Shaper: Mark Smith

Show aired on 27th February 2016

Transcript

Elliot Moss
James Brown with Get Up And Drive Your Funky Soul. Just what I needed to hear this morning. Good morning, it’s me, Elliot Moss, here on Jazz FM’s Jazz Shapers. Jazz Shapers is the place where you can hear the very best of the people who are shaping the world of jazz, blues and soul sat alongside their equivalents in the world of business. The crazy maelstrom world of business and my Business Shaper today I am very happy to say is Mark Smith; he is the founder and executive chairman of The Car Finance Company. They have already helped 60,000 people get loans – or probably more now – 60,000 people to get loans to buy their car and you will be hearing lots from him about how he has built that business an extraordinary story it is too. In addition to hearing from Mark, you will also be hearing from our programme partners at Mishcon de Reya, some words of advice for your business and then we have got the music and we have got some treats for you today from the shapers of jazz, blues and soul including Mongo Santamaria, Bobby Womack and this from Kamasi Washington.

That was Kamasi Washington with Cherokee and that was featuring Patrice Quinn and featuring at Love Supreme this year is none other than Kamasi Washington – well worth booking tickets just for that reason alone. Mark Smith is my Business Shaper today, he is the founder and executive chairman of The Car Finance Company, turnover in excess of 45 million pounds reported. He helps people buy cars and a lot more too. Mark thank you so much for joining me.

Mark Smith
Thank you, good morning.

Elliot Moss
Good morning. Now you weren’t always in the car business. I am going to go back a little bit. I am actually talking to someone who was in the Royal Navy? Tell me a little bit about that and then tell me about how that ended and then what you did next?

Mark Smith
So I joined the Royal Navy in 1985, two days after my sixteenth birthday, that was the earliest I could get in and I joined as a very junior marine engineer and mechanic, second class, got paid about £180 a month and I spent a couple of years sailing round the world on war ships which were pretty old and in a state of disrepair and I spent most of my time fixing them rather than actually visiting the countries that I had initially set out to. So not far long after that I decided to slightly change my career path and transferred into the Royal Navy Police or the Regulating Branch as it was called and I then spent the remainder of my career dealing with many of the things you see the military police doing on the television, investigating everything from drunkenness to fairly serious assaults and frauds and it was great eye opening opportunity. I spent a short period with the Royalty and Diplomatic Protection Group in 1994 for the 50th Commemorations of D-Day – met lots of different Heads of State and it was a really really great career. However, in the late 90’s I had picked up a couple of injuries during my time and was developing a fairly pronounced limp so I took a long hard look at myself and decided actually I was probably still young enough to start a second career, just coming up for 30 years old so decided that now would be the right time to leave. I suppose with the financial security of having a war pension to fall back on and maybe change a different career path altogether.

Elliot Moss
And with such a trustworthy face which you have, you know…

Mark Smith
Still clean shaven every day.

Elliot Moss
Still clean shaven. You are looking pretty good. I tell you what you put me to shame although I have shaved today just for the record. What made you decide because you went into sort of the financial services world, what made you decide to do that at that point and was it car related then?

Mark Smith
Yeah absolutely. I’ve always been a bit of a petrol head. I’ve been fascinated with cars, the noises, the colours, the shapes, the sizes and throughout my, I suppose my military career, I used to buy old classic cars and do them up and sell them or keep them for a while and most people that will remember me in the military I was a little bit different, I had a couple of Rolls Royce’s and a couple of Porsche’s and so maybe did stand out from the crowd a little bit but I wanted to move into the motor trade and I actually had my idea set on selling cars and thought that you know, just walking into a Bentley or a Mercedes showroom and giving them a fairly impressive CV they would have welcomed me with open arms but unfortunately that wasn’t the case.

Elliot Moss
That wasn’t the case but we are going to find out exactly what was the case because the story has progressed rather well for Mark Smith, my Business Shaper. Lots more coming up in a moment. Time for some music though in the meantime, this is Mongo Santamaria, I promised him earlier with Watermelon Man.

The Herbie Hancock classic, Watermelon Man from Mongo Santamaria, actually famous for those of you in the know, you will know this, for writing Afro Blue, another classic jazz standard. Mark Smith is my Business Shaper; executive chairman and founder importantly of The Car Finance Company. They make sure that people who wouldn’t necessarily be able to afford a loan for their car, can afford a loan for their car. Which is a good thing I think and we will find out how he has been doing that ethically and on a sound financial footing as well. Now Mark you were at the point where you’d left the military, you’d left the Navy and you had gone into the big wild world of business. You thought you would be able to stroll up there with your CV and say ‘hello I quite like cars, can you give me a job please’ in this Bentley or Rolls Royce showroom. Didn’t quite work out like that did it?

