James Gutierrez: Anatomy of a Social Entrepreneur
Entrepreneur and finance technology expert James Gutierrez has long believed in economic fairness. With a strong family belief in social justice and a career focused on building organizations from the ground up, fintech entrepreneur James Gutierrez recently discussed his professional and personal journey.
Gutierrez grew up in a family that worked tirelessly to support the Latino population and social justice causes. His family immigrated to the United States from Mexico and had their own struggles with hardship, economic challenges, and assimilating into the U.S. culture.
“I wanted to carry that torch and give back to the community, specifically helping to build wealth and address problems of economic inequality that persist in our country for Latinos, immigrants, Mexicans, people that are brown, but also the wider communities of color in the U.S.,” he said.
James Gutierrez On Foundational Values
This foundational set of values has shaped his professional journey. These foundational values have also served as the sprouting point for James Gutierrez’s professional ventures.
“They all came from a deep-seated passion for fighting for equality and fighting for justice, particularly economic justice for low-income communities and communities of color, which stemmed from my family and my background,” he said.
He focused on the importance of building a good credit score and the impact of poor credit on everything, from applying for an apartment to getting a cellphone. Without good credit, working-class people need to put down more cash upfront.
In his application essay to attend business school at Stanford University, he wrote about the influence of his upbringing and how he was passionate about his desire to “hack the system” to make sure it worked for working people. He did research in his second year at Stanford University on the issue.
Forging Values Into Career Opportunities
After graduating from Stanford University, young James Gutierrez founded Progreso Financiero (now named Opportun), a company that provides small microloans up to $1,200 to working families. These loans were “appropriately sized” for people with annual incomes of $30,000 to $35,000. Those borrowers who paid back the loans could build credit. This created a positive cycle of wealth generation for traditionally underbanked individuals.
“I’ve always felt that while our borrowers and the people we’re serving didn’t have formal collateral, they had moral collateral and that they would repay their loans,” he said. “That was the impetus for me to start a fintech company focused on lending for the poor and the underserved. I felt that this is where we have the greatest hope… and the highest aspirations.”
“In the U.S., it’s a Catch 22. You can’t build credit unless someone actually gives you a loan. So, you have to take out a loan and repay it in order to build credit,” Gutierrez said. “Therefore, you need a company who’s willing to lend.”
Establishing Opportunity For Others
Gutierrez believes there are two financial foundations that are the path to wealth creation and moving families up the financial ladder. One is building credit and qualifying for a mortgage. The other is starting a small business and securing financing.
Both paths require applying for credit. Too many people his companies have served have poor credit or no credit history, the latter of which Gutierrez said can be even worse.
“I’ve always said that not having a credit score is like not having a face. You just don’t exist and you don’t have an economic identity,” he said. “I wanted to tackle that problem first because I felt that solving that issue would put people on the map so they could participate in the U.S. economy and have a chance to build wealth.”
Over the next eight years, as Progreso Financiero grew, the principle of moral collateral remained true. “One of the things we were always very successful in is that principle. Our borrowers repaid and they repaid at higher rates than anyone ever thought they would, even greater than the general population. That was the motivation behind my first company.”
Creating An Inclusive Market
Years later, with the entrepreneurial drive still strong, James Gutierrez created Aura, which made loans out of small retail locations. Aura found success, he said, from “a corner of the market that was working well” – putting small stores and kiosks inside ethnic supermarkets that the company’s borrowers visited multiple times each week. The supermarket fostered community and was a popular gathering place. “It was a place where we could build trust, and see someone face to face,” he said.
Aura employees educated customers on the importance of building credit. The face-to-face relationship was important. While the fintech technology made it easier to establish a credit relationship, it was the ability to leverage the trust within the community – knowing about upcoming birthdays and neighborhood news – that made a major impact.
The impact those two companies have had is significant. Together, James Gutierrez estimates they’ve provided more than $3 million loans to nearly 1 million borrowers. What’s more, the companies provided an alternative to the predatory lenders and payday loan businesses that have preyed on vulnerable populations with exorbitant interest rates.
“We wanted to disrupt that industry by providing a loan that would build a credit score, and also be much, much lower costs,” he said. “I’m proud of that.”
As an example, Gutierrez noted that at Aura, Executives measured how much money they saved borrowers compared to unscrupulous lenders. Aura has made 650,000 loans worth over $800 million in Arizona, California, and Texas. Those loans saved lenders more than $500 million in fees that they would have otherwise spent in borrowing from predatory lenders.
Most recently, James Gutierrez hinted at the creation of a brand new venture in the fintech sphere. The established social entrepreneur is in the developmental stages of launching a new mobile-first platform that will match the Latin-X and underbanked communities with banking and insurance solutions. Utilizing payment technology and alternative risk scoring, the new inclusive platform will ultimately aim to make financial security and literacy available to Latin-X and traditionally underbanked communities.
Being The Change You Want To See
James Gutierrez is committed to helping the underserved in both his professional and personal lives.
He is a proud graduate of SEO (Seizing Every Opportunity), a global nonprofit that provides programs to support and educate underrepresented people. He said the program “changed my life, put me on a different path, and gave me a lot of confidence.” James Gutierrez serves on the Advisory Board of the SEO San Francisco Scholars program.
“I care a lot about helping kids, students of color, first-generation to go to college, get into college. There’s a problem in public high schools where a lot of kids get left behind,” he said.
James Gutierrez is also Vice-Chair of the Board of the Silicon Valley Leadership Group, a trade association of 380 technology companies. The organization advocates on behalf of its members for transportation, housing, and other policy issues along with improving the quality of life for employees.
The drive to serve and support others has guided Gutierrez at each phase of his career. When reflecting on his work at Stanford University, he recalls thinking about the impact he could have.
“I would think, ‘Can I start a company that would help to improve the lives, the economic lives, particularly people that are affected?’” A belief in community, a commitment to relationships and an entrepreneurial question led to an emphatic yes.