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How Katapult is Giving Brands Access to Otherwise-Forgotten Customers, with CEO Orlando Zayas

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There are certain things many of us take for granted, including making purchases on our credit cards. It might surprise you to learn that 40% of the population is actually considered non-prime. This means they have either been turned down for a credit card, have bad credit or have no credit at all. These people are often denied the ability to make purchases, particularly on large goods, like appliances or furniture. But what if they could be given the opportunity to make those purchases? What if they were given the chance to make payments based on their own ability on their own schedule? That would not only open up a new customer pool for brands, but it would provide a way for a large group of people to build credit in a meaningful way. 

Katapult is making all of that possible and on this episode of Up Next in Commerce, I spoke to Katapult’s CEO, Orlando Zayas= about how it all works. We talked about the difference between buy-now-pay-later and lease-to-own. We got into how new financing options lead to more incremental sales for brands. And we also dove into how to build a highly-functioning team and the challenges of going public. Enjoy this episode!

Main Takeaways:

  • Finding Missing Persons: When someone can’t get credit, or if they’ve been denied a credit card, they become non-prime consumers. This makes it much more difficult to purchase goods, particularly online. These customers eventually disappear, creating a void but also an opportunity to find them and bring them back into the fold. By giving these potential consumers additional avenues to make purchases, brands are adding more to their bottom line.
  • Consumer Control: By putting the control in the hands of the consumer, you allow them to get to ownership sooner rather than later. And when consumers are able to get to ownership with something they thought was out of reach, they are more likely to return and buy again.
  • Hire The Right People: You need a team that can act fast and independently, especially if you are a high-growth company. It’s imperative that your team can pivot fast and not get rattled when the company is going through a shift — like going public. If there are people on your team who aren’t working up to snuff, it’s better to cut them loose fast, rather than hang on to them hoping they’ll turn things around.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

 

“I really felt that ecommerce is the future and this non-prime consumer didn’t have the capability to shop online because they didn’t have the credit to do it. And so they might not have a credit card or they’re maxed out on their credit card and so they had limited options on ecommerce, but yet they were shopping online. And I liked the idea of providing very clear, very transparent, transactions to customers so they can make an educated decision.” 

“I really felt that the non-prime consumer you’ve got to handhold them. You’ve got to listen, you’ve got to be there when they run into financial difficulties, you’ve got to give them options to try to get to ownership. Nobody wants to miss a payment. I really do believe that most people are good people and they want to make their payments. And so how do you help them get to that point?” 

“If a person can’t get financing, they disappear. And so we felt it was a great way to help the customers that need financing for durable goods and then also bring an incremental customer to the retailer. We have a really high repeat rate — over 50% of the customers come back again. And I think that’s important because it shows that we treat the customer right, the customer is very happy with the experience and it’s building loyalty, not only with us, but with the retailer.” 

“Buy now pay later is really a function that took off in recent years and I call it the split four. So you can buy a pair of jeans and split it over eight weeks, and there’s no interest and you just pay four payments over eight weeks on your credit card or debit card. That has exploded because you can go down to $50. I think Amazon has some really low price points where you can split it. And so that I think has exploded because you can buy things and split the payments and mix it maybe a little easier. Where it gets a little tricky and where I think lease-to-own comes in is on the bigger ticket items. Once you get over $300, splitting it over four payments may be a little bit more difficult, especially when you get into appliances like a thousand-dollar refrigerator, for example. You’re going to have a hard time splitting it over four payments. Then if you look at the demand from the consumer, if the customer has access to credit, they’ll probably find out another way to pay it. They might have a credit card, they can put it on, they might apply for the private label financing and they can figure out a way to pay for it. It’s the customers that don’t have access to credit where lease-to-own comes in because we can approve people that got turned down for the credit card or maybe don’t have access on their current credit card to put it on, but they need that item and they need the furniture.”

“We put control in the hands of the consumer and we communicate with them often to say, ‘Hey, look, you’re in your 90 days, you can pay it off for a thousand dollars instead of $1,050 for that thousand dollar refrigerator. And then afterwards we communicate with them along the way to let them know when they can pay. So if they get a tax refund or they get a bonus at work or a stimulus payment, they can get to ownership as quickly as possible. And what we found is that f we get customers to ownership as quick as possible, they come back, and that’s what we want. We want them to be happy. We want them to feel pride of ownership and we want them to come back and do it again.”

