Innovation Finance: Verhelle Designs a Disruptive Model Built on Trust, Purpose & Humility
by Rita E. Garwood May/June 2018
Bill Verhelle is back in the game with the launch of Innovation Finance, which will focus on delivering a dramatically improved customer experience to sophisticated corporate and non-profit borrowers. In an interview with Monitor, he discusses the five traits of excellent employers and the guiding principles of his business philosophy: trust, purpose and humility.
Bill Verhelle, Founder & CEO, Innovation Finance
Bill Verhelle was having dinner with a friend in Naples, FL in late 2017 when inspiration struck. “We were talking about life and happiness,” Verhelle says. “I shared how fortunate I felt that I’d been in both my work and family life. However, I also shared how much I missed working.”
In the two and a half years since he stepped down as CEO of First American Equipment Finance (FAEF), Verhelle had remained active — serving as chairman of the Equipment Finance and Leasing Foundation and founding Harvard Partners, a company that invests in financial firms employing new business models — but something was missing.
“That night, I decided to explore the possibility of starting another new business, with the intent of developing a new business model in the commercial equipment finance marketplace,” Verhelle says.
Designing a Disruptive Model
Verhelle established himself as an industry leader by taking an unconventional approach to designing FAEF, the independent finance company he launched in 1996, successfully led through the Great Recession and continued to lead for three years after its acquisition by City National Bank in 2012.
Given his affinity for inventive organizational design, the news of Verhelle launching Innovation Finance, “a new kind of commercial lending business, built for speed, simplicity and transparency,” came as no surprise. Serving larger, sophisticated corporate and non-profit borrowers, the company “is committed to delivering a dramatically improved customer experience.”
Taking notes from successful disruptors known for obsessing over customer experience, such as Amazon, Salesforce and Tesla, Verhelle says the new venture will be organized in a “cross-functional team-based structure with a relatively flat management structure and considerable delegated decision making.”
Verhelle points to the failings of old-line, cost leadership-driven business models, whose top-down approach results in silos and hierarchies. He compares the resulting structure to a series of assembly lines, in which individuals have no opportunity to exhibit creativity. “In most cases, creativity is logically and understandably precluded,” he says. “There’s much more command and control, much less flexibility and adaptability for people who are actually facing customers or competitors in the marketplace.”
Creating a business with meaningful differentiation allowing for greater customer responsiveness is Verhelle’s ultimate goal. “It’s so important to have the ability to try new things and see how customers react and then make adjustments,” he says. “The business model you choose is so important to being able to execute and adapt.
“Twenty years ago when I was in business as a young man, it seemed like business was a lot more stable,” Verhelle says, “Today the business world is so much different and, quite frankly, it’s so much more exciting.”
Given today’s rapid pace of change, Verhelle says blazing a new trail is the only viable option. “There’s not one best way as there was for 20-some years in our industry,” he says. “Now customers are demanding new things. Now technology is making new ways of doing things possible that never existed before, and now we all have to figure that out.”
Cornerstones of Success
Verhelle can’t do this alone. The cornerstone of Innovation Finance is its core team, which includes former FAEF colleagues Mark Tomaselli, Mike Ziegelmann and Nate Gibbons, who will serve as president, chief financial officer and chief operating officer, respectively, and industry newcomer Kelly Armbruster, who leads marketing.
“These are the type of people I believe have the potential to create something new and meaningful for equipment finance customers,” Verhelle says. “And they are all people I’m delighted to work closely with, day in and day out.
“Mark is an outstanding leader, an excellent executive and a bold strategic thinker, especially regarding new technology and new business models,” Verhelle says. “He believes deeply in finding new ways to better serve clients, combining new technology with new business models to meet changing customer buying preferences.”
Tomaselli, who served as chief information officer at FAEF, is playing a pivotal role in the development of the second cornerstone of the company — a proprietary customer application, built from scratch.
“That’s really the main focus of our efforts right now,” Verhelle says. “In addition to all the post-funding tools that many companies in the commercial equipment finance business use for their customers, our application is going to be designed to enable large credit-worthy borrowers to actually compare different options and to select and consummate the financing that they choose.”
Happy, Satisfied Employees
As Innovation Finance expands its roster, it wants to attract the right kind of people. By offering unlimited PTO, generous parental leave and other perks, Verhelle 2018 says, “We hope to signal to potential employees that we are a different kind of company, and we’re going to set something up that really values your contributions to building this company.”
