Juno: The Costco of Student loans
+ Growing through an early adopter community
Hello folks 👋,
Around this time last year, when I got my tuition bill for my Masters's degree, I was filled with a cocktail of emotions: mostly anger and bitterness.
I was bitter because of how normal it was for an educational institution to charge me the equivalent of ~46,000 hours of white-collar labor in my home country, all to read a couple of case studies and having the honor of getting a reply from a bunch of people on Linkedin who share the same mascots on their profiles as that of my respective university.
What was more ridiculous was how I was expected to navigate this foreign American financial ecosystem and come up with an absurd amount of money in a grand total of 28 days. For reasons behind my comprehension, no school official would dare point me in the right direction, or god forbid, give me any insights on how to do so as an international student. The most common answer I received was to “consult with my local banks.”
It was during that dreadful process that I first encountered Juno (known back then as Leveredge): a student collective that uses group buying power to negotiate better rates.
Disclaimer: I ended up cold emailing the founders & joining the team around 10 months ago. However this is not a sponsored post
At this point, I am sure there are many questions floating around that beautiful brain of yours.
What exactly is Juno? What does “uses the group buying power to negotiate better rates“ mean? How they got their very first customers? and more important, Why is their story worth sharing?
Let me start with the latter 👇🏽
Why is their story worth sharing?
Over the past 53 issues, I have written about go-to-market strategies for almost every kind of company. One of the few types of companies I am yet to write about is partnerships-driven companies. Today this is about to change 😬.
Partnership-driven companies are unique in the sense that they don’t just need to create a competitive advantage; they need to create a competitive advantage that their partners are ill-suited to replicate in the near and future term. And this is hard to pull off.
The second reason why the Juno story is worth sharing is because they are one of the very few companies that managed to popularize a business model from other parts of the world and actually make it work here.
Historically, we have seen numerous examples of things working in the US and being replicated and localized in other parts of the world. For example
Uber (US) -> Careem (MENA), Didi Chuxing(China) , Grab (Southeast Asia)
Amazon (US) -> Flipkart (India), JD.com (China)
PayPal (US) -> Paytm (India), Flutterwave (Africa)
Stripe (US) -> Paystack (Africa), Checkout (Europe)
+every company that Rocket Internet ever launched.
There have been very few examples of people who managed to take successful business models from other parts of the world and bring them back to the US. QR payments have been widely adopted in China for almost a decade. Despite making the occasional appearance on VC twitter “yearly prediction,” they haven’t seen the light of day. The same goes for Social Commerce, Uber for buses, Superapps, Money circles, Remittance-related apps, etc. These are prevalent concepts outside the confines of the US that never found their footing in this market.
Juno, successfully I may add, brought the concept of group buying for student loans, a long-established business model in Israel, to the US.
This takes us to the second question I proposed:
What exactly is group buying power?
Group buying in theory is demand aggregation. If you manage to combine a lot of small transactions and pool them into one big order, you will have more power over whoever sits on the other side of the transaction. Juno applies that same concept of demand aggregation to private student loans.
As an individual borrowing money for school, you have little leverage over your lender. However, if you band together with thousands or even tens of thousands of other students all looking for student loans, the group will likely be able to negotiate better rates than if each individual went directly to the lender.
Each year, Juno creates negotiation groups for incoming and continuing students (whether they are MBAs, Grads or Undergrads) seeking student loans and goes out to the market to negotiate exclusive rates on behalf of the entire group. While each person get a different rate depending on their credit worthiness, everyone ends up with a better deal than they would’ve gotten if they went directly to the lender, and that my friends is the “power” of “group buying.”
Juno - the early days
As with many of the companies we covered, Juno started off in the dorm room…(well actually a little bit before that 🤓). Nikhil and Chris, two incoming MBA students at Harvard Business School, heard about the concept of group buying for students loans from another fellow incoming student who explained how this was common practice in his home country.
In a true Hail Mary fashion Nikhil decided to give this concept a shot. He would reach out in the group chat with other incoming Harvard students and ask them if they want to be part of an experiment of him negotiating student loans on behalf of everyone who is interested
Getting the first 70 users
The first 70 users came in from dropping a google form in the incoming students group chat. The form allowed people to opt-in to be part of this new Harvard MBA negotiation group concept and would help the team bundle all the demand from their classmates to later take to lenders.
With an initial traction of around $4m worth of loans, Nikhil and Chris started doing cold outreach to banks & lenders in hopes that they would be able to get themselves and their classmate a better deal than what’s out there…but with little to no luck. It wasn’t enough volume for anyone to take them seriously. If they wanted this to work, they needed to expand the group aggressively (at least X10) and do it all within 60 days.
Going from 70 to 700
The journey to X10 their user base in 2 months (to be able to meet the tuition deadlines of schools) was rooted in building a community around their concept. Communities usually come in two flavors:
Goal-Driven Communities: where people rally around a common goal (ie transitioning to a new job, building financial security…etc)
Identity-Driven Communities: where members of the group are able to find and connect with people who share a similar trait or characteristic
When Juno first tried to build a community around negotiating student loans, they borrowed a little bit of both. The had an identity aspect of being exclusive to “top MBA programs” and they rallied people around a clear goal of getting lower rates. This remix of the two translated in:
Having an intimate group of people who share a common ground and are able to closely identify with other members in the community. This built trust.
Having a highly mobilizable group of people who are all bought into achieving a single outcome of getting better student loan rates. This built purpose.
With trust + purpose baked into the DNA of their community, Nikhil and Chris would be able to galvanize that early cohort of 70ish users, to go out and recruit more users to join their efforts. They did that through 3 ways:
Aligning incentives: When pitching their idea almost weekly within their facebook group community, they key message was that “the more people who join our group, the more likelihood of us being able to successfully negotiate a deal for everyone in it.” Put another way, with everyone doing their part and helping to grow this group, everyone will be better off than if they didn’t
Naming and Shaming: Related to the above, if some people is not doing their part, then everyone will likely be worse off because of that. Naming and shaming the participating campuses that did not have sufficient traction in public put a social pressure behind students from those places to go out and recruit people from their university group chats and slack communities
Decreasing friction: To increase the velocity of their growth, they would arm members of the community with templates and key talking points to share with their classmates.
Armed with only a facebook group community and a google form, Nikhil and Chris were able to build a negotiation group of over 700 students across 10 business school, strike a deal with a lending partner all within a 2 months period. Out of the 700 members that joined this negotiation group, 50%+ ended up taking the Juno negotiated deal.
Ever since that first negotiation they ran, Juno has replicated the model in loan refinancing , health insurance for international student, and expanded beyond MBAs to negotiate on behalf of Undergrads and Grads. They run the same process across all these verticals of grouping together a large number of students, going out to the market and negotiating on behalf of everyone.
To date over 70k people have joined the Juno negotiations and have taken out over $400m of their negotiated loans.
and this is the story of how Juno got their first 700 customers,
See you next Sunday 😉,