“You have to put the right people in the right seats and let them do their job.”

Bio

“Orlando Zayas is a business executive who specializes in strategic direction that launches company growth. He joined Katapult in 2017 with a vision of creating the best point of sale payment platform in the eCommerce space while most providers were focused on brick & mortar. With Orlando’s vision and leadership, Katapult quickly became a leaderin the financial technology space through quick-turn integrations, best in class decisioning engines, and merchant support teams. Prior to Katapult, Orlando held the role of CEO for DRB Capital, was President at TEMPOE, led the Emerging Markets-Auto team for GE Capital, and was President of Safe-Guard Product, International. Throughout his career of increasing leadership responsibility in insurance, operations, marketing, and auto-related product lines, Orlando has been directly responsible for the implementation of new programs and processes that positioned each organization for growth. He has a unique ability to provide strategic direction while encouraging his direct reports to make decisions with autonomy. Under his leadership, his team is continuously developing innovative solutions that provide customer-centric point of sale payment options to retailers in various industries across the US. Orlando has a Bachelor of Business Administration from the University of Houston and an MBA with a focus in Business from Red McCombs School of Business at The University of Texas at Austin.”


Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

 

Transcript:

Stephanie:

Welcome back to another episode of Up Next in Commerce. I’m your host, Stephanie Postals, CEO at mission.org. Today on the show we have Orlando Zias, who’s the CEO of Katapult. Orlando, welcome to the show.

Orlando:

Thanks, Stephanie. Thanks for having me today.

Stephanie:

Yeah, I’m very excited. So, for anyone who does not know Katapult, can you tell me a bit about what it is, what you guys do, all the details.

Orlando:

Sure. So, Katapult provides non-prime financing for durable goods, like appliances, furniture, through e-commerce retailers and omnichannel retailers. So, a person might have gotten declined for credit it to buy a sofa or refrigerator, can come to us and we provide a lease to own option for them so they can take it home today.

Stephanie:

Awesome. Okay. And what does non-prime mean for people like me, who aren’t really sure?

Orlando:

If you’ve ever been turned down for a credit card, you’d be considered non-prime.

Stephanie:

Okay.

Orlando:

And it’s about 40% of the population. It’s surprising how big a population it is. I think the Federal Reserve had a statistic a couple years ago that said 40% of the US population has trouble making a $400 emergency bill. So, you can imagine you’re a single mother, three kids, your refrigerator breaks down, you might not have the money to buy a new refrigerator, but you need to get one right away.

Stephanie:

Got it. Okay. And you joined in 2017, correct?

Orlando:

Correct.

Stephanie:

What was the draw to come to Katapult? What was your vision when you were coming over?

Orlando:

So, I ran a company similar to this called Tempo that did mostly brick and mortar lease to own and was through major retailers. And what I liked about Katapult, was then called Zibi, and actually looked to acquire them because one, I liked what they did from an e-commerce perspective. And, I really felt that e-commerce is the future and this non-prime consumer didn’t have the capability to shop online because they didn’t have the credit to do it. And so, they might not have a credit card or they’re maxed out on their credit card. And so, they had limited options on e-commerce, but yet they were shopping online. And, I liked the idea of providing very clear, very transparent transaction to customers, so they can make an educated decision.

Orlando:

And, it’s much different than in a store where in a store you have a salesperson that might be overselling the products, getting them to buy more than they probably can afford. But in e-commerce, the customers are very educated. They can Google you, they can check out your finance and see how it compares and then they can make a decision. So, when I was approached to take over the company in 2017, I really liked what they did from the technology end of it, and doing the integration into the retailers checkout. So, for example, at Lenovo, which is one of our long term clients, you can go into the checkout and check out with Katapult and it’s real seamless, it takes less than five seconds to get approved and less than 90 seconds to complete the transaction. And, I like that digital first approach that the company had, and I just got excited about it because I think that’s the future of retail.

Stephanie:

Yeah. Cool. So, when thinking about the risk element to it, who actually is taking on the risk in the arrangement?

