Interview with David Leibowitz, CEO of Mulligan Funding

How do you treat the provision of small business financing – as a Service or as a Commodity?

Is offering capital to a small business entrepreneur done in a way that makes it a service or a commodity?  This question lies at the heart of David Leibowitz’s (CEO of Mulligan Funding) thesis underlying his entire business.

Where so many in the online small business lending marketplace are moving toward fully automated, immediate, impersonal provision of capital, David sees Mulligan’s position as fundamentally different.

“There is absolutely a market, and a massive one, for people who want to treat the provision of capital and other financial services as a commodity and who want to compare products purely on their features: Price, term, ease of use and immediacy.”

But David does not believe that’s the whole story.  He views the Mulligan Funding’s position in the marketplace as fundamentally different.

“We at Mulligan Funding are big believers in the benefits of data and technology, and we’re constantly looking for ways in which to use that data and technology to streamline and improve the way we operate and function”, he tells me.  But he goes on to say that “those technological adoptions, those benefits, need to be tempered because they don’t recognize the evolutionary hard wiring in human beings to look for relationships, to look for community, to look for a sense of belonging and networks and interaction”.

And furthermore, “I don’t think it’s an accident at all that the advancements we’ve seen in these technological automation processes have coincided with an absolute mushrooming of social media and social platforms and social networking. Because I think that what a lot of that automation does, is it depersonalizes the experience and it has the potential to detract from a sense of relationship and interaction and human connection.” 

So as the world is driving toward impersonal, faceless provisioning of capital to small businesses (and everything else for that matter), Mulligan Funding is trying to offer a human touch to the funding process as well.

They are not mere providers of a commodity, but rather they’re partners to the entrepreneur, offering them a consultative approach that few other firms can match.

In my view Mulligan almost operates as an outsourced CFO to the small business borrower, although David would hesitate to call it that in our conversation.

“For many of them (the small business borrower), the desire is to have someone hold their hand through that decisioning process, guide them, make them feel comfortable about the decisions they’re making.”

Taking this consultative approach in an ethical way is what attracted David to the Innovative Lending Platform Association (ILPA).  With our SMART Box transparent disclosure tool, ILPA is leading the way on small business lending transparency and best practices.

Leibowitz continues, “We have discussions all day long with customers who say to us – ‘I want X.’ And our analysis indicates that they can’t profitably sustain that amount of our type of funding. So we turn around and we say ‘No, don’t take any more money than you can profitably use right now.’”  Here is an analogy he says he gives all the time, “I say, think about what I’m telling you. It’s like a surgeon who tells you not to operate. I have no incentive to tell you to take less than the full amount we’ve qualified you for. Other than that I genuinely don’t think it’s in your interest. Why else would I undersell you?”

David and his brother founded Mulligan Funding in the ashes of the financial crisis in order to meet the growing need of small and midsized businesses for access to capital.    In his view, institutional lenders abandoned the small business market for a variety of reasons, not least of which was the irresponsible borrower and irresponsible lender behavior that caused the meltdown in the first place.

I asked about the genesis of the name and assumed that it had to do with golf in some way, but I was assured that was not part of it.  I like to think that it is about offering small business borrowers a second chance at the American Dream, after the difficulties of the financial crisis, and David said that seemed apt.

Running a high touch online small business lending company is a challenge that comes with human rewards though.  I ask him if Mulligan Funding can in some way rescue us from the depersonalized loneliness of our digital age.  “We aren’t trying to save the world from anything,” he demurs, “but yes, I believe that the model we’re pursuing offers something that a purely impersonal, automated model doesn’t offer – and that’s something important at a human level. Not something that’s just beneficial in terms of the commodity of capital provision to companies. I think it offers something at a human level that we’re hard wired to need and to be attracted to.”

