The UK’s cost of living crisis has been making grim headlines for months — with no respite in sight.
Just this week, newspapers reported that inflation had hit 5.5%, a 30-year high, further pushing up prices for everyday essentials like food. Worse is yet to come as an energy price cap will end in April, when bills are projected to rise by more than 50%. The poorest households describe a stark choice — between ‘heating or eating’.
Into this grim maelstrom a new London-based startup, called Nous, is hoping 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’s just step one, though. The startup’s wider pitch and “social mission” is to use (first party) household finance data and (third party) vendor data to build models that can progressively automate the management of essential service switching and/or contact renegotiating to offer a sort of household savings-as-a-(subscription)-service.
Nous, which is pronounced to rhyme with ‘house’, talks in terms of building an “autopilot” for routine household decisions — which spans and scans energy, insurance, mortgages, broadband and other subscription services to monitor activity and steer households onto better deals.
The startup projects that its future subscription service will be able to save a “typical” household more than £1,000 a year. (Its own service pricing would of course need to be set well below that to convince hard hit consumers to buy in.)
Nous tells us it even envisages being able to take on a public ‘punching-up’ role — once/if it’s operating at scale, with high level visibility into the consumer experience — saying it could call out vendors it sees trying to pull a swift one, such as sneaking in an extra price hike under the guise of a standard inflation rate rise, to use transparency and shame to force-correct bad behavior. (The success that food poverty campaigner, Jack Monroe, has had using social media to publicly call out massively over-inflationary price rises in supermarket ‘basics’ food lines — or footballer, Marcus Rashford using his social platform to drive change to free school meal contracts by showcasing horribly inadequate provision — may provide some inspiration on that front.)
But first the fledgling startup has to do the hard work of nailing down data access, pulling off bespoke modelling and executing on automation technologies to deliver on its consumer-friendly promise of savvy and seamless service switching.
For now, the 2021-founded startup is busy with product development. Currently it’s running a closed beta as it works to develop models and hone decision-making heuristics with the goal of building tech that can proactively protect consumers from opportunistic vendor price hikes and loyalty taxes. Or, well, that’s the dream.
As well as a dream, Nous has substantial money behind it — it’s just closed a $9 million seed round — so clearly isn’t in danger of a cash crisis itself.
It can tout a long list of early investors who have bought into a 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.
“There’s always felt to me to be something very problematic about the way that just as direct debit and other fintech innovations have created a lot of convenience for householders they’ve also made us susceptible — precisely because I can pay for my energy, I can pay for my mobile phone, I can pay for my car insurance on this sort of automatic mechanism… but that convenience creates this power imbalance because it puts the onus on individual householders to pay an enormous amount of attention exactly to where their money is going,” he tells TechCrunch, explaining the problem Nous is being built to tackle.
“In theory you can do that… but in practice, unless you are very, very self-disciplined, people don’t do that. And instead what [happens] — and it’s particularly households at the lower end of the income distribution, who are less financially sophisticated or who are just really, really busy… those householders get completely screwed.”
Marsh argues that this 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. It’s “systemic dysfunction”.
“Basically 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 very cynical game — which is how can I get someone in at a low price, how can I sell them a few things they don’t quite need… so people just end up massively overpaying,” he suggests. “So it’s that sense that unless you are really on it you will get taken advantage of.”
Nous’ contention is that a for-profit company can help fix systemic abuse by offering a subscription service — meaning it’s clearly batting for the consumer. Albeit also as a for-profit company with a clear “social mission”. (And on that front Marsh notes that Nous intends to apply for ‘B Corp’ status to back up its “strict” pledge of neutrality vis-a-vis service vendors.)
He argues this model is in marked contrast to the crop of (free-to-access) “web 1.0” price comparison/service switching websites which monetize consumer advice in other, less up-front ways — such as ads, affiliate links and/or taking a commission direct from vendors — asserting they can’t therefore claim to be entirely impartial or always working solely in the consumer’s interest. (Aka “he who pays the piper calls the tune”, as Marsh puts it.)
Whereas Nous’ business model will be pure “boring” subscription; no ads, no service provider commissions. And that means it has to be pro-consumer since the consumer will be the one actually paying for the service.
