I was like, "that's genius, but the IRS doesn't see student loans as an educational expense when it comes to 401ks." Don't ask me why. Those are the rules. They make no sense. But that's where the light bulb went off of, "What if we could get companies that are already contributing to people's retirements and other financial goals, but do it towards student loans?"
And so, that's what kicked off Student Loan Genius. And after leaving the company there, I knew we were making an impact. We had about 5% of companies in the country offering the benefit, but student loans went from like a trillion dollars, when I started that company, to 1.6. So I was like, "All right, I want to take another big swing at solving this problem." And I wanted to go directly to consumers. I didn't want to have to go sell to an organization or have consumers need to work for one of these employers, who could afford to do this, to get the help they needed.
And so, that's where Chipper came in. And Chipper, we launched in 2018. It was kind of at the heyday of when Acorns and Digit and all these incredible finance apps were getting their start, where they were using micro investing to just get people to start saving and investing with roundups or with small increments each week. And I was like, "What if we could do the same thing, but to chip away student loan debt?"
So hence the name Chipper. And so, we launched the company in 2018. We were doing awesome, got featured in the App Store, really started to blow up, but we got lucky. We put a chatbot inside of the app for tech support, and we started getting all these questions about refinancing, student loan forgiveness, all these things that we didn't do.
And so, that's where the light bulb went off for us. "Hey, it looks like people really need help on managing their debt, on trying to figure out what to do before they want to start paying off faster." And so, we pivoted the company, and the timing was impeccable. We pivoted the company at the beginning of 2020 and started focusing on what we do today. And so, our core focus is we help people figure out what's the best repayments and forgiveness program that they're eligible for, and we call it automatic enrollment. We help them actually get into those programs with a couple clicks. And pandemic hits in March of 2020. No one's paying student loans. And so, our pivot was just the perfect timing. You can't write a better story.
Clint Betts
How did COVID affect your business?
Tony Aguilar
The pivot was going to be more of a management part of student loans. I think, if we would've focused just on chipping away, we would've died, but because we started to focus on public service loan forgiveness and helping people optimize their debt, that gave us life. And we were able to find a big niche of users, and that were teachers, nurses, social workers, people who qualified for these programs, that still had this debt that, even though they didn't need to pay, they wanted to apply for forgiveness. So as soon as payments came back, they could have it all wiped away,like they were promised.
But as payments kept getting extended, we're on our ninth extension now, so this month has been three years of people not having to make a student loan payment. And somehow, through our grits and just finding the right pockets of users, we've been able to continue to grow from zero to over 150,000 users. But it's been tough. It's really been tough, especially with the VC market that's going on right now. And we raised a nice round last year, and so, it's trying to make that last. It's been a grind. It's been a grind, for sure.
Clint Betts
Yeah. Let me ask you this, since you brought it up, how did the Silicon Valley Bank stuff affect you?
Tony Aguilar
So luckily, we weren't impacted directly by the SVB situation. Our payroll provider uses their pipes, so I think our payroll is delayed one or two days. But we bank with another provider. So luckily, we were not impacted. But I will say, I felt like a therapist the entire week, that entire weekend. Because so many of our friends that are founders had their money tied up.
And then, it was interesting also being here in Austin. They're in SXSW. So you see people at the happy hours in the events, smiling, trying to have a good time, but then, turning away really quick and you know they're dealing with the situation of "Where's our money? Are we going to get it back? What's going on?" And so, it was really just being a mentor, just an ear for a lot of founders who were actually dealing with it. It was pretty scary. It was a tough couple days for founders that were directly impacted.
Clint Betts
Man, it was a crazy time. That whole weekend was wild. And then, you get to Monday, and it's like, "oh, you're all right." That was weird.
Tony Aguilar
"It's all back." It was like a fire drill almost.
Clint Betts
Right. Crazy. I want to touch on something that you mentioned previously around the Feds have made it so no one has to pay back student loans right now. Am I right about that?
Tony Aguilar
Federal loans, which is 95, 96% of the bulk of student loans, so nobody has to make a payment. And also, interest is not accumulating, which is what's really made student loans a balloon over the last 10, 15 years.
Clint Betts
So how long does that go on? Is that sustainable?
Tony Aguilar
I'm not going to predict anything anymore. I've predicted payments resuming for the last year and a half, two years, and I've been wrong every single time. But it's good. It's what's needed right now for consumers, for people with student debt, especially with inflation, the cost of expenses going up, all the other things we're dealing with in the workforce. It's what's needed right now.