Orlando:

We are.

Stephanie:

Okay. Fully Katapult. Okay. Got it.

Orlando:

We take the risk and that’s, I think, an interesting aspect of our business is one, the retailer doesn’t take any risk. And so, even if it’s fraud, for example, we have our own fraud filters, we don’t charge back the retailer, in any shape or form. And then, on the collection side, because these are non-prime consumers and they run into financial difficult, we’re very close with the customer around making payments if they miss a payment, trying to get them to ownership as quick as possible because that’s what most customers want to do.

Stephanie:

So, did you pull anything from maybe your history? I think you worked in finance and whatnot. Was there anything there that you kind of pulled into Katapult to maybe help from the risk protection angle or thinking about how to actually work with consumers maybe in a different way?

Orlando:

Yeah. Yeah. No, for sure. I worked at GE for a number of years at the credit card side and that was a machine. And, I really felt that the non-prime consumer, you’ve got to handhold them. You’ve got to listen, you’ve got to be there when they run into financial difficulties, you’ve got to give them options to try to get to ownership. Nobody wants to miss a payment, I really don’t believe that. Most people are good people, they want to make their payments. And so, how do you help them get to that point? And we’re very flexible. We work really closely. That’s why we have great NPS scores and trust pilot scores, is that, even when the customers miss a payment, we’re there to help them get to ownership.

Stephanie:

Got it. Okay. And you all, I think I saw you kind of partner with Affirm where if Affirm doesn’t approve someone, then you guys are the next layer kind of ready to help that customer. Tell me a bit about that relationship.

Orlando:

Sure. No, that was an exciting partnership with of them because you know, Affirm, like many of the prime lenders, they’re mostly prime, and Synchrony and ADSS and some of these other credit card companies, I used to work at synchrony, they focus on the prime consumer. And so, when you look at approval rates at a retailer for financing and you’re applying for financing, they could be anywhere from 60% to 30% depending on the retailer and the type of product. But, what happens to all those people that are applying for financing, they need to finance the good, and then they get declined, especially online? And, what happens is, and we’ve done some testing with some retailers, is that they disappear. And so, we approached Affirm about a partnership because what we wanted to do is have a waterfall where, you’ll apply for Affirm at select retailers, and if you’re declined, your data comes to me automatically, and then we return, sorry, you were declined for Affirm, but here’s an option. And then, again, it’s very clear, it’s very transparent and the customer can make the decision at that time.

Orlando:

And so, that was a great partnership for us because one, it helps the retailer capture those incremental sales, they don’t lose a customer. I think, Stephanie, you’ve probably like me, you go on to a website and you don’t finish the checkout or you’re suddenly getting messages from the retailer. Oh, don’t forget your cart. And so, that’s the case with financing, even more so. If a person can’t get financing, they disappear. And so, we felt it was a great way to one, help the customers that need financing for the durable goods and then also bring an incremental customer to the retailer. We have really high repeat rate, it’s over 50% of the customers come back and lease with us again. And, I think that’s important because it shows that one, we treat the customer right, the customer is very happy with the experience, and it’s building loyalty, not only with us, but with the retailer.

Stephanie:

Got it. Yeah. I want to hear a bit more about the customer journey, because when I think about, to be clear, I’ve never used a firm or anything like that, I also don’t make big purchases too often. But, I think what also has held me back is thinking about going through the funnel. I’m, oh, what will it take to get approved? I don’t even know what that looks like and how many things do I have to fill out? How do you guys create a process that is not something like in my head right now where I’m, Ugh, I can’t even start it. I give up.

Orlando:

Well, I’ll challenge you to go onto a Purple Mattress –

Stephanie:

Okay.

Orlando:

Just for grins, and apply for a firm. Because again, you won’t be charged anything, you can apply and see the process, but it really is simple. And, that’s why Affirm picked us to partner is when you apply for Affirm, you are asked last four digits of your social security number and your name and address, and that’s pretty much it.

Stephanie:

Oh wow.

