On Creating An AI Business Credit Platform
My name is Ken So and I’m the Founder and CEO of Flowcast. The business we run is a platform that helps small businesses build business credit and reach their full financial potential.
Our flagship product is Tillful, which is a small business credit platform that helps small businesses get access to and build business credit. Though Flowcast has been around for a few years, we started Tillful only a little over a year ago. In year one, we have grown to over 35,000 small businesses on the platform and facilitated over $10 million in funding to small business owners.
What's your backstory and how did you come up with the idea?
I grew up in an entrepreneurial small business household, and have seen the struggle of small businesses getting access to capital. My dad had multiple businesses when I was very little, growing up in Hong Kong. He sold his businesses to immigrate to Canada and started from scratch in Montreal. Being in a foreign land, we had no car at the time and so we were doing deliveries on the subway train. The whole family would help out and carry big boxes on and off the train platforms.
A lot of entrepreneurs chase the money and chase the investment, but the more important thing is to chase the customers.
He eventually carved out a nice niche for himself in Toronto as a wholesaler, and he landed some big companies as his customers, but ultimately, he wasn't national, and he kept it small. It was partly intentional, but I thought that he could have seriously invested in the business because he had a pretty nice monopoly and that it was a bit of a missed opportunity. But coming from his generation, scarcity is a key mentality block. He wanted to conserve his cash, and never wanted to borrow money to do anything.
There are a lot more opportunities now, and we have an abundance of resources. So I wanted to know, what’s keeping small businesses today from scaling to 10x or 100x? As we went to solve this problem, we recognized that there's over a $2 trillion financing gap for small businesses. Knowing this was the essential genesis of the company — we wanted to find ways to solve that. One of the pieces we ended up looking at was the intersection between alternative data and machine learning to help banks better assess risk for small businesses at scale. That’s where the Tillful business credit score comes in.
Take us through the process of designing, prototyping, and manufacturing your first product.
In the very early days, we were building Flowcast, Tillful’s parent company, with a very small team. It was mainly just my co-founder and me at the time, and we had a couple of interns. We couldn't afford to hire a full-time engineer at the time, so that’s why we mainly worked with just interns and ourselves to build the initial prototype.
Flowcast builds an enterprise risk assessment product, and Flowcast’s technology is deployed through Tillful’s platform for small businesses. So, in the early days when we just had the enterprise solution, we needed to sell to big companies, like banks for example, and we had to sell ourselves up a little, and make it seem like we were a bit bigger than we were. When we started we were all working out of a Philz Coffee, and eventually, we graduated from there to a co-working space, and then we got into the Alchemist accelerator.
Alchemist was our first network where we got plugged into the whole startup ecosystem. We got introduced to investors and other potential customers. That gave us the foundation and the infrastructure to be able to scale. We didn't pay ourselves until we got the first check from a customer.
Describe the process of launching the business.
For the launch of Tillful, we did a couple of things. First, we did a waitlist sign-up for about three months before the actual launch date. That gave us some validation as to whether there was a need in the market. It also gave a few early adopters so that they could give us feedback early on. We were able to interview a lot of small business owners directly to see what their pain points were, what they were using, and whether they were happy with existing solutions.
So while we were building the MVP, we were getting all this feedback from the closed beta with friends and family. When we launched, during that first three-week period, our main goal was to test everything out and make sure that it didn't break. When we went live, we already had a waitlist of about 500 or so people signed up. We then onboarded those customers, got feedback, and started iterating and acquiring additional users.
We built our first website using a tool called Unbounce which was a quick way to A/B test the initial brand and messaging. We did some of that before we settled on the final first draft of the messaging and the web design. Once we went live with the site, we went with WordPress.
As far as funding, Tillful is primarily venture-backed. In the early days, we had angel investors and some seed funds. Then we raised a proper seed round, followed by a series A.
Since launch, what has worked to attract and retain customers?
