How The Team At BodeTree Discovered The Transformative Power Of Exploring New Markets
This is the first post in a new series about the enormous transformation that my company, BodeTree, has undergone in the past two years.
In a short period, we’ve sold off our original line of business, reoriented our organization, and refocused on an entirely new industry, all while maintaining the culture and unique advantages we’ve developed over the years.
As we set out to explore this journey and its accompanying lessons, insights, and warnings, it only makes sense to start with the fundamental question that stands at the center of everything: What would compel a successful business to undertake such a massive transformation?
The answer is multi-faceted, but it boils down to the fact that we stumbled upon a new market that had more potential for disruption than we ever imagined possible.
The story begins nearly two years ago when a friend of mine convinced me to explore franchising as a potential distribution channel for our core product, an eponymous financial management platform for small businesses.
At the time, BodeTree was distributed almost exclusively through banks, though we did have some significant one-off clients (such as one of the largest insurance companies in the U.S.).
We had achieved a level of success that we were happy with, but we had by no means had as dramatic an impact on the banking industry as we had hoped.
Every deal we landed was hard-won and took on average about 18 months to close. We were tired and yearned for a chance to make our mark on the world in a meaningful way.
Historically we had shied away from working with franchisors because we (wrongly) assumed that it consisted only of large, established players like McDonald's. Once we were introduced to the world of emerging franchise systems, we saw just how wrong we were.
We soon came to find that the franchise industry was much larger, and far less efficient than we ever imagined. Additionally, we found that franchisors were highly receptive to our product in a way that a bank simply couldn’t replicate.
When I’m interested in something, I tend to throw myself into the topic and absorb as much as I possibly can. This is precisely what I did with franchising.
I leveraged my friend’s expertise to try and piece together an understanding of the industry that would allow me to better understand how it operates and, more importantly, how we would fit into it.
Throughout this process, I came to a few inescapable realizations. The first was that our product would solve a pain point that many franchisors shared. The second, however, was that there were numerous other pain points that had been allowed to fester over the years.
I came to understand franchising as a highly fractured, incredibly inefficient industry that was subject to minimal regulation yet had vast amounts of money floating around. In other words, it’s the entrepreneur’s dream industry, and it was ripe for disruption.
After coming to this realization brought on by what I initially thought was going to be an experimental entrance into a new market, the team found ourselves confronted with three options.
1.) We could stick with what we knew, which was selling to banks, and maintain the status quo;
2.) We could try and serve two masters by keeping our bank channel and dabbling in franchising; or
3.) We could take the bold step to divest the business we had built and focused exclusively on bringing meaningful change to the world of franchising.
Ultimately, we decided to go with option three and shift directions entirely. This decision meant not only retooling our existing product to better align with the needs of the industry, but also expanding our product offering for the first time in our history.
Our first step was to acquire my friend’s franchise development company and fold it into BodeTree proper.
From there, we set out to build two new products (Vault, a document management system and CapXpro, a hybrid savings/escrow service) that solved some of the most obvious pain points the industry was facing.
Most importantly, this decision prompted us to reevaluate who we were as an organization. Rather than follow the path of the single product SaaS (software as a service) company that we are all familiar with, we became a much larger and far more diverse organization that mixed service offerings with a portfolio of technology services.
This shift allowed us to become a far more nimble company with the ability to change an entire industry.
Of course, this shift in both perspective and focus didn’t come easily. It required me to reshape the entire nature of the business and convince our team, investors, and board of directors to move away from something they had all worked hard to build (I’ll explore this feat in an upcoming post).
Still, what started off as a simple exploration of a potential new market turned into a transformative experience that set us on an entirely new and exciting course.