The 12Five Website talks about being “happily different.” Can you tell us what that means and how it fits with your overall mission?

I love this question because “happily different” is one of my favorite core values.  “Happily different” means that we choose to be very different from a lot of our colleagues in this industry.  That’s not a judgment on everyone else, rather us deciding what was important to us and embracing it. This is easy to do when things are going well, but can be difficult to stay true to when things are tough. You begin to ask yourself, “Should I do it like everyone else?”  Truly, it came from when I started the company and I was trying to find a differentiator from the thousands of other finance companies out there.  My cost of capital at that time was quite high, which meant I couldn’t compete on price.  This led me to search for what our edge would be.  Having grown up in commercial finance, I had a very positive view of its impact on businesses and the lives of the people within those businesses.  Interestingly though, as I went to build my network of bankers, CPAs and such, I received grimaces almost every time I introduced myself and my factoring company.  It was those responses that guided me toward our differentiator.  Instead of being a lender of last resort, we decided to be a lender of first resort. Instead of prospecting “bleeding” companies, we went in search of young, growing companies. From there, this idea of being happily different continued as a thread through every decision regarding our business.  We embraced doing things differently and unconventionally, it became our DNA.  This feeds our overall mission of cultivating the passion of our people.  The “people” in this case start first and foremost with the people on our team. A happy team leads to happy clients.  It sounds simple, but it was something that seemed foreign when we decided on being “happily different”.

What are the most pressing challenges facing the factoring industry in 2020 and what can factors do to overcome them? Also, what opportunities do you see on the horizon?

This is always a pressing question and one I ask myself from time to time.  That said, I think it is far more productive to look inward at our companies.  Sure, we all know about the challenges from new entrants into our markets, retaining great talent in a job seeker’s job market and the ever-present challenge of a client base that can feel like it is churning faster than a tidal wave.  While these things are important, I like asking the smaller questions.  I read a book one time that talked about “aiming high, but starting at home.”  I love this because rather than relenting to some intangible, scary storm on the horizon, we can choose to care about that which is in our control.  I love asking questions like “Whom can I develop on my team to reach their highest potential?”, “How can I foster a deeper relationship with XYZ client?”, “How can I be a better leader for my people?”, “Are there small efficiencies that I am missing?”  All of these are things I control and can make decisions on that impact my day-to-day.

I also find the question of opportunities a far more enjoyable a question than the former.  I think there is real opportunity to be a leader in lending into markets like cannabis and the like. Sure, we aren’t there yet, but as an industry, we should be striving to be at the ready for the moment that we can feel comfortable to legally lend into that market.  And on that note, we should be consistently asking ourselves whether technology or industry changes allow us to lend into markets that historically have been no-nos.  This is all a function of not staying stagnant, rather being open to learning, listening and new ways to do things.

Finally, I also see a huge opportunity in the development of the young generation of the workforce.  They are finally here, much to the chagrin of many in this industry.  If we can flip our mindset, I think there is real value to be had in the development of the brains and creativity of this group of people.

Are there specific industries 12Five concentrates on? What are some of the challenges you see your clients facing lately?

Historically, we have been generalists and industry-agnostic.  We do try to create lending products for certain industry verticals from time to time.  We take on these projects as a leadership team starting with research of the why, then attempt launching them with the help of the rest of the team.  This saves bandwidth for our team, which allows us to be extra nimble.  Sometimes they work and sometimes they don’t.  It’s important not to “fall in love with your darlings” and be willing to kill them early.  For instance, this year we are launching a dedicated construction factoring program based on a year-long project from 2019.

In terms of the challenges that our clients are facing, I think the biggest challenge continues to be the easy money that is merchant cash advance companies.  We have tried to take ownership of that challenge though, by creating education programs for our clients relating to that product, as well as having a systematized approach to staying in front of our clients and ensuring that they have all the working capital they need.  At the end, we think that if we can be proactive in a preventative way, we can save the patient before they get sick.

You started this company ten years ago. What are the most significant changes you have seen during this time?

The most significant change that I have seen is the loss of hair on my head over the last ten years; never thought it would go that fast.  Kidding aside, one of the most positive changes I have seen is an increase in our industry’s adoption of technology, which only makes transacting among partners easier.  I’ve also seen a bit of an uptick in companies that seem to be putting culture first, which I think is so important for our industry body as a whole.

Your management team recently completed a course focused on mindfulness and mental strength, which also discussed the important of taking care of yourself physically. We know you are a serious runner. How does all of this contribute to the success of 12Five?

Yes! We just did Compete To Create, which was a fantastic course on what it takes to be a high performer.  For a long time, with special thanks to a mentor of mine that you may know well, I have taken the nurturing of my mind, body and spirit very seriously. As a leadership team, we did the course together and it was fun to see how everyone interacted, as well as the different takeaways we each had.

You can really only train your mind body, and your craft.  We all seem to do the craft part really well, but it really is a three-legged stool.  I can only speak for myself, but when my mind or body is out of alignment, I make less-than-ideal decisions and am not a ton of fun to be around. Ask my wife.  I think it’s so important to move around and sweat every day, whatever that means to you.  For me, it’s a lot of running, but for you it could be anything.  I ran my first marathon in 2007, which coincided around the same time as me starting the company.  Truly, having a daily focus of running has helped me to guide the growth of this company, as it created a rhythm that steeled my focus in so many different arenas.  While moving my body is important, working on my mind is just as crucial.  For me, having a routine of mindfulness has calmed my mind and allows me to be a better father, husband and leader to the people on my team.  The hardest part for me to learn has been the embracing of true rest and recovery.  For many years, I was able to outwork anyone and I learned very quickly that it was never sustainable.  Taking my rest so seriously, especially sleep, has allowed me to truly be the best version of myself and extract a level of performance from my mind and body that I never really understood. Being able to share these tools with my team and actively encourage them to nurture these parts of themselves is easily the largest part of 12five’s success.