Literally Nous’ customers will be paying it to save them money. So the relationship is clear.
Talking of money, Nous’ substantial seed raise was led by early stage London-based Mosaic Ventures (an erstwhile Series A investor), with participation from more than 65 angel investors — including the likes of Tom Blomfield (co-founder of GoCardless & Monzo); Marc Warner (co-founder & CEO of Faculty.ai); Dan Hegarty (founder & CEO of digital mortgage broker Habito); Eamon Jubbawy (co-founder of fintech unicorn Onfido); serial entrepreneur Brent Hoberman; ActiveHotels (Booking.com) co-founder Andy Phillipps; ex-number-10 strategist John Gibson (aka, one of the original architects of OpenBanking); plus the former head of Amazon UK; and the former head of the CMA (now FCA), among others — so its pitch has evidently turned a lot of wealthy heads.
The founding team looks similarly seasoned.
Marsh himself is no startup debutant; previously he’s worked for Index Ventures. He also exited his prior startup, an upscale ‘Airbnb’ called Onefinestay, to AccorHotels back in 2016 for $170M — before moving to the US to do a stint lecturing at Harvard Business School. Family commitments brought him back to London and back to scratching his entrepreneurial itch as one of four co-founders at Nous.
The other three co-founders are: Christian Hølmer, CTO; Jon Rudoe, chief commercial officer; and Glen Walker, COO, who was a Trouva co-founder. The current leadership team also includes a woman: Lydia Howland, who is head of service development. And, as a whole, the team packs in a lot of cross-industry and tech expertise — spanning stints at Facebook, Deliveroo, Ocado, Sainsbury’s and McKinsey, among others.
The large size of Nous seed round is a measure of the calibre of the team, per Marsh. Or, put another way, experienced talent does not come cheap.
As well as shelling out for talent, Nous’ seed will be used to get the first products to market — and for early scaling within the UK where it remains focused for now.
Its first product — due for launch within “a few weeks”, per Marsh (“hopefully early Q2”) — will be a free cost of living dashboard offering insights that it says will arm consumers by providing “clarity” on price rises; projecting how inflation will affect their finances, and offering support via suggestions of how they may be able to reduce the impact of rising costs on their household.
“It will show you on a personalized basis how upcoming price rises are going to affect you and your specific household situation,” explains Marsh. “You’ve got to do that analysis on a personalized basis to be useful. That’s not only useful because it provides insight — it’s also quite actionable insight. So it immediately alerts people to situations where they could jump on it if they have time and energy. But it also, we hope, will help inform people — as they have conversations with their employee rep or even directly with their employer about pay rises and things like that.”
As noted above, Nous’ grand vision is a big data automation play that will (at least to a degree) take over the management of household finances — absorbing the administrative tedium associated with spotting predatory price rises and switching onto better deals by, for example, simplifying the process of getting quotes to move to a new supplier.
“We already know, in our alpha testing, we can already see when switches should take place,” says Marsh. “And it’s not always switching, sometimes it’s also managing an existing vendor relationship. Sometimes it’s nudging someone to act where it’s actually relatively easy for them to act but making the action easier to accomplish. So the archetype of this is if you got to the comparison websites and you have to full in a 44-item questionnaire in order to get a quote for a new insurance product. Actually 39 of those items are information that we already know or can accurately infer. So all we really need to ask is one or two questions — clarifying questions or confirmatory questions — and those one or two questions then allow us, with you authority, to go and sample the market and figure out if there is a better opportunity.
“So you turn something that was previously a chore, and involved the big screen, into a quick thing you can do at the bus stop on your device and problem solved. So it’s partly about surfacing the action in a way that it’s easy for someone to grab and deal with and it’s partly around just deploying deploying better, smarter, existing technology solutions to make those processes more ergonomic, more convenient and easier. It also goes back to having an ongoing relationship with a household, rather than a transactional relationship.”