Orlando:

And so, there’s very few fields that happen. And so, I know the reason why they picked us is because we’re able to take that same data, pull up all your information, make a decision on whether to approve you or not and it happens literally within five seconds. So, there’s not a ton of information that is being asked of you, both on the Affirm side and on our side, I think that’s why they partnered with us. It was always kind of eerie when we talked to them, we showed our application flow and their application flow and their almost identical. And so, I think it was a logical choice for them to pick us to partner with. But, it really is simple. And, I think that’s the opportunity with e-commerce is you’ve got to make it as simple and transparent and easy as possible because we’ve all sat there waiting, maybe you have it because you haven’t applied for credit online.

Stephanie:

I’m so risk adverse. I stay away from everything, apparently.

Orlando:

You apply because you need a loan and you see that hour glass spinning and if it takes more than five or ten seconds, you’re like, God, I’m not going to get approved and then you bail. And, that’s why that speed was so important, making a decision and literally you go through the process, you’d be surprised how fast you’d get an approval.

Stephanie:

Yeah. Okay. That’s awesome. So now with the holidays coming up, what are you guys seeing right now on your side? Because I’ve heard that consumers are ready to spend right now, this is the season that is going to be better than it has been the past couple years for retailers. So, what are you seeing on your side? And how should retailers prepare for this, actually?

Orlando:

Yeah, I think that the problem that retailers are going to have is the supply chain issues, right?

Stephanie:

Yeah.

Orlando:

Can they get the product? One thing that I noticed, this holiday season at least, and the discounts weren’t as heavy as they were in previous years. And, I think that’s because they probably don’t have as much product as they had at previous years.

Stephanie:

Yeah.

Orlando:

And so, they’re not having to discount them that much to get people to buy them. But the demand is definitely there. I mean, the customer’s out shopping, the store traffic is better. I don’t think it’s as good as maybe ’18 and ’19, it’s definitely better than it was in 2020, because I don’t think people were going to the stores. And then, e-commerce is about the same. I think e-commerce picked up during COVID, especially during the lockdowns because there was no other way to buy things and demand is still there. And so, I think it elevated e-commerce shopping to… I read some reports that said it moved e-commerce shopping 10 years ahead.

Stephanie:

Yeah.

Orlando:

And it continues. So, we’re excited about the holiday season. It’s always from Thanksgiving until pretty much New Year’s is usually our best time of year.

Stephanie:

Yeah. It’ll be interesting to use this year as kind of a case study to see what does it look like if retailers aren’t discounting as much if the demand is still there. I think it would make me question, anyways, should I even discount like I have been doing for the past 10 years? Maybe that’s not as much of a driver as one would think.

Orlando:

Well, I think it’s all supply and demand, too.

Stephanie:

Yeah.

Orlando:

I mean, the reason they’re not discounting is there’s not as much supply. I think when they have a lot of product, they have to discount because they’re competing with other retailers. So, I think right now it’s just some of the supply chain issues are driving down inventories and that is allowing them not to discount as much. But, I think once that returns to normal, which I believe it will happen next year, then you’ll start seeing some of those discounts come back again.

Stephanie:

Yeah. Have you seen retailers doing anything strategic to handle the lack of supply that they have, where they’re you can buy it now and then get it next year? Or something to get ahead of that and still sell as much as they want.

Orlando:

I think online, because we’re, again, 95% online, it’s a little different because it is usually buy it and ship it right away. And so, what happens is we see customers cancel their transaction and go and get maybe the purple one that is in stock and they’ll change their behavior a little bit. But, I haven’t seen anything on the retailer side other than trying to build that inventory. I think the brick and mortar retailers probably have it a little easier to because… You I went to a Best Buy the week before Thanksgiving, I’ve never seen so many boxes stacked up. I mean, I was like –

Stephanie:

Costco, same. No problems there.

Orlando:

I guess you’re not having supply chain issues.

Stephanie:

Because they own the entire ship coming over.

Orlando:

Exactly.

Stephanie:

They’re like, we’re good.

Orlando:

Exactly. So, I think they had it a little easier because they were able to build up their inventories, where an e-commerce retailer that’s kind of like doing just in time shipping might have had a little bit of a struggle, but not too much.

Stephanie:

Yeah. Got it. I want to hear a bit about the difference between, well not the difference, but your thoughts on the buy now pay later option, which I’ve definitely heard of a lot of people doing that and then lease to own, which I haven’t really heard of retailers offering that outside of auto and maybe homes back in the day. But, tell me a bit about how you’re seeing the lease to own section kind of pop up.