What feels like what's going to happen is, on February 28th, the Supreme Court heard a case regarding debt relief that President Biden announced in the fall of last year. And based on when that ruling is made, which we expect it to be in June or late June, early July, repayment is supposed to start 60 days after that. So we're looking at August, September of when payments would resume again.
And so, that's what we're planning for. That's when we expect it to all happen and everything to come back to normal regarding student loans. But if you ask my confidence of like, "is that exactly what's going to happen?" It's a coin flip right now. It's 50/50. We really have no idea when payments are actually going to start, it’s tough to run a business when you don't know when it's happening.
Clint Betts
Yeah, I wonder, obviously, Washington doesn't take into account everything, kind of like the effects that they have may be unintentional or intentional, but that is a crazy thing to be in your business and just having like, "oh, nobody has to do anything for a while." That's pretty crazy.
Tony Aguilar
Yep. Our VCs, they're like everyone's facing challenges right now. Everything that's going on, it's tough. But for you guys, it's been a tougher journey for us. Our goal post continues to change, but luckily, we have an amazing group of investors who really believe in our mission and are going to be around to help us see this vision through.
Clint Betts
What was it like to raise money for all this? And who did you raise from? And did you raise in Austin? I'd love to hear about that experience.
Tony Aguilar
Yeah, so we raised a $5.6 million seed round last year. Our leads were Freestyle Capital, so love Dave and the team out there in Silicon Valley. Propel Ventures, also in San Francisco, big FinTech focus fund. And Slauson & Co, I'll say it's the number one fund right now for minority and women founders solving problems for underrepresented communities. And they're based out of LA. So those are the bulk of our investors.
But we also had incredible founders, like John Henry from LOOP, Craig Lewis from Gig Wage, Ethan Bloch, founder of Digit. So not only did we get the mix of VCs that we wanted, but we also had incredible founders. And obviously, a lot of our previous investors use a pro rata to continue to support us. And a lot of that is in Austin. So a lot of our angels, like Capital Factory, invested twice in Chipper. We have a lot of support locally as well.
Clint Betts
Yeah. Tell me, I know you do a lot of work around underrepresented communities, particularly the Hispanic community and other kinds of minorities. Why is that so important to you? And how do we, and the collective "we," and anyone who's in tech or business kind of support that?
Tony Aguilar
Yeah, the reason it's near and dear to me is because I've faced the challenges of trying to raise capital from traditional VCs. I didn't go through the typical routes of being an engineer or being in the tech community. I came from financial advising with an idea for a financial product that turned into a technology company. So I didn't have the network. I didn't have the connections to get into VCs. So with Student Loan Genius, I had 59 nos before I had my first institutional investor invest.
And I know that's the challenge that a lot of people, who have amazing ideas, that are solving problems for millions of people in the country, are facing, like, "Hey, I need capital in order to get this off the ground." And so, trying to be a mentor, trying to make those connections, trying to do everything I can to help these founders save time really and advance their business as quickly as possible, that's really my goal. I love to say, as I climb my pool, so every single rung that I'm going up or every level of that mountain, I'm trying to bring the entire community with me.
Your second question around what could the community be doing—I think we saw what happened, I think, post-George Floyd and the movement that happened with VCs and other funds coming out and everyone trying to get involved to start to help more minority and women founders, that was incredible to see. So I feel like that was a nice rush of 18, 24 months of Black and brown founders getting 2 or 3x the amount of capital they were getting before.
But what we saw this past year is the numbers that are being invested into Latino and Black founders is back to pre-pandemic levels. And so, as things get tough, it feels like VCs are getting back into the playbook that they have.
And so, the excitement, the momentum, the stats and reports that every organization was printing, as they were making those investments, I want that to continue, so they can see what's actually happening right now. Because we're feeling it. And that's the conversation that's happening internally with other founders and accelerators around the country of, "What could we be doing differently?" It's not like there's less deal flow. It's not like the ideas are there, but the amount of funding is shrinking at a dramatic pace. And I feel like we may be less than pre-pandemic levels after we see the numbers for 2023.
Clint Betts
What's going on in Austin? The growth of Austin has been unbelievable. I live in Utah, and the growth here has been crazy. But Austin is like, it's transformed. It's a whole different place. Can you talk about the startup and tech ecosystem in Austin and how that's changed?
