Building a $100M+ FinTech Venture from Michigan: Ryan Rosett, Founder and Co-CEO of Credibly (Part 5)

Sramana Mitra: What was your go-to-market strategy? And what is your go-to-market strategy today? It sounded like you got access to customers through First Data. Or did I get that wrong?

Ryan Rosett: No. They were selling credit card processing, so we would work with a number of larger independent sales organizations that sell credit card processing and forge relationships with them so that we can get referrals for which we’d pay a commission back to them. All the pricing would be built into the customer. That was just something that we would leverage. It proved to be a good hook for us with these partners.

Sramana Mitra: Was there a particular segment or a style of business that you decided to go after?

Ryan Rosett: We started with a heavy focus on restaurants and eating establishments in the early days. Then as the business evolved, we evolved as well. Back in 2010, credit cards were quite prevalent; a lot of the big businesses weren’t accepting credit cards, but restaurants always did. So, we focused a lot on eating establishments to start with.

Then it evolved where we brought down our focus on restaurants from 25% to 13%. The pandemic certainly brought a lot of stress to our business. We were at about 12% and no one was going out to eat, but we didn’t anticipate the carryout either. You know, the carryout turned out to be a little bit of a boon for restaurants during that period.

Sramana Mitra: And what constitutes the rest of the business? So when restaurants were 25%, what were the rest? And when restaurants were 12%, what was the rest?

Ryan Rosett: We’ve around 300 different industry codes. It’s across the board, we can underwrite and fund pretty much any business that is generating revenue.

Sramana Mitra: So you’re not targeting anything specifically?

Ryan Rosett: We’re just open to accepting business. We obviously use targeted marketing, but it’s for whatever our marketing team is working on from the perspective of bringing in customers that we find a higher conversion rate for. There’s a number of industries that we do that with; it’s not anything special.

Sramana Mitra: This is Google search kind of stuff on financing terms?

Ryan Rosett: Correct.

Sramana Mitra: What percentage of the business is through wholesalers versus your direct customer acquisition?

Ryan Rosett: Depending on the month, 60%-65% is wholesale and the other is either direct or renewals.

Sramana Mitra: How many wholesalers constitute that 60%-65% of the business?

Ryan Rosett: We have a couple of thousand wholesalers. It’s not the same 20% that are comprising 80% of the business. It’s an 80-20 rule, but it moves up and down. 20% of the brokers generate 80% of that 60%.

Sramana Mitra: And you proactively went after the wholesalers and the wholesale brokers, to bring them into this kind of a relationship. That was part of your go-to-market strategy.

Ryan Rosett: Correct. We like the variable nature of the business. It was a variable commission. We knew what we were paying. We built it into our technology, our pricing, and our calculator. If there’s a commission that’s paid, it gets put into the term of the loan so that the customer’s ultimately paying it; but that’s something that we’re comfortable with from a risk perspective.

Sramana Mitra: Let’s talk about business model and pricing model, since you just provided the segue to that. What’s the business model on the wholesale side? What’s the business model on the B2B, direct?

Ryan Rosett: To answer your second question first, there isn’t a huge difference between the wholesale and the direct. So the cost of acquisition is less on the direct side, but there’s still a point of deterioration. Say we’re spending a certain dollar amount; even if spend double that, we’re not going to get double the amount of fundings.

Sramana Mitra: So the customer acquisition cost on the direct side is lower than the commission you have to pay the wholesalers.

Ryan Rosett: Correct.

This segment is part 5 in the series : Building a $100M+ FinTech Venture from Michigan: Ryan Rosett, Founder and Co-CEO of Credibly
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