Leibowitz continues, “I have been to weddings of the children of customers of ours. I’ve been to openings of restaurants of customers of ours. I talk to them about personal family dynamics that have nothing to do with business. We’ve developed a genuine interpersonal relationship in the course of doing business with one another to the point, Scott, where I know they get solicitations from competitors of ours…some of whom are able to offer them slightly cheaper products with fancier features than what we’re able to offer them. And they never think about taking their business elsewhere because we’re fulfilling a need of theirs that isn’t quantifiable just in terms of the metrics of the loan.”

Finally, this capstone to our conversation:

“We still do business with the very first client we ever funded 10 years ago.”

All I can say is wow.  David Leibowitz and Mulligan Funding give me hope for civilization and I have certainly become an admirer of both.

Interview Transcript

Scott Stewart:

Again, I really appreciate your time and your willingness to have this conversation with me. So I have reviewed all of the comments you made in advance. I really appreciate that in digital format, but I always like to see if I can pull on a few threads once you get underway.  Why don’t you start with an easy one about when, how, and why did you start Mulligan Funding?

David Leibowitz:

Sure Scott. Mulligan Funding started in late 2008, early 2009.  And it was started by my brother and me in the ashes of the financial meltdown. We had two motivations for starting it and they’re related.

One is that in response to the financial meltdown, it became clear that institutional lenders had effectively run for the hills and almost entirely abandoned lending to the small and midsize business market throughout the country.  And our philosophy and our belief has always been that those small companies really are the engine room of the economy and we didn’t hold out very much hope for a genuine sustainable recovery for the economy unless those businesses and their capital needs were taken care of.

The second reason at the time was that we understood that what had caused the meltdown was an unfortunate combination of irresponsible lender and irresponsible borrower behavior.

And so we conceived of Mulligan Funding as an opportunity for us to try to address both those issues. To create a company through which we could provide capital to the very types of businesses that I’m talking about, the kind of small and midsize businesses that needed it most and couldn’t get it.  And to do so in a way which was responsibly-minded both from a lender and borrower point of view.  And that was really the genesis of Mulligan Funding.  And I think in fact, Scott, some of that is what accounts for the genesis and mushrooming of our alternative non-bank lending industry as a whole.

Scott:

It’s provided small business borrowers and consumers incredible access in a lot of respects. If you look at the broader lending industry with tailored products that are offered to them in real time and you get the speed, convenience, efficiency, that was really not possible in the old era of traditional bank lending.  David, you have an interesting view about that as we move closer to one click credit or a high speed and efficiency. I think that your view of the direction you intend to take Mulligan and how you intend to position Mulligan in that marketplace is a little bit different than perhaps some of your competitors. Can you tell me a little bit about it?

David:

Sure. What we see both in the financial services market and more broadly is this headlong rush to adopt some of the extraordinary technological advancements that automate all sorts of things that used to be manual.  And the benefit of that is obvious. It allows the use of big data in ways that were really hard to make possible before. It allows decision making to be sped up to a point where it’s virtually instantaneous and it allows all sorts of processes that used to be very labor intensive to be automated. And that’s a hugely beneficial thing because it allows, let’s just talk about financial services for a second, that allows financial services to be provided and capital to be provided with far less friction and therefore far less expense and much more quickly than it ever used to be provided before.  We at Mulligan Funding are big believers in the benefits of data and technology, and we’re constantly looking for ways in which to use that data and technology to streamline and improve the way we operate and function.

And those are huge benefits to the market and to the providers because it allows things to be done at a much lower cost and one can therefore pass those cost savings onto clients. We buy into those benefits fully.  And we use technology wherever we can to create that value.  But we have a slightly different attitude to the fuller context in which that technology serves our interests.  The kind of different attitude that Mulligan has is that those technological adoptions, those benefits, need to be tempered because they don’t necessarily recognize the evolutionary hard wiring in human beings to look for relationships, to look for community, to look for a sense of belonging and networks and interaction.

I don’t think it’s an accident at all that advancements in all of these technological automation processes have coincided with an absolute mushrooming of social media and social platforms and social networking. Because I think what a lot of what automation does is it depersonalizes the experience and it therefore has the potential to detract from a sense of relationship and interaction and human connection.

