September 20, 2022
Michael Broughton is the founder and CEO of Altro. He founded Altro in 2019, following personal frustrations with access to credit and financial tools. Prior to Altro, Michael spent time in Venture Capital, scouting for Sequoia Capital and working with early stage startups such as - Madefor, working with Blake Mycosike on launching the brand, shipping first product and understanding consumer spending (starting as us 4 out of his office at Toms); to Launching DOAPKitchens product at unis and creating their University Program, with the program starting at USC and expanding to local universities. Michael currently sits on the board of a ~900M Credit Union, turning from a board member to Vice Chairman in the past 4 years. He now spends his time in consumer finance, investing/advising companies such as Burst, StreetFins, LendMe, Of All Trades, Barcode, and others. Altro, since inception, has raised over $20M and grown its team across the United States. Altro aims to serve the 86M Americans who do not have access to finance.
Julian: [00:00:00] Hey everyone. Thank you for joining the behind company lines podcast. We are here, here with Michael Brownton. CEO of Altro Altro is a platform that helps people build credit through nontraditional data. Michael, thank you so much for joining the show. I'm really excited to dive into your background and, and what you're doing at Altro and and get into all that fun stuff.
But you know, jumping in right now, what were you doing before you started Altro?
Michael: Yeah. No, that's a great question and appreciate you for having me on the. Before Altro I was in college, actually, I was going through my sophomore year. I believe of college at the time. Funny enough, the story of Altro originated from my struggles of getting through college and actually, you know, getting a loan for college.
Yeah. So after that frustration, I ended up going from going to classes to focusing on the company
Julian: a little bit more. yeah. What, what frustrations were you dealing with in. .
Michael: Yeah. I came from a pretty big family. I was fortunate enough to be one of the first people in my family to go to a big school like USC.
And [00:01:00] didn't realize that this came with a heavy bill on it. You know, I got accepted, I was super excited then realized that I owed $10,000 on my tuition. Yeah. And didn't really know what to do, right. Yeah. So after looking at every single loan possibility out there and getting denied to. I realized that, you know, it was really hard for me to get the financial tools needed to actually start my college journey.
Not a single person actually approved me for a loan for the $10,000 deficit I had.
Julian: Wow. So, I mean, not to dive into too much personal topic, but where did you end up getting the finances you needed? If, if you weren't able to get approved for alum,
Michael: you know what I called the university every. Until they paid for my tuition for it.
So, wow. I still know the number by heart at USC I don't know if that's a good, interesting factor or not, but I called them literally every day until USC helped me out of the hole. But if it wasn't for that persistence, you know, I was in a situation, even my, even my classes were locked. Right. I can sign up for classes.
[00:02:00] So, you know, luckily I got out of the situation, but I can only imagine how many other. I've been in that situation, didn't start calling because of it.
Julian: Yeah. And, and was, was credit the biggest the biggest factor that, you know, these lenders wouldn't accept you and, and lend you money to, to pay for your classes?
Michael: I, I had no credit, right. Like I never had credit card. I, you know, I didn't really know what I was doing. And because there was no way to identify whether or not I was a good. Banks and financial institutions would rather say, you know, we'll push them aside than actually help them out getting their first school.
And I couldn't really get a guarantor or, you know, there was no one in my ecosystem. Right? Yeah. And normally it's like, if your parents have great credit, you'll have great credit. If your parents have bad credit, you'll have bad credit. Yeah. On the cycle kind of creates this a societal gap. Between those who have opportunities and who don't.
Julian: So is, is outside of, you know, you having good credit or your, your family network people around you, what are other ways students get over this kind of barrier? Or are there [00:03:00] anyways?
Michael: That's the issue? It's, it's crazy, right? There's this thing called the credit card act of, oh, wait mm-hmm during, you know, the crazy times in the.
And it really started in 2007 and there was another one that passed in 1999. Mm-hmm . These were consumer protection laws that were pretty much in the effort to help people, you know, get into credit a little bit safer. Mm-hmm advertly it actually limited credit access for a lot of young adults. The credit card act of oh eight literally says that credit card companies, financial institutions can't actually even market on college campuses.
Or to anyone below the age of 21, which means that if you are 1920, about to start college or in that moment where you need a financial tool, not only are banks not allowed to market to you, but nine times outta 10, you're gonna have to rely on someone else who has good credit to kind of buy you into the system.
