Solving problems in the era of COVID-19
As I write this on April 3, I’d like to send out best wishes to all in our industry with the hope you, your clients and employees are healthy and you are all staying safe and secure with your families.
March 2020 – What a month! We are living through such unprecedented times, in some respects, (while we are physically distanced) we seem to be more connected as we have this once in a lifetime, collective experience.
When I was asked to contribute to Non-Prime Times to give my perspective on how a FINTech founder and team are working through these super challenging times, I jumped at the chance. I’m far from a professional writer, and some might wonder what qualifies me as a “Fintech” founder anyway? The answer is less fancy than you might think.
My co-founder and I grew up in the auto finance business starting at our father’s finance company, on Southwest 22nd Ave. & Flagler in Miami, in 1987. That may be all you need to know, however, we consider ourselves lifetime, auto finance veterans having paid lots of our dues at companies like MFC, FirstCityFunding/Drive, CapitalOne Auto, and Group1Automotive, plus we’ve had the joys of owning and investing in retail and BHPH dealerships.
We’ve repossessed cars while they were running outside our branch (we called them “drive-thru” repos). We’ve been chased off front bumpers by Doberman-pinschers chained to the back bumper and located many a skip with the old “Goya Products giveaway” program. That was our Cuban mother’s idea, so don’t judge!
We’ve been in amazing situations, seen and been involved in great innovation and earth shifting moments in our industry, but COVID-19 might end up being the most challenging (not only for our industry) but for our country! These times will challenge and force the industry (from dealerships to investors) to level-up, and get more efficient just to survive as a sector.
In the 2008 financial crisis, many innovations sprung from a system that had perverse incentives and misaligned interests in our mortgage industry. Fintechs and software companies have helped the mortgage sector come out of the meltdown and (at least for now) survive with stronger controls, more efficiency, and these innovators have helped the industry virtually eliminate fraud.
The best software in any industry tries to solve problems or automates a process that humans find repetitive, mundane or inefficient. I think the perception of software creation or development is that it requires coding and development skills and while most of us know Bill Gates and Mark Zuckerberg as brilliant coders, more and more, B2B innovations come from the minds and experiences of business leaders, distribution and domain experts.
Famous VC and Netscape Co-founder Marc Andreesen says, “The world is being eaten by software.” One needs to look no further than Amazon and UBER, who own no stores or taxis, but run on powerful software, and solve problems we didn’t realize we ever had.
As I was affected by the latest announcement of yet another merger at my last bank in April 2016, I read a Wired magazine article titled, “The End of Code” by Jason Tanz.
The thesis of the article was that software, AI, frameworks, platforms and storage costs were getting to be so good and so affordable, that creating, testing and developing powerful solutions by domain experts are allowing for unprecedented innovation across the business, medical and financial services industries. The power dynamic was shifting from the developers to the business experts…this insight: plus a great Rocket Mortgage Refi Experience put me on the path we remain on today.
That article couldn’t have been more correct, and it’s not just happening in Fintech, MedTech and FoodTech where experienced practitioners can take basic “sandboxes” from platform and data providers, accessing free “starter” HIIPA Compliant AWS servers, and pretty much create products to solve the most vexing problems and challenges in any industry.
I believe we’re living in a new Victorian era, where the platforms we’re going to be using and living with for the next 50 to 100 years are being created. Quantum computing and cloud-based systems, AI, ML, and IoT will shift the world for our kids and grandkids.
Our Fintech company is busy trying to solve some of the most frustrating operational components of the auto finance industry: fraud, validation of income, employment and identity using modern, digital technology, (partnering with the consumer) ridding the industry of paper-based stips, faxes, and screenshots for good!
As with most crisis environments, some will get crushed due to nostalgia, or a deep commitment to the past, legacy processes and platforms and some will gain ground by perceiving the crisis as a chance to make big moves, strike up partnerships, help others work through their challenges, and ultimately help others solve problems.
Our father’s finance company was called E.S.A. Auto Finance. The E.S.A. stood for equity, stability and ability. It’s like the old three Cs of underwriting: credit, character and capacity.
We used to joke that our borrowers (and dealers) didn’t have any of the attributes in our initials!
My father, as you can tell, had a sarcastic sense of humor. Underneath the irony, he carried a deep understanding of the Florida Retail Installment Act and all aspects of laws that governed credit and sales finance. We were so early with what we were doing in 1987, that the State of Florida Finance Board, confused by our business model, came into our office for our examination and we watched our father calmly explain to the regulator that ESA, in fact, was not in violation of any usury limits, since we purchased credit sales, RICs (and not loans). My brother Ken was 17 at the time and a junior collector, no wonder he turned into a compliance nerd. (No offense to y’all fellow FCRA, TILA and TCPA geeks.)
I’m certainly not writing to look backward. One of my responsibilities, as Oasis said, is to “be here now” (in the present), taking those lessons of the past, informing our actions, big ideas we try to implement daily trying to live into the possibility of what might get built in our future.
Furthermore, software development (from my perspective) is less about fancy terms like “machine learning”, AI, blockchain and more about solving problems for human beings.
We like to say that our focus should be less on the feature set or whiz-bang and more on the problems and value we can deliver. Product development takes on a new meaning when you start with the perspective of solving one human’s problems versus building a product everyone has to conform to. My wise CTO, and friend Jude Samson taught me that.
As humans, what’s our most precious resource? I think it’s time. We all have the same number of hours as Warren Buffet. When I dig deep to understand why we are building TurboPass, I think of my dad and the time we wanted to spend with him, inside the businesses he was running during our childhoods – dealerships and finance companies.
So giving people back our time is a massive driver for us. The other theme we can’t stop thinking about is trust. Doesn’t it seem like the biggest thing missing from the car business is trust?
Customers don’t trust dealers, dealers don’t trust customers, and we lenders, we’re getting to the point that we don’t trust anybody!
Paradoxically, as a software company, our greatest goals are not technical…our greatest achievements will be when we can deliver trust and time…for buyers, sellers and lenders.
Stephen Covey, Jr. wrote a book titled “The Speed of Trust”. The thesis of the book is that when trust is high, things go fast, and when trust is low, things go slow.
As we check-in from the front lines of a Fintech, focused on helping dealers and lenders create trust in the credit sale transaction, I wanted to offer a perspective that after spending this time with our families, examines our priorities and values. I notice we’ve all had the incredible gift and opportunity to deepen our relationships – the relationships with each other, our families and our employees.
Not all the conversations have been easy, but maybe, we’ve seen a glimpse into the future.
Our productivity can be enhanced by technology, allowing us to focus on what’s most important in our lives: our relationships, our higher selves, and the present moment. Maybe technology can help us to stop living in the past or worrying about our futures, and maybe it can help us be here now.