Empowering Brilliant Minds | Chief Operating Officer of Fundbox, Cetin Duransoy (Podcast 204)

Hire the smartest people and get out of their way, enable their creativity and support them as needed. Like I'm not a very top down leader but more of I'm a big believer that show people the North Star, hire great people and just support them. I think that works in the larger companies that I work with. It is working here at Fun Bucks like we've been we are over 300, we were over 200, slightly over 200 when I joined. So we have, we are going through a massive growth curve and but again the fundamentals of the leadership has not necessarily changed.

The guest today is the Chief Operating Officer of Fundbox, Chetan Duransoy. In this role, Chetan is responsible for managing and growing the core credit business as well as building and expanding the company's product platform. Chetan joined Fundbox from Visa, where where he served as the company's head of global installment products and led a team of product managers, engineers and technologists to build the next generation of payment products and solutions. During his tenure, Chetan oversaw the creation and development of the company's installment payment ecosystem that enabled issuers to offer and sellers to display installment plans to cardholders, authoring the initial white paper and leading the program from conception to launch within three years. He also designed loyalty and benefits products and solutions that increased customer engagement for issues and merchants. Prior to joining visa, Chetten spent 15 years at Capital One where he held various leadership roles both in the credit card division and retail bank. In his last role at Capital One, he led the small business lending and deposits teams where he was responsible for all aspects of the business and associated P and L. Prior to Capital One, Chetten held various engineering roles. He holds a Bachelor of Science in Mechanical Engineering from METU in Turkey and an MBA from the University of Maryland. So, Chetan, welcome to the Second Command podcast.

Thank you, Cameron. Happy to be here.

Yeah. And I was wondering where the name Chetan was from. And Turkey is on my bucket list. A very, very short list now of a country that I need to get to. Is it as beautiful as everybody says it is?

It is definitely. For visiting purposes, Istanbul became a very large city these days, so too large to live in for my taste. But it's a beautiful place. Beautiful.

They said the south of Turkey. Is that where I'm supposed to go? Cappadocia is one south of Turkey.

You can find everything everywhere. Middle of Turkey, Cappadocia, south of Turkey. The beach and the west and the mountains on the east. It's a pretty diverse geography that I'm sure You would love it.

Yeah, it's on our list. We're going to be spending a bunch of time over in Europe and that one's going to be kind of high up the list. Well, thank you for doing this podcast. I really appreciate it. Of course, before we kind of dive into, I guess your experience and what you've been doing with Fundbox, can you just explain to us what Fundbox is?

Yes. Fundbox is basically a financial platform for small businesses. We have various products and ever expanding products, if you will. Mainly our core product right now is helping small businesses with their capital needs and then we have new payments product being launched. So various needs that the small businesses needs.

What would some of those needs be?

Short term cash flow is a huge problem, Cameron. For small businesses specifically, an average time for an invoice to be paid is around 19 days and there are around a couple trillion dollars waiting to be paid at any point in time. This is the money locked in on invoices. And having this money be paid in in a much earlier time frame basically unlocks the growth potential of small businesses. So that's one of the key problem that we have been solving since the inception of the company. And then we are coming up with more innovative products. The product that we call Flexpay as an example is basically giving the flexibility to our customers in paying invoices. Customers can basically use our own checking account for their payroll, for their insurance. The money is being pulled and then the customers have certain time frame to decide if they want to pay the money back in full or if they want to take a short term loan to pay that money money. So various needs of small business customers.

Interesting. Okay, in terms of the invoices that are out and the helping the companies with those short term loans, is that kind of like what factoring used to be called? Or is it similar to maybe the payday loans business for people, but you're doing it more for the business.

So factoring is very specific business model where the invoices are now owned by the factoring company. Once the invoice is paid, we solve the exact same problem, but differently. We do not own the invoices. The invoices are still our customers, if you will. And these are fairly short term loans. We have loans anywhere between 1224. We recently launched more for 52 weeks, but that's probably less for invoices, but more for slightly longer capital needs of the small businesses.