And so what we’re trying really hard to do in Mulligan is to balance those two things. We’re continually focused on using data, technology and those advancements to make sure that we’re efficient and highly competitive in terms of speed and simplicity and ease of use. But at the same time, we never want to lose what we think we’re really good at, which is that human connection – the relationship piece of what we offer. I think that makes us a little unusual in our approach. It gives us challenges that some of our competitors don’t necessarily have because it’s a lot harder to scale a business where you don’t want to give up on the interpersonal interaction and human touch, but we think there’s a balance.

Scott:

So how does it actually work in a in a practical manner?  Most of your competitors and other members of the Innovative Lending Platform Association are moving toward products that are instantaneous.  I was talking to Bill Phelan with PayNet about this not that long ago and he said: we are on the road to “one click credit,” where you are offered products in real time and you just accept them. But you see it differently. Why don’t we start with how you actually operate the human interaction part of your company?

David:

There are two areas where we focus our energy. One is external-facing, both in terms of our interaction with customers and with partners; and the other is internally in terms of our processes and decision making.

So let me talk about the external facing one first. In our interaction with our clients and with our partners, we don’t offer a purely automated, impersonal, one click product offering. We consciously made the decision not to disintermediate our human employees in that process.  Bill is 100% right that firms like Kabbage and some of our bigger and most successful competitors offer an automated process and automated, algorithm-based underwriting.  There is absolutely a market, and a massive one, for people who want to treat the provision of capital and other financial services purely as a commodity and who want to compare products purely on their features: Price, term, ease of use and immediacy.

There’s a real market for that Scott, and I’m not for one second suggesting there isn’t. However there is also a massive market for people to whom the provision of capital is not just a commodity-based decision.  For them, the desire is to have someone hold their hand through that decisioning process, to guide them, make them feel comfortable about the decisions they’re making. For many small and midsize businesses, they don’t have the level of comfort where they’re prepared to transact facelessly and impersonally.  And they trust their own judgment to know exactly who they should trust to deal with – and those trusted partners will help them decide what products to acquire.

And the second area in which we focus our energy, is internally on our decision-making process and underwriting.  Here, we’re very technology-focused and we make as much use of data and technology as we possibly can.  But we consciously avoid fully automating our credit decisioning and surrendering it entirely to an algorithm.  We believe that, unlike the consumer lending world, small and midsized businesses are not nearly as homogenous.  Each business is different – some in obvious ways, and some in quite nuanced ways.  And because of that, we think that both we and our clients are better served by us paying individual, expert attention to those differences and underwriting each file, at some level, with human eyes.

Scott:

With respect to the outward-facing client interactions you describe, you operate almost like an outsourced CFO to them.

David:

I don’t want to go that far and say that we’re in a position where we can advise them on the financial management of their business. But we are certainly trying to put ourselves in a position where we are able to provide a level of discussion, interaction, broader relationship than just the sale of the particular product. We would like to find ourselves in a position, in time, where – when the financial requirements of the company are up for discussion – we’re a natural port of call for them because they know that they will get honest, unbiased, transparent, ethical advice as to whether what we offer is optimal for their needs or whether something else is better suited.  We want to be the people to point them in that direction. So we’re looking to create an environment where we have a genuinely trusted mutual relationship with our clients that goes beyond the transactional provision of funding on a particular day.

Scott:

Does every client have an advisor? And about how long does that application to funding take?

David:

Yes they do.  And it takes a little longer than some of our competitors. But it takes much less time than others. So for example, there are competitors of ours who allow the entire process to be done on computer and virtually instantly. The kind of concept that Bill Phelan’s talking about. We’re not quite there, but we’re still very focused on technology, and we’re using it to help us underwrite and decision within a matter of hours, inside of the day. And from the point at which the client has heard what they need to make their decision and wants to contract with us, the path to funding is a matter of hours in addition to that. So from first interaction to funding can be inside of a day, but it often takes somewhat longer than that.  It’s an iterative process with the client. The kinds of discussions I’m referring to have to be had, and that makes the process different to some of our competitors. For sure.

