In this podcast, we sit down with Jason Cohen as he talks honesty. Cutting corners and exaggerating the truth may seem appealing when competition is fierce and the next deal needs to get done. But does it actually result in more revenue and higher profitability? Cohen makes the case for honesty and divulges how it can make us more effective and more profitable.
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Podcast Transcript
Dallas: Hello and welcome to The Purposeful Banker the podcast brought to you by PrecisionLender where we discuss the big topics on the minds of today’s best bankers. I’m your host Dallas Wells. Thank you for joining us. The title of today’s podcast is Trust and Transparency and features Jason Cohen, founder of multiple startups including WP Engine taking all of them to over a million dollars in annual revenue. He’s also been an angel investor for the past six years and has written early stage startups for the past nine years. We came across Jason at the Business of Software conference a few years ago. Loved the talk and we’re really excited to get to hear from him today, so Jason welcome and thanks for doing this.
Jason: Yeah. Thanks for having me.
Dallas: Lets start with the easy stuff. Why don’t you tell us a little bit more about your background, kind of how you ended up where you are now.
Jason: You said it. I’ve been starting companies for the last 20 years and both bootstrapped and having raised money, so the latest one is called WP Engine. We don’t build websites, but we host them for folks. In particular, we host WordPress, which is the most popular tool that people use to build and then manage webpages online. About 26% of every website on earth is powered by WordPress, so it’s quite dominant. We’re one of the largest companies that host those sites. We’re about 420 employees now with 5 offices in 3 countries and so this has really been an amazing journey so far and continues to be. I think it’s interesting, of course, because banking is a special industry I think when you compare it to other things whether it’s how you make money, how customers work, the fact that it’s kind of two-sided business with retail and lending and so for.
I think it’s interesting though to take lessons or stores from other industries and ask can it apply and sometimes the answer is no because it is a different sort of business. On the other hand, when the answer is yes that can be really revealing. I think this is true of really any kind of industry, but in banking I wonder if it’s a little more insular and a little more difficult to see what is happening in other companies and how can we bring that in. One thing I would also say about banking is that it’s relatively, from the consumer who just wants to have a checking account, it can seem commodity. What is the difference between this bank and that bank, they both give me no interest and they give me a checkbook and i don’t know, they both have little cups of coffee.
Dallas: Right.
Jason: I don’t know, I guess I’ll pick the one that’s closer, has slightly better hours. It’s very hard to differentiate and, therefore, perhaps doing even one special or unique thing can actually be a large amount of differentiation if normally there’s no differentiation, so maybe that’s another reason that why it is interesting to hear about other things. Even one point that you bring in might be a difference maker.
Dallas: Yeah. Absolutely. I think that’s really interesting the way you’ve raised that about banking. It’s one of the most common questions we get, which is what’s everybody else doing? The banks tend to be very secretive about their own process to thinks and so they don’t share much with each other. They view everybody as the enemy, the competition, and so I think they really do need to look kind of outside the walls to find the really good ideas and the powerful things. That’s kind of what we’re doing here. What we wanted to talk to you about is trust and transparency. You’ve given a lot of talks on those and that’s what we heard from you at Business of Software and there’s a couple of those where there’s really good ones online and we’ll give links to those on the show notes for this episode. Trust and transparency is one of those things that a lot of banks tout. Almost all of them probably have it in their marketing material somewhere and it sounds easy, you know being honest equates to this trust and more money, but it’s still really challenging to actually walk the walk. Why do you think brands struggle with being honest and truthful?
Jason: Well, people may say that they probably don’t show their books online and they probably explain how the business works online.
Dallas: Right.
Jason: It’s always difficult to be vulnerable. It could be bad news and it can make you look bad. People are so worried about them looking bad that they just want to control the messaging always. That is why it works so well to be vulnerable. If you ask any stand-up comedian what do you have to do, one of the few constants is that you have to be vulnerable. Someone who’s happy and everything’s working really well and everything’s good is not interesting.
Dallas: Right.
Jason: For banks in particular, regular people don’t trust banks and part of that is because of stories in the press that something bad is always happening. Sometimes it’s on a grand scale like mortgages or just something really atrocious like the recent Wells Fargo event, but why would someone trust a bank? People don’t know how it works. No regular person knows how the business of a bank works. They don’t know whether it’s profitable, they don’t understand how it operates or really how they make money. Maybe, at best, they could say something like there’s a differential between the interest they pay and the loan interest they make, but then it sounds like banks just automatically make money and they don’t think about defaulting on loans and they don’t think about how banks can contribute to the local economy and all that kind of thing.
