With the aim of reducing financial stress and motivating shift workers, Butter provides a tool to achieve transparency through real-time tax calculations and forecasting of earnings, the ability to set goals & savings targets, as well as accessing part of a salary as soon as a shift has ended. As a result, companies get happier employees, who are incentivised to take more shifts – and a reduction in admin cost in HR & Finance through a plug-and-play solution.
Jonatan: The way I’ve always thought about my career is that wherever I go, I want to learn as much as possible. Oliver Wyman was a good place to learn and I loved the Fintech and strategy skills that I gained. Working there was also a great way to test myself against the likes of Morgan Stanley and The European Central Bank, and allowed me to really understand what it’s like up there with the big dogs! I learned some key business skills like how to manage a project and how to present to CEOs… and then when I felt I had those tools built, I thought I may as well go out and build my own product!
I quit with no real plan of what I was doing next and I just wanted to learn as much about tech as possible. I spent a year in London as a consultant and then moved back to Denmark to work at a venture studio. I then worked with some scale-ups and startups and really tried to learn the market. I figured if you were building a company on your own you should probably have a positive impact on people’s lives – so I looked at where I felt I could have the most impact and considered impact investing. However, because this is a super crowded market, I realised I probably wouldn’t be able to make a huge difference.
I spent a lot of time in the consumer finance space trying to understand how people think about money and I’ve always been excited about behavioural economics and the idea that people are not 100% rational beings. I got really motivated by how people think about money and how much they think about opportunity costs and motivation.
At the same time, I was freelancing to pay for my startup ideas and saw firsthand how hard it was to visualize the earnings when you were working as a shift worker. With 90 days payment terms, it was hard to think of money in a tangible way to be motivated enough to do my work, and I felt like having an overview of my finances would be a really awesome tool. My mum has also worked in hospitality all her life and the only way she ensured she had enough money at the end of the month was to stuff money under the mattress! So, I realised I’d found a group I really related to and had a personal connection to, and therefore an issue that could be solved.
Jonatan: We spoke to 100 shift workers and it became clear that there were two main groups. The first group (and the most common) were people who looked at their bank account, and if they had money they would go out and if they didn’t, they wouldn’t. It was completely unrelated to the bills coming up or rent going out. The second group was people who tried to be organised and would create complicated excel sheets to try and address their finances. What became clear to us, however, was that there was no effective system for shift workers. The human mind isn’t designed to think about money or focus on economic figures. I think Fintech allows us to get beyond what is exact and to work with ‘worry-free money’ which is a really helpful concept. Not being able to see the money you earned after a shift or a day of work is damaging – it usually results in overspending at the beginning of the month and then eating only Ramen by the end!
We decided to focus on the 18-25 age group because when you are building a startup you need to be super focused on a specific problem from the start, and then branch out later. The group we are looking at is the most underserved in the market in my opinion; they aren’t private banking customers and they probably aren’t going to make huge investments – that’s why I chose this group.
Above: Jonatan Marc Rasmussen, founder of Butter Solutions
Jonatan: Butter gives shift workers transparency over the salary they’re earning in real-time. As soon as they finish a shift, they can see how much they’ve earned after tax. It also says how much they’ll earn at the end of the month, including the shifts they have coming up. That way, they know if it’s enough to cover rent or save enough for their dream holiday. If not, they can take on extra shifts.
It essentially gives workers an overview of rent, bills, fitness, Spotify (anything you want to log and track!). On this basis, Butter will then freeze the money that needs to go towards these outgoings and the rest of the money you earn is ‘worry-free money’. So it’s kind of an education tool, helping you set money aside and then give you the freedom to do what you want with it.
Jonatan: We are a financial tech company that wants to do things differently and be human-centered. So in order to be human-centered, we wanted to humanise what we were doing; we wanted a name that was relatable and a bit more fun. After a bunch of workshops, and also the fairly obvious phrase of ‘bread and butter’, we felt that Butter was a good fit for us.
Jonatan: From the start, we don’t want to make money from employees. There are some less ethical players in the earned wage access space who charge £4+ just to take money out before payday. In our view, it’s a really punitive way to help people. Our goal was to make a product that was so good for the employer they would be willing to pay for it for their employees. This would create value for the employer because it encourages people to take on more shifts – a kind of positive reinforcement and motivation tool. It’s also a good employee benefit/perk, and from a financial wellness point of view, it attracts and retains the right talent. It also aids the finance and HR department and clarifies payroll and salary slips so they don’t have to. Therefore, our model is about selling to the company rather than the user.
Above: Inside Butter Solutions
Jonatan: Obviously, it was strange to quit my job and then start a company just as the biggest pandemic was happening. For instance, I didn’t meet my cofounder until three months after we started working together! We would just meet via Google Meet, which although felt odd, did mean we were super productive.
It’s also been crazy to launch as we are selling to companies in the hospitality space, who had zero revenue and no idea when they were getting back to normal. So trying to sell into that segment during that period was hard. But on the other hand, the hospitality sector also had a lot of time to chat and we could learn and develop the product alongside them. We actually signed a restaurant chain just before the second round of Covid restrictions and we launched our MVP in August last year. From testing with this client, we learned a lot about our offering and could start to understand how people could use the app. For example, we are currently working on a system where we’ll give people a warning rather than freezing their earnings if they go beyond their allocated money.
Thankfully, as soon as restrictions started to lift, the contracts started to come in. We had five contracts in five weeks and since then it’s been going well.
Jonatan: Right now our clients are based in Denmark. For us, this is a sandbox where we can learn a lot and polish the product and then take it overseas. We are confident that we can translate the product to the UK, where you guys have even more shift workers and probably even less data about your payslips and salary breakdowns. We are also conscious of the payday lending mentality that exists in the UK, and we think Butter could be really useful.
I’m not focused on the size of Butter, but I think to achieve what we want to achieve, we need to be quite big. I really want it to be a way to empower shift workers to take their finances into their own hands. We are giving them transparency over their finances, but we also want to build it out and give them savings and investments; we want to be a small money advisor on the shoulder of the shift worker!
So, if this means we will eventually need to be a bank to achieve that, then we will be a bank. At the moment, there isn’t a clear vision of how we will achieve it, but we want to keep adding and testing features that will help our financial users. That’s where we’re currently at.