Scott:

Every client has an advisor.  They’re having conversations and they figure out what is actually the best possible fit for financing their small business or their enterprise. The fact that Mulligan functions with that human interaction is so interesting. You’re taking that and trying to build upon it because there seems to be something missing in our digital world.  People try to fill it with, with social media, but is that sufficient? I mean, is there more as we proceed further into this?  Not just one click credit world, but a world where everything is digitized, everything is rapid, everything is online. How are we going to, in a broader sense, keep that sense of community that gives you the chance to develop relationships like this?

David:

One of the ways in which I think that plays out, Scott, is a sort of partnership model. I don’t know that Mulligan is ever going to be in a situation where all of the company’s financial needs A) can be provided by us and B) can be guided or advised by us. I don’t believe that we’re headed in that direction. I also think the key to all of us is to have the kind of relationship with the client where they would rather get a particular financial product or service through you because of the relationship, than through someone else with whom they don’t have that relationship. Even if the features of the particular product the competitor is offering may be slightly different or better. So we have customers who deal with us all the time, notwithstanding that there are cheaper or technologically slicker and faster alternatives available to them. They do it because they trust us.  They know that dealing with us is the kind of experience and relationship that serves their broader needs and justifies the features of the product that we offer.

I think the way to get to what you’re talking about in terms of sense of community and serving that broader relationship need is by recognizing that we’re not a one-stop solution for a client in their financial life. And so we seek out partnerships with people who offer things that they’re good at, that we’re not, that have things to offer that we don’t. And we hope that between us and our partners we offer the client, collectively, the sort of relationship and community, and the sort of holistic solutions, that they’re looking for.

I think that’s part of my huge attraction to the ILPA for example. I think there are participants in all sorts of different areas of our industry, in our ecosystem, who are like-minded and who approach customer relationships and the way in which we provide what we provide in a way that fits very comfortably with our view of the world in terms of transparency, ethical best practices, et cetera. And what we anticipate is that there are partners within this group with whom we can have a kind of jointly owned customer relationship.  They will provide things we don’t and vice versa.

Scott:

That concept of partnerships is interesting to me. My  question I think on top of that is do you believe that the way you are running Mulligan and the way that you are thinking about the customer experience is potentially a model to rescue us, in a much broader sense beyond financial services, from this kind of faceless loneliness of the digital age.

David:

I’m way too realistic to imagine that we’re going to be a knight in shining armor of any description. We’re not going to save the world from anything. But yes, I believe that the model we’re pursuing offers something that a purely impersonal, automated model doesn’t offer – and that’s something important at a human level. Not something that’s just beneficial in terms of the commodity of capital provision to companies. I think it offers something at a human level that we’re hard wired to need and to be attracted to.

Scott:

As we’re thinking about this and you’re looking 10 years into the future, beyond Mulligan, how is the world going to be fundamentally different and perhaps how is it going to be fundamentally the same, based on this need for human interaction that you’ve outlined for us. What significant changes do you see on the horizon for the delivery of financial services?

David:

There is going to be a constant tension between the drive to improve processes and automate and make more efficient decision making on the one hand; and on the other hand, the desire not to lose that human interaction and sense of relationship. I don’t know about timeframe, but I think that the future, in order for it to be successful for human beings, is going to be one in which everything that doesn’t genuinely require to be done by humans in order to serve that hardwired evolutionary need for community and interaction, will end being automated. Those things will end up being done better by machines. But there will always be things in the relationship that can only be done by humans – that sense of community can never be provided by a machine. If the future is going to be successful for humans, it will need to be one in which those things are segregated most efficiently. Machines do what machines can do best; and humans do what only humans can do best.