Yeah. It makes credit for way more exclusive than what it should be. So right now, if I was, you know, back in college and all trail didn't. I really don't know how I would get my first [00:04:00] card
Julian: yeah, yeah, yeah, no, I, I, I was fortunate to, I was like working at, at a job and for somehow I can't remember exactly, but it was during the application process, I was able to get a credit card.
It, it was, I was it was a credit union who had a specific program and a limit. And like, there were so many different factors and restrictions that I had to abide by, but I was finally able to get a credit. A credit card and it actually now in retrospect you know, set me up to have access to different means, but tell me about Altro and, and how that's kind of changing the dynamic within access.
Michael: Yeah, of course. And you know, going back to what you just said, it's so ironic how. Difficult that that first card or that first financial tool is yeah. Like there's no explainers ever. Yeah. On like, this is how you get approved or I know I'm gonna get approved. Right. It's it's so crazy. Just how much of a gap that is.
And that's really where Altro focus is. It's energy at is we have dedicated our company [00:05:00] and our team and our mission to solving that gap, to making it very obvious on what you have to do as a consumer. To go from, I don't have credit to, I know I'm gonna get this credit card or this financial tool or this loan for college.
Right. And once you create that transparent gap, that educational tool, that zero to one, you've just solved a bridge for millions of people to actually get into financial tools without the dismay and the worry and the fear of it. Right? Yeah. So we start with subscriptions. Everyone has a Netflix, a Hulu, a Spotify.
Yeah. we pick those and put them on a financial tool. A revolving line of credit to help people build credit using their subscriptions. There's no credit check. You don't have to have previous credit. Doesn't matter who you are, as long as you can make sure a you're a real person and B you have a Netflix, you can start building credit, which is.
Julian: What are the mechanism that allows you to do that? Because I feel like there's so many, you know, different not gridlocks but different hoops you have to jump through. I mean, I know like for, for [00:06:00] me, I was able to build some credit off of like my gas and electric bill, but, you know, there, there was so much that I had to give them information wise, like social security and you know, my, my date of birth where I was born.
I mean, I, there was some crazy information. They asked me my, my, my, the name of my first pet for security reasons. I don't know what that information's really about, but yeah. How, how do you, how does that mechanism work within using subscriptions now to build credit?
Michael: Yeah. We actually work with all three bureaus to report your data to your credit file.
So everyone has this public credit account credit file that says what your score is, your accounts, your lines, any. And we create that for people who haven't had a credit score before, or haven't interacted with the bureaus and we approve it for those who already do have one, but it may not be good enough to get a financial product or they want a better financial product.
Maybe they want to discount the rate on their mortgage by a couple points by increasing their score, whatever it may be. We actually take, you know, after we verify you're a real person, so we make sure, you know, your name and where you [00:07:00] live and all that's accurate. We then just tie your subscriptions to this revolver.
And the app explains all of it beginning to end. Yeah. Then we start reporting it to bureaus.
Julian: Wow. So is it just like some kind of some kind of data, data bottleneck that previously existed, but now, you know, you've kind of found, I don't wanna say a loophole, but a workaround to add more information to these credit bureaus to then.
Michael: credit. Yeah. I, I would say the, the loophole is really that financial institutions don't really have a means to operate with people who don't have credit. Right. Mm-hmm and this is just pure capitalism, economics whatever word you wanna put in there. But if I am bank of America and there's millions of people out there who have a great credit.
Has a lot of finances. They're traveling all the time. I wanna work with them. Right. I know that they have money. I know they're a real person. I know that they can use my tools, very little risk. But when you look at 86 billion Americans who have never had access before, you [00:08:00] don't know where they are in their financial story, you don't know where, like you don't know who they are.
Mm-hmm, , it's a risk. Right. And banks and financial institutions would rather ignore these people just from an economic. And focus on this population that they know is real. And you know, this would be fine in dandy. If you know, the history of America didn't have bias in it. Right. Right. If, if everything was fair game and we were all equal people, then no problem.
But the moment that you've enacted any level of bias, you've enacted bias in your decisioning, on who gives credit and who doesn't. You can see that in the numbers. Right. I think it's like 85% of African Americans get denied on their first credit applic. Wow. The same is for women. Same is for people in Hispanic communities.
It's insane. Just how much of a disparagement. Right. And that's just cuz of our history.
