The first thing people do during uncertain times is look to the leadership for support, guidance, direction, encouragement — whatever they need to get them through it. Calm energy is infectious. Whenever my team is worried about something, I mindfully practice being as stoic and confident as possible.
As part of our series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times”, we had the pleasure of interviewing Loren Shifrin.
Loren Shifrin is a highly ambitious young entrepreneur with seasoned experience building brands and scaling companies in multiple industries. As CEO of Revolution Capital, Loren has been instrumental in the reshaping of the factoring landscape in Canada. He has started and acquired multiple companies in the factoring, alternative lending, and hospitality markets and has a proven track record of building successful businesses.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I started like most, at the bottom. Fifteen years ago, I started working as a collection agent at Baron Finance, which was, at the time, a small factoring company. As the company grew, I seized every opportunity I had to grow with it. Over four years, I rotated through almost every position the company had: Account Manager; Head of Accounts; “Legal Department”; Operations Manager; COO; and, eventually, minority owner.
At the end of 2015, it became clear that I wanted to lead my own factoring company — I had ambitions of doing things differently — so I quit (just a few months before my wedding). I left my secure salary, sold my shares, and bet everything I had on myself. I immediately recruited my first investor, and together we went out looking for institutional funds. After being laughed out of half of Bay Street, we finally struck gold with Morrison Financial. For some reason, one that is still unfathomable to me (yet appreciated beyond measure), David and Alex decided to take a risk on two young founders, and Revolution Capital was born.
On June 1, 2017, we opened our doors and began to grow at a pace never before seen by our industry. By 2018, we ended up acquiring and merging with Baron Finance. In 2020, we made four more acquisitions and solidified our place as the largest factoring company in Canada. We are now expanding very heavily in the United States, intending to become the North American industry leader.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
I made many mistakes at the beginning of my career and did not feel any were particularly funny, at least not at the time. One of the most infamous of my mistakes is the one that started me on my journey. My initial interview with Baron Finance completely slipped my mind until I received a call asking if I was still coming. I told them I was on my way and raced straight over. I showed up at the office, over an hour late, wearing shorts and flip-flops. I went into my interview with the owner of the company and somehow aced it. For some unbeknownst reason, Michael, who is now my partner and CFO, offered me the job. I quite arrogantly declined. I wanted an extra two dollars per hour. To my immense surprise, Michael agreed, and I accepted the position. The cost of this minor increase was to be nicknamed “Shorts and Flip-flops” for nearly a year.
Eventually, I became responsible for all interviewing and hiring at the company and never judged a candidate by their appearance or previous experience. The only thing that matters to me in an interview is a person’s character and perceived work ethic. Much like Michael, who, by chance, hired the man who would buy out his partners to become CEO, I eventually hired the best COO, despite his resume and initial position within the company.
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?
I often think about my career and how I got to where I am. I can attribute much of my success to three mentors and friends. Michael Lukhton, my former boss and current partner, taught me much of what I know today, despite him not always passing on these lessons intentionally. When we grew Baron Finance together, Michael would often entrust me with tasks or projects that I was unqualified or inexperienced to handle. I never challenged or rejected any assignment, so they just kept coming. Thanks to Michael believing in me, I developed much of my knowledge through hands-on experience. I was eager to learn and hungry for the job title I wanted rather than the one I had.
When I left Baron Finance, the first person I went to see was Amer Sabanadzovic. He was infinitely supportive and genuinely wanted nothing more than to see me succeed. While looking for funding for Revolution Capital, we bought and sold a few stocks together — shared profits, shared losses. After picking two winners, I got cocky and convinced him to go big on a third. We lost most of the money we invested. It was my first financial loss. I immediately panicked, wondering how I would ever pay him back. To my infinite surprise, Amer calmly said, “Don’t worry, it’s just money. They print more of it every day.” He fundamentally changed the way I view and react to losses. We have since made much more than I lost on that unfortunate investment.