From the customer acquisition standpoint, we’ve deployed across the three marketing pillars, if you will, which are owned media, paid media, and earned media. On the owned, or organic side, we have an SEO-optimized site, as well as SEO-driven content on our blog, and social media. Then we have a paid strategy, which includes search ads, social ads, direct mail, channel partnerships, and affiliate partners. As far as PR, we’ve done a little, but most of our marketing has been done through organic and paid, the latter of which does include influencers in the small business space. Since we’re only about a year in, there’s still some experimentation happening.
So what's been working? Well, in the beginning, we mostly relied on paid avenues because it was hard for people to discover us organically. We had some referrals, but it wasn't in high volumes because the product was in such early stages. I think when we started, about 90-95% of our customer acquisitions were coming from paid. Now we have it down to about 70-80% paid, with the rest of the customers acquired organically. I do want to note that our organic efforts have just started; it’s been less than a year. Over the past quarter, our organic traffic has gone up around 300% and is in the green month after month. Most of that is attributed to direct traffic, which we’re happy to see because it indicates that brand recognition is taking hold.
Ultimately, where we want to be is a third, a third, a third — a third paid, a third organic, and then a third channel relationship and PR. Though, as I mentioned, our organic efforts are just starting, what seems to be working well on the organic side is having good content on the page, “good” being thorough and educational, even if it doesn’t lead to signup or funding application right away. Building up our referral channels has also been successful.
How are you doing today and what does the future look like?
Right now in year one, we have 35,000 users, and in year two we want to get to over 100,000.
Customer acquisition growth-wise, we’re growing at a rate of about 200%. Our customer acquisition costs are also coming down because our organic efforts are growing. Based on some feedback from investors and advisors, we're achieving better than the industry average already in the short period that we have existed. We’ve done some comparisons with some online lenders, and we're yielding better economics.
What's next for us is that we’re launching a secured business credit card. It’s going to be a game-changer because it not only provides some liquidity for small businesses but also helps them build business credit with some of the major credit bureaus. We then bundle that with our funding platform so that while they spend and build credit, they can also get pre-qualified or even pre-approved for small business loans.
The card caters to what we call “young businesses,” which are businesses that have been open (or officially registered) for less than a year. After three months in business, a business could qualify for the Tillful card, which can help them build business credit much earlier in their credit journey than otherwise. Currently, many small businesses get caught up in a vicious cycle of needing to use credit to build credit, and many of them simply don’t qualify.
Once they start building credit and scaling, we can give them access to Tillful Funding, as well as access to other kinds of capital sources down the road. We don't want to be a one-and-done transaction for small business owners, and we don’t want to be another company that extracts as much as possible from small business owners, only to leave them worse off. We want to be with and alongside them from the inception of their business through to them reaching their full potential.
Through starting the business, have you learned anything particularly helpful or advantageous?
One lesson I’ve learned is about taking calculated risks. A lot of times with startups, speed is more important than anything else. So in a way, not spending money fast enough hurt us a little bit in the past. I’m now of the opinion that if we have a hunch that something is working, we should double down on it and try to grow as fast as possible rather than taking too much time to manage risk in decision-making.
That was huge, for example, with marketing. Before founding Flowcast and Tillful, I came from a B2B world where we didn't have to spend a ton on marketing. Leads were generated mainly through referrals and partners, so marketing was more of an afterthought, or a public relations tool. Going to the small business space, it’s still B2B, but marketing is much more crucial to customer acquisition. So one of the big lessons I learned was that investing in marketing is hugely important and that PR is important to not just getting the brand name out but to getting visibility and traction.
The same goes for hiring. To support the roadmap or support growth, we need to hire earlier as opposed to being too reactive. We don't know how long it could take to find the right person. In general, finding the right person is often the most important thing. But there is also the question of what is the right person? What is the right fit? A lot of times, we tend to focus too much on skillset rather than other attributes like alignment with goals, or the cultural fit. Those are equally important to a good skill set.