Orlando:

Yeah. So, the way we look at buy now pay later is so generic, right? It’s buy now pay later, pay later. It could take any form and function. I believe the buy now pay later is really a function. It kind of took off in recent years and I call it the split four. So, you can buy a pair of jeans and split it over eight weeks and there’s no interest and you just pay four payments over eight weeks on your credit card or debit card. That is exploded because you can go down to $50, I think Amazon has some really low price points where you can split it. And so, that, I think, is exploded because you can buy things and split the payments and makes it maybe a little easier. Where it gets a little tricky, and where I think lease to own comes in, is on the bigger ticket items.

Orlando:

So, once you get over $300, you knows splitting it over four may be a little bit more difficult, especially when you get into, appliances, $1,000 refrigerator, for example. You’re going to have a hard time splitting it over four payments. And so, that’s where I think we separate. And then, if you look at the demand from the consumer, if the customer has access to credit, they’ll probably find out another way to pay it. They might have a credit card they can put it on, they might apply for the private label financing and they can figure out a way to pay for it. It’s the customers that don’t have access to credit where lease to own comes in because we can approve people that got turned down for their credit card, maybe don’t have access on their current credit card to put it on, but they need that item and they need the furniture because we, we specialize in durable goods, these are items people need every day for everyday living.

Orlando:

And so, we helped that customer that got turned down for credit, maybe doesn’t have access to credit, but it’s a bigger ticket. It’s not $100 pair of jeans, it’s $1,000 refrigerator. And the way that the lease works is very similar to a car lease that you have monthly payments and we actually split the payments over by whatever the customer gets paid. So, if they get paid biweekly, they’ll have biweekly payments. They’re not paying anymore, we try to make it easy for them to pay us back.

Orlando:

It’s a 12 month lease, at any point during the time, they can pay off the lease and at the first 90 days, they could pay it off for 5% or less, as a fee. And then, after that, we discount the lease payments for the rest of the time. So, we put control in the hand of the consumer and we communicate with them often to say, Hey, look, you’re in your 90 days, you can pay it off for $1,050, that $1,000 refrigerator example. And then afterwards, we communicate with them along the way to let them know when they can pay. So, if they get a tax refund or they get a bonus at work or a stimulus payment, they can get to ownership as quickly as possible.

Orlando:

And what we found, and I think where we’re different in the marketplace, is that we found that if we get customers to ownership as quick as possible, they come back, and that’s what we want. We want them to be happy, we want them to be prided ownership and we want them to come back and do it again. And that seems to work because, as I mentioned earlier, we have over 50% of our customers come back and lease with us again.

Stephanie:

Yeah, that’s great. It seems like that entry point is really special and valuable to consumers who maybe have never had that before, because that’s a whole mindset shift when you’re able to finally own something that maybe you thought you would not be able to, or couldn’t even buy before that. I could see that just changing the whole landscape afterwards.

Orlando:

Yeah, it does. And, unfortunately these customers in the past would have to go to a pawn shop and pawn some things, go to a payday lender, they’d have to borrow money from their uncle, find other ways to pay to get the items that they need. Because, again, these aren’t luxury items, these are durable goods that they need for everyday living.

Stephanie:

Yeah. Yeah. Cool. So, when thinking about Katapult, I want to hear a bit about your growth within the company and how you’ve been hiring. I know you guys had a SPAC that you went public on. So, I want to hear all the details around what it’s been like the past couple years seeing that growth,

Orlando:

It’s been fun, exciting, crazy. There’s a ton of words I could use to describe it. When I took over the business in 2017, we were doing roughly $17 million in revenues, so it was small. But, I knew that this could be something, especially since we were focused on e-commerce and if we position it the right way. And, really, it was all about hiring the right people and I’ve found that throughout my career, whether I was a GE or wherever I was, is that you got to put the right people in the right seats and let them do their job. And so, I brought my CFO in with me, she was my previous company with me, I hired a really hotshot risk leader who she is amazing around modeling and underwriting.

