If you need to buy something but don't have enough capital to purchase, you need a loan. If you need a loan, you need to go to a bank and fill out a lot of paperwork in a cubicle that smells like lemons, with a very nice bank attendant who seems a little over-caffeinated for the occasion, and offers you a candy on your way out.
Or so you may think.
As baby boomers retire and millennials move up in the workforce, demand for more modern methods of handling money is increasing rapidly, and there are plenty of companies in the financial technology space racing to meet them.
Deep in the heart of the FinTech space, behind the wall of shiny consumer-facing brands that offer specialty credit cards, peer-to-peer transfer services and payment dongles, is the equipment financing market. Valued at $1.1 trillion, the participants in this industry are in the business of making loans to businesses for the express purpose of buying the machinery and supplies that they need. Quite a lot of them in fact - about 80% of U.S. businesses finance their equipment.
That market is currently being disrupted - that is, modernized - and guided by the demands of the new majority generation in the workforce: millennials.
The leader of this change is a company called Currency, which was founded in 2012 with the purpose of making it easier for small businesses to get a loan, as well as to distribute them. Currency targets both those who are trying to buy, as well as those trying to sell, and that mix has worked out very successfully for them - one click financing, with approvals given within a few minutes of application. The company is headed by CEO Charles Anderson, who was inspired to help small businesses get the loans they needed after growing up economically underprivileged himself, and witnessing the struggles of his neighboring local businesses.
So how do you go about changing how an entire industry works?
Recognize The Need
Most successful companies are based on a problem that the founder noticed, and decided to solve. However, the majority of them build on a previous solution and improve it gradually. When you want to catch the imagination of a laggard industry, you'll need to solve more than small inconveniences - the idea must be one that's worth rewriting protocols and processes for.
"What was really clear for me, when we first started, is that change was right around the corner. The way of doing businesses in this industry needed to be disrupted. If you look at other similar verticals like credit and mortgage, you can see their own disruption beginning and advancing rapidly," explains Anderson. "They're all transitioning from offline to online, as quickly as possible - except the equipment financing industry. It hadn't even been touched yet when we started."
By highlighting this change to customers, Anderson and Currency have convinced not only buyers, but an impressive roster of sellers of their worth, and the importance of updating technology before it's too late.
Know When To Approach
Just as you gauge when to ask a favor of a friend based on when they're feeling the most appreciative towards you, it's important to wait for the right time to approach an entire industry, and pitch a disruptive piece of technology.
"It was really interesting when we found that the average age of professionals in the equipment financing space was between 50 and 60 years old. Well known equipment financing associations are predicting that 45% of the professionals in the market will 'grey out,' or retire within the next few years. The combination of this market having massive turnover, and the total lack of technological advancement indicated that now was the perfect time to launch."
Start Specific, Evolve Offerings As Traction Is Gained
"Back in 2012, the original thesis was to get the organization to scale and ramp up. The initial business model we had was to be a best-in-class balance sheet lender. The liquidity wasn't originally there - we were a new, unheard of company, so it was to be expected. We guessed that if we could just have access to capital, and have a really efficient engine for delivering that capital, we'll have a shot at winning in a major way," explains Anderson. "That was the right thesis at the time - and allowed us to have conversations with companies we hadn't really allowed ourselves to dream about working with at the time, and after that, we were able to expand to what we currently do now. That also means we expanded our audience, both for buyers and sellers."
The lesson any entrepreneur can take from this is that yes, it's important to have an end goal, but don't feel compelled to offer it before there's interest from the market you're targeting. Laggard industries require, by definition, time to develop a relationship with each new company that joins their ranks. Just as you wouldn't propose to a stranger, don't try to force a total disruption on companies that are unfamiliar with you as a brand - start slow, with something that can instantly garner improved metrics, and build from there.