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Ken Rees of Covered Care: “The business you start is rarely the same as the business you grow”

The business you start is rarely the same as the business you grow: Each business I’ve started evolved very differently from its original market strategy. When I started my latest business, Covered, we thought we were going to reinvent traditional consumer lending using bank account transaction data. Of course, immediately after we launched the product, the […]

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The business you start is rarely the same as the business you grow:

Each business I’ve started evolved very differently from its original market strategy. When I started my latest business, Covered, we thought we were going to reinvent traditional consumer lending using bank account transaction data. Of course, immediately after we launched the product, the pandemic hit and essentially wiped out the demand for consumer credit. Fortunately, we pivoted into healthcare patient financing which is actually a far better market opportunity! We had to be nimble and listen to the market, but we are now growing like crazy should hit profitability much faster than our original business model.


As part of our interview series called “5 Things I Wish Someone Told Me Before I Became A Founder”, I had the pleasure of interviewing Ken Rees, CEO of Covered Care.

Ken Rees is a respected financial technology innovator who has built several successful companies serving the underserved. He sold his first company to GE, he took his second company, Elevate, public on the New York Stock Exchange, and he recently launched his latest venture, Covered Care, to provide affordable healthcare financing for people who struggle with less-than-prime credit scores.

He is the author of Teetering: Why So Many Live On A Financial Tightrope and What To Do About It, an Amazon financial services bestseller, and is a frequent speaker and writer on financial technology and financial inclusion topics.


Thank you so much for joining us in this interview series! Can you tell us a story about what brought you to this specific career path?

My “a-ha” moment came when I was a management consultant working on a project to improve branch productivity for a large bank. When interviewing branch staff, they kept referring to the problem of “lobby trash.” It turned out they weren’t talking about litter, but rather people who were coming in to cash their checks. They didn’t see these people as potential customers but rather as an annoyance.

I wasn’t aware that so many people weren’t traditionally banked and it opened my eyes to the opportunity to use technology to innovate better financial products for underserved Americans. It’s a mission I’ve been on for the past 25 years.

Can you tell us a story about the hard times that you faced when you first started your journey?

I was wildly overconfident when I started my first company, CashWorks, in 2001. I had what I thought was a winning idea to provide a better solution for check cashing services using prepaid debit cards. I actually sold my house in San Francisco to generate initial funding and build my team. However, almost immediately afterward, 9/11 changed the world and the venture market crashed. I had to be incredibly scrappy to survive, but ultimately we sold the business to GE in 2004.

Where did you get the drive to continue even though things were so hard?

Probably less “drive” than “desperation.” The thing that kept me going in many ways was the awareness of how many people depended on me to make the company a success. I had employees who had quit their previous jobs to help start the business, investors who believed in me, and even family members who had put some money into the company. I couldn’t let them down.

So, how are things going today? How did grit and resilience lead to your eventual success?

Over the past 3 companies and 2 decades, I’ve continued my commitment to building better technology-driven financial products for underserved Americans. Despite multiple market crashes, the great recession, and the COVID-19 pandemic, my companies have served millions of Americans and saved them billions of dollars over what they would have spent on traditional products like check cashing services and payday loans.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Like most entrepreneurs, I have always felt that my companies were doing something important and I wanted my teams to share my vision and commitment to the customer. When Elevate was starting to scale, I decided that we needed a mission statement and a clearly defined set of company values, so I spent quite a bit of time thinking about what was important and writing this up in a compelling, distinctive manner.

Unfortunately, when I proudly showed my work to the leadership team it went over like a lead balloon. They said that my proposed mission and the cultural statement was more about me than them, and they didn’t think they really reflected the company they had helped build. And they felt ignored and excluded from the process. Classic self-centered CEO behavior!

So I ripped up my ideas and we started overworking on them as a team. Not only was the buy-in better, but we integrated the mission and values throughout the company, from recruiting to appraisals, which helped build a resilient, customer-focused culture.

What do you think makes your company stand out? Can you share a story?

Covered Care has one of the most compelling missions imaginable — helping underserved Americans afford the healthcare they need — at rates lower than credit cards. This is transformative for patients, but also makes a huge difference for healthcare providers. As an example, we work with one of the leading clear aligner providers. They were frustrated because traditional “prime” financing providers were declining about half of their patients. We created a bespoke product for them that guaranteed that everyone who could make a small down payment would be approved — with no paperwork or hassles. This program was so successful that now nearly 30% of their patients pay with our financing program.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I think one of the biggest problems for entrepreneurs is loss of perspective. We become so committed to the success of our businesses that it becomes all-consuming. This causes stress, but can also erode relationships as well as mental and physical health.