Interesting. So are you just competing with traditional banks and what's your kind of, I guess, value prop? Against a traditional bank.

Cameron I guess my time at Visa taught me that the concept of frenemy, which is we compete, we partner with banks. We actually believe partners is going to be a great growth potential for us because small businesses, traditional or small business divisions in banks traditionally are less invested compared to the consumer or the commercial businesses. And we have spent over time $150 million to build our platform. And we see that there's a great opportunity to license our technology to banks to basically serve their customers as well. So we partner, we compete. That's I guess the new life connected life in 21st century.

Do you fund these loans faster than the typical retail banks are doing for companies? Is that something that is your value?

The short answer is yes. But more important than the speed, I think it is the use of AI that we have. Small business lending is traditionally done by paper. You submit bank statements, you submit the income statements, the IRS tax forms. What we do is everything is electronic. We are completely paperless. The customer connects their bank, the customer connects their accounting software. And our models basically assesses the risk of the customers real time. And the decision is given in 99% of the time, like within minutes. And then last 1% is we get a signal that there might be a fraud. Therefore we just pull that account and look at it more deeply if there's a fraud on that application or not. I think that's the biggest differentiator because when you look at the small businesses, nobody creates a small business just for the sake of they have a passion on something and they want to run that business. And when they are running that business, the financials is not necessarily the thing that they want to think about. And the time spent in application is an incredibly important time. Perhaps more important than how fast that they're going to be getting the funds.

Interesting. How about in terms of the rates as well? Is it a competitive rate to what the retail banks are doing? Are you more expensive?

There is one area that we are not directly competing with the banks, which is short term loans like the banks are more for capital expenditures five years. Our solution is short term and given the short term nature it is the fee of the amount has been borrowed and our pricing is competitive with similar solutions that's being offered in the marketplace. But there's no direct competition with the banks per se, if that makes sense.

Yeah, it does. There's a company out of Toronto, Canada called ClearBank. Is that similar to what you're doing and are you going after a similar clientele? Do you have certain verticals that you do go after and some that you don't.

So we have been traditionally more. First of all, clearco is familiar with the company. There are lots of similarities between what we do and what they do. I think one of the area that we focus on more is the B2B clients. Because when you look at the B2C small businesses, they're actually their option set when it comes to short term funding are many because they accept credit cards. And whenever they accept the credit cards, there are lots of solutions out there, your credit card provider, et cetera, to close that short term gap, if you will. In B2B business, this option is less relevant because they don't typically accept credit cards and it is all invoice based. And that's where we come in. I think that has been one of our differentiators in the customers that we are serving. Perhaps 80% of our customers are more B2B. We are not exclusive to B2B. But given the invoicing nature, 80% of our customers are B2B be today.

It's interesting. And are you, are you going after the, the online businesses or do you work with offline businesses as well?

Like I would say more offline than online. Again, we do not like our models obviously differentiate between online and offline businesses in terms of the risk profile per se. But in terms of whom we go after. One of the largest verticals that we talk Target and we have a great customer basis, professional services, whether it is the architects and the lawyers. And one other differentiator of ours is we have a very big partnership business. So most of our customers coming in are coming in through our partners and that defines what type of customers that is coming into us as well.

Oh, interesting. I've got a couple of clients that I coach that are very large, large, large personal injury law firms. Like they've got a, you know, $8 million advertising budget. So they're very large, substantial, 200 some employees, but they've got some big invoices out with their personal injury claims. Would that be something that you guys would be able to fund or finance? Potentially?

Haven't thought about it, but I'll do.

An introduction later and see if there's anything that they can do because it's a need that they have because they sit on such. They have a claim for $3 million and they're waiting for an insurance company to pay that off six months later. And they know it's coming. It's just the insurance company is like, yeah, we'll get it to you and, you know, 160 days.

Yeah, yeah, yeah.

