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Q&A: Zo Financial

by Jun 30, 2021

Buddy Bailey, Founder and CEO

zo Financial

Zo Financial is a virtual lease-to-own company that specializes in helping consumers purchase the things that they need at payments that fit their life budgets; it’s also the St. Elias winner of the Best New Company in 2020 category of the Best of Alaska Business Awards.

Zo Financial founder and CEO Buddy Bailey says, “We’re very excited about being voted as one of the best new companies coming around. I truly believe that Alaska over the next twenty-four months is going to see a company that potentially could be one of the fastest growing companies that we’d had in a very, very long time in Alaska. So we’re very excited about it, we’re honored that we got chosen for that award, and pretty excited about the future.”

Below is a Q&A with Bailey (and some insight from General Manager Scott Lee) about Zo Financial’s strong beginning and bright future.

Zo Financial launched during 2020, in the middle of the pandemic: was that because of COVID-19 or despite COVID-19?

[He laughs] You know, I’m a big believer in the timing of things, and the stars aligned at the right time in life for us to launch and grow this company. There was kind of a storm of things that came together, if you will, where the timing was right, the right partners came to the table, and the market is in the right position to open.

Tell me a little bit about your partners and what inspired you to open this business.
I came out of a pretty weird time in my life that was actually very tough… and I went and had lunch with one of our partners and he said, “Well, what are you going to do? Where are you going?” and I said, “Well, I don’t know, but I’ve wanted to start this business for twelve years and I’ve looked at it, and I’ve looked at it.” And so he and I sat, we talked about it, we went over it, and he looked at me and said, “Buddy, you’d be absolutely stupid not to start this company and it’s going to be wildly successful.”

So we did, we started the hunt for a couple of investors and researching certain things that we wanted to do with this business, and within a month and a half we had a couple partners come to the table, we started building software, hired our first full-time employee in August of last year— maybe it was July—and started moving from there.

And how many employees do you have today?
We actually have ten employees as of today.
That’s quite a bit of growth for less than a year
Yup. I would suspect that by the end of this year—so eighteen months in business—by the end of this year we’ll have somewhere around twenty employees.
Who’s the audience that you are selling to; who’s your clientele?

We’re very driven and built to be the helpers of the low- and no-credit segment. So the people that are credit invisible, their credit is blemished, they’ve had a bankruptcy, they’ve had—what we like to say is that they’ve had life happen, right?

Our company’s name is Zo, it’s a Greek word that means “to live.” So we are helping people every day live their best lives, is what we like to say. We run under that banner… We help our consumers get the things that they need. When every other credit out there said no, we say yes, and then we’re helping our retailers grow their businesses with creative payment options that keep their consumers in the door.

Do you work only through retail establishments?

We currently work only through retail establishments. Our prime is tangible items, somewhere between $150 and $5,000 in value. The prime retailers that we work with are furniture guys, rims and tires, electronics, home appliances, and then recreation equipment like bikes, or ATV parts, different things like that.
As you’ve been growing, have you been marketing directly to those types of retailers or have you also been doing individual outreach to make people more aware of who you are?

We have a three-pronged approach to all of our marketing: we tell the communities where we do business that we exist and why they should use us, so that’s our direct-to-consumer marketing; we market to retailers all around the United States in why they should use us as an option; and then we actually have a third prong where we market direct to our retailer’s consumers, and our goal there is to get people in those retailers’ doors to help them grow their business.

You mentioned that you are connecting with retailers across the United States.

As of last Thursday, we are in Alaska, Washington, Oregon, Idaho, Montana, Nevada, Utah, and Texas.

We have, in Alaska, twenty-seven retailers live and five outside of Alaska, and there are twenty-seven locations between those five retailers—and we’re about to bring on a few more. We’re covering ground quickly and we hope to have over a hundred retailers on our system by the end of 2021.

Are many of your employees here or have most of them been employed remotely?

We have six employees that are full-time staffed here in our Wasilla location, and that’s where our call center is, our headquarters. Our CFO is a fully remote position in New York; our national sales director is based out of Salt Lake City, Utah; and then our head of all Pacific Northwest regional sales is out of Seattle.
Your decision to headquarter the business in Alaska, was that an obvious choice or something you deliberated?

So two things: one, we are very, very driven to grow the Alaskan economy. Probably the reason I came up with this idea twelve, thirteen years ago was I was really frustrated: I saw another company that was doing it, how much money they were making off their customers, how bad their service was, and then the amount of money that was leaving Alaska… We want to change that and create jobs, create a better economy, create a better community.