Mark Smith
No not at all. I found that because I had such a disciplined and rigid career that most people thought I would be completely unsuitable in the world of sales because you need to be an awful lot more colourful and reactive but right at the time that was happening I was applying for or looking at other different jobs and I came across an advert in the local paper asking for people that had good interpersonal skills, the ability to understand the world of finances, an element of anti-fraud, an element of understanding cars and an element of be preparing to learn with a new style of enterprise and that was the first time I had ever been for a job interview. They accepted me and I literally started with them a week later. Whilst I was actually still serving there was a three month overlap between me starting work and me actually formally leaving the military I took advantage of some vocational training programmes that the military still offer, almost like a ‘try before you buy’ type of policy and I thoroughly enjoyed it and it was a whole new world to me. It was… financial services I had a very limited understanding of. I assumed if you wanted to borrow money you went to your bank and agreed terms and shook the bank manager’s hand and paid the money back over an agreed period of time.

Elliot Moss
So there is this period before you set up your own business of around six or seven years and you are working in this business to start with, this essentially is…

Mark Smith
Yeah it was slightly longer than that actually, it was about eight years, eight or nine years of actually working in the real world before I set up my own business.

Elliot Moss
And at what point of working in the real world did you have enough first, sense of what you wanted to do and then the courage to make that leap into creating your own business? Do you recall a moment in time where you went ‘that’s what I want to do’?

Mark Smith
Yes I do. I spent a fairly short period of time with my first employer. I disagreed slightly with how they were doing things and felt a little bit uncomfortable and it was quite an aggressive sales attitude they had towards their customers. So I left to join a competitive business and stayed with them for eight years. They were a new start business. I had a great grounding, learning how to build a finance company, learning the do’s and don’ts and fortunately it was at somebody else’s expense because they were obviously funded themselves and they gave me great career options and paid very well and it came to a point in 2007, where I was I suppose getting a little bit itchy feet and sensing other opportunities and I had now started, now fully learnt I suppose, the market sector we operate in and felt that there was maybe a different offering in a way where I could stand on my own two feet and to be fair they gave me a lot of help and assistance and I stayed with them for a further two years as a broker style relationship as well as utilising some of the knowledge base they had.

Elliot Moss
We are going to find out a lot more about exactly what happened and how Mark enabled himself to set up a business which recently was bought into by a private equity house for quite a lot of money based on some significant revenue so it’s again, as I have said, a very successful story. Lots more coming up from Mark, that’s after the latest travel in a couple of minutes and before that, some words of wisdom from our programme partners at Mishcon De Reya for your own business.

You are listening to Jazz Shapers with me, Elliot Moss every Saturday morning 9.00am I get to talk to someone who is shaping the world of business, an entrepreneur who is making it and indeed in some cases, has made it and is sitting back and looking going ‘wow wasn’t that fantastic’. My Business Shaper today is Mark Smith; he set up his own business in 2007 called The Car Finance Company, there are some subsidiary companies in there too, we are going to come onto that in a moment and he has done rather well and indeed had an event in his business where a private equity house bought into it last April in 2015. Mark, we were talking about the transition. We’ve gone through the Royal Navy, we’ve gone through the first job which didn’t last particularly long, you moved quickly into the second which lasted a long time and then as you said, you kind of thought ‘you know what, I think it’s time, I can do my own thing’. Do you know why you felt like that. Apart from having itchy feet, many people that have itchy feet go and work for somebody else. Why was it that the itchy feet led you to work for yourself?

Mark Smith
I think I had always fancied having a go at working for myself. My dad ran his own business. I had a few friends that were running their own businesses and I think it was more of a case of being in control of your own destiny rather than going to the daily grind and being judged on your last quarter’s performance. So I set The Car Finance Company up as a brokerage and we ran it from the spare bedroom of my house. I had two people working for me at the time.

Elliot Moss
What was the mantra? Was there a mantra then about what you were going to do differently? That had your personal stamp on it?