Orlando:

And then the COO, he executes, he just knows how to get things done. And then, you just continue to build out the team that way and then let them do their job. And so, we focused on going after those retailers that felt the same way we did about this market. We focused on the technology, we had a pretty sharp CTO who knew the space, understood the checkout and we focused on technology and then we focused on selling. And, I think those things all came together and we started doubling the business every year. And then, in 2020 we took off with COVID, because people were stuck at home shopping.

Stephanie:

Yeah.

Orlando:

But, yet they might not have had the finance capability to finance it. So, we took off, the business continued to grow, we had an amazing year in 2020, and that’s when the board decided, Hey, have we thought about what are options going forward? It’s some venture capital guys in the there, and some strategics in there, in our cap table that said, how can we continue to grow this business, get us access to capital, and the SPAC idea came up and, I’ll be honest with you. And I remember when somebody said, Hey, let’s go public via a SPAC. And, I had to look it up because I didn’t know what it was.

Stephanie:

Yeah.

Orlando:

So, I quickly got educated on what a SPAC was. It sounded exciting because I know from other companies that I’ve worked for going public takes a long time, takes a lot to build, and so this felt like a much faster, more exciting way to do it, and yet gave us access to capital. So, we were building up our balance sheet with cash so we could invest in the business. And, when we closed the transaction in June, we got an extra $50 million. So, we’re sitting on a $100 million of cash in our balance sheet that is enabling us to hire the sales people, hire the tech people and really continue to be in the forefront of e-commerce shopping and helping these retailers tap this incremental customer base. So, it was exciting. I mean, I rang the bell at the NASDAQ, that was probably the highlight of my career and it was great and the team was energized by it, obviously.

Orlando:

But, now we’re a different company, we’re not a startup anymore, we’re a public company. And, I think there’s challenges with that, too, because you hire different people than you’ve hired before. And so, we’ve had a few people believe recently because they said, Look, I like working for a startup. I want to go work for another startup.

Stephanie:

Yeah.

Orlando:

And I understand that, I’d say more power to them and then we hire people that understand a public company and what it takes to be a public company. So, I’ve had to learn, I’ve learned a lot in the last year and a half, a tremendous amount about what it takes to run on a public company and it’s a lot more than ringing the bell at the NASDAQ, that’s for sure.

Stephanie:

Yeah. What were some of the biggest surprises now that you are running a public company? What were some surprises that you didn’t anticipate, no one told you about and you’re, here I am, I have to do this now?

Orlando:

It’s a long list. I think just the scrutiny of, and I knew public companies are always under a little scrutiny. I remember working for a company years ago and they said, oh, you miss your earnings by a penny and your stock just craters. Yeah. So, there’s that scrutiny of hitting your numbers. There’s the audits and SEC regulations and the things like that that you’ve got to hire the right people that understand this because you don’t want to trip and fall on those types of things. If you look, an IPO takes anywhere from a year to 18 months, a SPAC can get done, we got our SPAC done in six months. I now know why you need a year, a year and a half, because you’ve got to build that expertise. And, you’re just doing it by like a fire hose.

Stephanie:

Got it. So, if you were to do it again, would you take the shorter route and maybe just go through the traditional IPO process, so then you could kind of learn a little bit more slowly than you had to?

Orlando:

It was an exciting way to do it during this SPAC, but if I was taking another company public, I’d probably take it the traditional route. I think you just have time to build what you need to build from a public company perspective. But, a SPAC is an exciting way to do it and it gets you the, the capital that you need quickly and get your name out there. And, I was excited because I got to pick the ticker symbols.

Stephanie:

Yeah.

Orlando:

And we got it.

Stephanie:

I mean, that is pretty sweet.

Orlando:

I’m not going to say I wouldn’t do it that way again, but it just depends on your life cycle in the business and where you are in the business. And I think we were ready, we probably needed a little extra time, but we made it happen. And, I think that’s the other piece of it is organizations, when you’re faced with that type of timing, you go fast, some of the things you do, you look back, you go, wow. That was amazing. And, I don’t know if you spread it out over a year and a half, whether they’re going to have that same excitement. I don’t know.

