‘SMBs want to be focused on leaving a legacy – not managing their money’: BlueVine’s Steve Allocca
- For major FIs, SMBs have traditionally been called “the invisible middle” – neither big enterprises nor individual households. The fintechs who serve them exclusively can make a real difference.
- BlueVine’s COO Steve Allocca joins us on the Tearsheet Podcast to talk about the challenges and opportunities of building and growing an SMB in today’s market.
The following was produced by Tearsheet Studios. We worked with small business lender BlueVine to produce a four-part series on creating financial solutions serving historically underserved small businesses.
In this episode, we spoke with Steve Allocca, COO of BlueVine, about the challenges and opportunities of building and scaling a customer-centric small business.
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The following excerpts were edited for clarity.
Steve Allocca, BlueVine: I'm Steve Allocca, and I'm the Chief Operating Officer of BlueVine.
BlueVine isn’t Steve’s first stint in financial service. In fact, he joined the company last year with 25 years of experience leading companies like LendingClub, PayPal, and Wells Fargo.
Steve Allocca: My career has been through an arc of starting with traditional financial services with Wells Fargo, and before that the company that's now JP Morgan Chase, then increasingly moving to companies that were more focused on technology, and frankly, have a business model that's more customer-centric than a lot of the biggest financial institutions today.
But it was Steve’s experience of over a decade, on the other side of the B2B relationship, that informs his purpose and decision making as the COO of BlueVine.
Steve Allocca: Prior to coming to Bluevine, I actually started a small business of my own – a company called Loan Science. Loan Science specializes in the education finance space, providing data, analytics, and portfolio management of loan portfolios to companies in the education space.
And through that experience, I learned just how difficult it is to get access to support and financial products that make sense and are tailored for a small business. I became very passionate about the need to be able to bring better mobile and digital banking that was designed for small businesses to entrepreneurs and business owners whose needs were more urgent than ever -- especially with the pandemic.
Building on his experience as a business owner on one end, and a leader in the financial services space on the other, I asked Steve: What’s the most important lesson you bring to work every day?
Steve Allocca: What I've learned throughout that journey is that putting the customer at the center is something that you can never underestimate the importance of. Making sure that your business and your products are designed for the customer is the most important thing there is. That’s one of the reasons I'm so excited about the opportunity that we have had at BlueVine, which is laser focused on creating better digital banking for small business owners.
What exactly is the opportunity at the center of BlueVine’s mission? And why is it so important for business owners to seek out products and services tailored to their own unique needs?
Steve Allocca: Simple, really. A small business is very different from a larger organization – they've got fewer employees, less revenue, and the cost of operating that business is a lot different than a larger company with thousands of employees.
The largest money center banks and big financial institutions do a great job catering to larger businesses, and in many ways are very focused on catering to individual consumers, as well. I think that small businesses in particular get kind of stuck in the middle. In fact, when I worked at Wells Fargo, we actually had a term for small businesses: “the invisible middle”, because the solutions are all too typically designed for large enterprises and get dressed down for small businesses; or they're designed for consumers, and get dressed up a little bit for small businesses.
That one size fits all approach really doesn't work for a small company. One of the areas you see the most is access to capital. Small businesses notoriously do not get access to capital at very good terms from the biggest traditional financial institutions. So that's an area where fintech has stepped up to be able to fill a lot of that void. You saw it very clearly with the government's Paycheck Protection Program that was rolled out during the pandemic, where fintechs really stepped up to be able to fill a lot of the void where large traditional financial institutions were not stepping up to be able to serve that small business market.
Fintechs like BlueVine, who make it their sole focus to serve SMBs, succeeded during the pandemic and helped businesses where traditional FIs failed them. That’s because they were already prepared with a tried and true solution. The strength of these fintechs is their focus on serving one core customer segment – really well.
Steve Allocca: Small businesses are the core segment of the American economy, but they've historically been overlooked by traditional banking providers. If a fintech company or startup tries to be all things to all people, I think they're going to have a really hard time.
But by focusing on one particular segment -- particularly one that's not well-served by traditional providers -- and taking a customer-centric, technology-first, mobile-first approach, there's a great opportunity to provide a lot more value to customers that are hungry for it.
Starting today, actually, BlueVine customers will have access to three really exciting new account features. The first one is expanded account access. This new feature is going to be available to all checking and line of credit customers and allow their business owners to be able to easily manage additional user access in their accounts.
The second one is bills management. With updates to our bill pay, customers can easily add track and manage bills on their BlueVine dashboard.
The third is QuickBooks integration. So we're launching QuickBooks integration that lets customers easily sync data, like bills, transactions, and payments between two platforms: BlueVine and QuickBook’s.