I love that you've got a product called, called Flexpay. One of my, one of my former clients is a company, it's called FlexPay IO. So I don't know if you've bumped into them at all, but they do not.

No.

Yeah, they do. Basically when credit cards are getting declined, they help companies reduce those decline rates and get the credit card processed faster. And they're a Montreal based company. Really, really wonderful team. All right, so why would you make. How big is Funbox? How many people? I guess it's big if you spend 150 million.

We are a little over 300 people.

Okay, so it's not a small startup, but it's still a massive difference from leaving Visa to come over there.

Yes, yes, certainly, certainly.

What was it that had you make that change?

I mean, at Visa, I work with so many different companies, different sizes, different types. But one of the things that has always appealed to me on the fintech side of the equation is how nimble they can be. My analogy is if the larger companies that you name is more of a transatlantic ship versus we are a speedboat. Just to give you an example, the Flexpay examples that I have given to you, that was an idea in August of last year.

Right.

And we launched that product in six months time frame. So like, the speed of which things we can do is quite amazing. Like one of the things that I was also considering that as we are doing these things so fast, are we breaking things? The answer is no. I think it is the coordination cost being so much lower is creating that speed in the smaller companies and the focus that we have, I guess that's one of the big advantage and that's why I was very well prepared to make the transition, if you will. So I haven't had too much of a surprise as I was coming in because I was expecting a much more nimble environment and I found that here at Funbox.

Interesting. Yeah, it's got to be fun for somebody who's as smart as you are and having the kind of industry, you know, expertise that you have to then go and work with a company where you can deploy ideas super fast versus like two years later hoping that we can get this thing out of the box, right?

Yes, that's it.

How have you, how have you had to change or adapt as a leader to that kind of pace? Have you had to change or was it easier?

Certainly, I mean, in our business, in financial sector, obviously there are monitoring meetings. We look at bunch of metrics. I used to do that monthly or quarterly here I do that weekly. Right. Things are moving much faster but the fundamentals doesn't change. Cameron at the end running the business has a series of fundamentals. When things the company becomes smaller, the frequency of which the things that we look increases if you will and it's a direct correlation with the speed of which we are going to. If you're going 30 miles per hour you don't need to check how fast you are going all the time but if you're going 80 mph you better check much more frequently because bad things can happen.

So I'm intrigued with the 300 people side size as well. With you coming into that size of a company, how specifically did your leadership styles change or did those change at all?

I don't think it did. The reason being like my leadership philosophy is hire the smartest people and get out of their way, enable their creativity and support them as needed. Like I'm not a very top down leader but more of I'm a big believer that show people the North Star, hire great people and just support them. Yeah, I think that works in the larger companies that I work with. It is working here at Funbox like we've been by the way we are over 300. We were over 200, slightly over 200 when I joined. So we have. We are going through a massive growth curve. But again the fundamentals of the leadership has not necessarily changed when when I've.

Been running smaller organizations like in that couple hundred size I've often been worried about hiring the seasoned executives who have come from large corporations worried that they wouldn't be able to adapt and become entrepreneurial. What do you think you would look for to know that somebody could come out of the bigger organizations and become entrepreneurial or adapt?

Yeah, that's a great question. There are many. I don't think I'm the creator of this word but I heard it somewhere that intrapreneur which is people who try to break things inside the larger organization. I myself has not necessarily been the best rule follower but hey, should we change this? Even the installment initiative at Visa was not given to me. It wasn't even my job. I said we should get in here which became a hundred people team over time. And when we are hiring people from larger organizations I think that's one big quality that we are looking for. Have you been an entrepreneur or have you been a more of a. Hey vision is there? Let me just follow that vision and execute on that I think execution is incredibly important. But in the meantime, that entrepreneurship quality, I found it to be fairly easily can be transported into smaller organization and turned into an entrepreneurship.