We have to recognize that there’s a difference between what a machine CAN do, and what a machine SHOULD do.  And if we get this wrong, Scott – and this is a deep philosophical issue – if we get that wrong and we start to automate all of the things that a machine CAN do, just because a machine CAN do those things, then the result will not serve our human interests well at all.  And, quite frankly, I don’t think that path has any natural limit – I don’t think there’s anything that a human can do that a machine won’t at some point in the future be able to do – probably more efficiently. But if we take the route of automating something just because we CAN, of always of going the way of the computer just because it’s possible, and we ignore the human need in the meantime, we’re going to end up disintermediating humans entirely out of everything we do.  And that will be a truly bad outcome for us.

Scott:

Indeed. I mean you could take that further. Can you see us moving that direction now?  And how do you recommend arresting that path that we’re on or slowing it down?

David:  

I don’t know the answer to that question. I think one of the seeds to the answer to that question is to continually focus on that human need for interaction and relationship and understand that whenever you make a decision to automate something, you need to ask yourself the question whether it’s sacrificing that human need more than it ought to.  There are going to be differences of opinion about that and there’s continually going to be a drive towards the view that people are not needed in this process.  Then people are not needed in the next process. And so on.  Eventually you’re driven to a view where the only reason to have people in any processes is going to be this belief that human interaction matters. And that’s a philosophical belief. It’s not a practical, functional belief.  It’s not a debate about whether the humans CAN be replaced by machines at a practical level. The answer to that will always be yes. At some point in the future there isn’t a single activity that humans perform that a machine won’t be able to perform better. Instead, it’s a debate about whether humans SHOULD be replaced.  So if you take your eye entirely off the benefits of human relationships and interaction, if those don’t matter to you, then you are headed down that automation road to a point where humans are no longer necessary at all.

Scott:

And obviously incredibly concerning. And I think that’s something we’re seeing in terms of automation everywhere. So the concern associated with the workforce is real. There was a concern years ago before the advent of significant digital interaction where there were going to be too few doctors. And now we’re in a world where a specific type of doctor may be in a group together somewhere.  There will be a handful of them and they will be on the clock 24 hours a day.  They will be able to reach you immediately at any point in time and provide specialized care.  So the required number of them would be perhaps fewer.  For example each hospital might not need a neurologist, since they could be brought digitally to the patient at any time from anywhere.

You would have a group of them living someplace and they just rotate being on call. And then if there’s a matter they can address anywhere across the globe they would in real time.  These questions are hard. So we would need fewer doctors?  What happens when we have automated vehicles?  Will we really need truck drivers? What do we do to absorb these people into the new economy. And what sort of industries, perhaps associated with financial services, do you see cropping up that are going to require humans?

David:

For me this is the most interesting philosophical question of our time and I truly don’t know the answer.  I think it’s important to identify the existence of the question though, and to understand that the question is meaningful and needs to be thought through. I can absolutely see exactly what you’re talking about. That in the process of using machines to make things more efficient, to make decisions more consistent – we render humans superfluous.  You gave the example of the medical practice. There’s no question that diagnostics will be improved by the use of data and by the employment of machines in that diagnostic process. No question about that. That means that the role currently played by diagnosticians will diminish. And the question you ask, absolutely legitimately is, well then what happens to all the people who are currently working as diagnosticians and people who would have trained previously as diagnosticians?

What career do I pursue and what are the career paths and the skillsets required for the things that I’ve described as truly the province of human beings, because they are relationship focused. I don’t know the answer to that with reference to this job and function versus that job and function. But I can tell you that I think a continued focus on serving the human need for relationships – the continued push towards deeply personalizing a product or service – will create a need in some other area to have the human interaction. The relationship piece of that will manifest in some other way and probably in ways we haven’t imagined yet.

So you talk about driverless cars. There is no question there will be driverless cars and they will be less accident prone, they will improve fuel efficiency because in time to come, no one will need to own a car of their own. The shared economy will move to transport for sure. Uber is already a really good example of that.  But that doesn’t tell me how people are going to replace the social interaction that comes from carpooling; that comes from spending time with your kid in the car on the way to school. I don’t know yet how people replace that function when it’s clear that an automated driverless car is a better option for a whole lot of other reasons.

