Picking out a new car can be a lot of fun. There’s the sheer kid-in-a-candy-store pleasure of selecting the make, model and colour; testing out cool technology; and luxuriating in that new car smell. But the process of actually paying for that sweet ride? Well, that’s a whole other story—and it’s a particularly unpleasant experience for those who have ever missed a payment, forgotten about a credit card or just never had the chance to build a credit history in the first place. For them, the act of securing financing is akin to an unscheduled colonoscopy, an experience that involves plenty of unpleasant poking and prodding, and almost never ends with a truly happy result.
Cody Green didn’t deliberately set out to change that when he took a sales job at a Hyundai dealership in West Edmonton. Fresh out of university, he intended to make a few bucks to support his musical aspirations, not to change how people purchased automobiles. But after a couple of years in the business (during which he relocated to Saskatoon), he realized there was a flaw in the prevailing sales paradigm, one that, as a natural problem solver, he couldn’t let go. Would-be car owners were too often choosing their dream vehicle only to find themselves ineligible for the financing needed to pay for it, an outcome that left everyone—dealer, consumer, financial institution—frustrated and inconvenienced. “For the customers who didn’t have perfect credit, that process was backwards and broken,” says Green.
If that process was inverted and buyers had financing arranged in advance, they could arrive on the lot with peace of mind and leave with the car they wanted—and without the usual emotional baggage riding shotgun. So Green started helping individual clients secure funding at the outset as a value-added service. It worked—he’d sell as many as 25 new cars a month, a very high throughput by dealer standards—but its success was naturally constrained by his capacity to personally co-ordinate the deals. Green had developed an aptitude for coding as a teenager—“I was one of those kids who wanted to understand everything about the Internet,” he says—and he decided build an online platform that would allow him to scale the process. “I thought dealerships could get value out of using this,” Green says. “And I wouldn’t need to be there to help every last customer.” This idea sparked two important revelations: First, that there was a business to be built around his idea and, second, that he was the guy to build it.
Green stopped selling cars in 2010 to pursue the venture, which he named Canada Drives. He believed in the platform he’d built, but the sales chops that worked so well on the lot were quickly put to the test when he deployed them in the more ruthless realm of startup business prospecting. His cold calls to dozens of dealerships were rejected until he was finally able to convince one—Vickar Community Chevrolet in Winnipeg—that his new technology could actually help both it and its customers. That sale led to another and then another, to the point that, by the end of the company’s first year in operation, 100 dealers were using its platform. And that was just the beginning: Canada Drives’ revenue grew by a staggering 12,686% from 2010 to 2015, to well above $20 million last year, earning it the No. 1 spot on the 2016 PROFIT 500 and the title of Canada’s Fastest-Growing Company for 2016. Its journey to date has been as unconventional as it has been speedy, and it’s only gearing up.
The business model behind Canada Drives is relatively simple: Customers, many of whom have less-than-perfect credit, come to the site seeking an auto loan. They’re met with an intuitive and inviting interface that prompts them to answer a handful of questions about the car they want to buy, their recent employment and their payment histories. Within 24 hours, the company says, customers are referred to a dealership Canada Drives has identified as the best fit for their credit profile and are contacted by that dealer to discuss their options. As a result, buyers get a sense of how much car they can afford—and how much a loan will cost them—before they step onto a lot. “I find that if you give people the option of finding their financing up front, their experience is way different,” Green says. “They have that security of knowing what their options are, and it turns what can be a really negative experience into a really positive one.”
Canada Drives isn’t in the business of lending any money itself. Instead, it serves as a bridge (and a tolled one) between demand and supply. Those with the supply—dealers—pay the company for access to those car buyers with the demand. Dealers love the service because it gives them warm leads for customers who might not have otherwise found their way onto the lots, and who, having been vetted by Canada Drives, then experience a pain-free financing process with the dealer’s lender of choice.
It’s a model that has benefited from excellent timing. Since 2010, as the financial crisis has receded and interest rates have continued to fall, more and more Canadians have been buying vehicles. In 2015, a record 1.9 million bought a new ride. Canada Drives was involved in approximately 40,000 of those transactions, helping customers get funded for more than $1 billion in loans. And while that’s a lot of business for what was, until recently, a small company, it’s still just a fraction of the overall market. According to the Financial Consumer Agency of Canada, this country’s auto finance market has doubled over the past eight years, to approximately $120 billion in size.
That gives a company like Canada Drives plenty of room to grow further, especially since the firm’s digital-first approach is exactly what customers seem to want: The company launched at precisely the same time Canadians became fully comfortable dealing with money issues online. “We are increasingly accustomed, as a society, to accessing financial products on our computer or our mobile phone, whether it’s for payment or a loan or insurance,” says Colleen Poynton, a vice-president at Core Innovation Capital, a Los Angeles–based early-stage venture capital firm focused on fintech.
And while each new year will bring to the market a fresh crop of potential car buyers who view the Internet the way fish do water, the shifting behavioural patterns Canada Drives is capitalizing on aren’t restricted to the young. According to Gregory Smith, a Toronto-based partner in EY’s financial services advisory practice, Canadians of all ages are interested in using fintech services. “The idea that this is just a millennial phenomenon is wrong.”
As a company, though, Canada Drives certainly skews young. Green turned 31 in March, and he’s older than most of the people working for him. The office has the requisite open floor plan and aggressively casual aesthetic common to all millennial-friendly companies, and it radiates a constant hum of energy that makes it feel like the set of a Canadian spinoff of Silicon Valley. For his part, Green has eschewed the swanky corner suite for an indistinct semi-private space nested in the middle of a fifth-floor office. “I don’t even have the nicest office on this floor at this point,” he says. “It’s about what’s functional for the team.”