Julian: So yeah, with companies, like also, do you think that there's gonna be, it sounds like, you know, it's like them, the excuse would be safety or, you know, it's like, you know, there's less risk in approving these individuals because [00:09:00] of their history.
Even though there's no opportunity to build history, there's just, there's no way. So it's this like, you know, never ending loop are companies like Altro giving more data, giving other types. You know, revenue incentives or subscriptions or data around that pushing it to these bureaus. Do you think that'll allow more access?
Not only to at the individual level, but from the, you know, financial institutions to, you know, even reach a broader audience because it seems like it benefits both at this point. No,
Michael: you're, you're exactly on it. And this is the first time that you're seeing wall street, the hill and the community all playing in the same ballpark.
Right. And I can explain all three from the wall Street's perspective, you just. If we can take 86 million people and show, these are the people who are great actors, these are the people who aren't, or these are the people who want to build credit. These are the people who wanna stay as far away as possible from the credit system, the financial institutions cannot work with less risk, right?
They're like, Hey, we can give these people, our financial products because Altro already showed us that they're real people. They're looking for credit products, they're paying their loans back. [00:10:00] Right. And that gives people a second chance or maybe even a first. To the system from, you know, the hill perspective, we're helping people, the government has tried really hard to help.
But maybe just hasn't done the best job. Yeah. There's so many initiatives and projects and opportunities that, you know, our government has launched, but it doesn't really solve the root problem of accessibility. It's like that quote, like if you teach Amanda fish rather than giving them a fish, right.
You know, we're actually teaching people how to fish, which is great. Yeah. And the community perspective, there's so many. So many edge cases where we actually have changed lives, right? Yeah. We have had members who were in a divorce and, you know, low and behold divorces can hurt your credit by a lot.
Yeah. Yeah. And you know, they had their score taken down by a hundred, 200 points and we helped them get their score back up so they can go get a new apartment or, you know, we've had people, you know, unfortunately have been in like abusive. Where, you know, the husband is like the breadwinner of the family and you can't really escape the situation cause you can't get a job and you can't get a job because [00:11:00] you don't have a credit score, which is crazy that a credit score is used to underwrite your job.
But regardless you help people build their credit score in those situations so that they can break out of those family issues. So many situations across the spectrum from financially acumen to people just wanting to learn what finances are. Really just helping a lot of people. So
Julian: I love that I, for, from the community level that the accessibility piece is so important.
I was talking to another founder and they were allowing people to have the access to make, or to get rewarded based on purchases they made that were carbon friendly. And it's like all these initiatives, aren't, you know, they're pushed by private businesses to allow people to do what they want to do.
And then when you give people the accessibility, it. Automatically compounds on itself and grows. So it's incredible to see that from all perspectives you know, Altros is really influencing people to, to, you know, productively pay more, get, get more incentives companies to make more money, access, more individuals.
I'm, I'm curious, you know, and, and being that you're [00:12:00] so. Involved in credit. And it's such an interesting, you know, phenomenon. I think a lot of people understand it. Don't understand it. We sometimes get why the scores go up and down. But when there's like some kind of financial, I guess, mishap, I don't even know what, what, what you would say, but like in 2008, a lot of people who, you know, defaulted on their houses and, and, and then had to rebuild their credit, they're not able to.
You know, or go over this hump. What are some, what are some ways credit really benefits you? And what are some ways that you think it really limits certain individuals.
Michael: Yeah. Man, there's so many edge cases here. There's no story. I think in terms of the basics, right? To get an apartment, to get a car to get a job, need a credit score.
Yeah. So part of the diligence. In terms of any upward mobility in terms of financial tooling you need a credit score. The average cost of just living is decrease like a percent level. And I don't wanna quote it cause I don't know the number exactly, but there's a [00:13:00] great difference in having a six 50 versus a seven 50 score and how much you pay just to live.
Right. Also there's, there's even more protections like credit allows you to do chargeback. Right. This is the small stuff. Like if you have fraud on your card and it's a debit card, it's much harder to get your money back than if it's a credit card. There's protections there. You can manage your cash flow.
There's just so much that comes with credit. And you're so right that, oh, eight kind of scared families into saying credit's a bad thing. Mm-hmm I mean, like it's the very common thing in black communities that like you don't touch credit. Yeah. Credit has negative connotations. It has. It has high interest rates.