When we opened Revolution Capital, I approached Sam Ibrahim, a close friend, and persuaded him to take a chance on me. I asked him to close his line of credit and factor all his accounts with my company. Being the incredibly supportive and loyal human he is, Sam convinced his partners that moving their account to my start-up was a smart decision. This was the first of many meaningful gestures that helped me along my path. Since then, Sam’s company and Revolution Capital have both grown exponentially and in direct synergy with each other.
Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
Most finance companies and lenders believe their value is derived from the size of their portfolios. I have heard many financial executives say, “They need us more than we need them” when referring to both clients and employees. To these people, tangible assets are the only ones that have value and the bottom-line rules all. We named our company Revolution Capital because we wanted to do things a little differently — and because we wanted to challenge what we believed was an archaic view held by many (though not all) in our industry.
Our business is built on people. Our strength comes from the relationships we build both internally and externally. Our purpose is to help small-to-medium-sized businesses achieve their potential by alleviating worries about payroll or how they will afford more equipment or take on new business. We need them as much as they need us. Every facility is mutually beneficial, and we believe that this understanding is what sets us apart.
Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
I’ve held management positions for most of my career, and through the years, my leadership style has changed and evolved. I am by no means perfect, and I am constantly learning and trying to improve how I lead my team. Over the past few years, I have found that the best way to lead is by empowering my department heads, middle managers, and team leads. We saw moderate success when I was attempting to do everything myself. We’ve seen immense growth since I have begun trusting my team to do what they do best.
At the beginning of 2020, we monitored the COVID-19 situation closely and began planning for a finance company’s worst-case scenario: off-site work arrangements. It was uncharted territory for our industry as we were not equipped for remote work.
After completely reworking our IT infrastructure, we decided to allow everyone to work from home before Ontario went into its first lockdown. Employees were encouraged to take their computers from their desks if need be. Those who took public transit were sent home in Ubers (at our expense). We were going to work from home until this all blew over.
We made the decision swiftly and without hesitation. We put the interest of our employees ahead of our fears and insecurities. It paid off. The following week most of our competitors were offline for a few days while they scrambled to adapt. Any concern we had about loss of productivity was also immediately appeased — because we had shown our staff that we care about their wellbeing above all else, they wholeheartedly returned the sentiment and did not let us down.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
Never. I have always been highly ambitious and very hungry. I understand the path I have chosen will not always be easy to navigate and that every challenge is part of the journey. I sincerely believe that if I am too comfortable, I am not growing.
Although it seems that every new challenge is larger in scale and complexity, these challenges also become easier for me to overcome because I have a solid support system (at home and at work), a wealth of experience to draw upon, and unwavering conviction.
I am committed to my clients. I am committed to my staff. I am committed to my partners. I am committed to my investors. They have all taken risks on me, and I owe it to them to overcome any challenge that comes my way. I am eternally grateful to all of them for what they have done to support me, and I will never let them down.
What would you say is the most critical role of a leader during challenging times?
It is a commonly held belief that the role of upper/middle management is to support the CEO. I’m sure that on some level this is true and that for many CEOs this is of utmost priority. However, I believe, especially during challenging times, that the opposite is true.
Occasionally, I find myself in a meeting where staff from various departments must introduce or reintroduce themselves. “Hi, I’m Joe, and I’m in charge of Supply Chain.” “Hi, I’m Susan, and I am responsible for marketing initiatives.” When it comes to my turn, I usually answer jokingly, “Hi, I’m Loren. I’m the CEO, and I take credit for all your hard work.” It usually breaks the ice by inspiring a laugh, but it isn’t a joke. My job as a leader is to inspire, value, appreciate, encourage, and support all those who work with me and allow me to do what I do. It’s during the challenging times that people most need to feel valued and supported, and that’s precisely what I strive to ensure.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
Communication is key. I am (almost) always in a good mood and looking forward to the future, but I can’t expect the same from my team if they don’t know what I am thinking/planning.
Every Monday, I meet with my department heads to go over any pressing issues, address any concerns, and plan for the week ahead. These meetings usually involve more laughter than a productive discussion, but that’s part of the appeal. Happy managers inspire happy staff.
