The American social safety net is in tatters—and Kristen Tyrrell is working to rebuild it.

Tyrrell is the Founder & COO at Catch, a tech startup that offers savings, investment, and insurance solutions to workers without access to employer benefits. The company recently raised a $5.1M Seed round led by Khosla Ventures, Nyca Partners, and Kindred Ventures.

Catch currently serves 20,000 users, who deposit savings (on average) five times per month. They use the app to deposit between 25-30% of each paycheck, resulting in an average savings balance of about $2000.

"The simplest answer to the question, 'Why are you the right people to solve this problem?' is that we're doing it"

Previously, she worked with Commonwealth to design and scale innovative savings products that today serve more than 80 million consumers. She also helped launch one of the first student loan repayment SaaS benefits platforms.

Dan Kahn leads the Bank Integrations team at Plaid, where he helps financial institutions power data access and open banking initiatives. (article continues below)

courtesy of Kristen Tyrrell

The world, upside down.

DK: What drew you to this work?

I came to Catch with the idea that the benefits world was upside down. This idea that employers were the distribution point for the social safety net felt really outdated. Everything from tax withholding to health insurance to 401(k)s.

It was a classic story of regulation, where laws and rules are pieced together in an ad hoc way, and then everyone forgets that it wasn't really on purpose. We just throw up our hands and decide that's the system we have now.

"At a 50,000-foot level, we're rebuilding the safety net. That’s because, fundamentally, we believe the safety net should sit with an individual, not with a company."

We're a pretty unusual country in that we look at HR as a central distribution point for things like insurance and retirement savings. These were formerly standalone products, but that’s changed over the past 50+ years.

I joined up with my co-founder Andrew, who had built the prototype for Catch. At that time, he was a freelancer who was living these problems. He felt that figuring out all of this tax stuff and retirement stuff was actually the hardest part of his job.

DK: Why are you the right person to solve these problems?

KT: The simplest answer to the question, "Why are you the right people to solve this problem?" is that we're doing it.

There are so many important unsolved problems out there, and sometimes people put too much pressure on questions like “are you the right person?” “do you have the right credentials?” and “did you work at Google?” Ultimately, if you think you have the solution, then you're probably the right person to work on it.

DK: Talk about your background.

KT: I majored in math and economics at Pepperdine. I went to graduate school after that, because the economy was in the garbage. I did a master's in London and Shanghai, and started my career in consulting.

From consulting, I moved to a firm called Commonwealth, formerly D2D Fund. We built and scaled financial products and services for the underserved. It was great to enter fintech with a group of people who were so exceptionally focused on mission.

"More and more traditional W2 rolls are going contract. For example, the number of 1099s at Google is now larger than the number of W2s. And it's not just janitorial and food-service staff. Those are contractors they bring in for design, product, and specific engineering jobs."

It helped me understand the importance of building things that actually are good for people. Products that solve problems, products that align positive outcomes for the company with positive outcomes for the consumer.

I ran an accelerator in London for a bit. Then I was the first hire at a startup called FutureFuel. We did student debt repayment as an employer-led benefit; that's what got me into the benefits space. (article continues below)

Catch co-founders Andrew Ambrosino and Kristen Tyrrell

Like Gusto, but for benefits.

DK: What are the core problems that you're solving with Catch?

KT: At a 50,000-foot level, we're rebuilding the safety net. That’s because, fundamentally, we believe the safety net should sit with an individual, not with a company.

There are three types of products that make up the safety net: savings, investment and insurance. We’ve built our MVP to address one item in each of those buckets.

"It helped me understand the importance of building things that actually are good for people. Products that solve problems, products that align positive outcomes for the company with positive outcomes for the consumer."

For savings, we're looking at tax withholding. For people who receive 1099s and don't have taxes automatically withheld from each paycheck, we built a tool to set aside that money every time you get paid. That way you don't find yourself $20,000 in the hole when it comes time to pay your taxes.

For investing, we started with retirement. That's one of the most important products to get right, because it has to do with end-of-life planning, how you think about your future, and making sure you have enough money for when you're not earning income.