Tony Aguilar
Absolutely. So I've been in Austin since 2008, so I've seen this. Obviously, it's been growing since the early 2000s with the tech boom then. But to see it grow from 2008 to what it is today and then, being a part of Capital Factory and really just the center of gravity for technology here in Austin, it's been amazing. It's, I think, great for founders in one sense, where you're having a ton of people moving to Austin. So the talent pool is here. There's a lot of more collaboration going on.
You're starting to see more VCs coming to town, more capital is kind of flowing through. And one of the biggest gaps we had in Austin was getting that seed round, getting that post-angel, pre-Series A, that was the biggest gap that we saw over the last five or six years. But that's now starting to get filled, which is fantastic. That means more ideas are coming out and getting tested, and hopefully, we'll start to see the lagging indicators of that over the next couple of years.
But in addition to that, you also have huge corporations coming. Oracle moved their headquarters here. Tesla's in town. HP. There are so many companies that have come and started to build bigger offices. Amazon. And although that's great for Austin as a whole, it's also been challenging as a founder, as a startup, to acquire talent, because now you're competing against those salaries. And so, we faced it after our seed round of trying to build our engineering team and the rest of our team. It's like, now you're dealing with a lot of these organizations who can pay top dollar, and in most cases, startups can't do that. And so, you see the good and bad of what's happening in the technology space.
But overall, it's fun. It's exciting to be here. We're not leaving anytime soon. We have three kids. Austin's going to be home for at least the next like 15, 16 years.
Clint Betts
Well, it's just such a great, incredible city. And Sixth Street is really cool. Do you ever get lost on Sixth Street late at night?
Tony Aguilar
Not as much as I used to. That's for sure. It's like I want to enjoy my weekends now. If I go do that, I'm out till Monday.
Clint Betts
Oh yeah, for sure. For sure.
Tony Aguilar
But it is fun. You drive downtown, and it's like, "when did this high rise go up? I haven't been downtown in three weeks, and a whole new skyscraper is getting built." So it's awesome.
Clint Betts
Yeah, it's unbelievable the growth of Austin. And the growth of a lot of places outside of Silicon Valley has been incredible. And I do think COVID accelerated that to a pretty insane extent. I wonder what your thoughts are on the future of education. How do you think we're going to be learning 10 years from now? Why don't we all just get degrees on ChatGPT 4?
Tony Aguilar
We should. I hope that we can. I was actually, my daughter's starting her first business, she's nine. And so, we were getting content ideas using ChatGPT yesterday. She's like, "this is amazing." And I was "Uh-oh." I'm just interested to see how they're going to use it. Are they just going to be copying what's on there? I'm excited to monitor how she uses that technology. But the future of education is definitely changing.
However, the universities and the public institutions still have a stronghold on our education system. A lot of careers, a lot of jobs still require a bachelor's degree or master's degree or that's like the first thing they're looking for before they hire anybody. So depending on which industry you're going in, getting a formal education is still going to be part of the process to get educated, but we've seen some big organizations like Google and a few Fortune 500s, who have said, "We're not requiring a college degree anymore to hire somebody."
And so, I'm hoping that kind of catches and we can have people start to take more online courses, certifications, and not have to go through the traditional four year university process and take a lot of classes that you're never going to apply, that you don't really want to take, but you're having to pay for, and especially if you're pulling out student debt for that. And so, I think we're going to definitely move to more of a virtual online educational system. Schools need to get more innovative in looking at the future of what kind of skill they need to provide their students, so that they can actually go into the workforce and be successful. And I'm hoping that will help alleviate some of the cost.
We've seen tuition skyrocket 7% a year almost consistently over the last 15 years. I'm hoping that that's going to get pulled back, because people aren't going to be having to take a lot of electives and additional classes. Because they're just taking core focus classes online.
And as you know, right now, we're seeing just so many changes in technology and innovation happening for jobs, whether it's design, ChatGPT stuff, or content writing. Things are moving so rapidly. I believe we're going to also have employers really start to connect with a bunch of universities and just continue to just increase the education within their organizations. So instead of having people go to get an MBA or go to a university, they'll be able to start to provide the classes and certifications internally and really control that more. And hopefully, that also reduces the cost and prevents people from going into student loan debt.