Mark Smith
Yeah. Yeah it was really, it was just a much more personal approach. The normal way that things are done in the world of car finance is the creation of lots of applications and they are spread around to many different lenders and fitted into different slots and cohorts as to what customer and what car fits what lender and I thought actually it could be done much better on a much smaller basis where you are offering a slightly more individual tailored offering to the car dealers and marrying them up on a more personal basis with the right finance company. It’s a better transition for the customers because it is a more informed way, they don’t feel that they are just being put into a computer and ‘sorry the computer says no’ and that’s the end result. So…

Elliot Moss
But hard to scale like that. I mean the reason why I guess there is data and technology behind it is because you can process lots at once. I imagine a more personal approach has its challenges?

Mark Smith
Oh of course yes and as the story unfolded what happened, you know, in 2008 and 2009 made me think really long and hard about actually was I going to be… end up on the scrap heap of life because…

Elliot Moss
Yeah how did you not end up on the scrap heap of life Mark? I mean obviously you definitely didn’t but how did you avoid that?

Mark Smith
So I decided to change the trajectory of the business altogether and move from becoming a broker introducer to becoming a direct lender so effectively took the ultimate plunge and re-mortgaged my house and took out some credit card loans and borrowed some money from friends and family and managed to persuade my girlfriend to offer her house up as a lean for the bank to give us an overdraft on. So very much a case of all chips in on the table.

Elliot Moss
Wow. Find out how the all chips on the table approach has come good for Mark because it has and I am kind of jealous already. Time for some more music, this is Bobby Womack with another classic, it’s California Dreaming.

California Dreaming from Bobby Womack. Mark, we were talking about the chips on the table, I am intrigued to know how you got your girlfriend to put her chips on the table as well, the family and friends. What were they buying into? Because you just, as you said, you had to pivot, you pivoted, people weren’t using that phrase then but they would now looking back. You went ‘no no I can be in the lending business’. What were they buying into about Mark Smith? Why you?

Mark Smith
I suppose right from the onset it was a very very different approach. A lot of people in the world of supine car finance and indeed supine banking and finance altogether were all tarnished with the same brush of the looming financial crisis on the horizon. So just about everything we did and the way we operated was extremely different to everybody else in the market place at the time.

Elliot Moss
A couple of examples just in terms of understanding?

Mark Smith
Well I would hesitate to mention companies names because that’s…

Elliot Moss
No don’t do that but the differences you provided though were what?

Mark Smith
It was a non-credit scored service so everything was underwritten based on a unique set of circumstances, understanding that there is no customer the same as the previous customer and the ingredients of any car finance loan are never the same as the previous deal. In terms of the car is different. The profile of the customer is different. The income profiles are different. The credit history, good, bad and indifferent is different so it is really a case of sort of plotting all of those out on a theoretical axis and deciding on whether that is a, a yes or a no or a maybe.

Elliot Moss
And then in those early days obviously because, as you said earlier, the chips were on the table, things went well and have continued to do well predicated on what do you think? What do you think is the secret of your success?

Mark Smith
I would say its… there’s no one easy answer. It’s a bit of a celestial alignment of circumstances. At the time an awful lot of lenders in this market place were exiting or re-trenching or actually had their funding withdrawn altogether so the market was grotesquely underserved. Huge demand and tiny, tiny supply and pretty much still is today. I suppose the other aspect was we were small enough to survive a fairly dark and stormy night in the world of finance and banking and certainly as we went through ’08 and into ’09, partially because we were running it from my house so we had very little overheads, very tiny staff payroll.

Elliot Moss
But did you ever think on those dark and stormy nights just before we go to the traffic and travel. Did you ever think ‘you know what, it’s enough’?

Mark Smith
No. I could actually see the opposite of that is the fact that there was now a better opportunity than what there ever had been and now was the right time to keep the chips on the table.

Elliot Moss
We will have our final chat with Mark plus play a track from the Ray Charles, that’s after, as I promised earlier, the latest traffic and travel.

That was Ray Charles with Hit The Road Jack, one of my all-time favourites, I am sure I have said that before. Mark Smith has been my Business Shaper, and will continue to do so just for a few more precious minutes. I should note that the business he has set up has won many, many awards and it is interesting because you wouldn’t necessarily associate a car finance company with being a good company to work for but it is, for winning consumer credit awards but it has and for being a very fast growth company and again, it’s delivered on that. Lots of things that have been successful in there Mark and as you said, there is never one answer to the secret of success and you also said earlier that you never thought for a moment, you never doubted that this business would grow. How does one scale a business where you are so, you know, you are individually looking at every single person if you like and treating them as an individual versus a statistic on the screen. How have you managed to scale? How have you managed to encourage someone to buy into this business because that is no easy thing?