“We’ve got to make it really easy for households so that on the margin this is something they do, rather than something they leave until tomorrow,” he adds. “This stuff is boring, it’s stressful, it’s inconvenient, it creates anxiety — all the reasons why humans leave til tomorrow the thing they should do today. Which is precisely why direct debit creates convenience but it also creates the opportunity for people to be abused.
“We are very, very conscious — firstly of how important this is — but also how hard it’s going to be to get that level of trust and confidence with people that they are willing to share the information with us and that we can actually help them.”
This premium product will be the subscription service and that clear billing will, it hopes, provide customers with reassurance that it is working to look after their interests — and not doing anything nefarious with their data. (Its privacy statement also states upfront: “We don’t make our money through advertising or selling data.”)
“We want to be a business that’s fundamentally sitting with consumers, fighting for them,” adds Marsh. “Which is one of the reasons why we’ve ended up thinking so specifically about a subscription model — in a sense it’s the hardest thing for us to do because to justify a subscription model we’re going to have to delivery an enormous amount of real value.
“But if we can get there — we think we can — and when we get there the place it allows us to occupy is a place that’s genuinely on the households side, not secretly selling thing because there’s commission revenue there or secretly advertising through the backdoor and actually being in the pocket of providers of mortgage services or providers of insurance services or providers of energy services.”
The goal is to launch the subscription product this year too, although Marsh won’t be tied to a more specific timeframe.
Open data and service access
For Nous’ business to function as intended, it’s clear that access to data — both on the consumer spending side and on the vendor pricing/tariff side — will be paramount.
That means this startup is a clear beneficiary of UK regulations that open up access to market and/or customer data, via initiatives such as OpenBanking that are designed to unlock innovation by fostering consumer trust.
OpenBanking is obviously one critical piece for Nous, as the visibility it will get into household finances and spending will flow, in large part, from consumers who agree to connect their bank accounts, via this standard, providing it with a core feed of data on household incomings and outgoings.
The full detail of services contracts won’t be found in bank accounts, though. But here Nous also hopes to convince consumers to provide it with access to parse their email accounts — where it can apply automation technologies to extract and distil relevant intel from vendor comms to better understand service provision (and consumer demands).
It undoubtedly faces a bit of a chicken and egg challenge of needing enough consumer trust to gain enough account access to build enough utility which — Nous and its investors’ are convinced — will ultimately win it a steady revenue stream of subscribers.
It’s also clear that the free product has a very critical role of onboarding accounts (and data) to support Nous’ product development and overall mission, as well as acting as a customer acquisition funnel where it can upsell its premium product.
Marsh is candid that getting all the necessary information for Nous to effectively manage household services with only minimal ‘steerage’ needed from the household is a core challenge.
“There is no silver bullet. It’s not like there’s one data feed which just solves this problem,” he admits. “You get broad and shallow information from an OpenBanking data feed across multiple household accounts, you a searchlight data from connecting email accounts over time. You get information by connecting into walled garden services here and there — but not every provider will let you into those walled gardens, some are very defensive about their data because, let’s be honest, they have a lot to lose.
“The last thing that mobile phone providers really want is for people to really understand that they could probably save £150 a year if they moved onto a better tariff… that’s straight out of the profit line of the mobile phone companies. So we’re not complacent about this being an easy journey and we think there will be tension and friction over time. But we also think we’re doing the right thing by trying to be on the customer’s side and trying to make their lives simpler and fairer.”
Ultimately, Nous’ automated advice will only be as good as the data it’s able to access — so the more users it can attract, and the greater demographic variety across its user-base, the richer its market intelligence, and the broader utility its service may provide.
On the latter point there is a clear 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) — and low uptake at the low income end could mean Nous’ visibility into (and support for) household finances gets skew toward the ‘squeezed middle’, rather than the most vulnerable.
If so, a marketing strategy that foregrounds talk of ‘getting wise to the cost of living crisis’ could risk looking cynical and opportunistic — because the service may not actually be reaching those households in the direst need.
Those on the lowest incomes will certainly be the hardest to help as a subscription business since there’s no escaping that it is yet another outlay for people who are already struggling and may not be able to access credit (let alone take a punt on paying more now in the hopes of saving later).
