Banking Then and Now: A Tale of Two Business Owners
Monday, September 08, 2014
Such is the case with two business owners in Portland, Ore.: Monte Sheldon and Casey Botta. One represents how business once was, and the other how it will be.
Recently I spent the weekend with Sheldon. He owns the Jaguar dealership on West Burnside. I was with him at an auction in Monterey, Calif., where the most expensive car ever sold at auction would sell just moments after our arrival.
The first thing you notice about Sheldon is that he’s in shape. He works out religiously and it shows. Maybe that’s why at 82 he has so much energy. The guy looks like he could be a retired bullfighter.
Building a company
Monte Sheldon built his company the old fashioned way - one car, one brick at a time. One of his closest friends is a guy named Bob Ames. He’s a car collector and former banker who pulled some strings, trusted his intuition, and convinced the bank he worked for to give Monte the money he needed to buy the Jaguar dealership in Portland.
Because of Ames's investment in Sheldon, at one point over the years Sheldon sold more cars out of his store than anyone in the country. Bankers had those kinds of relationships with people in those days. You can stare as long as you want to at those loan applications, but you will never see any boxes on that form to check that say character, heart or work ethic.
Banking hands are tied
Yet it seems today that the banking hands are tied. Regulations set by smart guys don’t know people, but they do know math. Truth is, math tends to make things more predictable and easier - for the banks, that is.
Botta Moto Works is a small business owned by Casey Botta in Northwest Portland that fixes expensive European cars. He has been in business for more than four years.
Botta wanted a small credit line from his bank. He submitted a loan application.
The bank said no.
But it didn't end there.
Botta was already using the new credit card processing system called Square for his credit card transactions. You’ve seen these things popping up all over - if you've made a purchase at a foodcart or a small store lately, chances are you've used it.
So Square, these new kids on the banking block, offered Botta the cash advance he wanted based on projected revenue from swiped cards processed. The deal was, for every card swiped they would take a piece to cover the cash advance.
Yes, it was that simple.
The people at Square have never met Botta, a 36-year-old Boston transplant, one-brick-at-a-time, business builder.
But when you compare Sheldon with Botta, then the Bob Ames figure becomes Square.
How did that happen?
These guys at Square could be perceived as dumb and reckless. Traditional bankers might say they're going to go broke taking crazy risks on people like in the old days.
But wait… It turns out the guy who invented Twitter, Jack Dorsey, is also the founder and CEO of Square. So maybe that guy knows what he's doing after all.
So maybe our modern bankers need to take a lesson from Dorsey and his ilk. Maybe there's more than one way to decide whether it's worth taking a punt on a business.
Maybe the old style - finding a way around the red tape and formulae through relationships - is not so far from the new style, of finding a way around the red tape and formulae with the help of technology and a little bit of innovative thinking.
Home page photo credit: 401Kalculator.org