It has loan sharks. It has payday lending. Like all these things like even buy, not pay later, puts people in a weird situation with their finances. Yeah. There's not a lot of companies focusing on empowerment. So I think we really double down on that and the importance of credit and just what it brings to you.
Julian: I love that. What, what kind of traction are you seeing now that, you know, you you've, you've built Altro you're you know, reaching all different. I [00:14:00] would, I would say the triad of, of who you're working with where, where is Altro where are the numbers? How much has it grown in the last year? Gimme a little bit more information about who you're working with, who you've affected and, and where you're kind of looking to increase your effectivity.
Michael: Yeah. So we've gone viral twice. Lovely. Which is amazing. We've been top 10 in the app store. A number of times, which has been great. But we've been really purposeful in our onboarding experience. And when I say that we, when we first launch products, we onboard people one by one to make sure that they're getting what we expect and they understand the product.
If they don't, we go back to the drawing board, we rebuild we really take our time in making sure that we're delivering the right customer experience. So we've done things like reporting rent to the bureau. We've explored the world of subscriptions and there's even more on the timeline that we could talk about coming into Q4.
That we've really been testing with our audience. And we have a number of super users who are committed to just like testing, letting us know if this is what the community needs or not. But it's led to us having a lot of sustainable growth. We, I think our lowest cost is [00:15:00] actually any marketing dollars.
We don't really have a marketing budget, actually. It's solely just on innovation and tech, cuz what we're building is, is not out there currently.
Julian: That's amazing. I was talking to another founder and he recommended a book for me called contagious. And it's, I I'm still in the midst of reading this book, but he was talking about, or the book talks about that the best marketing tool or, or, or customer acquisition tool for any business or anything that needs to gain any amount of traction is word of mouth.
So it's like we think about this going viral, constant, but really it's just, there's so much work that happens offline. He was like 7% of you know, of. of the outreach or of, of how much that goes viral is actually happening online. Like how much of that community is discussing. It goes online.
Everything else is word of mouth, like person to person. And so it's incredible to see that you have super users. I'm sure they're huge advocates for your tool. How do you maintain that relationship with those super users? To not only learn about what the community. Cares for, but [00:16:00] also to make those different product decisions.
Because I think all companies have, you know, their, their main client base, but struggle or main customer base, but struggle to really get the information they need to then make, you know, the, the correct product decisions. How do you maintain that relationship with
Michael: those users? Yeah. A lot of calling, I mean, yeah.
I have talked to more. This year, then I've talked to anyone else in my life. I, I am dedicated to just making sure I have a connection with people and no, luckily I get to wear the CEO hat. So people actually do wanna talk to me when they get to talk to the CEO. But I just cold called people and I'm like, Hey, look, it's Mike.
I just wanna know how our app is working for you. And, you know, people honestly are receptive. They, you know, I try to call after work hours, cuz most of us are on a nine to five schedule. Yeah. But. Yeah, no people love to talk and people love it when you build something that's meant for them and they get an input on it.
It just makes such a big difference. Like we, we launched a hoodie [00:17:00] campaign where each quote that goes onto the hoodie. Each time we recycle the hoodies is one from our members actually. So the small stuff like that really goes a long way.
Julian: I love that. What are some of the biggest risks that Altro faces today?
Michael: Tech innovations costly. Yeah. I think that we are really at the forefront of seeing a societal change in the definition of credit. Like truly, and I don't say that just to say it. I think that there are a lot of government campaigns. There's a lot of startups and a lot of money flowing into equitable access.
And that's also happening in the world of finance and the smallest innovations lead to the, the biggest markets in this space. A friend of mine, his name is Sheridan is working on a company called Lin table where, you know, they help people match their 401k, something that people never thought of. It's a simple loan company.
Right. But it is just the impact is just so grand based off of just how they perceive market. So I think we're seeing this change happen in real time and it's, it's exciting [00:18:00] to see us be a part of it. Yeah.
Julian: Yeah. What's the long term vision for Altro
Michael: long term. I think. I want to make this app controlled and owned by our community.
We've been purposeful about our investors and our audience and the effort to make sure that one day this app is outta my hands is in the community hands to the point where if the community says we need to do this, it starts getting built. Right? Like they become the CEO and it honestly feels like that right now already, honestly I feel like I have multiple bosses, but I, I.
Community trust is something that you can gain quickly, but lose even faster and regrow really slowly. And I think that if we can become entrusted to that level it would just mean the world. It would, it would change the way that we think about credit. It would give so many people access. The impact, the social impact of what we would be doing is, is amazing.