And to bring it back to financial services, Scott, I don’t know, exactly which jobs really require long term to be done by humans in order to retain that relationship piece. All I know is the business we’re in at the moment – that client-facing interaction, we think it matters enormously to develop a relationship at that point where the person feels not just like a customer of Mulligan Funding, but they’re made to feel like a partner of ours. They’re made to feel like someone about whom we as a company genuinely care.  They feel like a part of our community.

Scott:

Let’s drill into that a little bit in terms of its effectiveness for your customers and for Mulligan Funding overall. Do you see a significant number of repeat borrowers? You’ve mentioned that before, but are you built on that kind of a return customer? Is that something that is critical to your model?

David:

Enormous. It is our model. If you look at the cost of customer acquisition in our industry because it’s so competitive and there are so many participants and the barriers to entry into our industry are as low as they currently are, the cost of acquisition of a customer is enormous. If we had to regard every initial customer interaction as purely transactional and as a sort of one-and-done interaction, if we did not have a genuine repeat business model, the business would not be profitable and capable of being sustained. What makes the business worthwhile is the long-term repetitive interactions we have with the customers who come back again and again and again to do business with us. Because on that second and subsequent visit, the costs of original acquisition have already been absorbed. And so the costs to us and therefore to the customer on that second and subsequent transactions are much lower.

Scott:

And you’re a part of that, right? You personally are a part of developing those actual relationships. What percentage of your customers do you personally speak to?

David:

I talk to as many of them as I possibly can. My day is relatively full of interactions with customers that we’ve dealt with for a long time. And that’s, for me, one of the most deeply gratifying parts of the business. We still do business with the very first client we ever funded 10 years ago.

Scott:

Wow.

David:

I have been to weddings of the children of customers of ours. I’ve been to openings of restaurants of customers of ours. I talk to them about personal family dynamics that they have that have nothing to do with business. We’ve developed a genuine interpersonal relationship in the course of doing business with one another to the point Scott, where I know they get solicitations from competitors of ours some of whom are able to offer them slightly cheaper products with fancier features than what we’re able to offer them. And they never think about taking their business elsewhere because we’re fulfilling a need of theirs that isn’t quantifiable just in terms of the metrics of the loan.

Scott:

You give me hope for civilization, for humanity, the way that you run your business and you talk about this. Let’s talk about the real financial impact of the way that you deliver products and services to your clients. I was just listening to Bill Phelan at LendIt. He moderated a panel and started off with a couple of slides about the data that he’s collected, that small business borrowers of online financial products increased their credit quality by roughly 69%.  So around seven in ten are better off than they were before. How would you say that that Mulligan Funding would fit into that mix? What percentage of your clients improve their credit quality throughout the funding process and as they come back to you for further products?

David:

That is such a vital question.  I would like to think the answer to that is the vast majority of them.

I’d love to tell you we got this right in every single instance, but we don’t. We have defaults, we have customers whose businesses may not fail but certainly deteriorate over time. But the vast majority of our customers, I would believe, improve their situation partly at least as a result of their interaction with us. And this is the reason why the question is so vital is I believe that has something, and something meaningful, to do with the capital we provide them. But I believe it has almost everything to do with the context within which we provide that capital. And most importantly, the level of responsibility that we bring to bear in that transaction and the level of responsibility we insist that they bring to bear in that transaction.

We have competitors who are bad actors, Scott, we have people who take advantage of businesses who are in difficult positions, who up-sell the product beyond what the business they’re selling to can really afford or profitably use. There are businesses that we compete with that hide fees, that basically profit off the idea that customers don’t have absolute transparency into what this really costs them. If you provide the capital that we provide in that way, the answer to that question is going to almost invariably be that the businesses you lend to is worse off because of the loan. Businesses are only going to be better off as a result of our interaction with them if we act completely responsibly and so does the borrower – and the only way that we can ensure complete responsibility on their part is by ensuring that they have absolute transparency into what this is costing them, what they have to be able to do with our money in order for the cost benefit to be positive. We have discussions all day long with customers who say to us – “I want X”. And our analysis indicates that they can’t profitably sustain that amount of our type of funding, and we turn around and we go “No, don’t take any more money than you can profitably use right now.”