Whenever I come up with a crazy idea, want to make an acquisition, implement some new software, or create a new department, I share the vision and encourage open discussion. The only successful way I can implement a new idea is if everyone understands and agrees with the logic behind it. If it’s solely my idea, there is a chance somebody won’t accept it. But if it becomes our idea, buy-in and enthusiasm are almost always guaranteed.
What is the best way to communicate difficult news to one’s team and customers?
Directly, openly, honestly, and without hesitation. Bad news is a part of life — and of business. Deceit and duplicity don’t have to be.
Luckily, we are rarely put in a position where we have to give bad news. If it impacts the team, I will tell the bad news personally as I feel it’s better coming from the top. If I expect my staff to deliver bad news honestly and compassionately to clients when necessary, I owe them the same courtesy.
Giving bad news is only half the battle though. We also must be ready to suffer related consequences or make adequate accommodations, even to our detriment.
How can a leader make plans when the future is so unpredictable?
The future is always unpredictable. Even some of my best-laid plans wound up derailing at the 11th hour. Knowing how to make a solid plan isn’t the concern — it’s learning how to freestyle, adapt, and pivot quickly and efficiently. That is key — and that takes practice and a strong stomach.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
People over profits. I believe that people are the most important intangible asset of any business. By treating company stakeholders ethically and with respect, you lay a foundation that can weather any storm.
During turbulent times, we rely on our customers to support the company, our employees to maintain the company, and our investors to finance the company. Showing our commitment to them during the good times increases the likelihood that they will return the goodwill when we need them most.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
When outside factors impact your business in ways you cannot control, it’s easy to make short-term reactionary decisions out of panic or fear. I watched a few of my competitors have knee-jerk reactions to the pandemic that I doubt they will ever be able to recover from fully.
One of my competitors was so desperate for business at the beginning of the pandemic that they reacted by cutting corners on due diligence to close deals more quickly. They ended up acquiring another portfolio (without doing adequate diligence) that we had ourselves passed on due to poor credit underwriting. They missed many of the problems we caught and ended up losing millions on the deal.
Another tactic that many in my industry resorted to was cutting prices. In the early days of the pandemic, leads were scarce and there were two or three factors fighting over every deal. It was easier to compete on price rather than service. The irony of this decision is that lower margins cannot support quality service, and poor service damages a company’s reputation resulting in fewer deals.
Some competitors became so preoccupied with increasing sales at the cost of margins that they had no choice but to start applying additional pressure on their staff to do more faster. They forgot about the importance of treating their people well. Some people who worked for years at their old shop ended up leaving for greener pastures. Their losses became our gains.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
Since the inception of our company, we have relied almost exclusively on word-of-mouth referrals for our growth. It’s been a great strategy that has led to quality leads and excellent close rates. That said, we naively assumed that this growth strategy would sustain our ambitions forever.
At the beginning of the pandemic, our natural sales funnel dried up completely. Although it has since recovered, we had no option but to diversify our growth channels. I immediately reached out to several competitors to see if they were looking to sell. Given the uncertain nature of the economy and the industry as a whole, I felt confident many would be. We acquired four companies and have since engaged an investment bank to help identify additional acquisition opportunities. We hope to make some announcements before the end of the year.
We also began building a dedicated marketing team and investing in SEO and digital ads. We are starting to see the fruits of our labour now with an overflowing digital funnel.
We engaged head-hunters to recruit salespeople from within the industry. Interestingly, this proved difficult, so we opted to pivot and asked the same head-hunters to find candidates with sales experience outside our industry. We asked them to identify targets who were unsatisfied with the overall culture at their current places of work. We invested in training these recruits, and they are performing better than anticipated.
When the world changed dramatically, almost overnight, we didn’t dig our feet in the sand. We immediately employed multiple complementary strategies, took risks, and ventured into uncharted territories.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
- The first thing people do during uncertain times is look to the leadership for support, guidance, direction, encouragement — whatever they need to get them through it. Calm energy is infectious. Whenever my team is worried about something, I mindfully practice being as stoic and confident as possible. Things were highly chaotic when we did our first acquisition and merger. No one on our team had ever done anything like it before (including myself), and they would come to me every day to tell me about new issues that had arisen and say things like, “We will never survive this.” One of my top managers was convinced that this transaction would be our demise and that every day could be our last. Each day I listened to his concerns, reassured him that everything would be OK, and watched him leave my office only slightly calmer than when he had entered. Looking back, when it was all over and done with, he admitted to me that I was right and that it hadn’t been that hard. Little did he know that much of my confidence at the time was sheer bullheadedness. In fact, we are doing due diligence on a significant acquisition now, and he was the first to volunteer to take the lead on the project.
