Wouldn’t you rather deal with a Canadian company?
Have you ever received a phone call or a direct mail piece from On Deck? If you own a small business in Canada you probably have – they’ve spent millions of dollars in advertising since creeping into Canada from the US in 2014. If you’ve never heard of them, On Deck is a 10 year old publicly traded Wall Street company that provides online small business loans in the US, Canada, and Australia.
In 10 years they’ve never made a profit and have accumulated more than $200 million in losses since inception. Last year alone they lost a record $85 million.
On Deck went public in December 2014 and since then the share price has tanked from $24 to $4.30. As a result, an investment company that holds a lot of shares in On Deck has issued a letter to the CEO that basically says your losses are out of control and, for lack of a more sophisticated term, you guys suck.
Here’s a few choice snippets from the letter
- It is increasingly obvious that OnDeck’s strategy of aggressively growing loans in order to cover approximately $200 million of overhead is at best flawed and perhaps might even be viewed by some as reckless.”
- The market values OnDeck as a subscale commercial lender with no technology advantage or domain expertise, even as the Company’s cost structure remains elevated and resembles that of a prized technology concern
Flawed, reckless, subscale, with no technology advantage – ouch
So if you’re a small business owner in Canada that is considering a loan from one of the new online lenders (like us or On Deck) why should you care about what’s going on with their Wall Street investors? Because On Deck has been “put on notice” and pretty much been ordered to slash costs. They’ve built this huge multi-million dollar automated loan processing algorithm that’s already paid for so there are no cost savings there. Their only option for slashing costs is to fire a bunch of people – the people that service your account.
Company Capital has been in business since 2010 and although we’ve automated many of our processes we believe the human touch is our biggest strength. Our service standard of having a real person answer every phone call within 2 rings sets us apart from our Wall St competitors – and we haven’t lost $200 million. Wouldn’t you rather deal with a Canadian company?