But when asked about this Marsh says the team is looking at potentially offering the subscription product free to households that qualify for the government’s Warm Homes Discount scheme — as one way to expand its socioeconomic coverage.
Elderly people, too, are often on very low incomes and can be among the most vulnerable to predatory price hikes that rely on consumers closely tracking tariff changes. And this cohort of households may also be disproportionately likely to receive paper-based bills from service providers — and may not even be signed up for online banking, let alone tech savvy enough to know how to connect their account to OpenBanking. So, again, helping that very-vulnerable-to-the-cost-of-living-crisis demographic via a data-fuelled subscription platform play may be difficult — without ploughing major effort into targeted outreach and support.
Responding on the general point, Marsh essentially argues that Nous has to start somewhere. Albeit that somewhere is “an intersection between where we can quickly and conveniently get data” — underlining what the ‘digital divide’ means in practice: The tech savvy and digitally armed stand to benefit first and (likely) most.
If Nous can successfully scale a service he does also suggests there would be scope to focus more on addressing harder to reach households, such as by bolting on document scanning tools (i.e. so people could snap a photo of a paper bill to upload the data).
He also notes that Nous is doing outreach to financial literacy charities — and says it’s keen to work with relevant support services to serve its wider social mission.
But it will undoubtedly have its work cut out to ensure that data-driven and automation-enabled cost savings don’t further entrench what are already massively unfair socioeconomic divides.
On the question of why others haven’t tried a subscription model to tackle the problem of predatory services, Marsh suggests this is — at least in part — linked to the maturing regulatory environment — which has been getting more conducive to intermediaries.
“You wouldn’t have been able to build this business ten years ago. It would have been almost impossible. Until things like OpenBanking became properly implemented,” he says, noting that one of Nous’ investors was a key government sponsor of that initiative and adding: “It’s great to see the UK actually having taken the lead on some of this stuff.”
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. So it’s a case of regulation enabling consumer-focused innovation in these particular services markets.
“I wouldn’t understate the important of this — the UK has a surprisingly sophisticated environment or ecosystem of sectoral regulation,” says Marsh. “So actually, although they are far from perfect, what the Ofcoms or Ofgems and the FCA [Financial Conduct Authority] and so on have done, sector by sector, is they have increasingly created an environment where vendors have to support data sharing and they have to allow agent-led switching.”
“We’ve seen the most extreme expression of that so far in the energy sector. Where energy companies are obliged to allow third parties authorized by households to manage the switch for them,” he adds. “The same sort of stuff is now increasingly mandated in other verticals. So [while] there will be some sectors which are more resistant to this but increasingly it’s very, very hard for vendors to stand against that.”
He does not rule out future international expansion into other markets where the team believes the model could also work — assuming, of course, the right regulatory framework is in place. But it’s fully focused on helping UK homes for now.
“Over the last 12 months we’ve been watching with increasing concern just how serious the cost of living increases are actually going to be for UK households. And I know it’s making headlines now — it is going to hit really hard. And it’s going to keep hitting; it’s going to hit in April, it’s going to hit again in October when energy prices rises seasonally. It’s going to hit periodically through that period… So the average household’s going to end up stiffed for several thousand pounds… People are going to feel properly poorer — they’re going to feel really squeezed.”
“A free market economy [for essential household services] is only going to work if you have a fair market,” Marsh adds. “And a fair market is only possible if people can have price transparency, they do have choice of vendors, they can switch between vendors, they can achieve reasonable pricing. So I think that we’re relatively well served in the UK by the regulatory community.
“The UK sectoral regulatory regime is a few years ahead of some of those other contexts [in other countries]. And so once we’ve got this working here clearly we aspire to taking it internationally but we’ve got to start somewhere.”
Disclosure: This TechCrunch reporter has known Nous’ CEO, Greg Marsh, since university, when we were (briefly) in the same college subject cohort. However that historical connection did not in any way influence our reporting of this startup
So how are we to balance falling public-market valuations for fintech companies and simply bonkers-level private-market investment? That’s our question for today. To get our heads around the issue, if not the solution, let’s start with a refresh of fintech venture capital results, the fintech liquidity crunch and what has happened to fintech stocks.