FAEF has been continually recognized as a best place to work, and Verhelle’s employee-friendly approach will continue in his new venture. “At the end of the day, happy, satisfied employees create happy, satisfied customers,” he says. “I don’t think you can start talking about delighting your customers until you first figure out how to really connect in a sincere way with your employees.”
When asked what sets an excellent employer apart from a mediocre one, Verhelle says it comes down to recognition, respect, organizational design, employee development and meaningful purpose.
Verhelle focused on recognizing the success of employees during his time at FAEF, and he plans to continue this practice. “Part of the benefit of expressing recognition to high-performing employees is that it makes them feel good about their hard work,” he says, “Another important part of employee recognition relates to the way it clearly communicates to all employees what success looks like in the company. These are the specific behaviors and the philosophies that are valued here.”
He says respect is another essential component. “We’ve always tried to build an organization that respects and treats everyone with professionalism and dignity,” he says. “Happy, satisfied employees engaged by a cause they are passionate about are unstoppable.”
Verhelle’s innovative business models also keep employees top of mind. “An excellent company structures itself in a way that provides employee satisfaction,” he says. “Are jobs defined in a way that employees can actually see why what they do every day matters in the scheme of the larger company? Flatter, more team-based organizational structures tend to be more satisfying for employees.”
He says expressing interest in the continued professional development of each employee is crucial. “Employees should feel like you sincerely care about them, and you are actively helping them get better,” Verhelle says. “Hopefully it will be a learning organization where people feel like every day when they’re driving home from work, they may not have had success with whatever they’re working on, they may have had a hard day, but they feel like they work for an organization that is challenging them and helping them get better every day in their career. I think if you give that to people, they appreciate your approach, and they’ll stay with you.”
Verhelle says the purpose of an employer also can be a deciding factor in an employee’s level of engagement. “An excellent employer strives to accomplish something meaningful that is motivational to everyone involved. When people are given an opportunity to create something new and better, that’s always motivational and inspiring. So I think purpose is a part of it,” he says.
Trust, Purpose & Humility
Purpose also is a central theme of Verhelle’s business philosophy, as are trust and humility.
“Successful companies are comprised of smart, inspired people working toward a common goal. It’s hard to be inspired, if your goal is to make 5% more for your shareholders than last year,” he says, adding it’s especially difficult if a company plans to reach that goal by reducing quality to squeeze out more profit. “Successful companies almost always have big, customer-focused goals. Young professionals want to do something meaningful with their talents. Set big, meaningful goals that will make the world a better place,” Verhelle suggests.
Verhelle says trust is the lifeblood of a successful business. “If people in an organization don’t trust each other, or their leader, it leads to all sorts of dysfunction,” he says. “A big part of trust comes from leaders consistently honoring their commitments. Trust is what allows business teammates to undertake their responsibilities zealously, without worrying whether their colleagues may be doing the same. In the most successful organizations, it evolves into a form of organizational loyalty, in which people do whatever it takes to accomplish the worthwhile goals of the organization. Leaders must never take any action which compromises employee trust, as this is the costliest of leadership mistakes.”
Verhelle’s emphasis on humility is refreshing. “In the end, there is more luck involved in business success than we would like to admit,” he says. “Be humble and remember that success is never guaranteed. By recognizing the temporary nature of our successes, we are more open to the ideas of others and the marketplace changes going on around us.
“We are starting a very small company, with a different approach, on a very small scale,” he says. “Many of our initial assumptions will prove to be wrong. If we are eventually successful in any material respect, we will have quickly adjusted following our failures in order to try again and again.
“While we are flattered by recent public attention, we recognize that we haven’t accomplished anything yet. We have much hard work to do over a long period of time. With a little luck and a great deal of hard work, success is possible. It won’t be possible without the support of many partners in the U.S. equipment finance industry. And we are sincerely grateful for the encouragement we have received from our many friends in the industry.”
Relationships are the cornerstone of any business transaction, and broker/lender interactions are no different. Steve Geller outlines some of the basic due diligence and research brokers can perform to ensure their lender relationships are successful and long-lasting for both them and any potential borrowers.
Liability policies are standard procedure when leasing equipment, but not all policies will cover vicarious liability in the event of an accident caused by the lessee or require the same financial responsibility depending on the state. Jody Green and Bill Mulder provide a basic breakdown of when additional insurance may be necessary and the types of equipment that most need its protection.