The cost of living crisis in the UK has been making grim headlines for months.
Newspapers reported this week that inflation had hit a 30-year high, pushing up prices for everyday essentials. When the energy price cap ends in April, bills will go up by more than 50%. The poor households have a stark choice between heating or eating.
A new startup in London called Nous is trying to throw households a life-raft by offering a free personalized report that explains how price rises will affect their costs and gives advice on how to adapt to inflation.
That is just the first step. The startup wants to use household finance data and third party vendor data to build models that can automate the management of essential service switch and contact.
Nous, which is pronounced to rhyme with house, talks about building an autopilot for routine household decisions.
The startup believes that it will be possible to save a household more than a thousand dollars a year. To convince hard hit consumers to buy in, its own service pricing needs to be set well below that.
Nous wants to be able to take on a public role once or twice, with high level visibility into the consumer experience. Jack Monroe, a food poverty campaigner, has used social media to publicly call out price rises in the supermarket.
The startup has to do the hard work of getting data access, pulling off modelling and executing on automation technologies to deliver on its promise of savvy and seamless service.
The startup is working on product development. It is currently running a closed alpha as it works to develop models and hone decision-making tools with the goal of building tech that can protect consumers from vendor price hikes and loyalty taxes. That is the dream.
Nous just closed a $9 million seed round, so it isn't in danger of a cash crisis.
It can point to a long list of early investors who have bought into the vision that co-founder and CEO, Greg Marsh, says aims to leverage the power of data to work for not against the consumer for once.
It has always felt to me that the way in which direct debit and other innovations have made us vulnerable is problematic.
In theory, you can do that, but in practice, people don't do that. Households at the lower end of the income distribution, who are less financially sophisticated or who are just really busy, get completely screwed.
The situation where consumers who aren't hyper vigilant will end up overpaying for core services is not the result of a few bad apple suppliers according to Marsh. It is a systemic function.
Everyone plays this game in the industry and all the pricing analysts and all the revenue management departments in all of these providers are playing the same cynical game, which is how can I get someone in at a low price.
The contention is that a for-profit company can help fix systemic abuse by offering a subscription service. As a for-profit company with a clear social mission. Nous intends to apply for B Corp status to back up its pledge of neutrality.
He argues that this model is different to the crop of free-to-access websites which monetize consumer advice in other, less up-front ways. He who pays the piper calls it the tune.
The business model will be boring and free of service provider commissions. Since the consumer will be paying for the service, it has to be pro-consumer.
Customers will be paying to save money. The relationship is clear.
A substantial seed raise was led by early stage London-based Mosaic Ventures, with participation from more than 65 angel investors, including the co- founder of GoCardless.
The founding team is seasoned.
Before he worked for Index, Marsh was no startup debutant. He left his previous startup, Onefinestay, to AccorHotels in 2016 for $170M, before moving to the US to teach at Harvard Business School. He came back to London to be with his family and then co-founding Nous.
Glen Walker, COO, was a Trouva co-founder, as was Jon Rudoe, chief commercial officer. Lydia Howland is the head of service development. A lot of the team's expertise is cross-industry and tech related, including time at Facebook, Deliveroo, Ocado, and McKinsey.
The large size of the Nous seed round is indicative of the team's quality. Experience does not come cheap.
Seed will be used to get the first products to market and early scaling within the UK, as well as shelling out for talent.
The first product will be a free cost of living dashboard.
It will show you on a personalized basis how price rises will affect you and your household. That is useful because it provides insight and it is also actionable. If people have time and energy, it will alert them to situations where they can jump on it. We hope that it will help inform people about pay rises and things like that, as they have conversations with their employee rep or even directly with their employer.
The grand vision is a big data automation play that will take over the management of household finances and absorb the administrative tedium associated with spotting predatory price rises.
In our alpha testing, we can already see when switches should take place. Sometimes it's nudging someone to act where it's easy for them to act but harder to do. If you got to the comparison websites, you have to fill out a 44-item questionnaire in order to get a quote for a new insurance product. 39 of those items are information that we already know. We don't need to ask a lot of questions, just one or two questions that will allow us to sample the market and see if there is a better opportunity.
You can do something at the bus stop on your device if you turn something that was previously a chore into a quick thing. It's partly about making it easier for someone to grab and deal with and it's also about making the processes more convenient by using better, smarter, existing technology. It goes back to having an ongoing relationship with a household.
We need to make it easy for households so that they don't have to leave until tomorrow. Direct debit creates convenience but it also allows people to be abused.
