Few financial technology (fintech) companies realize just how big of an impact going public will have on their overall brand. Fewer still realize that their CEO’s personal brand can have a powerful effect on keeping the company outlook favorable after an IPO.
Our current economy is ripe for disruptive financial services - the global fintech market size reached a whopping $111.8 billion in 2018. Many financial tech companies are now turning to public trading to expand their market share. But somewhere down the line, these companies’ efforts often tend to shift from a customer-centric model to a profit-centric one. This approach might be good for business in the short term but can have devastating effects on the company’s bottom line if it’s sustained.
Let’s take a look at the current trends of public trading within a fintech perspective and how to avoid the largest pitfall many fintech companies tend to stumble into after their stock market launch - decreased brand approval. Outlined below are examples of why a focus on fintech CEO’s personal brands can have a positive effect on keeping the company’s brand favorable after an IPO.
When Change Becomes a Problem
It’s no secret that those who decide to go public face a lot of challenges, but none more so than those in the fintech industry. For those working in Fintech, however, these challenges can compound due to increased competition and demand bottlenecks.
Of course, despite all those impediments, the world’s technological and economic ecosystems are ideal for new fintechs to enter the market. The prospect of going public is still a favorable move for many fintech companies. Which is why the burgeoning fintech sector is seeing such widespread growth.
Despite the positives, going public puts a lot of pressure on companies to show positive short-term growth. This can have an unhealthy impact on business activities due to shifted priorities within the company’s directorate. It’s a case of what is commonly referred to as shareholder primacy. This shift, while normal to a marginal degree, can become disruptive enough to its core brand to influence sales and user opinion.
How Fintech Companies Can Leverage The CEO’s Personal Brand
There’s nothing wrong with shifting focus to keep investors happy and attract more potential investors. It’s part of the public trading cycle and many companies have succeeded in balancing this new demand with their established brand virtues. In many cases, while some consumer perspectives falter during this time period, these companies have succeeded in leveraging the faith established in their leaders’ personal brands to push through any negative sentiment that would have otherwise developed.
One perfect example of this is LendingTree’s founder Doug Lebda, who has managed to keep his publicly-traded company profitable for 21 years - through a dot-com crash and two financial crises. Not only did this work because they kept their main focus on the product, but the hits their reputation would have taken due to the inevitable small shift in priority to a profit-based model was curtailed thanks to Lebda’s impeccable reputation. A reputation that is still going strong to this day.
Now, let’s look at some examples of flourishing fintech companies that have expressed intent to go public soon. They all have leaders with a strong personal brand, which they can utilize to ensure a smooth transition and to maintain public approval.
The CEO of Credit Karma, Ken Lin, hasn’t expressly said that they’re planning to go public anytime soon, but there’s been lots of speculation, and the company’s efforts certainly seem to be gearing up towards an IPO.
For his part, Ken Lin has been steadily building a solid personal brand through his various business ventures that should help him carry Credit Karma through any potential hiccups. Should the company decide to turn to public trading within the next few months, Ken will likely focus on the trust that he has built up with the public. His dedication to keeping the focus on the deliverable will also be a big determining factor of the IPO’s success.
This California-based company is run by co-founders Vlad Tenev and Baiju Bhatt. In 2018, they announced plans to take their investment platform public, with a projected market value of $5.6 billion.
Robinhood has only been up and running for a few years, but it’s founders are already working hard to make a name for themselves in the industry. What’s interesting about Tenev and Bhatt is that most of their personal brand building has been a joint effort that focuses on their partnership. Their efforts should pay off when they take the company public later this year or early 2020.
No corporate brand can exist separately from its CEO’s brand. A strong brand strategy becomes vital as a company grows and scales, to make sure that the initial brand of the company flows throughout the organization from top to bottom, and to consumers and investors.
This strategy needs to ensure that the brand stays consistent with what made it successful in the first place. Especially as the company looks to go public and takes on the responsibility of its shareholders’ expectations. It will be interesting to see which fintech brands will succeed in building on their CEO’s personal brand to dominate the market moving forward in such a newly budding marketplace.