Clair: Enabling Employees To Get Paid Quickly With Fee-Free Access

By Amit Chowdhry • Jun 12, 2024

Clair is a New York-based pioneering fintech company offering free earned wage advances originated by a national bank. Pulse 2.0 interviewed Clair Co-Founder and President Alex Kostecki to learn more about the company.

Formation Of Clair

How did the idea for the company come together? What are your primary responsibilities?

Kostecki said:

“My Clair co-founder Nico Simko and I met in New York while I was working at Deloitte on Mergers & Acquisitions for finance companies, which included Mastercard and American Express. We bonded over our experiences immigrating to the U.S. from Switzerland, and Nico told me about how, when he first arrived, he had an hourly job where he eagerly awaited his paycheck every two weeks. That initial conversation ultimately sparked the inspiration to create a solution that would allow workers to access their pay immediately instead of waiting two weeks, thus Clair was born.

“We both studied economics in school, so we talked about our experiences with adapting to the U.S. credit scoring system since we don’t have a numerical system like this in Switzerland, and you don’t have to ‘build credit’ there. Most immigrants can probably relate – when you arrive in the U.S., you typically need good credit to do things like rent an apartment or buy a car, but it can take years to build up a ‘good’ credit score.”

“These tough requirements made us ponder the struggles that everyday workers face, due to the lack of affordable financial services and the way the payroll system is set up. We wanted to create a better financial tool for workers who are severely underserved and want to better manage their finances. We founded Clair in 2019 and have grown it into a mission-driven fintech company that offers compliant-first, on-demand pay. In order to do this, we leverage data through partnerships with workforce management and payroll companies to assess earned wages, instead of relying on individual credit scores.”

“We also designed Clair as an employee benefit for companies to offer, to help them attract and retain workers. There’s been a labor shortage – especially in industries like healthcare and public safety – and many employers are turning to financial wellness benefits to have an edge on their competition by helping their employees reach short-term financial goals, not just save for retirement. Workers are demanding more flexibility in when and where they work, and that extends to how they get paid, which makes Clair an attractive perk. All accounts are FDIC-insured and supported by our partnerships with national bank Pathward, N.A., and Mastercard.”

“In my role as Co-Founder & President, I oversee operations, compliance, product and engineering, among other things.”

Favorite Memory

What has been your favorite memory working for the company so far?

Kostecki reflected:

“It’s hard to nail down just one, but my favorite memories have been from our company offsites in Tampa, Florida, and most recently, New Orleans, Louisiana. It’s so great to be able to get the team together outside of the office. From bonding over fun activities like boat rides and karaoke, it’s just nice catching up with people from different teams who we may not get to talk to every day.”

Core Products

What are the company’s core products and features?

Kostecki explained:

“Clair has created a fintech platform offering free earned wage advances originated by a national bank. It is available to more than 80,000 workers through 10,000 employers and over a dozen HR technology platforms, including Gusto Embedded, TriNet, When I Work, and 7shifts, and more.”

Challenges Faced

What challenges has Kostecki faced in building the company?

Kostecki acknowledged:

“Partnering with HR platforms is important to our business and our mission but it can be a lengthy process to forge the partnerships and integrate Clair into their platforms as an embedded finance offering. While we work towards even more HR platform partnerships, we need to be able to onboard companies directly if they don’t use one of the dozen platforms that already includes Clair. To meet demand and make this as easy as possible, we developed new technology to connect to companies’ payrolls and launched Clair for Employers, so we can onboard more companies directly.”

“The integration costs nothing for employers and doesn’t require ongoing maintenance, making it easy to manage after signing up. Clair does all the work, from connecting to payroll to educating employees on how to use the app.”

Significant Milestones

What have been some of the company’s most significant milestones?

Kostecki highlighted:

“Clair has been on a steep growth trajectory, increasing revenue by 10x over the past year and providing millions of dollars in free wage advances to employees.”