In the insurance bucket, we started with health insurance. That’s because health insurance is both a legal requirement and one that you can’t afford to get wrong. It's easy to say, "That'll never happen to me", but that's of course, the famous last words of everyone who's ever had a health emergency.

Going forward, we’re looking to build out the products into a benefits platform, kind of like what Gusto has done for small businesses. We want the individual to have all these different pieces in one place, where they can set them up and manage them in an automated way.

DK: What do your users have in common?

KT: The biggest similarity we see among our users is the volatility in their income. They are freelancers, contractors, gig workers—this sort of alternative work force. Some will earn $25,000 and then won’t get paid for a couple of months. Others are earning small checks every couple of days from different platforms: Uber, Lyft, TaskRabbit, Thumbtack.

Both scenarios make it difficult to manage your finances on a time horizon. What we’ve done is built a tool to help our users manage that volatility. Every time they get paid, a certain percentage—which the user specifies, and which we help them estimate—is automatically withheld toward goals like taxes, retirement, and time off.

Our current users set aside an average of about 25% of each paycheck with us. They might set aside 20% for taxes, 5% for retirement, and 3% for time off. We want to make sure they know exactly what’s going to happen, and that they feel very comfortable with it, because a quarter of your paycheck is a very meaningful number.

DK: Do you think you might eventually develop a way for a freelancer to press a button and send that money to the IRS once a quarter?

KT: Yes. There’s a product on our roadmap—tentatively titled e-file—that allows you to send money directly to the government when you’re filing quarterly taxes. It’s actually not that difficult; it’s just a matter of getting there.

DK: How’s it going with the company so far? Talk about your progress.

KT: It’s been less than a year, and we already have 20,000 users who are moving money on the platform, saving for retirement. We’ve moved several million dollars of money moving through the platform. We’ve processed almost 10 million dollars’ worth of paychecks.

We're still very much in the early stages, but now we are starting to get a better idea of how users behave when they come on the platform. We’re also learning more about how we can nudge them to save more money, and to save for the right things. (article continues below)

courtesy of Kristen Tyrrell

Right-sizing an MVP.

DK: What is the biggest challenge you’re facing?

We’re building a benefits platform that's trying to recreate a safety net. So one of our most interesting questions has been, how do you create an MVP for that? How do you bite-size that MVP and move things forward?

The problem is that you can't just put out the first feature. Then you’re not proving the platform; you’re just proving the feature. We solved that problem by launching our first two features at once: savings for tax and time off. Both were cash-related.

Catch currently serves 20,000 users, who deposit savings (on average) five times per month. They use the app to deposit between 25-30% of each paycheck, resulting in an average savings balance of about $2000.

We recently added a benefits checkup, which helps people understand the benefits landscape. Through it, they can access the health insurance marketplace to see what plans are available; we also help them determine which plan might be a good fit for them.

That piece that I mentioned that we're missing, this health insurance integration, is a really exciting way to be able to directly enroll in a plan through our platform, rather than having to go out to something like healthcare.gov, or one of those other marketplaces. That goes live this year.

DK: Talk about going through Y Combinator. What did you learn?

KT: Y Combinator is an amazing program because it was built for founders. If you look at what they do, a lot of the purpose behind it is to shift the power dynamic in favor of founders—and that’s an incredible opportunity, especially for first-time founders like Andrew and myself.

If you don’t have a “traditional” background, if you didn’t go to Stanford and work at Facebook—these are things that can make it harder for a venture capitalist to say yes. One of the things we’ve always joked about is that no VC will ever get fired for giving a check to a Stanford grad.

And that's great if you went to Stanford. That's really awesome for you. But not everyone has that leeway, that space to explore. Not everyone has that robust network that’s built out from early credentialing. And I think Y Combinator is trying to be an antidote to that. They do their selection based on the quality and caliber of the solution that you've put forward.

DK: How do you think the economy will change over the next couple of decades? Especially for those who are not in a traditional salaried role?

KT: More and more traditional W2 rolls are going contract. For example, the number of 1099s at Google is now larger than the number of W2s. And it's not just janitorial and food-service staff. Those are contractors they bring in for design, product, and specific engineering jobs.