Stephanie:

Yeah. And, I feel like the team that you have, who can go through that, they’re the ones you want to keep that can kind of go through all that craziness come out and be like, oh, we did it. Okay, onto the next.

Orlando:

Exactly. But that’s usually a high growth company. They’re They feed off the adrenaline of the growth and going of public just fed on that, as well.

Stephanie:

Yeah. So, are there any moonshot projects you’re working on any secret projects that you’re, I don’t know if this is actually going to work, but we’re trying this out.

Orlando:

If there were secret projects, I couldn’t tell you.

Stephanie:

But, you could tell me, though. I’m just moonshot thinking right now.

Orlando:

Yeah, no. We’re looking at reinventing the way people shop in store, because the problem with instore and, not to disparage sales people in a store, but they have one thing in mind, they want to sell more. And, what happens is sometimes the training and education of financing tools in a store is difficult. And so, how can we kind of upend that process, put the power in the consumer’s hand so the consumer sees exactly what they’re paying, how much they’re paying, what the terms and conditions are, and they can make that decision, even in the store, without a salesperson really having to even talk about it. I think that’s exciting to us because one, we have a big group of customers that are that are loyal to us, they come back to us again. Now I want to be able to send them into the store and do the same thing in a store because sometimes you can’t get everything online.

Stephanie:

Yeah.

Orlando:

And give them more flexibility to go to either other retailers that we have signed up, or maybe just another retailer and give them the same power that they have online in a store.

Stephanie:

Yeah.

Orlando:

And, I think changing the way it happens in store on the financing side has got to change because there’s all kinds of dead bodies in the wake of financing companies that messed up in store. And, I’m not going to let that happen. I think it’s the right thing to do for the consumer, as well. And then, and then we’re looking at what other products can we bring to our consumers that help them build their credit and how can we provide education and things like that so that we’re not overburdening them from a debt perspective, we’re just helping them get the tools to build their credit over time so that they can graduate.

Orlando:

One of the things we have partnerships with Affirm is we have two agreements with them, we have the waterfall that I described earlier, but we also have a graduation program, where if a customer comes to us that they decline and they actually make all their payments, we’ll share that data with them so they can make them an offer for an installment loan that helps build their credit and gives them a cheaper way. My goal is that I want to give the customer the best financing option for their situation at the time, and if it’s with somebody else, I’m okay with that.

Stephanie:

Very cool. Yeah. Thinking back to the in store, how to get this to people in store, I’m just imagining the sales associates, Do you want a credit card? I’m running away through the aisles, like, no, I don’t want anything, leave me alone.

Orlando:

They get incentives.

Stephanie:

I know, they’re even ding the bell, like good job, Joanne, just got another one. I’m, was that me she just got? I don’t know. But, thinking about a tablet that you could just kind of go to see really quickly, Oh, I qualify.

Orlando:

Do it on your phone

Stephanie:

Or do it on your phone, yeah.

Orlando:

Do it on your phone yourself, so you don’t have to talk to anybody in the store. You can just do it on your phone and then maybe you show a barcode or something like that to get the transaction done.

Stephanie:

If you’re on your phone, would it matter what location you’re in? Does it even matter?

Orlando:

No.

Stephanie:

No? Okay. That’s great.

Orlando:

But, there’s obviously technology around knowing that somebody’s in what type of store, whether it’s a furniture store, electronic store so you can kind of make decisions on underwriting that way. But, there’s a lot of technology out there that we’re working on and developing around how do we get that customer again, make it a customer friendly transaction, whether it’s in the store, on e-commerce. One of the things I’ve been adamant about is we’ve got to be fair to the customer, we’ve got to be clear and transparent to the customer, they got to know what they’re paying, and that shows up.

Stephanie:

How are you finding customers right now? Because I’m thinking about the customers that almost apply, they get denied like you said, they disappear. How are you finding the people who maybe you don’t even know to look for credit options?

