Interview with Mr. David Margendorff | Co-Founder of PawnHero Philippines
In the Philippines, pawning jewelry, electronics, mobile phones and gadgets with a lot of pawnshops around has been the most common and quickest way to address an urgent need for relatively small amounts of money.
Compared with banks, pawnshops do not require as many documents before releasing cash. Additionally, some banks only grant loans for individuals who has bank account and have at least a minimum income of Php. 15,000/month. Well, thanks to modern technology. It really changes the way of almost everything, like this company that offers pawning online! Yes! You’ve read it right, Pawning Online! And look, they offer the lowest interest rate of 2.99% per month compared to physical pawnshops which is around 4 to 5%.
Fortunately, we’re so grateful that we’ve been granted for an interview with the C0-Founder of PawnHero Philippines, Mr. David Margendorff and here’s our interview conversation.
Kindly tell us something about yourself (personal life, education, business background, interests, hobbies, sports etc.)
I was born and raised in Germany. I was never been a top student at school. I passed classes by applying the Pareto principle. Back then, I had very little interest in learning about what was taught at high school. But I had an entrepreneurial mindset from very young age. Once, I attended a concert with my father and I saw all the empty cups of beer and cans of Coca-Cola which — when returned — generated cash. I must have been hardly 12 years old when I made a couple of hundred Deutsch Mark during that event. I recall a few more ideas. Like, for example, when I was the first in my class who had a cd-writer, so I started selling copies of games and music but then I realized that that was nothing that I couldn’t scale up, apart, of course from being on the then edge legality. But it gave me the idea of what I eventually ended up doing for almost 10 years of my life. I saw a big demand for video games and I found a supplier for video games (mostly imported) and I started selling those and the video game consoles to friends. It never felt good making money from just friends so I built an e-commerce platform. This was in late 1999 (Amazon had just launched the year before in Germany), I started off operating from my room but soon expanded across the entire house and, eventually, had to move on to my first office. My mother — who had always supported me — was worried it might be too big with just 120 sqm but we soon after outgrew it anyway and expanded to a bigger space.
After 10 years, I felt that it was time for the next chapter and a new challenge. Having literally never seen a university from the inside, I thought it would be great to combine my work experience with the theory you learn from such institutions. Sadly, because I never got my A levels (or its equivalent), I was not allowed to attend a public university in Germany. In any case, this was not my plan, I wanted to leave my comfort zone and discover the world. I had applied for a Bachelor’s Degree at a Business School in London. Initially I was rejected because of the same reasons, but when they took a closer look at my CV, I was invited for an interview for an MBA. I felt honoured, but wasn’t sure if it was the right thing to do, since I felt the other students would be more experienced. Also, my English wasn’t as good back then. I flew to London for an interview, and got the offer. I rejected it ultimately, as I felt I wanted to study not only for 10 months, but also to learn another language and study abroad. The admissions department accepted me for the 4 year course and I went on to study International Business with a major in Finance with Spanish in London, Buenos Aires and Barcelona.
I used the winter and summer breaks to get as much additional experience as possible. During my first and 2nd semester I worked for a boutique investment bank in London. I didn’t earn a single Dollar but the experience was priceless. Later I also worked for Ernst & Young, one of the world’s leading professional services organization. I even worked for a private equity and fund advisory firm in Switzerland, where I was directly engaged in the fund raising as well as in the review, evaluation, and structuring of potential investment opportunities.
When I graduated, I wanted to go back to the startup world. A friend of mine had just joined a group of ex-Rocket Internet entrepreneurs in Kuala Lumpur. He sold me on the vision to work with the people who started companies like Zalora (the leading online clothing retailer in South East Asia), Lazada (the leading online department store in South East Asia), and Groupon (Offering daily deals at restaurants, retailers and service providers in 28 countries). There was a hint in that they had a limited budget and could only pay me USD 500 / month. That was hardly enough to survive — with very little savings left (I had just lived four years in one of the most expensive cities in the world, London). Regardless, I accepted the offer, buying a one-way ticket to Malaysia in August, 2013.
We worked 16–17 hours per day, close to 7 days a week but it was fun. Two months later, I was offered to lead the expansion in the Philippines. Today, CompareAsiaGroup is the largest financial comparison website in Asia.
