Nico Simko: The Social Impact Fintech Empowering America’s Workforce

In the heart of New York City, a Fintech startup is on a mission to transform the lives of American workers. Clair, a trailblazing digital banking platform that empowers employees by offering fee-free access to their earnings at any time is led by two dynamic young Co-Founders; Nico Simko and Alex Kostecki.

At the core of Clair's groundbreaking approach is their On-Demand Pay product, seamlessly integrated into the digital and physical punch clocks of HR technology partners across the nation. With a simple clock-in and clock-out process, American workers gain control and immediate access to their hard-earned wages, liberating them from the shackles of traditional payroll cycles. This transformational feature has brought newfound financial confidence to the workforce, allowing employees to navigate life's challenges without delay.

Clair's reputation as a trusted player in the industry is underlined by its partnerships with leading HR tech companies, including notable names like When I Work and 7Shifts. Thousands of businesses across the United States have embraced Clair as a valuable employee benefit, affirming the platform's efficacy in fostering financial well-being among workers.

Recently, Clair achieved a momentous milestone by securing a remarkable $175 million in funding. This substantial influx of capital is made possible through a strategic partnership with national bank Pathward, enabling Clair to offer the first-ever free on-demand pay solution in the market. With this revolutionary financial model, front-line workers no longer need to wait for their paychecks, gaining the freedom to access their earnings every day.

As a Geneva native with a background in economics from Harvard, Nico's journey has taken him from the world of big finance firms, like J.P. Morgan, to the forefront of Fintech innovation. Through Clair, he champions the belief that financial well-being is a fundamental right, not a privilege reserved for a select few.

With an inclusive and equitable approach, Clair aims to transform the financial landscape for the better. Nico, Alex and their team are driven by a deep commitment to providing all workers, regardless of their background or income level, with the tools and resources needed to thrive in their financial goals. By doing so, Clair is not only revolutionizing the way people access their earnings but also creating a positive impact that rewrites the rules of financial accessibility for America's workforce.

With a mission-driven spirit, innovative technology, and a resolute belief in financial equality, Clair continues to lead the charge towards a brighter, more financially secure future for all. In an exclusive with Machinelab, Nico speaks with us about how the idea for Clair was born, the challenges he faced along the way and much more.

Nico, tell me a little about yourself and what inspired the launch of Clair...

I grew up in Geneva, Switzerland, and was born to a family of entrepreneurs; my grandfather exported rubber from Argentina and my parents ran a marketing agency in Geneva. I moved to the U.S. for college and studied economics at Harvard, where I was also on the fencing team. After college, I worked at J.P. Morgan, where I conducted due diligence on a lot of different Fintechs, which is where the idea for Clair came from.

While I was in college, I worked an hourly job, which ended up inspiring me to create Clair – but I didn’t realize it at the time. All I knew back then was that it was incredibly frustrating to wait weeks to receive my paycheck in the mail, and sometimes processing errors meant it took even longer to access my money. It made keeping up with my expenses hard enough as a college student trying to scrape together beer money on a budget, and it made me realize how difficult it must have been for hourly workers who were trying to support their entire families. 

It seemed silly to me that people couldn’t get paid as soon as they clocked out because, at that point, they’ve already done the work that earned the money, so they’re essentially providing a no-interest loan to their employers. Meanwhile, they can’t pay their bills because their rent is due on the first of the month but they might not get paid until the sixth.

After graduating, I dove into the world of big finance firms by starting my career at J.P. Morgan, where I worked on some deals involving ride share drivers. That helped me gain a deeper understanding of the Fintech space and the massive hurdles to financial stability that front-line workers are facing. One example we encounter all the time when talking to Clair customers and their employers is: if you run out of gas money and can’t get to work to earn more, what options do you have?You’re unfortunately caught in a catch-22 that can lead to deep debt, homelessness or other traumatic circumstances. 

Sadly, more than half of Americans live paycheck to paycheck and have less than $500 in savings, meaning surprise expenses can drag even the most hardworking employees into vicious debt cycles. One car accident, emergency room visit or higher-than-usual utility bill is enough to cause a butterfly effect that could make a negative impact for years to come, once you add up all the late fees, overdraft fees and high interest rates. Many people resort to taking out payday loans from predatory lenders that charge up to 600% APR, maxing out several credit cards, or borrowing money from family and friends. None of those options are good ones.

Can you explain how Clair's On-Demand Pay product works and how it benefits American workers?

At Clair, we’ve created the first workplace-connected banking app that allows any employee to get paid as soon as they clock out. Plus, instead of using a bank that charges overdraft fees and requires minimum balances, workers using Clair enjoy perks like a high-yield savings account and cash back on gas. The majority of our customers are GenZ-ers and millennials who are trying to create bright financial futures, even though they’re operating in a way tougher economy than their parents and grandparents faced at their age. Using Clair is easier than creating a TikTok video, and involves less dancing – all workers have to do is download the Clair app for iOS or Android and connect their direct deposit. As soon as they finish a shift, the money they earned will show up in the app and they can tap to receive it early.

‍What challenges did you face in convincing businesses to adopt Clair as a valuable employee benefit?‍

It hasn’t been too difficult because we see it as a win-win and businesses tend to understand that pretty quickly. Employees win because they can access their money when they finish work and pay their bills on time. Their employers win because happy, healthy employees are productive employees. Our research has found that workers who use Clair pick up 15% more shifts and stay employed for 25% longer. Whether they sign up through our HR platform partners or directly through the Clair for Employers offering that we recently launched, it is completely free for businesses. Plus, onboarding is super easy, with no ongoing maintenance. We do all the work for you, from connecting to your company’s payroll to educating your employees on how to use the app!

