Big Boys Going after Consumer Lending

Earlier this week, I shared my thoughts on consumer lending heating up. It’s a large and growing market that’s big enough for multiple winners and hasn’t kept up with changing consumer behavior. The market opportunity could move the needle for any company, even a juggernaut like Apple.

Today it was reported that Apple is partnering with Affirm to offer a buy-now-pay-later option for Apple devices purchase in Canada. This is yet another big announcement in the consumer lending space within a short time. Apple and Square are making big bets on it. (Affirm was already in the space.)

I figured consumer lending would be strategically important and change quickly, and it appears to be changing even faster than I thought. Change is generally good—I’m a fan of it. Especially when it helps solve pain points for consumers in a better way. I can’t wait to see how this space is revolutionized by these new entrants.

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Land Grab Turned into a Land Mine

Speaking with a founder today reminded me of my days as a founder. He and his team have a great product and they’re focused on producing as many of them as possible to get them in the hands of customers. It’s early days for them, and naturally they don’t know everything. They’re still trying to find product–market fit.

I remember a time I had a bright idea at CCAW: let’s add a ton of new distribution centers all at once. We literally flipped a switch one day and added over a dozen massive warehouses to our distribution footprint. What could go wrong? Um . . . huge problems kept orders from being in customers’ hands when they expected them. Working through the various reasons this happened was painful and stressful for our team.

I later realized that we had trained our valuable energy on the wrong thing: growing our distribution footprint and revenue. We didn’t have product–market fit yet, so we should have been listening to our existing customers, not executing a land grab to get new ones. We missed out on valuable customer insight during a critical phase of our startup journey. The company still scaled and was successful, but I believe that missed insight was the difference between eight figures in revenue (which we achieved) and nine (which we did not).

Focusing on the right thing at the right time is critical for early-stage companies—there’s only so much bandwidth to go around. If I could do it all over again, I’d work on understanding my customer’s problems before adding operational complexity to acquire more customers.

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Consumer Lending Is Heating Up

Last month I shared my thoughts on how I could see Apple as the go-to consumer bank in the future. Since then, it’s been reported that Apple has partnered with Goldman Sachs to offer a buy-now-pay-later option for products purchased via Apple Pay on Apple devices. Today it was reported that Square is acquiring an Australian pay-later company for $29 billion. This announcement caught me off guard and got me thinking.

Consumer lending is a large and growing market. It plays a key role in the overall economy, so it’s big enough to move the needle for a huge company like Apple. And the market is large enough for there to be multiple winners. It’s not on the cutting edge—it hasn’t kept up with other changes in consumer behavior. Considering these and other factors, the moves by Apple and Square make perfect sense. I suspect they won’t be alone—we’ll see more companies entering this space.

I think consumer lending is about to change rapidly. I’m excited to see new entrants in the space and can’t wait to see what direction this goes in.

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The Rise of the Retreat

With more companies working remotely, I’ve been hearing more founders searching for ways to keep their teams connected on a deeper level. Some of them are putting more thought into their retreat planning. Retreats are usually meetings outside the office where everyone gets together to bond and discuss the business. Some last one day; others are multiday. Many include team-building activities to allow team members to overcome a challenge together.

I’m a big fan of retreats and attended two a year before the pandemic. Most were for two to four days and attended by other entrepreneurs. Without a doubt, these have been some of the most transformative and enlightening experiences I’ve ever had. I’ve always left more focused and excited about what lies ahead.

Retreats were helpful before the pandemic, but I think they will be a critical tool for leaders going forward. Can’t wait to see all the creative ways people find to get teams to bond.

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Weekly Reflection: Week Seventy

Today marks the end of my seventieth week of working from home (mostly). Here are my takeaways from week seventy:

  • Origins – A close friend reminded me of how I began as an entrepreneur. It was unglamorous and at times dangerous (I was dealing with large cash payments from customers). It’s good to think about where I started and how far I’ve come. I believe I’ll share more of those origin-story details going forward.
  • Top of mind – Staying top of mind with people can lead to amazing opportunities. I read a book about this years ago, and this week I experienced the power of staying top of mind.
  • July – The month is over, and a little more than half the year is over. Time is flying by.

Week seventy was a great one. It was brisk and keep me on my toes. Looking forward to starting August off on a great note.

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The Office Won’t Be the Same

I’ve been having conversations with friends who’ve returned to the office. I was curious to understand what they’re experiencing and how they feel about it. One friend summed up what I’ve been hearing: “There’s no way I can go back to doing five days, but one or two feels good.” Going back to pre-pandemic office life isn’t resonating with friends, but neither is no in-person interaction. Face time for certain situations and just to stay connected in general has value.