And finally, the other thing that I'm really excited about is that customers are going to receive 1.2% interest on their deposits. This restructured interest rate rewards small business owners for using BlueVine to regularly deposit revenue into their accounts and use the account as their primary operating account.
The term “customer-centric” has long shifted from trend to table stakes. What has BlueVine done to create a customer-centric solution for SMBs, and how does it support their financial wellbeing?
Steve Allocca: We've streamlined a complicated and time consuming part of owning and operating a business, through having one simple online dashboard where business owners can manage their cash flow, pay their vendors, and access credit – without having to go to a physical bank branch.
It allows small business owners to optimize the tools that they're already using. SMBs want to be focused on their customers, growing their business, and leaving a legacy – not managing their money.
BlueVine works exclusively with small and medium-sized businesses. As such, they’ve learned a thing or two about what it takes to run a successful SMB – and where SMBs regularly fail. What are the fundamentals SMBs need to have for success?
Steve Allocca: You’ve got to develop a product or service that you're passionate about, where there's a clear market need. That to me is the first critical foundational building block of something that has to be prioritized – or else nothing else subsequently really matters.
Once you've got a product or service that resonates with customers in the marketplace, relative to other available alternatives, the next critical thing is making sure that you've got funding, because that's what's going to allow you to be able to scale and be able to keep up with the demand. A lot of things that I see trip up small businesses as they're growing fast is that they haven't sought out access to funding to be able to enable that growth.
How small is a small business? Many SMBs start in someone’s garage: A side hustle with a lot of passion and hard work thrown into it. And as side hustles mature into businesses, so should their financial technology.
Steve Allocca: Besides access to capital, another challenge that I'm seeing small businesses encounter is relying on consumer-focused solutions.
Entrepreneurs are leveraging the existing peer-to-peer platforms – which are really built for consumers – to find solutions for their side hustle. And then if they're successful, and their side hustle grows into something that looks more like a traditional business, they're really facing some challenges, because those peer-to-peer payment platforms weren't designed for businesses.
Having been a small business owner himself, I wondered how Steve thinks having had a BlueVine a decade ago could have made a difference for his own enterprise.
Steve Allocca: Oh, gosh, in countless ways. Like the drive to the bank branch, where it felt like you are you're having to pledge your firstborn child just to be able to get access to your own money that was sitting in the bank.
Having BlueVine or other mobile-first solutions would have saved me so much time that wasn't spent figuring out better ways to be able to attract, retain, and grow customers and the business.
Besides the right technology partner, a successful business needs the right people. I asked Steve: What is the most important advice you would give SMBs when it comes to expanding out of the garage and into a team?
Steve Allocca: One tried and true thing to do is hire an accountant or a bookkeeper; make sure you have somebody on your staff who can keep track of where the dollars are going. It’s a common piece of advice, but all too often overlooked when you're focused on taking care of customers and growing a business.
But especially as you grow, managing your finances gets a lot more complicated. So I think having somebody on the team who's dedicated to managing your money becomes increasingly critical.
Despite the anticipated hurdles of taking your small business out of the garage and into the world, we’ve seen a tremendous inflow of SMBs into the market – why is that?
Steve Allocca: I think there's probably no better time than right now to start a business. There's an increasing number of people who are starting a side hustle or effectively starting a business on the side.
There's no better time than right now to have the level playing field that technology gives us. If you're a retailer, you’ve got the ability to set up shop and be selling online in minutes – that wasn't available just a couple of decades ago. And then if you need to raise capital and fund that business, there's been no better time than what we're seeing right now to go out and raise a bunch of money for a business idea that makes a lot of sense.
To wrap up, I asked Steve my favorite question, that I like asking everybody who joins me on the podcast: What gets you excited to come to work every day?
Steve Allocca: For me, it's about purpose, Zack. I truly believe in what we're doing: bringing better banking and financial services solutions to small business owners.
To go back to my early days at big banks: most of the big banks are not really designing solutions with small business owners in mind. My own experience as an entrepreneur and small business owner myself taught me firsthand that at a big financial institution, you're a number.
So to me, that need has always been clear, and then the pandemic made it that much more clear how underserved small business owners are in this space of banking and managing their money across deposits, payments, and credit.
Having a purpose is to know that what you're getting up every morning to do is making an impact on people. And I think there aren’t many audiences that to me are more rewarding to help than someone who's dedicated their professional life to starting a business that they're hoping to grow. It's rewarding to do everything we can to be able to help that kind of customer who's trying to do everything they can to leave a great legacy.