I find that time with non-work friends is essential for keeping balance and recognizing that the world doesn’t revolve around your latest venture. In fact, the best friends are the ones who can call BS on you and knock you down a bit when necessary.

It’s also why I think that cycling is the best possible sport for entrepreneurs because it gets you out of the office for hours at a time and connects you with lots of people you would never otherwise meet. And it’s hard to worry about business when you are climbing up a long hill on a hot day!

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

My Dad believed in me enough to put money into all of the businesses I’ve started and my wife believed in me enough to stay with me despite occasionally being on the verge of losing it all!

How have you used your success to bring goodness to the world?

At a certain point, serving Americans suffering from damaged credit, poor savings, and limited financial options changed from being a business opportunity to being a mission. At my previous company, we helped customers save billions over what they would have spent on competitive, “legacy” products like pawn, title and payday loans. Also, based on my experience (and original research from an organization I established call the Center for the New Middle Class) I wrote a book to raise visibility into the unique challenges facing non-prime Americans (who I call “Tightropers”).

What are your “5 things I wish someone told me before I started leading my company” and why. Please share a story or example for each.

  1. The business you start is rarely the same as the business you grow:

Each business I’ve started evolved very differently from its original market strategy. When I started my latest business, Covered, we thought we were going to reinvent traditional consumer lending using bank account transaction data. Of course, immediately after we launched the product, the pandemic hit and essentially wiped out the demand for consumer credit. Fortunately, we pivoted into healthcare patient financing which is actually a far better market opportunity! We had to be nimble and listen to the market, but we are now growing like crazy should hit profitability much faster than our original business model.

2. Don’t mess with a good thing:

Entrepreneurs love to innovate. We are tinkerers and love pushing the envelope for our teams. However, once business models and products are refined and ready to scale, this tendency can be a distraction to explosive growth. In my previous company, we had figured out how to use direct mail to reach nonprime consumers who were eager for credit and were dropping over 100 million pieces of mail a year. I foolishly decided to build an entirely new product line while we were growing our core business and it almost completely derailed the company. My team pointed out the resource conflicts this was causing and convinced me to shut down the new product shortly after launching it. Painful, but the right thing to do. When in a growth mode — focus is essential.

3. Control your own destiny:

In the early days of a business, there is a temptation to partner with other larger companies. It offers the potential to improve market access and gain credibility. However, “strategics” often want concessions and preferential access. This can be a killer and can limit the long-term growth of the business. As an example, in my first company, we negotiated an investment from a large ATM manufacturer in exchange for an exclusive agreement. Fortunately, we were ultimately able to get out of the exclusivity because it was dramatically harming our sales efforts. I am now VERY cautious about any early deal that limits our options or makes us reliant on any other company.

4. Never fall in love with your company:

To be successful, entrepreneurs need to be passionate about their ideas, their teams, their customers, and their companies. However, this can lead to bad business decisions if you can’t be clear-eyed about risks, opportunities, and what is the best for investors (including yourself). At my first company, we had just proven the business model and were getting some very early traction in the market when GE approached us about using our technology platform. While I was cocky about our ability to grow a successful company, a board member helped me understand the risks we still faced going forward. He gave me a “reality check” that convinced me to shift the deal with GE from partnership to acquisition — a very smart move in retrospect!

5. Don’t believe the hype:

Too many entrepreneurs lose focus by chasing the latest trend — whether Big Data, Blockchain, Diversity, Great Places to Work or any other technology or business concept that the business press loves to hype. While all of these can be great, they can become an end in themselves rather than a way to drive the success of the business. Looking back, even though I have tried to steer away from chasing trends, I still regret the amount of money I wasted over the years on various HR-related initiatives. Employees gain satisfaction from accomplishment and recognition, not parties and ping-pong tables. Focus on what really matters, not what other people think is cool.

Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?

For the past 15 years, cycling has been a key release valve that helps me handle the upsides and downsides of entrepreneurship. When things go well, I can use that energy to train harder and push myself on the bike. However, there is nothing better for taking my mind off of work frustrations than punishing myself on a 5 hour ride.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

It has become clear that our college system is fundamentally broken. Too many people are spending too much money on higher education and getting too little from it. We need to reinvent the entire concept of college for the real-world needs and pressures of the 21st century.

How can our readers further follow your work online?

Actually, the best way to learn my thoughts on building fintech businesses for underserved Americans is to read or listen to my book — Teetering: Why So Many Live On A Financial Tightrope and What To Do About It. It was published this year and is an Amazon financial services best seller.

This was very inspiring. Thank you so much for joining us!

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