Orlando:

Well, obviously, we do some marketing ourselves, but we rely on the retailer. Once the retailer realizes that this market one, is shopping on their site and it becomes an incremental customer, then they’re more likely to start marketing towards this customer, which is, again, different search engine optimization, all the tools that retailers use to drive customers to their site. They could change the way they market to certain groups of people because they realize these are incremental customers that they thought weren’t shopping on their side and are. And so, we work with the retailers to help them identify this customer, the marketing tools. Obviously, we do some marketing on their behalf to our current customers to get them to come back to the store or the website. And so, I think it’s a combination of all those things to drive the incremental business, but it really is around the retailer acquisition. So, our acquisitions are also really low compared a lot of e-commerce businesses because we rely on the retailer, we partner with the retailer, but we’re also educating the retailer on how to target this customer.

Stephanie:

Yeah. Got it. That’s awesome. All right. Let’s shift over to the lightning round. The lightning round’s brought to you by Salesforce Commerce Cloud. This is where I ask you a question and you have a minute or less to answer. Are you ready, Orlando?

Orlando:

I’m ready.

Stephanie:

All right.

Orlando:

Go.

Stephanie:

What’s the best piece of business advice you’ve received since becoming CEO at Katapult?

Orlando:

Best advice is hire the right people and get rid of the wrong people fast.

Stephanie:

Yeah, yeah. That’s always a good one. What’s a book that you keep coming back to, year after year, you’re like, I want to check back in on this.

Orlando:

Yeah. It’s Execution by Bossidy, I think, I always say get the… It’s an amazing book and it talks about, and I think I even mentioned it earlier in the talk, that you got to hire the right people and put them in the seats on the bus and then they’ll help you drive the bus in the right direction. And, I’ve always felt that way. You got to hire the right people and they’ll help you drive the business.

Stephanie:

Yeah. I’ll have to check that book out. Sounds like a good one. What’s one thing you don’t understand today, but wish you did?

Orlando:

Nuclear fission. No, I’m kidding.

Stephanie:

Hey, that can be an answer.

Orlando:

There’s a lot of things I don’t understand. Let’s see what I don’t understand today. I mean, there’s so many, I’m trying to think. How the macro economy is affecting inflation. I loved Economics when I was in college. I know we print money and things like that and I still… You talk to two different economists, you get two different answers. So, I’d like to know more. I think if I went back to school, I would major in Economics.

Stephanie:

Yeah. I want to know what’s happening with inflation, too. So, when you find out, come back and let me know, because it’s gone wild.

Orlando:

Right.

Stephanie:

Okay. If you had a podcast, what would it be about and who would your first be?

Orlando:

It would be about life experiences. I love reading autobiographies, or biographies, not autobiographies and about success stories, people that have started from nothing and how they did it. Because it’s always fascinating to me when somebody is successful and how they got there. And, there’s different avenues for everybody and you can learn from every single one. And, that’s probably my second favorite books are biography.

Stephanie:

Yeah. Same. That’s great. All right, and then the last –

Orlando:

That would be a podcast.Go ahead. Sorry.

Stephanie:

No, you’re good. That sounds great. Last one. What’s the nicest thing anyone’s ever done for you before, ever?

Orlando:

Nicest thing. Oh my God. There’s so many for me. Nicest thing. There was a party that my team threw for me when I reached, and this wasn’t at Catapult, it was previous prowl, when I reached five of years and it was an amazing party and they gave me some really interesting gifts and it was the surprise party. And, I was really shocked at it, but I had a 360 review where they said they had to give feedback on me. And, one of my employees who never admitted to it, said if feedback is a gift, Orlando’s the most giving person I know. And, it was actually a compliment because I think it’s important to give feedback, but also take feedback. So, when I left, they threw this party and they gave me a bat that was inscribed with that and they all signed it. And, so it was endearing, I still have that bat today because it was the coolest recognition of Yeah, we didn’t like the feedback sometimes, but it all made us better.

Stephanie:

Yeah, as it always does. I love that. That’s great. Sounds like a good team.

Orlando:

Yeah, it was.

Stephanie:

All right. Well, Orlando, thank you so much for hopping on here today and joining me. Where can people find out more about you and Katapult?

Orlando:

I am on Twitter and LinkedIn and, of course, katapult.com. And we have our investor relations side as well as more of information about us. And, I’m in the process of building Orlandozais.com, so hopefully we’ll be a website shortly.

Stephanie:

Yeah. Awesome. All right. Thank you.

Orlando:

All right, Stephanie, thank you again. Appreciate the time.

Episode 170