We are conscious of how important this is, but also how hard it is to get that level of trust and confidence with people that they are willing to share the information.
It hopes that clear billing will provide customers with reassurance that it is working to look after their interests, and not doing anything that is bad with their data. We don't make our money through advertising or selling data, according to the privacy statement.
We want to be a business that is fighting for consumers.
If we can get there, we think we can live in a place that is genuinely on the households side.
The goal is to launch the subscription product this year as well.
It is clear that access to data will be paramount for Nous to function as intended.
This startup is a beneficiary of UK regulations that open up access to market and customer data, as well as initiatives such as Open Banking that are designed to foster consumer trust.
OpenBanking is a critical piece for Nous, as it will give it visibility into household finances and spending, as well as providing it with a core feed of data on household incomings and outgoings.
The full details of services contracts will not be found in bank accounts. Nous hopes to convince consumers to give it access to their email accounts so that it can apply automation technologies to extract and distil relevant intel from vendor comms to better understand service provision.
Nous and its investors are confident that it will win a steady revenue stream of subscribers by gaining enough consumer trust and account access.
It is clear that the free product has a very critical role in supporting the overall mission and product development, as well as acting as a customer acquisition funnel where it can upsell its premium product.
Getting all the necessary information for Nous to effectively manage household services is a core challenge.
There is no silver bullet. He admits that it isn't like there is one data feed which will solve this problem. You can get information by connecting into walled garden services here and there, but not every provider will let you in, some are very defensive about their data, and they have a lot to lose.
The last thing that mobile phone providers want is for people to know that they can save up to 150 dollars a year if they switch to a better deal. We think there will be tension over time because we think this is an easy journey. We think we're doing the right thing by trying to be on the customer's side and making their lives simpler.
Nous will only be as good as the data it can access, so the more users it can attract, and the greater demographic variety across its user-base, the richer its market intelligence is.
There is a risk that a subscription service won't be able to help those most in need in a cost of living crisis since it is another upfront cost.
The service may not actually be reaching those households in the direst need if the marketing strategy foregrounds talk of getting wise to the cost of living crisis.
Those on the lowest incomes will be the hardest to help since it is yet another outlay for people who are already struggling and may not be able to access credit.
The team is looking at offering the subscription product free to households that qualify for the Warm Home Discount scheme as a way to expand its coverage.
Elderly people are vulnerable to predatory price hikes because they are often on very low incomes. This group of households may not even know how to connect their account to Open Banking, and may be disproportionately likely to receive paper-based bills from service providers. It may be difficult to help a very vulnerable-to-the-cost-of-living-crisis demographic via a data-driven subscription platform play.
Marsh argued that Nous has to start somewhere. The tech savvy and digitally armed stand to benefit from the intersection of where we can quickly and conveniently get data.
If Nous can scale a service, he suggests that there would be scope to focus more on addressing harder to reach households, such as by bolting on document scanning tools, so people could snap a photo of a paper bill to upload the data.
Nous is interested in working with relevant support services to serve its wider social mission, and is doing outreach to financial literacy charities.
It will have its work cut out to ensure that data-driven and automation-enabled cost savings don't further entrench what are already unfair socioeconomic divides.
The maturing regulatory environment is one of the reasons why others haven't tried a subscription model to tackle predatory services.
Ten years ago, you wouldn't have been able to build this business. It would not have been possible. He said that one of the investors was a key government sponsor of OpenBanking and that it was great to see the UK actually having taken it.
The UK's approach of targeted, sector specific regulation provides an operational framework for third parties like Nous to access data and perhaps act as an agent on consumers' behalf. It is a case of regulation enabling consumer-focused innovation in these markets.
Although they are far, the UK has a surprisingly sophisticated environment for sectoral regulation.
We have seen the most extreme expression of that so far in the energy sector. Energy companies are obliged to allow third parties to manage the switch for households. There will be some sectors that are more resistant to this, but it is very hard for vendors to stand against that.
He doesn't rule out future international expansion into other markets if the right regulatory framework is in place. It is focused on helping UK homes.
Over the last 12 months we have been watching to see how serious the cost of living increases will be for UK households. It is going to hit really hard now that it is making headlines. It will hit in April and then hit again in October when energy prices go up. The average household is going to end up stiffed for several thousand pounds.
A fair market is only possible if people know their prices. I think that we are well served by the regulatory community in the UK.
The UK sectoral regulatory regime is a few years ahead of other countries. We want to take it internationally once we get this working here, but we have to start somewhere.
When we were in the same college subject cohort, this reporter knew the CEO of Nous. The historical connection did not affect our reporting of this startup.
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