
Even – Get your average pay, every payday - frankacter
https://even.me/
======
dragonwriter
> Even – Get your average pay, every payday

Note that "average" is misleading; as used by Even, it means "some amount we
calculate by a secret-sauce algorithm that is not any usual definition of
'average'."

From the Even FAQ [0], under "How does Even calculate my average paycheck":

 _Even looks at how much you 've earned and how much you've spent in the last
6 months. To be fully transparent, your Even pay isn't actually a mathematical
average. When we use the word "average" we're using that word to make things
easy to understand. Your Even pay is calculated using an algorithm that is
more complicated than an average, because it does things like treating more
recent paychecks as more important than paychecks you got 6 months ago._

(That they characterize this description as being "fully transparent", is
further illustration of their creative use of words outside of their normal
meanings.)

[0] [https://even.me/faq](https://even.me/faq)

~~~
run4yourlives2
I don't think they're being too misleading though. If I were to do something
similar, I'd weigh current pay higher than past pay too. They're topping up
the difference so they need the overall math from the excess + interest to
work in their favour after all.

They are most certainly targeting people who are bad with money though. But
then again, so do lotteries and designer jeans makers.

~~~
codewithcheese
They should be 'fully transparent' and publish the algorithm in a simple
layman's formula

~~~
run4yourlives2
So should a lot of industries. Tell me, what's the spread on a Big Mac? A new
car? Anything, really?

~~~
codewithcheese
It important to know when it's a company that is portioning out your paycheck.
It nothing like the margins on products that you purchase.

~~~
run4yourlives2
Not really, since they are never taking any portion of that paycheck away from
you. It's all yours at the end of the day, they just keep it "in trust".

(The point I'm struggling with is how they do this without a) earning
interest, and b) earning enough for themselves)

~~~
ac29
They charge ~$150/year for the service according to their FAQ:
[https://even.me/faq](https://even.me/faq)

------
chetanahuja
So this is basically a payday loan scheme with venture backing? At any rate,
for the kinds of jobs this seems to be designed for, $3 a week (~ $156 a year)
sounds like a very high amount of fixed interest to be paid.

EDIT: Regarding the argument in this subthread regarding interest rates, the
common mistaken assumption seems to be around what constitutes the "principal"
here.

In "steady state", there will be very little money flowing out of Even's
coffers into the user's wallet. So the "average" amount loaned _to_ the user
is likely to be close to zero... or even negative (in case the user makes a
bigger paycheck than usual). So the interest calculations only make sense on
_that_ amount. Not the entire amount of money that the user made. The actual
"interest" payment in those cases could easily be in 100% + range or more for
the average user.

~~~
callmeed
Min. wage in California is $9. At 40 hours/week, that's $360. $3/week is less
than 1% of that. Payday loans use much higher interest from what I understand.

(I ignored taxes/withholdings to make the math easier).

~~~
dboyd
That's less than 1% over _one week_. The APR would closer to 15-20% (depending
on salary, pay frequency, etc.).

~~~
rory096
Yes, but ed's statement still stands. Payday loan APRs often reach into the
hundreds of percentage points.

[https://www.scc.virginia.gov/bfi/files/pay_guide.pdf](https://www.scc.virginia.gov/bfi/files/pay_guide.pdf)

[http://www.in.gov/dfi/2366.htm](http://www.in.gov/dfi/2366.htm)

~~~
chetanahuja
I've answered with an EDIT in my GP comment to keep it in one place.

------
slg
Would this be easy to scam if I know in advance that my income will be
decreasing, especially if it will decrease incrementally?

EDIT: This is almost the equivalent of paycheck insurance. Like most insurance
companies, I imagine Even makes money off of float [1]. However, insurance
companies are also great at modeling their customers' risk. I don't see how
Even could accomplish that. It is a natural information asymmetry and I'm not
sure how Even could have a better idea of a customer's future earning then the
customer.

[1] -
[https://en.wikipedia.org/wiki/Float_(money_supply)](https://en.wikipedia.org/wiki/Float_\(money_supply\))

~~~
dragonwriter
> Would this be easy to scam if I know in advance that my income will be
> decreasing, especially if it will decrease incrementally?

They're using a non-disclosed algorithm to calculate an "average" that's not
really an average, and holding on to all the money above that, and charging
you $3/week for the privilege. If they haven't already constructed the
algorithm so that its nearly impossible for them to ever be giving you a
"boost" other than from your own deferred wages that they are holding on to,
I'd be surprised.

> However, the insurance companies are also great at modeling their customer's
> risk.

Insurance companies also have to disclose the terms and conditions, including,
particularly, the specific events that qualify for a payout and the amount of
the payout; Even does not disclose this.

> It is a natural information assymetry and I'm not sure how Even could have a
> better idea of a customer's future earning then the customer.

Because of the non-disclosed "average" algorithm, there's an additional -- and
potentially more significant -- information asymmetry working in the opposite
direction of the one you describe.