I left the firm eventually because I felt that — with PawnHero — I could do something more meaningful and solve a real problem. I felt that there was a better way to meet the needs of Filipinos who tended to rely on informal financing sources like pawnshops. So I founded PawnHero in 2014 to meet the needs of the “unbanked’ who form a vast majority of the population. Today, we have helped thousands of Filipinos gain access to affordable credit. We currently employee over 50 people in two countries and by the end the year we will be more than 100.
Tell us a little about how PawnHeroPH started? Pawning online is a brilliant and cool idea, how did you have this kind of vision?
When I started working for GlobalCompareGroup’s expansion here in the Philippines, I noticed there were a lot of pawnshops along the road where I traveled to and from the office. I realized that it was a popular way for Filipinos to get fast cash. Naturally, I wanted to try for myself how convenient it was. I learned many lessons trying to pawn something. For one thing, the interest rates were very high. For another thing, there were many hidden costs involved. Add to that the fact that the value of my item seemed to differ depending which pawnshop I took it to. It just all seemed too complicated and difficult to work with. I set out to disrupt the industry and a good way was to have everything done online. This would make it easier and safer for people to pawn their items when they needed quick cash.
What motivates you to build it? Your inspiration?
A great majority of Filipinos don’t have a credit card and even more are unbanked. This means that Filipinos rely on informal loans when there are emergencies and problems that they need to deal with. The many options that they have to rely on often charge very high interest rates that can get crippling and leave people heavily in debt. This is something that puts a strain on them and their lives. PawnHero is here to be the good guys that help them in their times of need. We want to make sure that they aren’t burdened by heavy interest rates because we keep ours fixed at 2.99% monthly — with no hidden charges. We also make sure that those who pawn with us are safe because everything is online and we take care of picking up your item. You don’t even have to carry around loan cash too as we deposit this in your bank account or in a PawnHero card that you can use in any ATM nationwide. What inspires me, you could say, is being able to genuinely help other people.
How did you come up with the name?
Like I said, we want to be the good guys. We want to be able to provide a service that people can depend on and rely on. PawnHero is all about being there to help, being there to provide for the financial needs of others without burdening them with potentially heavy debts that only cause more problems in their lives. Also, we like to also think that each of us working here is being a hero in the time and effort that we put out to continuously make this system better.
What was technically the most challenging part of developing PawnHeroPH?
At the time that we started out, a lot of the little details of how PawnHero would work weren’t too clear. We were breaking new ground in the Philippines so there weren’t any systems to base our platform on. Overall, there was a challenge because we had to make sure that the process was ironed out and secure. All of that, after all, would translate to the customer experience as a whole. We (my team at the start and I) had to think about how to secure every step of the way. We had to create checks and balances along the way from the initial estimate to the pay out to ensure that there was no way to have problems along the process chain. We also, of course, had to figure out a safe, quick, and effective way to get cash to our customers. A lot of the specifics have to be kept secret for security, of course, but I would say security was the big challenge.
According to my research, you’re a German national, my question is, why did you choose the Philippines as the home of PawnHeroPH?
Like I said, I had worked with CompareGroupAsia which dealt with loan comparison in Southeast Asia. Even then, I already knew that there was a great need for providing dependable financial solutions to the region. Having come to the Philippines, I also noticed that pawnshops are very popular here. I already talked about the problems I had observed with existing pawnshops, so I will just add that I find the Philippine market more welcoming and friendly than most other markets. It has a lot to do with the character and culture of your country. I am, of course, learning more, but so far I have found that this country is very open to newer ideas and concepts and very embracing of new technology.
What is the hurdle you have faced or are still facing? What is your current vision for PawnHeroPH? Where do you see PawnHeroPH in 5 years time? What are you most excited about at the moment?
We’re always looking to improve in every way and we are still learning a lot. From the way the system works, the operations that guide our service, and the service itself. The question we constantly ask ourselves is: how do we make things better? We strongly believe that there are always ways to do things better so we never stop pushing ourselves to learn more and innovate. A common mistake people in business make is to stop growing. When this happens, there’s a bigger chance that things will fail. So as we walk into the future, we’re looking to get better and better.
In one word, describe PawnHeroPH.
Disruptive. ;)
In one sentence, how would you market PawnHeroPH?
If you want cash fast, safe, and convenient, we’re the Heroes to call on.
What advice would you offer to any soon to be startup Founders out there? Do you have any message for aspiring Founders?
Don’t be afraid to take risks. Make them smart and calculated, but don’t be held back by fear. There’s always something that you can improve upon.
For more information, check out their website at pawnhero.ph and learn more about their offers and service.
Originally published at www.millionrising.com.