In the past, we’ve over-indexed on the technical attributes rather than some of the “softer” attributes, which affected other team members and the overall dynamic of the company. Alignment with company goals and the mission is hugely important. If they're just in it for money, it's always been that they don’t last very long, and we want people for the long haul.
What platform/tools do you use for your business?
I would say my top three apps if you will, are Slack, obviously, for communication, HubSpot for really everything now (sales, marketing, analytics, support), and Viral Loops, which has been working very well for us in driving sign-ups.
From an engineering perspective, we use JIRA. We’ve also recently added Productboard, which I’m pretty bullish about. It’s a nice way to organize product ideas and get them prioritized onto the roadmap in one place. Plus, the whole team can suggest features, which is a great way to help us all collaborate remotely.
Miro is another great tool for brainstorming and whiteboarding when we're not all sitting in the same room. Some teams, like marketing, use Trello quite a lot. It varies by team, but those are the main ones that we use.
What have been the most influential books, podcasts, or other resources?
When I first started the company two books shaped how I was thinking. One was Zero to One by Blake Masters and Peter Thiel — it's a good startup book. The other one is called Pitch Anything by Oren Klaff. That one was great for pitching to investors and customers. I didn't have a sales background, so that book helped me learn about the psychology behind sales and pitching, and it’s stayed with me even now.
As far as day-to-day, I read a lot of newsletters. One of them is called FinTech Brain Food. It's a weekly newsletter, and it doesn’t just regurgitate what's in the news. The writer Simon Taylor gives pretty good insights. FinTech Takes is another good one. It is more news-based, but it finds things that you don’t see in Bloomberg, or Forbes, or whatnot. And then, of course, The Hustle is my other go-to for startup news. Lastly, I also like CB Insights for all their data reports.
Advice for other entrepreneurs who want to get started or are just starting out?
A lot of entrepreneurs chase the money and chase the investment, but the more important thing is to chase the customers. You get one point for landing an investor and 100 points for landing a customer. So you should spend disproportionately more time finding the customer and finding product-market fit. It's important to get VC dollars to help build the company, but if that's all you do every day, then that's something's wrong. You need to talk to and listen to your customers. There is nothing like building an awesome product that changes people’s lives.
But there’s also a balance. There's a quote from Henry Ford, and Steve Jobs used it too, which says that if he had only listened to his customers, then he would have built a faster horse. You could take that to mean that you shouldn't be listening to your customer at all (I think sometimes people think that’s what Steve Jobs did when he built the iPhone), but I think there's a bit of nuance to what Henry Ford was saying. I think he meant that you should hear your customer and identify the problem that you need to solve, but not necessarily follow the solutions that your customers come up with. So there's a difference between hearing, listening, and acting upon what you're hearing. You want to listen, but you don't want to listen.
Are you looking to hire for certain positions right now?
We’re looking to hire on the engineering, sales, and operations teams.
Senior Python Engineer - Full Time, Remote
We’re seeking a Senior Python Engineer to join our core engineering team to keep up with customer demand. The ideal teammate is an experienced professional looking to take ownership of critical backend services of our quickly-evolving business credit management apps. These backend services are built within the Python ecosystem. We use modern tools, which means you’ll have the opportunity to work with software like Redis, RabbitMQ, PostgreSQL, Docker, Kubernetes, and much more.
Sales Development Representative - Full Time, Remote (US)
We are looking to hire a Sales Development Representative who can help business owners with their financial health and provide them with access to the best credit options for their businesses. In this role, you will serve as the first line of support for prospective and existing merchants on the platform.
Operations Lead - Full Time, Remote
We are looking to hire an Operations lead who will be in charge of leading our company's operations and customer servicing. You’ll oversee service operations and customer support, and identify areas for process improvement. This role will partner with Product, Sales, and external partners to better service customers, as well as have a key role in constructing clear OKRs for the company.
Please apply through the careers page.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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