Miguel Trujillo discusses how to make a company disruptive based on his experience with Kreditech. Kreditech uses big data and machine learning to provide fast digital loans to underserved customers. This disrupts banks by using new data sources and interfaces. Kreditech fulfills the characteristics of disruptive innovation by creating new markets, affecting traditional support networks, and being led by outsiders. Trujillo advises entrepreneurs to create disruptive technologies, think globally, and allow business leaders to take risks in order to make their company a threat to big firms.

1. How to Make Your Company
Disruptive and a Threat to Big
Firms
The Case Kreditech in the Fintech Industry
Miguel Á. L. Trujillo – miguel.trujillo@kontomatik.com
Tutor IE Business School
Country Manager Iberia & LatAm Kontomatik (Kreditech Group)

2. Miguel
• International expert: Fintech, VC financing, business
development, entrepreneurship
• Country Manager Iberia & LatAm Kontomatik
(Kreditech Group)
• Partner BA International Partners (Madrid & Houston)
• Tutor IE Business School (4th in Europe, FT 2016)

3. This presentation
• Goal: ideas to make your company disruptive
• Tools: my 1st person experience studying it (academic),
analyzing it (entrepreneur), living it (employee)
• Structure: disruption theory + Kreditech case +
disruption takeaways

4. Theory
• 1995-97. Dr. Clayton
Christensen, Harvard.
Book: Innovator’s
Dilemma.
• Goal: identify radical tech
changes that produced
radical market changes.

5. Theory
• Christensen initially focused on
disruptive techs role
• Later, he realized that the business
model, not the tech alone, however
revolutionary, disrupted markets and
value networks.

6. Disruptive Innovations. 5 Characteristics
1. Creates new markets + new values. When activated,
eventually overtake existing markets
2. Industries are ripe for disruption when their core tech is
“stretchable”
3. Affect tech support networks
4. Tend to be produced by outsiders and entrepreneurs
5. Designed for new sets of clients

7. 1. New Markets
Sustaining innovation:
• Evolutionary: improvements expected by
clients
• Revolutionary: improvements unexpected by
clients, but existing markets not affected

8. Revolutionary

9. Evolutionary

10. 1. New Markets
Disruptive innovation:
Creates new markets and new values that,
when activated, eventually overtakes existing
markets

11. Disruptive

12. 2. ‘Stretchable’ Essential Core Tech

13. 2. ‘Stretchable’ Core Tech
Traditional industries:
• Vertical structures, glued with vertical
value chains, transaction costs from one
link to the next were expensive

15. 2. ‘Stretchable’ Core Tech
Now:
• Digitalization > zero marginal cost in
transactional costs > the cost of producing
1, 2 or 1M is essentially zero
• Results: links in value chains separate +
new players compete to be more efficient
managing them > vertical oligopolies lose
protection – its competitive advantage!

17. 3. Affect Support Networks

18. 3. Affect Support Networks
Affects the whole culture
of a organization:
• Network organization
& structure
• Qualitative nature of
network’s tasks
• Requisites +
information flows
• Management style
and skills needed

19. 3. Affect Support Networks
Middle management of existing support networks
especially resist disruption to protect their hierarchy,
comfort, and narrow specialization.

20. 4. Led by Outsiders & Entrepreneurs
Middle management
resist disruption to
defend its castle.
Leading companies
prefer to finance
sustaining
innovations, and not
disruptive, because
they are more short-
term profitable

21. 4. Led by Outsiders & Entrepreneurs
Entrepreneurial mindsets and organizations, usually backed by
loads of VC money, are more willing to take the risk, and
wait for the revenue to start invading the leading market,
obliging incumbent players to counter attack

22. 5. Designed for New Clients Sets
Mainstream players
focus on sustaining
innovation (more
features) for
demanding, higher
margin clients, to
obtain short-term
growth and benefits

23. Disruptive innovation
usually offer less of
what customers in
established markets
expect, and different
values mostly valued
in niche, remote or
emerging markets,
unimportant to
mainstream.

24. Disruptive players corner
niche markets, improve
tech, go to a more
profitable niche,
increase market share,
and eventually attracts
higher-margin clients,
pushing incumbent
players into smaller
markets.