~~~
slg
Then they are almost assuredly in violation of some type of regulation. They
can't just charge interest, call it a proprietary average algorithm and avoid
all the regulation regarding publishing interest rates and such.

Also their about page is throwing red flags in regards to regulation. First
off, it doesn't look like anyone involved has experience in either finance or
the law. Secondly it says "We're not bankers. We're not a payday lender or a
credit card company." That isn't up to Even, that is up to the law and this
sounds a lot like those laws are being completely ignored.

~~~
dragonwriter
> Then they are almost assuredly in violation of some type of regulation.

Quite possibly, not like they'd be the first startup to do _that_ as a core
feature of their business model.

> They can't just charge interest, call it a proprietary average algorithm and
> avoid all the regulation regarding publishing interest rates and such.

Sure, but what they're actually doing is charging interest on loans, they are
holding money from your paycheck as a deposit _before_ you need the loan,
using the undisclosed proprietary "average" algorithm. Then using the same
algorithm to determine when you are due a "boost", and paying that boost to
you _out of your own deposits that have been kept from prior paychecks_ , only
giving you an interest-free advance if their undisclosed algorithm says you
are due a boost _and_ you have exhausted the deposits previously held-back
from your pay by the same algorithm.

The customer's superior knowledge of their likely future income situation
can't be used to game the system without knowledge of the algorithm which sets
the rules of the game.

~~~
slg
True, I guess it entirely depends on their average algorithm. However, if they
are paying the boosts out of previously saved money then they this a managed
bank account. If they are paying the boost on the assumption that it will be
paid off in the future then they this is a loan. Either one is required to
spell out the exact terms in a clearer way than Even's very simplistic FAQ
page.

It just rubs me the wrong way that too often these days disruption amounts to
"I am going to go in to X line of business, ignore the law, and pocket all the
money any competitor would have to pay to comply with regulations."

~~~
run4yourlives2
I think the issue is less the algorithm (so long as the consumer is made
whole, there's no issue) and more the "how are we making money here".

Disclosure is a big one when it comes to financial regulation. Something tells
me there is an undisclosed source of income here beyond $150 membership fees.

------
Johnny555
At $150/year, this sounds like a service for people are so bad at managing
their money that they'll pay $150 for someone to meter out their paychecks.

~~~
run4yourlives2
Pretty much. But that's a hell of a lot better than those people using payday
loans.

~~~
dragonwriter
Payday loans might be used for leveling variable pay, but the impression I've
always gotten is that they are used more for addressing inconvenient expense
timing for people that have neither reserves nor more conventional credit
available; Even doesn't really help with that.

~~~
jschlossberg
70% of payday loans are used for predictable, recurring expenses.

~~~
dragonwriter
> 70% of payday loans are used for predictable, recurring expenses.

Even if that unsourced figure is correct, it doesn't really address the issue:
if they aren't used to deal with "I was short because my pay was lower than
normal this week", Even wouldn't help. That's its a predictable, recurring
expense doesn't mean that its not a recurring pattern of timeshifting a
mismatch between income and expense, rather than dealing with irregular income
patterns.

Even (at best) deals with irregular income patterns, but nothing else.

~~~
jschlossberg
You are correct, we solve irregular income patterns and nothing else. Still
workin on dat perpetual motion machine.

------
grhmc
This seems to be a bandaid over someone failing to correctly budget their
money.

I was there, I think everyone has probably been here.

I can't recommend [http://youneedabudget.com](http://youneedabudget.com)
enough. I don't work there, get kickbacks, or anything. They have turned my
life around.

------
nestlequ1k
I don't understand the financials on this. Unless this is a non-profit charity
(and funded by donations), I can't see how Even stays in business.

The key point as I understand it from reading:

\- if I make more money than the average, i get the savings and Even does not
make any money off of it

\- if I make less money than the average, Even will give me an interest free
loan that I don't have to pay back

Seems fairly easy for someone to game this system so they get more $$ than
they pay in, how do you protect against that? Freelance works on Uber / Lyft /
etc can set the amount of hours they work easily. And then stop using Even
when they've earned more than they've paid in.

To be clear: I like the idea a lot, I'm just looking for more info about how
it intends to stay operational.

~~~
run4yourlives2
1\. They calculate the average. I'd imagine they'd like you to be "over
average" more often than not.

2\. All "overages" go into an account they control. Sure it's yours, but they
are pooling money from all users and investing it in the meantime. Bullshit
they aren't making money off of it. It isn't sitting under their mattress,
that's for sure.

3\. They promise no interest either way, but the amount they "loan" people is
more than covered off in interest earnings on the pooled "overages" from all
users.

4\. On top of all that, they charge $12 a month.

I think they've got the profit side down.