To say it’s a transparent and honest would mean that you are honest both about how you make money in one sense, but also the good things that happen. How you did help the business get off the ground and be successful because they had a revolving line that allowed them to take out only what they needed when they needed it and, therefore, it was cost effective and the bank was a partner and without the bank the business couldn’t of existed. That’s amazing. It’s hard to tell that story only and that’s never any bad news. That can’t be true. In general, opacity breeds fear and especially around money where people have high emotions around things like money. We don’t usually talk about our salaries with folks, right?
Dallas: Mm-hmm (affirmative).
Jason: Money is a big reason why people get divorced. Money is a really high-stakes, high-emotion thing in America and banks are the center are where money comes in and out as far as a regular consumer is concerned, and they don’t understand it all it, it’s a complete black box. That’s not a good recipe.
Dallas: Really all they get from the banks is kind of this polished marketing scheme with a lot of cliches and the same message from every bank in town, so that there really is no way to figure that out.
Jason: Right. Then you hear about how people don’t get loans.
Dallas: Right.
Jason: For example, what if a bank stood up and said we analyse the loans that we gave out and we have been biased. Now there’s a strong statement.
Dallas: Yeah.
Jason: You have to be careful how you say that. There’s regulations with this and that, you don’t want to get lawsuits, right? You have to be careful in how you go about that.
Dallas: Right.
Jason: A bank who figures out how to say that in a way where they’re saying we’re one of the few who are willing to look at the truth and see what’s really going on and, therefore, we’re one of the few who are going to fix it. You can’t possibly fix a bias in something like lending unless you first measure it and then you can try to take action and then, of course, measure against that action to see if you succeeded. That’s the way to do it, but only if you’re honest about what’s going on in the first place can you begin to fix that. You could use analogies in interviewing and hiring, for example, which is a pretty good analogy of having to use an interview process data, both qualitative and quantitative about somebody to decide whether they should join your team. That’s not terribly different than a loan. It’s a risk in a payoff and then so on. Certainly, biased in interviewing and there’s things you can do about it and both of those things are quite interesting.
It’s the companies that admit that there can be bias in interviewing and attempt to do something about it that are the ones in the forefront and maybe impressive actually. Maybe that’s a place that you want to put your money as a customer of a bank and want to put my money in a bank that understands what the problems that the bank could contribute to and then conversely the very same coin, obviously can be part of solution for that. That to me is actually an inspiring message about how a bank can help transform a community and it would take. Again, I appreciate that there’s regulations and laws and I also appreciate that I can’t enumerate them all because I’m no expert. I know that. I realize that I’m saying that not as an expert, I know that. At the same time, also not being esteemed in this maybe I can help challenge the notion, ask how can we do this, how can we say yes to that rather than it’s impossible.
Dallas: Yeah. I think what you’re talking about is one of the recurring themes we hear in your talks, which is transparency is a lot about kind of exposing the flaws, you know by customer reviews and things like that. I think bankers a lot of times will hide behind those regulations on the stuff, well we can’t talk about anything specific because we can’t talk about individual customers, it’s against the law. Really, that’s kind of a lame excuse. There’s lots of ways that you can talk about bad experiences that the generic customer had and be truthful about those and exposing those and as you said you’re going to show they hey we’re aware of this, we’re working on it and that makes the good stuff that you talk about that much more believable.
Jason: Yeah. There’s two things there. One is the fear of exposing flaws, like a bad review. The second thing is unable to talk about a specific customer. On the first point about being difficult to talk about flaws, it turns out that talking about flaws actually causes more sales to come in a bank and the specific examples of how that works and why that works, that’s part of the talk that I will be giving later. I don’t want to give away … That’s not a secret. It is true and it’s true in more than one way. You’re right that customer reviews are an example, but there are other examples too. I understand if the specific example of a customer review could be impossible due to it being specific to a customer. I understand if that’s true.
Dallas: Mm-hmm (affirmative).
Jason: That doesn’t mean that you can’t take the lesson and use it for your benefit in some other form. For example, maybe you can’t talk about one customer, but can you talk statistically about your customers, 80% of customers who do X, Y happens or in the banking industry normally X, but in our case Y, and that’s because of Z. Statistically, can we talk about stuff if we’re not allowed to talk about the individual? That’s one potential way. What if you said hey as a bank as a partner to small business we want to see small business succeed, therefore, we want to literally give advice to small business about how they can succeed because we want those loans paid back, by the way.
Dallas: Yeah. That’s a nice thing to have.