“In July 2023, we announced $25 million in equity funding in a round led by Thrive Capital, with Upfront Ventures and Kairos participating, bringing total VC funding to $45 million. We’ve used the new funding to expand our team, accelerate adoption, and build new integration technology.”

“We also announced $150 million in a consumer lending program from partner bank Pathward, N.A., to launch our consumer-friendly, on-demand pay solution backed by an FDIC-insured bank. The program allows workers to take wage advances from national bank Pathward, N.A., and also access other services.”

Customer Success Stories

After asking Kostecki about customer success stories, Kostecki highlighted:

“One of my favorite stories is from a senior living facility where many employees were quitting after less than 10 weeks on the job, sometimes to work for a competing company that paid them only 50 cents more per hour. After we rolled out Clair, employees started staying for at least 30% longer, with some staying far longer than that. It’s a meaningful difference for both the workers – who can stay and grow at the company with the team support they need – and the employers, who aren’t woefully understaffed and constantly desperate to hire.”

“Another one of my favorite stories is Chloe’s. I love going out to restaurants in New York because I often end up meeting people who use Clair and I met Chloe, an actor who supplements her income by working as a server, on a visit to Tyger in Soho. She needed access to her paycheck to cover some expenses between pay cycles, which is what Clair was intended for and we often share her story with others.”

“Today, Clair has helped more than 80,000 employees and is available through 10,000 employers, including EverView, Viking Ranges, and SanStone Health & Rehabilitation.”

Total Addressable Market

What total addressable market (TAM) size is the company pursuing? Kostecki assessed:

“There are 76 million hourly workers in the U.S. – more than half of the country’s workforce – who need and deserve financial tools to help them keep up with expenses and build wealth. On the employer side, many companies – particularly in industries like healthcare and construction – which are seeing record worker shortages need to ensure they are fully staffed and must find compelling ways to attract and retain employees. Financial wellness benefits like Clair are key to addressing those needs.”

Differentiation From The Competition

What differentiates the company from its competition? Kostecki affirmed:

“My co-founder Nico and I wanted to take a creative approach to Clair’s business model and have consistently prioritized compliance from the beginning. We’ve developed an advanced lending infrastructure and compliance framework over the past three years, so we can provide more robust and seamless solutions for wage advances in a changing regulatory environment. Compliance is more important than ever for employers, especially as states like Kansas, California, Missouri, Connecticut and Nevada move to regulate EWA companies.”

Future Goals

What are some of the company’s future goals?

Kostecki pointed out:

“Our goal is for any professional who needs their paycheck early to be able to use Clair. We hope it becomes even more accessible to employees across the country.”

“We’d also love for our work to spark a bigger conversation about financial wellness and the opportunities people can unlock when they don’t have to wait two weeks to access the money they’ve already earned. We think they should be able to access their money and put it to work for them right after they’ve earned it. We’re exploring some new offerings that will add value in this way.”

Additional Thoughts

Any other topics to discuss?

Kostecki concluded:

“We’re excited that financial wellness benefits have become a hot topic in HR and benefits circles, and we’re encouraged to see more companies adopting them. A recent survey we conducted found more than half of today’s employers (52%) feel responsible for helping employees with their financial freedom.”

“Financial health is particularly important to millennials and Gen Z-ers who will soon become the majority of the workforce, as they grow older in an economy that’s much more challenging than when their parents came of age. Many smart leaders are picking up on this and exploring financial wellness benefits that are useful to today’s workers.”

“Chipotle is a great example – 3/4 of their restaurant workforce is Gen Z. The company recently introduced new 401K benefits for their front-line workers, who don’t often get access to retirement savings, while also offering student loan debt support, credit score optimization tools, and access to financial education. The fact that 90% of Chipotle’s restaurant leadership roles are held by people who started as crew members and grew into management roles is a testament to their employee retention.”

“That’s what happens when you prioritize investing in your people and giving them the support and benefits they need. When employee benefits like paid time off and health insurance are now table stakes, employers need to decide what kind of workforce they want to build for the future.”