~~~
davrosthedalek
They claim they don't earn interest on the savings. From their FAQ: "Money
you've saved with Even does not earn interest. To be candid, if Even savings
did earn interest, you would only earn about a dollar per year. For what it's
worth, Even doesn't make any money off your savings."

So they do that all for $12 a month?

~~~
run4yourlives2
_Money you 've saved with Even does not earn interest._

For YOU. Not for them. They say it goes into an insured bank account. The
moment you put any money into a bank account, it stands to reason it earns
interest.

 _For what it 's worth, Even doesn't make any money off your savings."_

That isn't the same as saying they don't _earn_ money off of these accounts.
It just may not make them any profit, hence the $12.

------
jrbancel
How is it different from using a credit card and paying the balance once the
paycheck arrives? There is no fee if the balance is paid on time.

~~~
llamataboot
Less friction, less temptation to "let it ride for another month and pay it
back then" while debt keeps growing, nothing to do or think about, etc.

------
run4yourlives2
This is actually a pretty cool idea. I've got no use for it directly, but I
can see that many people that would benefit from it.

Nice, innovative, and actually useful. I wish them luck.

~~~
DarthMader
I disagree. I feel like the people that would need this idea the most can't
really afford to throw away $150 using this service

~~~
s73v3r
The people who need this idea the most are the ones whom generally have to pay
the most for other things.

And this sounds close to the argument that people make against the poor having
smartphones, without realizing that there are lots of cheap smartphones out
there, and generally this is their own connection to the internet, which is
increasingly needed for everyday life.

------
tomasien
Any product the serves people with uncertain income or abnormal financial
lives (freelancers, contractors, poor, etc) is met so predictably with
comments that criticize the audience by proxy of criticizing the product. "How
could someone be so stupid that they need to pay someone $60 to smooth their
income" is what I'm seeing here. Look at what people pay financial advisors
and then calm down.

~~~
nmrm2
As someone who has freelanced and is also criticising (I guess, although I'm
not critical of the business overall, just one way in which it lacks
transparency), I don't think financial advisor is a fair comparison.

The assumption with a financial advisor is that there's value add; the advisor
should either out-perform a standard investment mechanism, or know how to
navigate bear markets, or preferably both. And also should definitely handle
taxes and fees etc. without blow a bunch of my money or exposing me to
risk/loss. In other words, they should know how to do something that I cannot
reasonably learn how to do, or even if I learn could not do on my own without
investing a huge amount of time/effort.

What Even provides is a service that someone with the ability to do a bit of
personal financial planning is certainly able to do for themselves by taking
:30 out of every Sunday afternoon, no knowledge of tax code or stock market
finesse or weekly research projects required. It's certainly not a worthless
service, but the recurring monthly fees seem on the high end of what I'd be
willing to pay. For that reason, the lack of transparency about how exactly
these amounts get determined (and where exactly the time value of my money is
going) is extremely troubling to me.

------
mherdeg
It's really interesting to think about this in the context of the "1099
economy", especially people whose sole income comes from contractor work for
some combination of Lyft, Uber, Postmates, Handy, Instacart, GrubHub, etc.

This product seems like one way for "dependent contractors" to make a
predictable wage. That's a real problem in that line of work.

------
fuddle
"Does the weekly $3 fee every change?" \- Some obvious typos on the site.

~~~
flippant
I reported it a few days ago. It seems they haven't updated it yet.

------
jackfrodo
This is a great idea, especially for people living from paycheck to paycheck.
I would imagine most people who read HN are salaried, so I'd definitely be
interested in the opinion of a freelance or contract worker.

------
caioariede
It would be better if it could consider exchange rates. Lets say I receive in
USD but in the end I get it in BRL. Right now, 1 USD is ~ 3.40 BRL but last
year it was ~ 2.80 BRL.

------
keerthiko
I would imagine it's hard to convince people who live paycheck to paycheck to
pay $3 per week on this. That's the cost of a meal at McDonald's, where many
of the target market members probably get at least a meal a week.

Wouldn't it make more sense to try and get the employer's on board this
program? It allows the employer to offer a more reliable compensation to the
employee, and they can just pull the fee out of their salary anyway?

~~~
NSAID
This concept isn't terribly different than what the FLSA rules for Fluctuating
Work Week offer.

[http://kielichlawfirm.com/fluctuating-work-week-flsa-
calcula...](http://kielichlawfirm.com/fluctuating-work-week-flsa-
calculations/)

------
prawn
I was thinking about this idea the other day, but it paid out at a higher
frequency (hourly or daily). And there was a companion app that simulated
cents trickling into your pocket based on your hourly rate.

------
edoceo
$12/mo to manage money for persons in jobs that pay <$12/hr