Jason: I feel like this is how a bank really can substantially impact the lives of the people in the communities that they operate in, which is to me that’s one of the great missions that perhaps a bank should have. Obviously, the number one is your own balance sheet, but in terms of the human mission, like yes, but so what, what if the balance sheet’s good, why do we care about that? It’s because we can transform people’s lives in the community while we do it. I think that’s why not do both. Isn’t that actually worth doing? In that vain, you want to help small business and that vain you could say things like what I just said about interviewing, and of course there is a lot of stories and data about what it is to have bias in interviewing that you can take out and then can you say, at that point, number one I’ve now helped you hire better, and number two even we here at the bank we think about our employees the same way because we want to hire only the best to work for us and we don’t want to be bias in how we hire, so we think about these things too. Also, we even think about these things in loaning because if you think about it the analogy’s actually pretty good.
It’s actually a lesson that we take on board when we think about these things. Now, you’re not promising anything, you’re not naming a specific policy you’re going to do, you’re not naming a customer. You can just say in general, this is something we think about that we value, that we want to implement in some form or fashion. You can be in the sense nonspecific about exactly how it goes into policy, but you can be specific in what kinds of things you want to think about. Again, I know i don’t know all the rules about what can be done, but I’m sure there are ways to do things through analogy or in concert with how you’re helping your customers that would work that would take these general lesson and apply it in a way that does work even if it’s specific thing like a customer review isn’t one of them
Dallas: Yeah. Jason, and again without giving away too much of the punchline, if an organization believes this, if it makes sense to them, there’s some pretty deeply embedded cultural stuff there that they’ll have to overcome. How do they shift their approach to become more transparent? Where do you suggest they start?
Jason: Here’s a few specific ideas. One is start with something you believe strongly that your customers probably don’t know that you believe.
Dallas: Okay.
Jason: Maybe you believe in the customer service is the primary kind of mission of that front office with the coffee. Now, of course, in the back office you have loans, you have other things that matter the most, but we’re talking about what happens from that back-well forward, would we care about, and lets suppose you do care about the customer experience. You actually put great coffee in that carafe because you’re not going to cheap out on the coffee, you want to have them take a sip and go that’s actually pretty good. Just even the little cookie, it is nice. Isn’t it?
Dallas: Sure. Yeah.
Jason: Pens that work and aren’t chained to the desk because a pen that’s chained to the desk is part of that experience.
Dallas: Right.
Jason: They don’t even chain it to the desk at the Taqueria.
Dallas: Yeah. The bank can’t afford a pen?
Jason: Yeah. Number one they can’t afford a pen, but maybe number two just put your name on the damn pen and let them steal it, so that their name is on the pen.
Dallas: Yeah. Please take it.
Jason: Let them take it. It’s your name. Yes, of course, it’s okay to brand the pen that they stole, that’s fine. Kind of advertising. They stole it for goodness sake, it’s fine. Why not look at it as marketing or anyway the chain just, what does that mean to a person that’s grabbing that and they try to sign their name on that weird deposit slip and they’re trying to find where to sign and now the chain is taunt. It’s a terrible experience.
Dallas: Yeah. It is.
Jason: Your customers don’t know that you care even if you do. You could start with something that you believe in strongly, that your customers don’t know that you believe in, and then you can ask them what does that mean to us? What are all the ways in which that would manifest, whether it’s from that island in the middle with the weird pens or it’s the desk you come up on to do your business or the other desk to get notarized and all the other things, like the kind of people you hire, what you’re hiring to because I guaranteed you that no one walking into that bank knows that you care about that.
Dallas: You have to prove it, basically.
Jason: Yeah. It’s great that you care about that. It’s fantastic. I really think they care about that. You could talk about something again that you already believe strongly, so it doesn’t bother you to be honest about it because you believe it. Start with something you already believe strongly, but that your customers don’t know, and be really transparent about that including, again, the bad stuff. You could say things like we really care about the customer experience, we did this, we did that and the other thing, and we realized something, chaining the pen to the desk is the opposite of what we actually think about, so we don’t do that anymore. That’s admitting something bad, but actually it’s kind of a fun thing to admit as bad. It’s funny.
Dallas: Right.
Jason: That’s what we’ve always done and that’s what everyone else does and then we sat up and said wait a minute, we should do things just because everyone else does it. We should do what we think is right and that’s not right, so we changed it.
Dallas: Yeah.
Jason: Even admitting that you did it because someone else did it or that you were thoughtless about it. These things that sound negative, but by saying that you could say and then we said, but no, and that shows you to be thoughtful and evolving and then believable as someone who does care about a customer experience.
Dallas: Yeah. It puts a humanness to that decision of hey everybody’s been in that position where you look at something like why are we doing this, and you figure out that it was a bad idea and you fixed it.