That team has exploded in size since the move from Saskatoon to Vancouver in 2014, and its 170-plus people are now split across two floors of the Bentall II building in the city’s downtown. “The things that worked with five people didn’t work at 20, and they definitely didn’t work at 60,” Green says. “So we have to constantly reinvent who we are and how we do things.” On the sixth floor, co-CEO Michael Galpin (who joined Canada Drives in 2011) spearheads the sales side of the business, supervising the interactions with customers and managing the relationships with a growing network of dealer partners. A floor below, Green handles the more product-oriented concerns, like design, technology and advertising. They share the CEO title because, as Green puts it, “two heads are better than one.”
Such magnanimity is a tell—one of many, in fact—that Cody Green is not your average tech entrepreneur. That’s perhaps because he never set out to be one. When he left his hometown of Salmon Arm, B.C., at 17, his dream was rock and roll, and he went on to graduate from MacEwan University’s music program in 2006. (He majored in performance, with a focus on the bass guitar.) But Stephen Brown, a childhood friend who left a promising career at PwC to join Canada Drives as CFO in 2013, says there were signs long before then that Green was destined for something different. “The Internet was still very new—we had dial-up Internet—but when I met Cody, he was already building websites. He was already into that world.”
Prodigious technical skills obviously helped Green get Canada Drives going, but Brown believes his friend’s music background, and the perspective it gave him, was just as important in moving the business forward. “Cody is incredibly sharp, and he picks things up very, very quickly,” Brown says. “But he recognizes where his expertise is and where he needs to rely on other people.” That willingness to empower others to take on big responsibilities, Brown says, has helped create the kind of engaged employees who make very fast growth manageable. “We’ve all had opportunities that we may not have had elsewhere, and we’ve had the ability to learn and grow on the job. And we’ve all learned a lot from how Cody approaches things.”
That approach is rooted in the quiet self-confidence that infuses both Green’s demeanour and his behaviour. There are no conspicuous displays of ego, and he is visibly uninterested in affirmation or praise. Instead, he projects an almost preternatural calm, a sense that he’s more interested in solving problems his own way than collecting the usual badges of tech-sector success. To wit, when asked why he opted to bootstrap the company’s growth—Canada Drives remains self-financed today—he admits he never knew there was another way: “Maybe had I lived in Vancouver and been part of this community, I would have been like, ‘Cool, venture capital. Seed round? I’m in.’ But by the time I was aware that there were other options, we didn’t need them.” Likewise, he has no interest in going public—“We think we’re the best stewards of our journey”—and, while he says he’d never categorically rule out selling the company, it’s clear the price would have to be very, very right.
There might be a hint of Evan Spiegel—the Snapchat CEO who turned down Facebook’s $3-billion takeover offer in 2014—in Green’s interest in forging his own path, but Brown says it’s a sign of the self-determination his friend has always had. Green prides himself on his ability to outwork others, and his preferred way to decompress from work is to set stretch goals—from running a half-marathon to avoiding alcohol for an entire year—purely to test his own mettle. “He’s incredibly disciplined when he sets a goal for himself,” Brown says. “He won’t waver.” And maybe he shouldn’t: Snapchat is now valued at over $20 billion, after all.
Canada Drives is some distance away from a $20-billion valuation, but it’s not inconceivable to imagine it facilitating $20 billion in auto loans before long. According to EY’s Gregory Smith, we’re still in the early stages of the fintech adoption curve in Canada; a survey his firm released this past January found that fewer than 10% of digitally active Canadians had used two or more such services in the preceding six months, well behind consumers in the U.S. and U.K. If that gap does close, and more Canadians decide to take fintech companies for a spin, it will put Canada Drives in an even better position than it’s in today. That’s why, for now, the company’s focus is exclusively north of the border. “I think there’s going to be a lot of room to run in Canada before we look to other markets,” Green explains.
That same EY report found that Canada’s fintech lag stems not from technological distrust or security concerns, but rather from a lack of awareness of both what online financing options are available and where to find them. That makes marketing the big challenge for a company like Canada Drives. “People just don’t know these services exist yet,” Green says. “And that’s where the biggest growth comes from: awareness.” In the past, his team has relied on organic measures like referrals (the company amassed 200,000-plus Facebook fans mostly by word of mouth), but it has tried more targeted efforts recently, including a small campaign using Yahoo’s native ads platform.
Canada Drives largely targets—and appeals to—what Green calls “under-banked” customers: those people who are, either because of bad or non-existent credit, of little interest to the big lenders. He estimates that approximately 25% of all loans issued in Canada are to people with low credit scores, and while he believes people with higher credit scores will make up a growing proportion of Canada Drives’ customer base going forward, he has built a business (and brand) around an ability to get that 25% into cars. Green makes it clear that they’re not in the same dubious business as the so-called “buy-here, pay-here” used-car dealers that were the subject of one of comedian John Oliver’s recent televised rants—and definitely not in the same line of work as payday loan operators. “A payday loan is designed to keep you in a cycle of debt,” Green says, adding that his company’s goal is to help move people up the credit spectrum rather than trapping them at the bottom of it. “A lot of these consumers are caught between being underserved by their banks and preyed on by payday lenders. There are a lot of financial products that are necessary in that middle ground.”
It’s an important clarification, and it may signal a future for the company in which it goes beyond facilitating auto loans and toward offering a wider range of products for the chronically under-banked. “The problem we’re solving right now? I think we can solve other people’s problems too,” says Green. “There’s a lot of runway.”