Okay, so then my next question ties into when you came into the organization here you come in as the COO into a 200 person company and there's a whole bunch of people that have been there working in their jobs and doing their job. And now you come in kind of as their boss and as that seasoned executive. How did you help them manage the emotions? How did you help come in and settle in without, you know, ruffling feathers? That's got to be a really hard thing for you to do, but also for the company to do.

I think that's very true. I think the interview process was a big help. I tell you. I met with the CEO and the founder four times, four interviews. On top of that I had 13 other interviews including all of my would be the future directs as well as all the people whom I work with. So that interview process really prepared me well and even prepared all the other folks who's going to be better in my team or will be working with me on parallel that everybody knew what they were getting into. And I think the good part of it is people who would report to me had a saying in my hiring. I found that to be a very interesting thing that fun bucks that I'm not necessarily used to, but I'm loving it so far and applying the same principles and meet the people, put them into interview panel to those people who will be reporting to this person. Because we're working again, we're going super fast. We don't necessarily have time for months and months of adjustment between the new leader and people who would be in that leaders organization. And we try to pull that forward as much as possible during interview process. So going back to your original question, like by the. By the time I started I think I knew everyone. I knew everyone's, everyone being every one of my directs, obviously everyone's motivations, where they want to go, what they want to do. So I did not face much of a problem because we sold those during interviews.

Yeah, it's interesting. I had my team back when I was building 1, 800, got junk as the COO. I had six or seven of my team hire their head of sales and they did a lot of the interviews and once they hired the head of sales they were all so excited to be working for them because they knew everything about them. So it's interesting. I think companies need to do a lot more of that as well. Talk about your first 90 days coming into the company or first hundred days coming into the company. What did you focus on? What did you avoid doing? Were you, you know, were you careful at all or guarded or how did you approach that?

Yeah, I have in all my job changes even inside the company or going into a new company, I have the 36 to 90 day rule. 30 day is on the observation. I don't even open my mouth, I listen. Which might be unsettling for the employer if you will on we hired this guy, he's not talking anything. What's happening here? The second 30 days, 30 to 60 day is sharing my reflections with definitely in this case it was a CEO Prashant as well as CFO is like hey, this is what I am observing and here is how I am thinking about approaching this problem. And then 60 to 90 days is all about the execution. Now acting on, on those reflections when I look at Funbox how that has been applied, I think 30 days was 30 days. We squished the second 30 days into probably two to three weeks time frame. It was faster. By the time week seven hit, I was making all the new process changes in place because again the big companies has figured out certain things like the processes is much better, etc. Finding that perfect match between how am I not going to lose the nimbleness but bring the structure. So as I come in I introduced a series of business processes in place which has been very, very well received at every level in the organization. The weekly meetings that I'm talking about was a receipt result of those and just brought so much more structure and also allowed us to move the levers because we see things in real time. Like if something is not going well or something is going really well, should we double down on that thing or should we pull back from that thing? Those were the results of some of the observations and then therefore the new business processes that I put in place.

So and you're, you're an engineer by, by kind of background and you know, in fintech and so I would imagine you're very much on, on procedures and systems and then you then you meet this kind of like fast growth organization as well which is still in the same, same space. But do you throw out the process at times and just grab the diamond in the rough or do you kind of constantly try to balance between both? I don't know if that question is clear.

I think it is, but it is constantly trying to balance the both. The common expectation is processes slow things down. And if you look at the application of processes in larger organizations, that I think certainly is true. In the meantime, it doesn't have to be if used well. I have seen actually processes speeding up things because it creates more structure on how are we going to see things. I'll give you one example. If I would let my calendar filled with things and if something new pops up, I would have waited until like next two, three weeks to be able to look into that thing. But all my Wednesday mornings are empty. People come in, put things into the agenda. Nothing waits more than couple days until the next Wednesday in our organization. Because I will always have time on Wednesday mornings. If there are, by the way, 10 topics, we start dividing the time. Instead of me looking into one topic for 30, I'll look at it for 20 minutes. But we squeeze everything into those Wednesday mornings.

