Fintech Leaders
Fintech Leaders
Jason Guss, CEO & Co-Founder of Octane - Building a Profitable Fintech, Capital Markets Lessons, The Future of Software in Fintech

Jason Guss, CEO & Co-Founder of Octane - Building a Profitable Fintech, Capital Markets Lessons, The Future of Software in Fintech

Miguel Armaza interviews Jason Guss, CEO of Octane Lending, a multibillion software and credit provider for purchases of powersports vehicles.

This article is part of Fintech Leaders, a newsletter with almost 60,000+ dreamers, entrepreneurs, investors, and students of financial services. I invite you to share and sign up! And, if you enjoy this conversation, please consider leaving a review on Apple Podcasts, Spotify, or wherever you get your shows so more people can learn from it.


My guest today is Jason Guss, CEO & Co-Founder of Octane Lending, the leading software and credit provider for purchases of powersports vehicles, RVs, and outdoor power equipment.

Founded in New York City in 2014, Octane now funds over a billion dollars in annual loans and is backed by Valar Ventures, Contour, IA Ventures, Barenson, Third Prime, Fintech Collective, Upper90, and many more. Jason is also one of the most respected founders in fintech and the world of credit.

In this episode, we discuss:

De-risking your business with early hires and the difference between missionary and mercenary talent

“Amazon, Google and Facebook are three businesses run radically differently, they're all wildly successful. Goldman Sachs is another very successful business, also radically run differently than those other three. So you don't have to run the business like Amazon or like Google or like Meta in order to be successful, you can do it your own flavor.”

Jason emphasizes the critical role of 'missionary' hires over 'mercenary' hires in the early stages of a company, especially in businesses reliant on credit. Missionary hires are driven by factors beyond economic returns, such as passion for the work or the problems being solved. This approach is particularly important in the initial phases when capital is limited and the company cannot afford to attract mercenaries who are primarily motivated by financial rewards. Mercenary hires in the early life of a company can lead to ongoing frustrations related to compensation, title, and position, potentially fostering a politically charged environment that is detrimental to a startup's growth and culture. While mercenaries can play specific roles, over-indexing on missionary hires in the executive team is crucial for long-term success, as they contribute positively without the negative side effects often associated with mercenary behaviors in a startup's early days.

Why they were forced to build a business with profitable unit economics from day one

Because we weren't in one of these marquee markets where everyone's like, well, all you need is an idea on paper and a good team, and we'll give you a ton of capital. That was never our story. And so the unit economics always had to work, there always had to be tons of margin.

From the very beginning, Octane had to focus on profitable unit economics due to the difficulty in raising funds in their niche market. Unlike companies in more popular sectors that could secure capital with just an idea and a team, Octane needed to demonstrate compelling KPIs and substantial margins to attract the attention of VCs. Additionally, Guss highlights the importance of equally investing in technology, credit, and capital markets from the early stages. This approach enabled Octane to achieve significant milestones like securitization their debt early on and getting rated by one of the major agencies, leading to access to stable and cheaper capital markets, supporting their unit economics. Octane's focus on profitability and owning their destiny allowed them to quickly adapt strategies when market conditions changed in 2022. In 2021, when many fintechs were unprofitable, Octane was GAAP net income profitable. This profitability, coupled with a conservative mindset, enabled them to swiftly return to profitability in 2023 despite market challenges, maintaining profitable unit economics throughout.


Reflections from joining other company boards and working with multiple entrepreneurs

 “There's really only two rules don't run out of money and don't over lever the business.

Joining other company boards has provided Jason with exposure to various strategies for operating a business. This experience has broadened his understanding beyond the singular perspective he had from his own company's board meetings, allowing him to see different approaches to displaying KPIs and running a business. He’s also learned to optimize board meetings by observing how others conduct them. Initially, his board meetings involved extensive reporting by him or his executive team. Now, influenced by his experiences on other boards, he focuses more on discussing key business problems during meetings, leaving standard financial and KPI reporting to be reviewed beforehand. Additionally, through his angel investments in nearly 30 fintechs, Guss has encountered a wide range of personalities and problem-solving strategies. This exposure has enhanced his ability to handle complex situations, such as disputes between executives, by drawing on a broader network and observed experiences.

Fundraising lessons and advice on how to deal with venture capitalists… and a lot more!

“Clean over dirty. What I mean by that is, take worse valuations in clean terms over preference and other strange terms. It makes all your future rounds much harder to get done. And there's usually a correlation with people who are giving onerous terms to not being good venture backers. So the best VCs tend to give very clean terms, you might not agree with their valuation all the time, but it's worth it.”

After raising 100s of millions of dollars from venture capitalists, Jason advises founders to prioritize clean terms in deals over higher valuations with complex terms. He notes a correlation between onerous terms and less supportive venture backers, suggesting that the best VCs offer straightforward terms even if their valuations are lower. Additionally, At Octane, different VCs have played various roles in Octane's journey. Early investors instilled discipline, while others contributed to understanding capital markets, pushing for ambitious growth, and exploring new value propositions. This diversity in roles and contributions changes as the company matures. Guss also reminds founders that VCs primarily provide advice on common startup challenges, push founders to envision the potential of their business, and facilitate crucial introductions, especially for fundraising. However, VCs do not build the business for founders; instead, they offer support and resources while the founders must address the unique challenges of their venture.

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Miguel Armaza is Co-Founder & General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.

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