Running Through Walls: No Straight Shots in FinTech
Ryan Gilbert, co-founder of SmartBizLoans, knows the path to entrepreneurial success is filled with curves and unexpected detours. “I wish life was about straight shots,” laughs Gilbert, who is now a partner at Propel Venture Partners, in addition to chairman of SmartBizLoans. “One of the things we like to say we’re good at in this company is pivoting. If we could productize the pivot, we’d be a lot better off.”
Gilbert is speaking to Venrock’s Brian Ascher about the evolution of SmartBizLoans (which started life as BillFloat, and then BetterFinance), a company that built a platform for online short-term lending for consumer bill payment. “Our product was running well, and our default rates were low,” says Gilbert, a native of South Africa. “But our softness was on gross margins.” Great technology and solid underwriting were pluses, but the small loan sizes got in the way of profits. The company shifted to providing larger loans to small businesses — but also made a detour into using the financial services platform for financing for consumer mobile phone purchases, working with partners like MetroPCS and Radio Shack.
“The challenges we faced in that business were very different from being an online-focused lender,” Gilbert explains. “When you get into retail, you realize there’s a lot less that you can control. There’s certainly more focus on sales force development and training.”
The evolution of Gilbert’s company belies the conventional wisdom in the entrepreneurial world that leaders must stay focused on a single business to ensure success. From Gilbert’s perspective, the focus comes from examining and understanding a single market — even if the business pivots to change its services to that market.
“The one common thread we’ve brought together in the market has been better experience, more accurate underwriting, and a faster outcome,” he says. “Instead of saying we’ll disrupt the banks, we’ll talk about rebuilding a service that small businesses or consumers are getting at the end of the day. We’ve really focused on reusing assets and learnings.”
And a key part of maintaining that focus on success, Gilbert says, is listening to customers at every pivot. “Every step we took, and every pivot, was driven by feedback from our core customers,” he says. “Without customers, you don’t have a north star. Our approach was to get out of office and go and see our customers, trying to learn from them. That built their confidence in us to execute.”
Gilbert’s advice for entrepreneurs seeking to start financial services companies: “Don’t look to disrupt — try to rethink and rebuild,” he suggests. “Banks have embraced innovation more than ever. It’s been phenomenal to see new types of products coming out of large financial institutions.”
And, Gilbert says, focus on changing what you can change, and accept what you cannot. He likes to quote advice from his mother: “You can’t control the winds but you can control the sails.”
