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Oxygen: A New Model of Financial Services for the Freelance Economy

There are more than ~57M contractors in the US, accounting for more than 35% of the current workforce, according to Forbes.  However, these workers oftentimes have difficulty accessing credit given their lack of W-2 income.  Oxygen founder and CEO, Hussein Ahmed, encountered this problem first hand and set out to find a better way to allow freelancers to access and manage their finances.  I recently had the opportunity to sit down with Hussein to learn more about the ways in which Oxygen is serving freelancers as the gig economy takes off.

A New Economy   

As freelancers and “gig” workers comprise a growing percentage of the workforce, estimated to comprise a majority of the American workforce in ten years, a larger proportion of the population will have difficulty accessing financial services.  The reason is that many financial service applications, such as loans and mortgages, require W-2 income.  Freelancers, whose income is reported not via W-2 forms but via 1099s, often have more variable income, which makes applying for a credit card or personal loan difficult and time-consuming.


Oxygen founder and CEO, Hussein Ahmed, encountered this problem personally when doing freelance work while pursuing his MBA at Haas. Since Hussein was freelancing, lenders had trouble verifying his income.  In the absence of a W-2, he was required to complete ten pages of documentation. This experience was eye-opening and Hussein set out to find out if there were others that were facing the same obstacle.  The answer was a resounding yes.

First Hand Experience Leads to Innovative Solution

The Gig Economy comprises a growing percentage of jobs; Source: Mattermark


Hussein learned that 1099 workers collectively generate $1.4T in income, according to a 2017 study.  Notably, this 1099 income doesn’t satisfy the requirements of many finance platforms such as Lending Club, for example.  Hussein had found enough evidence to conclude that his experience wasn’t the exception to the rule and he wondered if there was a way to use machine learning to determine credit worthiness instead of relying on W-2 forms and other traditional credit risk metrics.  If so, it meant that he could improve access to credit and mobile banking services for freelancers just as the gig economy was taking off.


Through his research, Hussein realized that apart from facing barriers to access, freelancers oftentimes run into working capital management issues as they sit waiting for an invoice to clear or when the timing of payments for a contracted project isn’t well aligned with rent payments.  Freelancers and contractors don’t have consistently timed pay checks, but they do have consistently timed bills, and this creates unique needs for financial management. Hussein, drawing on what he had learned at Haas, determined this was an opportunity worth pursuing.  Coming from an engineering background (Hussein has a PhD in distributed systems from Virginia Tech), Hussein credits his time at Haas with giving him the tools with which to evaluate this business opportunity and to successfully execute as a tech company.

In Hussein’s words, “Haas was invaluable in that it gave me a 360-degree knowledge of running a business coming from an engineering background.  Getting advice and feedback from professors in the hallway and having access to industry experts was priceless.  It was incredible to be on the UC Berkeley campus while launching this venture.”

A New Model for Financial Services  

Oxygen offers financial services designed for freelancers and their specific needs


With Oxygen, Hussein has created a financial services platform designed with the needs of freelancers in mind.  As highlighted above, consumer lenders rely on data such as billing info, the number of open credit lines a potential client has, how far back their history goes, if they have any missed payments, and their income.  However, there is no standardized documentation for freelancers to satisfy their traditional evaluations of income and, therefore, many of these applications go unprocessed.  On the other hand, business lenders look primarily at a company’s cash flow profile.  Hussein has devised a means of combining both approaches, evaluating potential borrowers “through two lenses instead of one.”


Through Oxygen, users with sporadic income facing the above outlined challenges can sign up for an FDIC bank account.  Oxygen can integrate directly with employers, following a three-day employer onboarding process, allowing for direct payment integration.  Oxygen Premier services then allows users to pay a flat monthly subscription rate ($29.99) which grants them access to faster payments (one-day transfers), zero-fee banking transactions, and access to a cash reserve, which is essentially a floating line of credit financed by Oxygen.  Importantly, users only pay the monthly fee when they’ve drawn on their line of credit.  Oxygen also facilitates one-click disbursements, which are accessible via 50,000 ATM locations, all without fees.  If customers need immediate liquidity, they can elect to pay $6.99/month to access Oxygen’s Immediate Pay service.  In contrast, alternatives charge between $70 to $195 per year for access-to-pay services. Customers’ whose employers don’t participate can download the app and apply for loans themselves.

There aren’t many alternatives serving Oxygen’s target market.  Oxygen’s users are looking for access to credit in order to smooth out erratic incomes as opposed to looking for more evenly distributed or granular distribution of full-time income, which some competitors do address (Even, for example.)  In other words, Oxygen’s users are not looking for $75 cash advances, the average Oxygen user takes out a loan between $1,500 – $4,000, meaning the company is targeting a fundamentally different segment of the market.

A Solo Founder Success Story   

The House Fund and applied to YCombinator.  Hussein was accepted into YC as a solo founder, which is very uncommon.  As a solo founder, Hussein has consistently demonstrated an ability to think strategically and remain disciplined.  For example, the company chose to take out ads on the back of buses, rather than on the sides, since it was not only cheaper, but Hussein also recognized that many freelancers would actually spend their days sitting in traffic behind these buses (Uber, Lyft, DoorDash, etc..)  After completing the three-month program, Hussein had created an MVP and launched the first version of the service.  Hussein considers the mentorship and advice from the people at YC to have been priceless in the development of Oxygen.

“It’s hard to explain how much value you get out of these interactions.  These partners, mentors, and advisers are super-entrepreneurs that have been through it all, they’ve really been through a lot on their way to reaching their current positions and, as a result, the advice they give really resonates.”

– Hussein Ahmed, CEO of Oxygen

A Focused Approach to Expansion  

When the company first launched, it was faced with validating a new market.  Now that ~20,000 customers use the service and the company is adding +6,000 new accounts / month, the company no longer has to validate its thesis.  Once investors began realizing how large the market was, and how fast it was growing, the company found itself facing different challenges.  A sort of landgrab mentality has emerged and the company is now tasked with executing extremely quickly so that it can own the segment it helped to uncover. As a result, the company is working to scale rapidly.  When it comes to scaling, Hussein thinks that hiring is an overlooked start-up hurdle.  At first, most start-ups are a one or two person show, but that’s clearly not scalable.  As the company grows, co-founders end up trying to juggle varied roles ranging from managing relationships with vendors to acquiring customers to making marketing decisions.  That’s usually not optimal, as each one of these functions merits its own business owner.

“Hiring is the most important thing for us right now.  These hires are not going to be taking over existing business units, they are going to be designing and building them.  A start-up’s likelihood of success hinges on its ability to get the initial team right.”

– Hussein Ahmed, CEO of Oxygen

Oxygen provides financial services for freelancers


The company has taken a deliberate approach to geographic expansion, choosing to focus primarily on two primary markets, resisting a broad, nationwide expansion initially.  San Francisco and New York were natural choices given the density of freelance or contractor work, but the company now effectively operates nationwide.


Given the proliferation of businesses that depend on “gig” workers (Uber, Lyft, DoorDash, etc.) and the trend towards a more geographically disbursed, if not decentralized, workforce, it seems safe to say the freelance economy is here to stay, and so is Oxygen.

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