Clint Betts
Yeah. I wonder how AI is going to change Chipper. Well, how are you thinking about integrating this technology? I think everybody's going to be an AI company, to some extent.
Tony Aguilar
Absolutely. We've already started a test, ChatGPT, AI, whatever you want to call it, in a couple different ways. One is just from a content perspective. There is so much confusion and knowledge that needs to be shared around student debt. And being a startup, having limited resources, we can't afford to hire multiple writers to write all the content that we want. And so, we've started to test out different content strategies and essays, social posts, blogs, just to see how accurate it is, because also we don't want to be giving out the wrong information.
And so, it's not where we need it to be yet. But for certain types of content that we need for our website or for social, it does an amazing job. But also, to just get brainstorming going as well. We're also going to be testing out soon, we had a discussion about this last week about testing out a ChatGPT. Or within our chat bot, within the Chipper app, they have a new AI integration, where it could essentially take over your support. So instead of having a person having to message all the users coming in, based off the questions, they could read it and provide an accurate reply for whatever question, whether it's a technical issue or an actual student loan issue.
So we're starting to put that in place and start to test it and make it better. And so, that's the first two use cases right now. As we look into the future, I'm not sure yet, we haven't thought that far. I think we're waiting for payments to resume before we really start to look at, what does our product roadmap look like integrating AI?
Clint Betts
Oh yeah, the payments thing and the just total pause, I can't even imagine being in your shoes, running that business, and the federal government was like, "Hey, we're just putting that on hold for years. Just take it easy."
Tony Aguilar
It's like "another six months." "Oh, okay. All right. So board and investors, the plan that we had, we're going to nix that, and here's what the next six months looks like."
Clint Betts
That is crazy actually to think about. Finally, I ask everybody this question at the end. Because at CEO.com, we believe chances given are just as good, if not better, than chances taken. So the chances you take on yourself, but the chances you give to others are incredible. I'd love to hear from you on somebody or something that gave you a chance.
Tony Aguilar
Yeah. First of all, I would say my father. One of my favorite quotes ever is from Jimmy Valvano. He said, "My dad gave me the greatest gift you could ever give another person, and it is that he believed in me." And so, big shout out to my dad for being the biggest believer in my dreams and everything that I'm doing today. He sacrificed so much to make it all happen. And so, if it wasn't for that and that support, I don't know where I'd be.
Also, I'd love to give a shout out to Capital Factory here in Austin. Like I mentioned, going from a financial advisor to the technology space, which is on the opposite spectrum of innovation, I had no idea what I was doing when I was getting into tech. And I found a home at Capital Factory, where I like to say you can get an MBA in startups in three months, just by being there, meeting with all the mentors, and everything they do to support first time founders, or founders in general, but definitely first time founders, to just really learn how do you do all this stuff? How do you build tech? How do you hire a team? How do you raise capital?" If it wasn't for them, I definitely wouldn't be here today.
So big shout out to Josh Baer and the entire team there.
And lastly, you can work as hard as you want. You can have the best ideas, but you can't do it alone. And I've had two mentors, who have really been there with me the entire way. They've really been coaches of life, not just in business and startups, but really, "How do you balance this, while also having a family, while also taking care of your health, and all the challenges that I face over the last couple years?" So if it wasn't for them to bounce ideas off, to get feedback, to let me cry and vent, I definitely wouldn't be here today.
Clint Betts
That's beautiful, man. You've built something incredible, and man, Capital Factory really is the hub of Austin. The amount of energy you feel, I've been there a couple times, it's an incredible, incredible place and a real gem, I don't see that replicated anywhere else. It's pretty unique.
Tony Aguilar
Yeah, that's one thing I love about Austin too. I feel like Austin is a place where, if you need help, if you're asking for something, the community in Austin as a whole, but definitely within the tech community, is willing to do everything they can to help you succeed. And I think Josh and the team there have really capitalized on that and the culture of Austin to make it what it is today. But hey, you guys are doing great things out in Utah too. We hear about it. I haven't seen it in a while. I haven't been out there in a couple years, but we hear the buzz. It sounds like you guys are next.
Clint Betts
Come on out. We got a big event coming up in September. I'll send you tickets.
Tony, thank you so much for coming on. So incredible to talk to you and learn how you built Chipper. We'll see you down the line, my friend.
Tony Aguilar
Hey, it's great to meet you. Thanks for having me on.