These structural changes go all the way down to education; in fact they kind of start there. Look at coding bootcamps, the income-sharing agreements. Rather than take on $100,000 of student debt, you agree to pay a share of your first-year income. The result is a more flexible, more attainable education, and incentives that are aligned between school and student.

There is much better recognition now that the things you learn in college are probably not the things you need to know in your career when you're 40 or 50—just because of how quickly the economy is changing.

DK: Could you see building out your offering to reach a more underserved population?

KT: We have a lot of people on our platform earning $20,000 to $30,000 per year. Which is to say, I think we’re already reaching a lot of people on the lower rungs of the income ladder. You can especially see that in our retirement offering. People who deliver for DoorDash may get a $50 paycheck, and they'll put aside like three dollars for retirement.

Most other platforms don’t look at that market because they don't think it's profitable. We do. The important thing is that we have a business model with different functional elements, so we're not dependent on millennials earning $150,000 a year.

The future of fintech.

DK: Talk about being a woman founder.

KT: It’s true: there are not many female founders in fintech. There are some, and I hope eventually there will be more.

Up until now, we’ve seen a glut of technology around entertainment and video games. Then it was services innovation: things like DoorDash and Rinse. I think now we’re finally entering this new stage of technology, where we innovate around old processes, things that are standing in people’s way. And I think you’ll see a lot more women founders entering that space.

"We’re entering this new stage of technology, where we innovate around things that are standing in people’s way. And I think you’ll see a lot more women founders entering that space."

In this new category—the highly regulated startup in an industry like healthcare or finance—the skills that women bring to tech will dominate. It’s an ability to think beyond technology and build collaborative infrastructure. The other day, someone from Uber was telling me how regulated their space is, and I just laughed. I was like, "We work with health insurance. You have no idea."

As a woman in fintech, I have never felt explicit bias toward anything I’ve tried to do. The bigger problem is the unintentional stuff. Statistics show that men interrupt women; women interrupt women. It creates the expectation that women are more likely to get interrupted; it normalizes it. The result is that women don’t have the same ability to be heard and get their ideas out there.

On an individual level, it’s important that we call out those moments. Zoomed out, I honestly don’t know how you fight those trends. But it’s important that we do it, that we get better at this. As we enter the third wave of tech, you need a diversity of thought, of lived experience, to create solutions to these big challenges that are ambiguous and hard.

DK: What are the main differences between the Bay Area and Boston?

KT: Ha! I would refer you to my Twitter feed. I talk about this a fair amount.

Both cities have wonderful things to offer. In my experience, San Francisco has been more idealistic, which is both a positive and a negative. On the positive side, people are exceptionally welcoming; they are truly generous with their networks. Also, in San Francisco, people want to believe that what you’re trying is going to work. They’re like, “Let's make it happen."

"The baseline in Boston is skepticism and cynicism. People are like, 'This isn’t going to work, and let me tell you why.'"

The baseline in Boston is skepticism and cynicism. People are like, “This isn’t going to work, and let me tell you why.” And that can be really challenging as an early stage startup, because you're fighting so much on every side. Honestly, I think that that's how San Francisco has gotten to where it is. If you say it enough, if you really believe, sometimes it becomes true.

The upside of Boston is that people here are focused on doing things that matter. There’s a high bar for achievement, and exactly zero lip service given to big showy things that don’t deliver. It's that puritanical New England history. People are like, "Put your head down, do the work." I respect that because it's very humble—but also, it’s hard to fundraise like that.

DK: How do you see the fintech space evolving?

KT: Everyone talks about the PayPal mafia: the group of tech stars who got their chops at PayPal, and all the great things they’ve gone on to accomplish. But that was back in the 90s. I think we, as an industry, need to come together and create more mafias.

In the short term, it’s easy for fintechs to feel competitive with each other. But the long term has so much more potential than that. We want our people to go on and start companies and build on what we’ve done. Someone from Robinhood, someone from Catch, someone from Plaid. There is so much potential to get better outcomes for the consumer, because we all have such a depth of knowledge.