25. Additionally, in their path to becoming mainstream,
disruptive players fulfills social changes’ expectations,
thus performing better than incumbent players and
eventually displacing them.

26. Example 1: Fertilizers vs. crops ROI

27. Example 2: The Battle of the Interface

28. Does Kreditech fulfill the disruptive premises?

29. Germany. Founded 2012
CEO and leader Alexander Graubner-
Müller (28). Business and
econometrics backgrounds. Had an
early entrepreneurial experience at
Rocket Internet (Germany).
Amazed about how difficult was to
access money in a sea of data.
Obsessed with risk hypotheses.
Banks did not want to collaborate.
Decided the entrepreneurial route:
lend money himself to test his
hypotheses

30. 2012. 18 employees. 2017. 300 employees
Revenue: 41,3M€ (2015) – 20M€ (2014). 5 markets. 3 continents
3M loan applications, 1M granted.
Lower default rates than market standards

31. Investment: 12
rounds. 500M€
(200M€ debt –
300M€ equity).
Last one May 2017
World class investors:
Peter Thiel, World
Bank

32. 1 acquisition – Kontomatik
(data extraction and enrichment)

35. Spain 18M
Mexico 110M
Brazil 100M
Germany 30M
Value: €8 US Trillions worldwide
Market: underscored and underbanked population in
developed and developing countries. 2,000M globally

36. Value Proposal: A user-friendly mobile interface. 12 fields
to fill in (vs. 50 in banks). Credit granted in 1 minute.
People control the data they want to share

42. Magic behind:
• State-of-the-art algorithm: leverage big data +
machine learning.
• Lends individual in minutes, not days, with less
risk and defaults

43. Banks: analyze 300 data points, mainly based on negative
and past bureau info
Kreditech: benefits of huge data generated in today’s digital
world. 20k data points analyzed.
Don’t look on past defaults, look for attempts to pay back:
banking history (provided by Kontomatik),
microgeographies, macroeconomies, social network
interactions, typing behavior, browsing history,
inconsistencies…

46. Results
• Classical definition of creditworthiness is challenged.
• Previously rejected customers served with premium
attention (fast, secure, transparent), and high client
satisfaction.
• Banks avoid Kreditech niches:
– Not enough machine learning investment
– Little appetite for risk and experimentation
– Very divided departments vs. Kreditech’s flat structure

47. Next Segments in Pipeline
Physical niche
Point of sale finance (110M€ invested in May 2017 with PayU
partner). 2.3B people in 16 markets, requesting local retailers
finance their purchases.
Goal, to get bigger margin niches. Kreditech’s data shared via
APIs = model “credit as a service”.
Digital wallets
Enter the payment industry and compete against banks.
Following the cashless-society trend.

49. Is Kreditech a ‘disruptive’ company?

50. YES!
 New ‘blue ocean’ market. Banking for the underbanked
 New customers and new values. Better interfaces for
digital natives
 “Stretchable” core tech: 100% immediate, cost-
effective digital loans, servicing better than banks’

51. YES!
 Affect support networks: new management (young,
tech savvy), new attitudes (digital, faster), new requisites
(big data analytics), new organizational culture (flat,
results-oriented), new information flows (from past info
from credit bureaus to current bank cash flow info)
 Produced by outsiders and entrepreneurs

52. Kreditech #7 worldwide
Fintech innovator 2016
(#9 2015)

53. How to make your
company
disruptive
and a threat to big
firms?

54. • Be a disruptive entrepreneur
(tech + business + agile +
adaptative)
• Create disruptive technology
and link it to the digital system
Today it’s less hardware and
more software, it’s about digital,
robots and mobile. And it’s
absolutely about data and
analytics

55. • Have business leaders
understand those technologies,
and allow them to take risks
• Be ambitious. Think global. Scale

56. And be aware of this change of paradigm

57. In the older world, a ‘competitive
advantage’ was the control of
your costs over your value chain
(Michael Porter)

58. In this world of
disruptors, from now
on your ‘competitive
advantage’ would be
the speed and
effectiveness of
your organization
to change things,
itself, and the
World.

59. Thank you.-
Miguel Á. L. Trujillo – miguel.trujillo@kontomatik.com
Tutor IE Business School
Country Manager Iberia & LatAm Kontomatik (Kreditech Group)