Now the other side to that is we will most definitely have to open a second call center, probably somewhere in middle America, and that’s solely because of time zones. Right now our farthest east time zone is Central; when traditional retailers open at 9 a.m. and 10 a.m., that means we have to have people here ready to be on the phones at 6 a.m. to 7 a.m., right? The further east we go, that turns into a four or five hour difference; that puts us in a position where we have people starting at 4 a.m. in Alaska.

Outside of the time zone, have you had any other Alaska specific challenges to getting yourself launched?

Our biggest challenge right now is the ability to find help, with the COVID world that’s happened and our scalability. To put it in perspective, if we grow the way that we think we can, by the next year we may be somewhere around 100-plus employees here in Alaska.

Well what does that mean from a workforce standpoint? Does Wasilla [where the call center is located] have the workforce available to hire quickly fifty employees, seventy-five employees?

Outside of that, we haven’t had any issues with sales, bringing on retailers is awesome, our technology is good, we have a really good process for building our technology and how all of that works, so our real challenge is just manpower.

So the expansion of employees that you’re looking at, that’s primarily at your call center?
The expansion will be at the call center as our support team is very, very important, but also we are massively expanding our sales team. We fully expect to be in all fifty states within twenty-four months from now, and so as you can imagine there’s a lot of things that go along with that.
What does your employee training include?

If you look at the core of our business model, what we care about is people. My true goals in life is to just love on people, and to build a business that helps us make money to go do that is really why I do what I do.

No matter where you look inside of our company, you’re going to hear the exact same story from any employee that you’re going to hear from me. And that is that we are humble with people, and we’re selfless with people that we come in contact with. Our service model to our consumers is very, very highly driven on loving people, giving them dignity, being humble with them, being selfless with them, and trying to be givers of our time, energy, and resources.

Sometimes I think that’s the hardest thing to train some people on. I can teach people to use a computer fairly quickly, I can teach people to show up on time, or teach people to do this or do that, but sometimes that’s a very difficult to teach somebody a potential character trait: every time a person calls into our help center, what’s the voice like on the phone that they’re going to hear?

As a lending institution, at some point there must be a decision about sending a client to collections or what do to if a payment hasn’t come through. So how are you applying your policy to those kinds of situations?

So here’s the key in our business model: since we are a leasing company, we don’t deal in the world of interest, we don’t deal in the world of credit and finance. From a legality standpoint, everything we do is a lease purchase, lease-to-own.

My point with that is that if you and I were to start talking about a credit card today, the reality there in that industry is that they don’t actually want you to pay off your balance… They want you to make your minimum payments for the next ten years, never pay off your balance, and all they do is get interest, right? That’s how a credit card works.

We have a very set value on that lease over twelve months—no ifs, ands, or buts. We’re in a very unique scenario to tell a customer, “Hey, I don’t actually care when the money comes back, just that it does.” Clearly, we don’t say it in those terms to a consumer and just tell them that they’re free to do whatever [he laughs], but we can talk to a customer, and if the customer says, “Man, I can’t make my payment today,” we can say, “Well, would it help you if we pushed out your next payment seven days? Would that help you be able to continue to move forward?”

For us, it’s just that people communicate with us. The only time that we’ll actually send somebody to collections is if they just ghost us: they stop answering calls, they won’t discuss anything with us. Outside of that, we’re very, very, very flexible, to the point that thus far we have basically a zero percent default rate at all. We haven’t had any accounts completely default.

Definitely because of the type of clientele that we work with, people miss payments and we work with them, and they’ve been pretty dang good about that. So we’re very blessed so far to have pretty good clients that we’ve worked with. And that’s tough as a new company.

Zo Financial General Manager Scott Lee adds: One thing that we think is really important is we start every single one of our collection calls with, “Hi, Mr. Smith, this is Scott from Zo Financial, we were just calling to see how you were doing today.”

And we let them vent for a moment, maybe tell us if they have anything going on they want to tell us about, and then we go down a path of, “Okay, well I was calling today because you missed a payment. Not a big deal, I just wanted to touch base with you, make sure we’ve got a plan to get that caught up. Is there anything I can do today to help you get that caught up before your next payment’s due?” So we take a very different approach to collections, and we find that it is better received than maybe a strong-armed collection model.

I was the first employee that Buddy hired and it was told to me day one that approach was an important part of everything that they were going to be doing—so all of our training materials, everything we’ve developed over the last few months, has been with that core value in mind.

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