By Ray Birch
LAS VEGAS—Credit unions, like the small stores that helped Daymond John launch his FUBU clothing line into a multi-billion dollar company, have a growing ability to compete with the large banks, thanks to digital, says the entrepreneur and co-star of Shark Tank.
John urged attendees at Alloya Corporate’s Credit Union Executive Leadership Symposium to not overlook the advantages agility offers to smaller organizations.
“It’s much harder to turn the big ships, than it is the smaller ships,” said John.
John shared with the meeting the story of how a large number of small apparel shops were able to pivot quickly when the FUBU clothing line was growing, and in many ways became the heart and soul of his then growing empire.
David Vs. Goliath
“It’s David versus Goliath,” said John, referring both the early days of his clothing line and the current market differences between bank and credit unions. “I was able to get information out to the small stores more quickly. Those little stores were agile and they told us the issues the kids who bought my clothing line had. Again, they were so agile and, eventually, some of these stores, instead of having just one location in a neighborhood, ended up having 10.”
That kind of growth, which John believes could also be in store for credit unions, was not just the result of those stores’ ability to quickly adjust to market conditions, but was also due to their close relationship with his clothing line’s customers.
“They were in tune with our customers,” said John. “They were not like Kodak and Blockbuster, who refused to change. You have to be ready for disruption.”
‘One Step Away’
John emphasized the importance of the small organizations being “one step away from the money.”
“They are talking directly to my customers,” he said, which helped his company develop better products with the small stores’ feedback.
“Before I made a product and then sold it, I had to know what my customers wanted. I was not six or seven steps away from my customers,” explained John, who added that credit unions have a wealth of data on their members and should be conducting the same research with their member base to learn what they need as the financial services industry changes.
“I cannot stress enough the importance of communication with your members,” said John, who noted he grew up in a household in which his mother was a CU member.
‘Reverse Mentorship’
But researching market demands should involve more than just members, said John, who urged CUs to be gathering input from younger employees. It’s a strategy he said FUBU employs.
“I have reverse mentorship going on in my companies, where the kids come in and teach us what's going on with communications in the world,” he said. “They're moving so fast on their devices. I love getting interns from colleges—they are a data goldmine. And they are the next generation of people who are going to run this industry. I really stay in touch with younger people.”
John pointed to how other industries are paying more attention to youth, as well, including even the Federal Aviation Administration (FAA), whichhas been hiring young gamers whose skill on the PC keyboards, phones and other digital devices are translating over to run air traffic control towers.
“They are hiring kids 17 and 18 years old with gaming skills and starting them off at $130,000,” said John about the FAA.
John also said companies in other industries are turning to younger adults as the labor shortage drags on, including hiring 14- and 15-year-olds.
Get Educated
As financial institutions adjust to a landscape where new products are always entering the market, such as such as buy now, pay later solutions, John said credit unions must educate themselves, explaining that creating new products and entering new markets demands preparation.
“The first thing you do is educate yourself on the space—before you do anything,” he said. “And then go out and try to get proof of concept. There are two areas where startup companies fail the most—overfunding with no proof of concept and no foundation.”
As an example, John shared the story of one cupcake retailer that entered the market with little knowledge of the business, the local market, or the competition.
“They’ve never sold cupcakes and they want $100,000 to get started,” John said. “They open up a store, everybody is walking around wearing cupcake hats, the register looks like a cupcake, everything in the store looks like a cupcake. But then they learn that the little old lady down the road has been slinging cupcakes like crack. Spending more money in a weak program is not going to help you.”