Mark Smith
I think part of the secret if it is a secret is not trying to do it yourself. I am quite a good listener to a whole variety of people that will give you advice that is wanted or unwanted. I probably did something which a lot of people do but most people don’t and brought some very intelligent and capable people on board to do the stuff that I couldn’t do or I knew they could do better. You know, bringing the right people on at the right moments and allowing them to effectively co-run the business rather than me making unilateral decisions was key to it. They also brought on board their key relationships with niche banks and niche suppliers that listened to us and were comfortable with dealing with us when they maybe weren’t comfortable with dealing with some of our competitors.

Elliot Moss
And the other businesses, the subsidiary companies that I mentioned earlier, where do they fit into the equation?

Mark Smith
Well it’s really just part of the corporate structure. The only, I suppose difference in that is our trade sales element which is The World of Cars which is really an outlet for us to retail cars back to the members of the public for cars that are given back to us in the normal course of business through people having their allocated time in them, people just not wanting them anymore, some people can’t afford them anymore and some people outright default and end up having the cars repossessed because there is no other option.

Elliot Moss
Just a quick note before we go as promised to go to the music. Your future in a sentence. What’s it going to be with this business now? You are in a slightly different role, you are still very involved but less kind of day-to-day operations, how do you perceive the next few years for the business and you?

Mark Smith
Significant more growth.

Elliot Moss
Easy, three words. Even better than a sentence. Thank you. It’s been a real pleasure talking to you Mark and good luck, you deserve the luck that you think you have got, I think it is a lot more than luck obviously. What is your song choice before I let you go and why have you chosen it?

Mark Smith
So it is Louis Armstrong, I Have All The Time In The World because it is fairly represented the polar opposite of most of my life.

Elliot Moss
Here it is especially for you, thank you very much.

We Have All The Time In The World from Louis Armstrong, the song choice of my Business Shaper today, Mark Smith; the founder of The Car Finance Company. Someone who has made the transition from the world of the military to the world of business and it is just testament to the fact that you can do it, indeed from one career to another regardless whether it is the military or not. Someone who was fundamentally a petrol head and decided that the car business in some form was going to be for him and he took a different approach to what had been a pretty staid industry around lending money to people who wanted to buy cars. Someone who has been able to build a team and to connect with his customers. Fantastic stuff. Do join me again, same time, same place, that’s next Saturday, 9.00am here on Jazz FM for another edition of Jazz Shapers. In the meantime though don’t go anywhere because coming up next, is Mr Nigel Williams.

Executive Chairman & Founder, The Car Finance Company

Mark Smith was born in 1969 and lived in The New Forest throughout his childhood. Mark joined the Royal Navy in 1985 at the age of 16 as a junior mechanic, later transferring to the Royal Navy Police.  After 14 years of service he then spent ten years in specialist consumer finance.

Mark founded ‘The Car Finance Company’ from the spare bedroom of his Portsmouth home in 2007. Its annualized lending now stands at £150m, with £80m revenues.

The company currently employs 450 staff and was ranked second in ‘The Sunday Times Fast Track 100’ in 2014”,  10th in the same publication in 2015,  whilst simultaneously ranked 74th in “The Sunday Times Best 100 Companies to work for” in the UK.

Follow Mark on Twitter @tcfcmark.

Listen live at 9am Saturday.

I joined the Royal Navy in 1985, two days after my sixteenth birthday…it was a really really great career

I’ve always been a bit of a petrol head. I’ve been fascinated with cars, the noises, the colours, the shapes, the sizes… throughout my military career

…it was about eight years, eight or nine years of actually working in the real world before I set up my own business.

…2008 and 2009 made me think really long and hard about actually was I going to …end up on the scrap heap of life

I think I had always fancied having a go at working for myself.

So I set The Car Finance Company up as a brokerage and we ran it from the spare bedroom of my house.

I decided to change the trajectory of the business altogether and move from becoming a broker introducer to becoming a direct lender…

…just about everything we did and the way we operated was extremely different to everybody else in the market place at the time.

I think part of the secret – if it is a secret – is not trying to do it yourself.

I probably did something which a lot of people do but most people don’t, and brought some very intelligent and capable people on board to do the stuff that I couldn’t do or I knew they could do better.