Yeah.

Therefore nothing waits. So it's a process. Is it slowing down? I don't think so. I think it is speeding things up. So that balance is super important. Also, even in product development and the technology implementation, leaving processes can be very dangerous because making mistakes and the errors in coding becomes a huge problem. Following processes there, looking into go no go meeting before we launch, which may look like it is slowing things down and maybe it is for a couple days, but the errors that it removes from the system eventually speeds things up more.

I like that. Talk to me about the go no go meetings and then I'll ask my other question. What's a go no go meeting look like for you?

Basically it is every single person who played role in the launch of that product comes into the room, obviously virtual room these days. And I look at literally the eyes of the person, like, do you ever go or no go and tell me why? My first job out of college was actually in rockets and we did have go no go meetings. It was military records as opposed to the more civilian records. And I don't think I never made peace with the military record portion. So that's why I quit it after a couple years. But it taught me many things. And it's not actually that different than the go no go meetings that you see in the movies for rocket launches. Obviously people are not gonna die, hopefully in our case. So there's less stakes, less stakes out there. But I look at the eyes of the person and say like, go no go and tell me why. It's amazing. That word is mine. Floor is mine now I need to talk just. It just puts so much responsibility to that person on yes, I may go. Here is the reason and I like.

You'Ve gone back to that three times on the here is why the here is why. This is my reason. It's so important that they that you actually because you're growing their skill set and their confidence on forcing them to do that, aren't you?

Absolutely.

And you mentioned earlier that you. You kind of try to get out of their way and support them. What does that mean for you in terms of supporting them?

So in terms of supporting them, couple things. Number one is if they want to use me as a brainstorming person that I can brainstorm with them. They might say help. I'm thinking about this versus that and I can tell them on here are the pros and cons as I see it. But I think I'm a very Socratic teacher that my kids were probably tell you that they hated that nature because I never give the answer. And I let people get to the answers by asking them the questions because I believe the depth of learning increases materially. With Socratic teaching the supporting the people is when they ask for help. It's basically going through that process with them or if they have two options or three options, just working with them on the pros and cons on each and every one of them. But the goal is never to make a decision on behalf of them because one thing I always love to do when I was on the other hand of the equation is when I was more junior. When I'm going to my superiors, I never ask should I do a rb it was my nature. Maybe too much of a rebellious nature that I had is I always said I evaluated abc. I'm going to do a let me know if you have any problem with that. And I guess I try to push that with all my directs as well all the time. Don't make me to make the decision because you're far closer to the facts. I may have more context at times, but you are far more closer to the facts and you make the choice. I'm always going to have the veto right. The more senior person is always going to have the veto right. But don't let the more senior person choose for you. You choose on your own.

That's really, really strong leadership too. And I love that you mentioned the Socratic method where you kind of ask a lot of the questions to get them to discover for themselves what the answer is right versus giving them the answer. Again, that grows their confidence in their skill set. All right, I want to go Back to the 21, 22 year old Chet and you're just getting started in your business career, what advice would you give the 21, 22 year old?

Oh, God. I guess it's just the thing that I would tell myself is it's gonna be just all right. Yeah. I was so impatient. When am I gonna be the CEO? How like everything was taking it so seriously. And at the end, it's just gonna be all right. Just calm down a little.

It's funny because when I asked you the question, I saw you kind of look up and start to smile. I knew it was something that. That around, like, just chill and relax. We're gonna be okay, right? It's amazing. Chet and Durancy, COO from Funbox. I really appreciate the time today. Thank you so much for sharing with us on the Second Command podcast.

Of course, of course. Thank you, Cameron. Thank you for having me.

That was great.

Are you the kind of seasoned practitioner who's coaching an up and coming CEO, or are you a foil to their relative strengths and weaknesses or. There was three or four roles I think, that they categorized at the time. I think for me, I was seeking to almost create more of a handbook.