I know the return-to-the-office situation is fluid, but I’m interested in seeing how this plays out. My gut tells me that decisions made during this period are likely to shape how we work for the foreseeable future. We’re in a period of change that will have a lasting impact.

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There’s Usually More Than One Way

As a founder, sometimes it’s easy to get caught up in seeing things your way. You see an opportunity and a path to pursuing it. You’re locked in and focused. Founders often miss that their way isn’t the only way or always the best way. As the old saying goes, there’s more than one way to skin a cat.

Founders should be locked in on a destination but not necessarily a path. They should be searching for the best path to get to the desired destination. Sometimes that path will be something they thought of, and sometimes it will come from others. That’s one reason I’m a big fan of founders sharing their ideas with other people. Sharing invites feedback, some of which will be valuable insights.

If you’re a founder going after a great opportunity, consider taking time to solicit feedback. You never know, you might just uncover the yellow brick road to your Emerald City.

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Optimal Hours

Over the years, I’ve noticed that I’m most productive in the mornings. I try to do things that require heavy mental lifting in the a.m. Recently I had a conversation with someone, and we randomly got on the topic of what habits work for me. To my surprise, his profession involves discussing habits with his clients. He said that a high percentage of them are the same—very productive in the a.m., and they get the most done before normal office hours.

Understanding my optimal hours and scheduling the right things at those times has been beneficial for me. Random things come up, so I have to be flexible. But when I’m able to stick to my schedule, I’m more productive. I get my high-priority work done early in the day and deal with reactive or mindless tasks the rest of the day.

Being self-aware is important for founders. It can sometimes be the difference between success and failure. Understanding your best hours and optimizing them is part of that. If you’re a founder, consider asking yourself, “When am I most productive? Am I working on the most important things then?”

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Investing Styles

This weekend I listened to an investor discuss his strategy and track record. The strategy revolves around having conviction about an investment. He gains that conviction through his own research into the company and market. He talks to customers or potential customers who experience the problem the company is solving. Once his belief in the company is sufficiently strong, he pulls the trigger with a large investment. A small number of strong-conviction bets with a large amount of capital is his strategy. It’s worked out extremely well for him—some of his investments have been wildly successful.

Today I had a conversation with a founder friend turned investor. We discussed the strategy described above and tried to answer this question: “Is there a correct approach to early-stage investing?” I know successful investors who have used a methodical style like this one and others who have totally different styles. Like other things in life, I believe investing styles are a bit like personalities. There is no right or wrong style in the abstract—the right style for an investor is the one that works for them. Everyone has different risk tolerances, horizons, etc. Imitating what has worked for someone else may not work for you. Each person must figure out the approach that’s true to them, test it, and adjust (if necessary) as they learn.

I’m looking forward to learning and refining my own investment style.


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A Picture—or a Clear Summary—Is Worth a Thousand Words

A friend does real estate projects, which I love hearing about. As we walk his sites, he tries to describe the end product. It’s hard to grasp what it will look like as I listen and look at the incomplete construction. He recently began getting renders, and he showed me one of the final version of his current project. I got it right away. The rendering brought his words to life and filled in all the gaps in two seconds. We discussed how helpful that rendering was for someone like me, and he shared an insight: it’s also been helpful for his workers and vendors. They understand what he’s aiming for now, and they make better decisions on their own that align with that vision rather than constantly ask him questions.

This past week I had a conversation with an early founder who’s building a software company. We’ve been working on his one-page strategic plan for the last few weeks. It includes his vision, mission, values, target market, three-year-goal, annual goals, quarterly goals, and quarterly projects. It’s essentially a roadmap that measures progress. It details where the founder wants to go, how he’ll get there, and what he needs to be working on this quarter and this year. The founder rolled out the plan to his team and got an interesting response from a team member: “I don’t feel like an employee anymore. I feel like an owner now, and I know exactly where we’re going and what I need to be doing.”

The founder was surprised that a simple one-page document was so illuminating. Having been a founder, I knew exactly what he meant. I also knew what he was missing. I reminded him that founders have more background knowledge about their market and where the company is heading than anyone else on the team. It’s all in the founder’s head. He’s been thinking about it nonstop. It’s clear to him. It makes sense to him. Other team members’ knowledge is full of gaps. Laying it all out in a simple way fills the gaps, making clear to everyone what’s so clear to the founder. It can be a rendering, a one-page strategic plan, or something else. If it connects the dots for other people, the outcome should be the same.

These two conversations were independent and about different industries, but the founders’ conclusions were the same. It’s important for founders to empower teams by painting a clear picture of where they’re going and how they plan to get there!

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