Interview with Michael Aleles, Quippi

Story by Benjamin F. Kuo


Southern California in recent years has become a hotbed of financial startups, and for years has been a destination for companies looking also to address companies across the border in Mexico and Latin America. One of the startups here at the intersection of both, is San Diego's Quippi ( Quippi offers up the ability for consumers here to purchase gift cards--not for U.S. retailers, but instead, for Mexican reatilers like Office Depot Mexico, Farmacias Benavides, Farma Todo, and Opticas Devlyn. We caught up with CEO Michael Aleles to learn more about the company and its quest to serve consumers in what has been a consumer unfriendly market.

What is Quippi all about?

Michael Aleles: What we do, is we sell gift cards on behalf of international retailers. We sell those gift cards in the United States, providing consumer immigrants with an alternative to the traditional, money transfer services. We sell those gift cards on behalf of major retail brands in Mexico, who have brand awareness from immigrant customers in the U.S., but no other brand presence here. We let them buy gifts cards, in a similar way to how you might go to the local drugstore and buy a gift card here. We do exactly the same thing, but for brands across the border.

Can you talk more about the money transfer service problem and why people would want to buy gift cards for Mexican brands here?

Michael Aleles: We started the company with the basic hypothesis of providing a financial service to immigrant consumers, without charging fees. There's no commission, no ffees, and no exchange rate. Instead, we charge the issuer of the gift card a fee, because we're sending business their way. It's the same analog as you walking into a local drugstore here, and buying a gift card for Gap. You pay face value, because Gap is paying a fee, because they know that when you buy a gift card you'll be walking in their door later. We do the same thing across the border. Our customers know those brands, because they used to shop there, and their families still shop there. We are leveraging brand awareness and familiarity, and providing a way for those consumers to help support their families back home.

How did you get into this?

Michael Aleles: My career has had two facets. Half of the time I had been in Silicon Valley, and half of the time, I had been in Latin America. The ideal mix of those two is where I have spent my carrier. I lived and worked in Latin America for ten years, and saw first hand how working class consumers really get abused by financial services. If you look at the way working consumers use financial services, you see payday loans, prepaid credit cards, money transfer, and check cashing services--all of which include very high fees. Our approach, was to build services which didn't charge any fee. That was really one of the missions of our company, to act for the social benefit of consumers. It would have been very easy to layer fees on what we do, like everyone else does, but we did not. Our true mission is to give the consumer value where no one else does.

How is your company funded?

Michael Aleles: We raised our Series A last year. The round was led by Avalon Ventures, and we also had participation from Acciom Venture Lab, a socially responsible venture fund out of Washington, D.C. We also have several, high net work Mexican individuals invested in our company. That's been a great door opener to the brands we work with in Mexico. Today, we are working with six brands in Mexico, all national retail chains. We have a department store, supermarket chain, pharmacy chain, electronics chain, and an optical chain. We're adding more every day. Those Mexican investors were really key in providing the relationships to get those brands on board.

What are the biggest challenges for your business?

Michael Aleles: Most of our customers and recipients are not very technology savvy. So, the service as it is doesn't need you to understand technology in order to use it. However, technology is what allows us to do what we do. You don't need technology to use the service. To reach this audience, which is an audience which is not as familiar with the app economy as you or I might be, you've got to tailor that service to the consumer, and meet the challenge of reaching that audience.

Your service is currently aimed at Mexico, but we imagine is applicable to all of Latin America, and elsewhere. How are you planning to address other markets?

Michael Aleles: We absolutely plan to address other countries. However, Mexico is by far the largest destination for consumer dollars from the U.S., and for people who are sending cash, money, and helping to support their families overseas. It is a more than 23 billion dollar business in moving money to Mexico. Mexico is our pilot market, and is also our largest market. Beyond that, there are several other countries in Latin America which are relevant, and this works between any two countries, anywhere where immigrants are supporting family in another country. We have very large expansion plans, however, Mexico is the largest destination for U.S. capitl. In fact, receiving cash is the second largest source of income and GDP in Mexico, and the only industry larger than remittance is the oil business.

As a cross border company, have you found it different operating with Mexican companies?

Michael Aleles: You have to adapt to the culture and the country in which you operate. Of course, at the end of the day, signing a contract with a Mexican partner is the same as signing a contract with a U.S. partner. However, how Mexican businesses operate is culturally different from U.S. businesses. That's been part of our advantage, is that we're a bicultural company. That's why we have our headquarters in San Diego, because it's a good place to do business with Mexico. Mexico is more accessible from here, than anywhere else in the U.S., and we use that to our advantage. Of course, there are clearly cultural adaptations we have had to make to operate in another country. You can't just fly in and expect things to work like they do here, they just don't.



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