As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing Jorge Sun, CEO and Co-founder of LendingFront.
LendingFront is a technology company that powers the future of business lending for community banks, credit unions, CDFIs, payment processors and alternative lenders. The SaaS platform enables lenders to separate small business lending from the traditional commercial lending process so they can lend capital in a more efficient, low-risk manner. Jorge Sun founded LendingFront in 2015 after working in small business lending for a number of years with Capital One, OneDeck and others.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I founded LendingFront in 2015 after seeing how frustrating it was for financial institutions to not be able to lend to small businesses in the ways small businesses needed as most of the large banks were set up to cater only to larger credit requests. Prior to founding LendingFront, I was a banker at both American Express and JP Morgan, focused on small business lending. I was also a part of the founding team at OnDeck and served as Chief Credit Officer, where we were focused on lending to small businesses differently than large banks by using different data sources, product structures and shorter terms. Following some time at OnDeck, I returned to the banking world and joined Capital One as Head of Small Business Credit. I have also had experience as a small business owner — I ran a restaurant in New York City called Ginger — which gave me the opportunity to see the capital needs of small businesses firsthand.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I don’t really have a funny story or funny mistake but can share what I have learned from my past experiences. Having gone through the economic downturn in 2008 and 2009, I learned that the three most important things for an executive to do are to be available, be visible, and be decisive. It’s important to be there for your people and to answer the questions they have — and to project confidence even when you’re facing the same uncertainty they are. When COVID started to spread in the US, we went from being at a conference in mid-March to most of the country being shut down just 2 weeks later. The lessons I had learned previously have served me well in leading the company the last 9 months.
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
I’m a big fan of “Hug Your Haters” by Jay Baer, which talks about how companies and leaders learn best not by what they do right, but by what they do wrong. It highlights the importance of embracing feedback, especially the negative kind, as part of growth and professional development.
Are you working on any exciting new projects now? How do you think that will help people?
We recently collaborated with Salesforce to get the LendingFront-Salesforce Connector app deployed in the Salesforce AppExchange. This allows our customers to seamlessly move data between LendingFront and their CRM. It makes them much more efficient, and we’re excited to bring this capability to the other financial institutions using Salesforce.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
As I said, my experience with large banks showed me that many financial institutions were not equipped to meet the capital needs of small businesses. Research has shown that 43% of small businesses will seek external funding throughout their life cycle, but 40% of these will either be rejected outright or not receive the full amount they seek. I started LendingFront to help financial institutions become powerful lenders to small businesses. Access to capital is what they need for growth, expansion, and right now, sometimes survival. That’s our purpose.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
In the finance industry specifically, it’s important to recognize the long sales cycle and be patient. One of the biggest challenges in finance is convincing financial institutions that they actually need to change how they do business. Being patient is crucial as most sales take a long time from start to finish.
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
Before COVID, we focused a lot on lead generation and attending conferences and in-person events to meet with potential prospects. Since then, we have been putting more emphasis on our thought leadership program. We’ve prioritized creating new content in the form of blog posts, white papers, eBooks and webinars to keep the LendingFront brand top of mind with potential prospects and also highlight the points-of-view we have on current events and how they’re shaping the lending landscape. And this thought leadership program has become our primary source of leads during the pandemic.
If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
The way a startup is funded is a crucial decision that can impact the future of your business. Not everyone is in a position to bootstrap to get their business off the ground. But if you do have this as an option, it definitely gives you more flexibility and freedom to make decisions. On the other hand, working with venture capital gives you access to a broader group of experts that are vested in the success of your business. But it’s important to make sure you are in sync with your investors in terms of business goals and benchmarks.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
Because our focus is facilitating the lending process for small businesses, we understand that the criteria you might use to value a large company may not be the same as what you would look at for a smaller business. In fact, this is one of the things that sets LendingFront apart. Our platform lets lenders use SMB-specific credit criteria such as real-time cash flow, which may not be as important to larger companies.
And with respect to the global pandemic — when the future is volatile, a short-term lens is the way to go. Instead of focusing on lagging indicators of credit-worthiness such as last year’s tax returns, it’s much more productive to examine what’s going on in the business right now. Basing lending decisions off of real-time cash flow and sticking to short-term agreements is the best way to reduce exposure and mitigate risk.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
I think hitting a plateau is a normal part of business. But as a founder it can be frustrating to feel stuck and not see forward momentum. It’s important to see this as a moment in time and not a permanent state. But also don’t ignore it if you seem to be plateauing more than normal. Often a solution can be as simple as asking your client base about their changing needs, where you might not be meeting them, and tapping into your network to understand if peers are dealing with similar challenges. I also find it helpful to change your perspective by looking at your business from all angles — as a customer, partner, end-user and more.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Before the pandemic hit, the economy was roaring, and I think a lot of businesses assumed that growth would continue unchecked. It can be easy to make investments that you come to regret later when the situation on the ground changes. LendingFront has always been more calculated when it comes to making big investments, and I think that’s a good viewpoint to have. It continues helping us whether the current uncertainty in the economy.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
- Hire smart and from diverse backgrounds. At LendingFront, we’ve made it a point to hire people from all industries, not just in lending. This gives us a broader perspective and helps us craft more creative solutions to challenges. We’re good at thinking outside the box, and that’s something that has served us well in the current environment.
- Make room for down time. Finance is a stressful and 24/7 type industry. Schedule time to unplug and check out so you don’t get burnt out.
- Assume the economy is going to throw some surprises your way (and plan accordingly). In a booming economy, if you spend with the assumption that things will always be booming, you can easily get yourself into trouble when things change. We were well prepared for the uncertainty that COVID-19 threw at us because we’ve always been thoughtful about what investments we make and when.
- Don’t get discouraged. Finance — and particularly lending — is known for its long sales cycles because lenders are inherently risk averse. It takes time to build relationships, so it’s important not to get discouraged when certain deals take 12 months or longer to close.
- If you’re a tech company like we are, don’t build a product that makes it easier to play yesterday’s game. As Henry Ford said, if he had made what people wanted, it would have been faster horses. To be really innovative and disruptive in this industry, you’ve got to focus on making new rules — on changing the way the game is played. It takes longer to do and it can be more difficult to achieve success, but it’s important to play the long game.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
It’s important to have a network of peers and colleagues to rely on for advice and to learn from. Being a startup founder can be isolating and exhausting. It’s nice to be able to connect with people in a similar position to vent and share ideas and just know that others are dealing with the same issues you are in terms of scaling a business.
And spend your weekends with family and friends (in a COVID safe way!) and not obsessing over that stack of emails that can wait until Monday.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I think I’d want more people to understand the importance that small businesses play in our economy — to buy local and to shop small. When you look at the records that the Dow Jones continues to set, you’re really seeing a measurement of large businesses, and many of these businesses have thrived during the pandemic for a variety of reasons. The stock market doesn’t measure the small business economy though, and these small businesses employ half of all Americans and contribute half of US GDP. It’s critical that financial institutions support small businesses, but it’s equally important that consumers patronize them.
How can our readers follow you online?
I am on LinkedIn at https://www.linkedin.com/in/jorgesun/ and on Twitter at @LendingFront1.