Julian: you, when you say, when you say you know, the community kind of drives the, the, the the, the product, how do [00:19:00] you ensure that that happens? You know, I, I know like, like with web three, for instance, right, how it's built is decentralized. So, you know, the users, you know, actually influence the decisions that are made by different you know, projects and protocols that are out.
But you know, being that this is a web two project. And so that there, it seems like there might be a little bit more work or maybe some creative work that allows the community to have their input and have it heard, how are you fostering that community to be able to one day have that reality?
Michael: Yeah, the, the first step is our, our values, our first value in the company is that the member drives and we pay the roads.
Yeah. So where we make any product decisions, we actually have to get member approval on it. Which is super cool. Design. Products. Everything has to get member approval. And going viral really didn't help us, you know, people probably listening to this, it's probably like think of the inverse, cause we had so many people reach out to us and we couldn't contact everyone about member approval.
Yeah. The people who did contact were definitely our super users. But I think that also, like when you think about like, even like our cap table and stuff like that, we [00:20:00] really want to find ways that we can get, you know, our members on the cap. Stuff like that is like at the top of mind for us and for me and what I think we could do to really empower our audience.
Julian: Awesome. I always love to ask this question from, you know, the, the diverse founders that I meet and, and talk to. There's always a brilliant answer. And so much homework for me to do that. I'm gonna create a separate post about everyone's answers, but what are some books or some people that have influenced you the most?
Michael: I would go listen to John hope. And probably listen to everything he says twice. brilliant, man, who really knows his stuff. He's done some amazing work with operation hope. And he he's, he's just a man of wisdom. He, he really speaks in a way that we, we had him as a as a spokesperson for our event up in, at the white house, actually.
Well, not at the white house at Congress. Mm-hmm . I think that he's very influential in the way that we should see the world. A lot of what we do and what we practice comes from what he has said. So I would recommend just spending time just listening to him. I love it. I also read a ton of books, but [00:21:00] right now I'm not reading anything too exciting.
So I won't recommend anything at the moment, but yeah.
Julian: yeah. I love that. What, what, in, in terms of you know, what he said in the past, what has like stuck with you or. Sticks with you every day, like in particular, is there some specific quote or, or, or mindset or perspective that he shared that you're like, this is, this is something that really that, that has stuck with you and, and continues to stick with you each day.
Michael: explain it way better than me. And hopefully you'll, you'll be able to hear it somewhere from him, but he, he really highlighted that we're at a moment where, you know, we just came out of a point of. Racial inequities. And Jim Crow ended in like the mid 19 hundreds, which is crazy to think about.
Yeah. There's people alive who had experienced eradication of Jim Crow laws. And we're kind of like at the point now where, you know, the, the war on race has turned into a war on capital mm-hmm and everything that you see, like the, the rappers and the [00:22:00] artists and the NBA, like everything's about.
Right. And it's a war on money and access to money. And there's, again, going back to economic disparities, you know, I think it's like 50% of America's wealth is sitting in the 1%. There's a war to pull that wealth down into more communities. And that battle is really where you see radical ideas come from.
This is where you see our politics really get pulled into. Everything gets affected by this war on capital and he really highlighted. What we're experiencing right now is just truly that battle. So how can you go into this battle in an equitable way? What does this mean for both sides, both parties.
And how does this affect America's future? Like, he has really good thoughts on it. Really great speaker. He, again, would explain that much better than.
Julian: I love that. I love that. And, and that's such a you know, noble cause to, to, to help you lead in your decision making, it sounds like it does influence, you know, your product decisions, how you view the company and its impact.
So thank you so much for being on the show. And last little bit, I always [00:23:00] like to have guests plug in their social channels, where can we support Altro and its mission and its product growth? Where can we.
Michael: Yeah, my socials are all the same. It's Mike underscore, Altro a L T R O. If you wanna check out our website, I think it's a really cool website.
It's a LT R o.io.io. And reach out to me. My email is michael.io. Talk, startups, investing anything. Always open to it. So
Julian: I love it. I love it. Well, thank you so much for being on the show. Michael, I learned so much about not only what Altro is doing to impact the community, but also the financial industry and, and I'm really excited to see where your product goes from now until until, I guess it's handed over to the community, but all, thank you so much for being on the
Awesome. No, and I appreciate you having me.