In recent months, the front-line worker shortage has created a sense of urgency, as employers are doing everything they can to attract and retain workers. Their businesses can’t run without great people to do the work, and studies have shown that workers value and appreciate financial wellness benefits like Clair. If onboarding to Clair, which is free and easy, helps you hire a stellar new employee or keep your current team around longer, it more than pays for itself. The toughest part is breaking through to HR and finance teams who are juggling a million tools, tasks and emails. But once we get their attention, it’s easy to convey the value and get them to understand why they should give Clair a chance. They’ve got nothing to lose.‍

Can you share some success stories or feedback from businesses and workers who have utilized Clair's services?‍

We’re proud to say that Clair has helped more than 50,000 employees and it’s available through 10,000 employers and a dozen workforce management platforms, including Humanity Scheduling, When I Work, 7shifts and more. Hearing workers’ and employers’ heartbreaking pain points and then seeing how Clair helps them eliminate these issues is the most rewarding part of my job. 

Especially after gas prices rose to alarming prices this year, we often hear that business owners must give their workers gas money, just so they can get to and from work. One entrepreneur told us that she was spending her own time meeting her teammates at the gas station, so she can charge their fuel on her credit card. We’ve also heard from several people that many front-line workers have resorted to donating plasma to make ends meet since most donation centers provide compensation. One of my favorite stories is from a senior living facility where employees were quitting after less than ten weeks on the job. After we rolled out Clair, employees started staying for at least 30% longer, with some staying far longer than that. It’s a meaningful difference for them.‍

How does Clair differentiate itself from other digital banking platforms and on-demand pay solutions in the market?‍

Other on-demand pay providers charge fees – sometimes disguised as “optional tips” – to workers or their employers for on-demand pay, then move the money to a bank account where customers are charged even more fees. It’s just fees on fees on fees, which is absurd. The industry operates that way because other providers are incentivized to encourage employees to borrow more money since that’s how the providers earn revenue. We decided to do things differently, so Clair doesn’t make money when employees take wage advances because we only earn money from merchants when our customers spend on their Clair Mastercard debit cards. That means we’re incentivized to help customers save and spend responsibly. And data shows we’ve been doing just that – Clair has provided over $10 million in free advances to employees, and our customers take fewer advances over time as their financial situations stabilize. 

Clair is also unique because of our partnership with Pathward, N.A., a national bank. Pathward provides the advances to employees, which are properly regulated. Other on-demand pay providers lend to customers from their own balance sheets, which is unregulated lending, so they risk being non-compliant with different states’ regulations. That could mean their customers might have trouble accessing their money in the future, which would be a disaster.‍

What measures does Clair take to promote financial inclusion and equity among its users?‍

Financial inclusion is part of our mission and we believe everyone deserves access to valuable,easy-to-use banking accounts and money management tools. Most of our customers earn less than $60,000 a year, so big banks aren’t interested in building products for them because they’re not going to bring in the most lifetime revenue. But the underserved, underbanked workers that we focus on helping are the ones who need easy-to-use financial resources more than anyone. They can’t improve their financial well-being without the right support.

‍How do you envision the future of Clair and its impact on America's workforce?‍

Our goal is for every front-line worker in the country to be able to use Clair. We hope it helps end the worker shortage, as the companies offering Clair can hire and retain the workers they need to run their businesses and it becomes an in-demand employee benefit across the country. We’d also love for our work to spark a conversation about why we’re still using an antiquated twice-a-month payroll system that doesn’t really work for anyone.‍

As an entrepreneur, what are some of the most valuable lessons you have learned throughout your journey with Clair?‍

“Move fast, break things” has been a common motto in startups for years but that doesn’t work so well for highly regulated industries. Don’t be afraid to invest upfront in something that positions your business for long-term success, even if it means you can’t scale as quickly in the beginning. From the start, we wanted Clair to be able to serve people and companies nationwide. But to do that, we had to get licensed in all 50 states, which was a big lift for our team. While it wasn’t the easiest journey, we feel confident that it was the right choice, as we’re seeing the current regulatory turmoil in the Fintech industry affecting other companies’ business models. ‍

What advice would you give to aspiring entrepreneurs who are just starting their own ventures?‍

Focus on your mission and values above all else. As an entrepreneur, you might be tempted to laser-focus on your company’s capital. But I believe that hiring a thoughtful, stellar team that believes in your mission and aligns with your values is the root of success. That team is what will drive the capital you’re looking for.‍

What are some key qualities or skills you believe are essential for entrepreneurs to succeed?

‍I think focus, tenacity, and adaptability are critical. You can’t solve 10 problems at once, but you can solve them one at a time if you’re tenacious and are willing to learn whatever skills are needed to get the job done. ‍

Is there anything you're currently working on that you'd like to share with us?‍

With legislators cracking down with new earned wage access regulations in states like Missouri, Nevada, California and more, we’re making sure Clair is active in these regulatory conversations about new and proposed legislation. We believe EWA is lending, so lending regulations should apply. I’m constantly flying to D.C. and around the country to meet with Congress people and other lawmakers to discuss the best way forward, so that’s been really eye-opening. As an immigrant to the US, I never thought this was the way I’d learn about American laws and government! ‍

What is your one guiding principle in both life and work?‍

Happiness is a function of expectations over reality. I try to keep my expectations reasonable so that I don’t get disappointed when things don’t go our way. On the long road to building a category-defining Fintech business, we frequently face disappointing challenges – but we’re making strong progress every day.

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Photos courtesy of: Clair