The Sosa Brothers: Turning $750 Into a Billion Dollar Company
While start-up companies are no longer a relatively foreign concept to the average person, given that access to information is widely available in this day and age, most people still can’t name a prominent and successful company that was started from the ground up. To make matters worse, I would wager that it would be even more monumental to name a successful start-up company ran by an entrepreneur of color. Don’t worry, it took me a few days of researching myself before I could understand the hoopla behind start-ups as well. Anyway, in the last few decades people of color have contributed greatly to the development and innovation of companies not just in Silicon valley, but across the nation as well.
One prominent Latino entrepreneur, named Roy Sosa, is a prime example of how influential people of color can have on the economy. Roy Sosa’s rise to prominence is a particularly inspiring story, one filled with the kind of happily-ever-after ending we all seek in life.
In 1998, Roy Sosa and his brother, with a whopping $750 in their hands, decided that they wanted to start up a company together. Inspired by the expansion of the internet in the 1990s, the Sosa brothers conjured up a brilliant plan to provide individuals, of whom did not have established credit or bank accounts, credit cards and prepaid cards to grant them the ability to purchase items at retail locations. They believed that many people were being excluded from the financial service industry across the country, so, naturally, they wanted to fill this void. It was at this moment that NetSpend was born out of an apartment in Austin, Texas.
NetSpend operates by marketing and selling prepaid cards at a variety of locations across the country, as well as on their website. Places that we all have visited at least once in our lives, such as H-E-B or ACE, all carry cards that are provided by NetSpend. The primary consumers of these cards are individuals who generally make less than $30,000, according to the FDIC, due to them being unable to acquire credit cards from larger companies like Chase, Citi Bank, or American Express which require established histories of credit and higher incomes.
NetSpend offers the ability for its users to have free direct deposit, free money transfers, online bill paying, and much more. The flexibility and consistency of NetSpend, without a doubt, has allowed it to grow from being a small company to now being valued at over $1.4 billion dollars.
While NetSpend has enjoyed relative success in the market, however, it faces competition from other companies that service the same type of products such as Green Dot. In particular, Green Dot has announced plans for an Initial Public Offering (IPO) that would inevitably increase the value of the company on a vast scale. As a result, NetSpend has announced that they may have plans for an IPO in the future as well, as they look to remain relevant in the marketplace because of the growing competition.
So, in terms of growth, the future looks promising for NetSpend as its consumer base is largely going to continue to exist. So long as there are people who are disenfranchised from the financial services market, there will always be a need for the services that NetSpend offers the people.
Though the Sosa brothers are no longer as involved in the company as they previously were, instead focusing on their philanthropic creation called MPower Foundation, an organization that empowers individuals across the world, NetSpend has remained a contender and powerhouse in the marketplace for prepaid cards. As we continue to follow the growth of NetSpend in the future, it is reassuring to know that in order to become successful sometimes all it takes is a small amount of money and the desire to overcome any obstacles put forth. Having said that, the Sosa brothers should be an inspiration for all aspiring entrepreneurs of color across the country for the way in which they successfully managed to create a business from the ground up and how they’ve helped spread the idea of empowerment to people of color. I think it is safe to say we all could learn a thing or two from the Sosas.