Jason: You can be honest whether it hurts your business. You could say you know we’re getting more expensive pens, which sounds kind of silly, but we’re going to actually have to justify that to corporate. You can talk about that. Do they know that you’re beholden to someone else? Because you are. They probably don’t know that. That might be interesting. There is a story or a value that could make you look bad in the short term, pens don’t make you look that bad, there may be other things that you look worse, but by doing that that would demonstrate your trustworthiness or demonstrate that you stick to a value ahead of your brand. Another example of a place to start is some kind of about us or about this bank or about this branch sort of webpage. It probably gets very little traffic because who goes to that page.
Dallas: Right.
Jason: That also makes it a safe place to being. If you’re worried and scared, it’s a safe place to start. Exactly, because it doesn’t get a million hits a day. The people that do go there I guess they want to know the answer of who is this? That’s interesting. I bet you they either don’t have that page at all or you do, but it’s just full of bland.
Dallas: Yeah. Super generic.
Jason: It doesn’t mean anything that I could probably apply to any bank in the whole work or indeed most business in the whole world, which only proves that it’s saying nothing at all. What if you said gee they’re very few people that go to this page actually want to know the answer and maybe we should give them one. Right?
Dallas: Yeah.
Jason: Even if it was little things like hobbies, so and so likes to do paddle boarding, so and so thinks that she’s crazy because she has to get up at 5:00 in the morning to go sculling with people on the lake and that’s insane.
Dallas: Right.
Jason: It just makes a human being in a way that doesn’t negate anything else that you’re saying. That might be a safe place because it’s on the side and it’s an easy place to be a person. Those few things whether you believe in strongly, what could make you look bad in the short term, but good in the long run, or something out of the way, but it’s safe like an about us webpage. These are ways to just maybe dip your toe in and get started.
Dallas: Yeah. That’s great. Jason, we’ve hinted at it a couple times here, but you will be joining us for our second BankOnPurpose conference in May of 2017 in Austin, Texas, so give us the elevator pitch for you talk. What can people expect to hear if they show up there?
Jason: Well, it’s easy for me to sit and say you should be honest and hopefully I’ve given some specific examples, so that’s a tangible real concept and not just academic talk or something. What you’re going to expect from my talk is to hear many real examples of companies from the fortune 500 down to tiny startups from the business world, but also from the nonprofit world or the social business world, so from all kinds of industries and types of businesses and organizations what did it mean to them to be honest and how did that change their business to the good. I think at the end the kind of sense is this seems to be a general purpose lesson. It doesn’t seem to be specific to crazy startups for the rally or well sure a nonprofit can say that because they don’t need to make money. There’s a lot of easy ways to sort of excuse, but I think when you see it in total not only does it make the point that there kind of is a basic human thing here, but also it ends up being tons of specific examples to steal from.
It’s also explainable how could this look, how could this in fact work. Maybe one example or one thing either you steal directly or it’s enough examples that you are inspired to think of a way that it works for you because in the presence of this many ideas sometimes that’s what it takes to have your own ideas. Hopefully, this is perspective in examples that may not only sway you with data and stories, but more importantly inspire you to becoming more honest business person, both because that’s just sort of a great thing to do as a human, but also because I do think this is one of the fundamental ways that a bank could distinguish themselves among the commodity fungible nature of the bank at least in the eyes of a normal consumer. This is one of the few ways that you could distinguish yourself and since that’s so rare and difficult, I would suggest that’s perhaps the very strongest argument of all.
Dallas: Yeah. Absolutely. Well, that’s good stuff, Jason. I think we’ll wrap it up for now right there and we’ll encourage everybody again to check out Jason’s stuff. We’ll have links to it in the show notes. If you want to hear more sign up for Bank on Purpose. Jason will be there and as you heard he’s going to give a great talk. You can sign up for that at bankonpurpose.com. Jason, we really appreciate the time. Thanks again for coming on and doing this.
Jason: Thank you.
Dallas: Thanks to all of you for taking the time to listen. If you like what you’ve been hearing, make sure to subscribe to the feed in ITunes, SoundCloud, or Stitcher and we’d love to get ratings and feedback on any of those platforms. You can always find more episodes, as well as our show notes at precisionlender.com/podcast. Thanks for listening. Until next time, I’m Dallas Wells and you’ve been listening to The Purposeful Banker.
Ashley: Hey everyone. Ashley here. We’re so excited to announce that it’s that time of year again. It’s time to BankOnPurpose. BankOnPurpose is a conference based on the belief that the path to banking success is built on a customer-centered foundation. It brings together the best and the brightest minds in banking in Austin, Texas on May 3rd through the 5th. It will be 3 days filled with insights on how to build a team, a brand, and a bank with purpose. Early registration is available until February 1st. You can use the code podcast17 to get 10% off your registration and to show your pride for the Purposeful Banker podcast. It’s time to stop reacting and get back to what makes banking great. It’s time to BankOnPurpose.