- Open and effective lines of communication are essential to the success of any enterprise. That is especially true when times are tough, and the strength of the team/company is put to the test. I never fully appreciated just how intricately intertwined every department is until I started getting my department heads in the same room once a week. The more I share my thoughts and ideas, the more insight and feedback I receive from people with completely different roles and experiences from myself that is of immense value. The more I listen in these meetings, the more my managers participate. And now, if we have a problem or issue that we need to overcome, we do it together.
- My job as a leader isn’t to come up with the answers to all of our problems — it’s to make the best decision I can with the information I have available to me. By allowing my key people to participate in the conversation actively, I am more informed, and my ability to make the right decision is greatly improved.
- Morale often suffers when times are tough. Although my focus is usually solving the problem at hand, I always ensure that I am also spreading optimism and positivity. I encourage my managers to do the same. Throughout the pandemic, each of my department heads spoke directly with each of their employees daily. Many employees told me that in an uncertain world with the challenges of working from home combined with the impacts of social isolation and loneliness, it meant a lot to have friendly and meaningful interactions with colleagues who cared about them. The efficiency and quality of our interpersonal communication have greatly improved over the last eighteen months, and I believe our work culture and company pride have been enriched as a result.
- Always be ready to pivot. If there’s anything the last year and a half has taught us, it’s the importance of being able to adapt, willing to try new things, and open to change. Two years ago, I would have said that working from home was not viable for our industry. I would have said that a flex-work schedule wouldn’t be conducive to a productive work environment. I would have said that no one would read a monthly company newsletter. I would have said the only salespeople worth hiring are the ones with proven track records. I would have been wrong on all counts. Empathy is a strength. It took me a very long time to understand this fact and many people, including myself, had to suffer while I figured it out. For years, I had a reputation for being a hothead who would argue to the death just to get my point across without regard for the person I was arguing with. I would “win” any argument by being the loudest and most forceful voice in the room. Being right was what mattered, regardless of the cost. I’ve since learned to listen. I am now far more successful at de-escalating and negotiating difficult situations as a result. A few months ago, we had an account debtor who was livid and making all manner of threats against the staff and the company. As it turned out, we hadn’t done anything wrong, and he was directing his anger at the wrong party, so I decided to give him a call. He started the call by threatening to find and kill me. He spent the next few minutes calling me names and insulting me. He spent a few more minutes letting me know how upset and insulted he was. I spent about nine minutes being verbally abused and didn’t say a word. Eventually, after he’d rid himself of this toxic energy, he began to calm down. It was only after I had listened to him, without interruption, and allowed him to work through his anger, that I was able to explain the situation to him and help him understand that he was actually mistaken. The total call lasted over an hour. In the end, he apologized and offered to send flowers and cakes to everyone in the office and my immediate and extended family.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I can’t think of any “Life Lesson Quotes” that really resonate with me, except maybe what Amer told me about the printing of money. I do, however, really enjoy “The Road Not Taken” by Robert Frost.
Although I am always conscious of what my competitors are doing, I remain true to our origins and encourage the team to remember our vision and hold fast to our core values of honesty, integrity, and transparency. In general, I believe that when we chase what someone else is doing — following a trend for the sake of conformity — we lose a little bit of what makes us special. That’s why, at Revolution Capital, we are committed to forging our own path.
“I shall be telling this with a sigh somewhere ages and ages hence: Two roads diverged in a wood, and I — I took the one less traveled by, and that has made all the difference.” — Robert Frost
How can our readers further follow your work?
Readers can find more information at www.revinc.com. They can follow our company Revolution Capital on LinkedIn and Instagram @revolution.capital.
Thank you so much for sharing these important insights. We wish you continued success and good health!