The analogy I give people all the time, Scott, is I say, think about what I’m telling you. It’s like a surgeon who tells you not to operate. I have no incentive to tell you to take less than the full amount we’ve qualified you for. Other than that, I genuinely don’t think it’s in your interest. Why else would I undersell you?

Scott:

Right.

David:

But unless you do that, the chances of you hurting their business, exceed the chances of you helping them. The cost of alternative, non-Bank funding is expensive? And I don’t want to give it to people who don’t know that.

Scott:

Really such interesting question. I just love our conversations and I feel like we can go on for a long period of time. I do want to let you talk a little bit about the Fourth Industrial Revolution and then your take on the confluence of finance, innovation and technology. The example that they give is that the pace of change is so rapid, so incredible and exponential that if you look at the first industrial revolution, the symbol of it was the spindle. You could relatively rapidly turn wool into thread in a uniform fashion. And it took about a hundred to 150 years for that to traverse the globe and for it to become ubiquitous. Now I am talking to you on a smartphone and there are people in Kenya who are making micropayments for water right now with these devices. And these devices have been around for about 10 years now. So that pace of innovation, that pace of change, so incredible that it’s significantly disrupting and disintermediating the human experience and rapidly changing it. How do we rescue humanity from the pace of this change in our lives?

I know we both like these broader philosophical questions.

David:

Absolutely. Another fascinating question and I’m going to be sensitive to the time here and not do what I think I could easily do, which is go on and on forever about this stuff!

I really think that the pace of technological development at the moment, this Fourth Industrial Revolution that you’re talking about, has massive opportunity and massive risk at the same time.  The opportunities are the sorts of things you’ve alluded to, the fact that we can have this discussion by smartphone and the fact that you can make micro payments for water in a third world country using technology that just simply didn’t exist a decade ago. And that as a result, things are becoming possible with a breadth and efficiency that we couldn’t even contemplate in what, in historical terms, is the blink of an eye ago. And that’s huge opportunity.

The danger is that we spend all our time and energy and emphasis on taking advantage of all these technological advancements and ignore in the process some of our deepest, most fundamental human needs.

You talk about saving humanity from the speed. I look at a little differently. The challenges is retaining our humanity, despite the speed.  The challenge is going to be to continually focus on the things that really matter to humans in addition to automation, technology, lack of friction, efficiency, et cetera. There are things that are truly essential to the retention of humanity as a relationship-based species, that we have to be wary of every time we make a decision to automate something, to do it more efficiently with the use of technology.  We have to be aware of the trade-offs.

Scott:

Absolutely. And it’s a tension, an interesting and fascinating question. Is there anything else that you wanted to, did you want it to touch on in this conversation so we can maybe capture it in the text and in an actual article?

David:

The only other sort of comment I would make, Scott, is one that I think have made to you before, which is the way I encapsulate all of what we’ve been talking about in our industry:  I think about the difference between providing capital as a commodity, and what I refer to as providing capital as a service.

I think that difference, in conceptualizing capital as a service-related issue rather than a product- or commodity-related issue, encapsulates everything I’m talking about. In both instances, I’m providing a business with X dollars in capital.  In the one, it’s simply a product I am manufacturing, shipping and delivering. In the other, I am actually providing it in a way that adds value to the relationship between me and the customer, the buyer. I think the challenge is to try to make the capital I provide in that service context as efficient to acquire, as the capital provided in the pure product/commodity environment. That’s really an overarching view of what I think people ought to be thinking about.

Scott:

Which is your view of the industry and how Mulligan Funding captures the imagination of its clients in a way that no other company does by developing those actual personal relationships. This has just been a fascinating conversation.

You definitely give me hope for humanity, that’s for sure.

David:

We shall see. It’s definitely what gets me out of bed in the morning.