I took a week off in June to do some reading and Seth Godin’s This is Marketing was on my list. On the face of it, a marketing book doesn’t seem to offer much on collaboration in fintech, but the lessons are there.

Part of this is because Seth’s starting point is to educate marketers both about the changed business world they operate in and it’s knock-on effects on how you gain attention. To paraphrase, Seth says marketers and brands must seek to listen and engage small groups with something better, rather than try to spend their way to success via the homogenous ad campaigns of the mass media era.

As we explore what this means for collaboration, the principal impact is on how we collaborate with our customers. Much of the noise around collaboration concerns how business, typically, one large and one small, work together. However, a central pillar or collaboration is about creating shared value in order to convince someone to give you access to their unique strengths. In this framework, your customers are your largest and strongest potential partner in building your company. They control your cash flow, your reputation and thereby, the ease with which you can attract new customers. So why not let a marketer tell us, as Seth puts it, how to listen better?

The book includes multiple case studies, a number of which have a common theme: empowering your customers.

Collaboratio consumero (imagine it in the voice of a young Hermione Granger)

Penguin Magic sells magic tricks. Their platform isn’t built around having the most comprehensive stock of tricks, but rather having the latest and most innovative tricks. To do that, they created an environment where magicians post new tricks to sell and review each others’ work. The result is that the best tricks surface to the top and magicians are incentivized to bring something new. The product stays fresh, the quality stays high and they create value for professional magicians through reputation. So clearly worthwhile for their magician collaborators.

All this means that when novices come in looking for a new bit to impress at the post-lockdown dinner party, they are confident they’ve got something special that their guests won’t have seen before. (Full disclosure: As a kid, I had a paperback book of magic tricks, and I still use them on my kids, so yeah, Magic Penguin is for jokers like me).

By listening to their customers and understanding they were going to have to impress the same family or friends over and over, Penguin Magic designed their product and experience to meet that need, not by hiring an army of magicians or salespeople, or spending lavishly on Facebook and TikTok ads, but by convincing magicians they had something to gain from helping to build their product. And now for something completely different.

Sharing code

Stack Overflow solves your coding problems. Or rather, it shares other peoples’ solutions to those coding problems. If you need code that can accomplish a specific task, odds are somebody else has already solved for that and Stack Overflow just lets you use that person’s idea. Their competition monetized the solution, with a price tag assigned to each solution, but this limited their customers to the most desperate or the most lazy.

Instead, Stack Overflow lets coders post solutions, which are reviewed by other coders and then discussed and explored publicly. Along similar lines to Penguin Magic, they incentivize their customers to ensure the quality and scope of their product by proffering reputation. The site is monetized through job ads which further incentivizes coders to build their reputation on the platform by supplying the best solutions.

Once again, customers are given control over the product and rewarded with an improved reputation that can potentially be monetized through new jobs. The customer is a key collaborator in the product direction and the user experience.

In both cases, Seth makes the point that the most successful firms listen to the needs of a core group of customers, design a product to delight just those people and then tell a story that empowers that same smallest viable market. In terms of fintech, this customer focus is well-known, but often poorly materialized. In both incumbents and startups, a desire to collaborate with customers is waylaid in different ways.

Among Financial Services incumbents, customers were often part of the product design process, but their role pales in comparison to those of the legal, compliance, risk and IT teams. Furthermore, banks that attempt to collaborate with customers in designing products run into the challenge of iteration. All too often, the rigors of internal approval are prohibitive when it comes changing an existing product based on customer collaboration.

Among fintech startups, customer-centricity is a mantra and you could even argue, a cliche. Collaborating with customers is the typical starting point of a disruptive offering, because startups typically prioritize referrals to lower customer acquisition cost and because an improved UX is an easy way to differentiate. The problem is in the hockey stick. For years, fintechs were plied with venture capital seeking outsized returns and pushing founders to scale their solution. Investors and many founders expect that product-market fit is a question to be answered as quickly as possible to proceed into rapid growth. This inherently challenges iteration and customer collaboration.

Lots of firms want their customers to feel engaged, listened to and ultimately, inclined to stick around. But as Seth Godin’s book shows us, there is an inherent challenge to bringing the type of interaction that ingrained customer collaboration anticipates. Looked at another way, YouTube doesn’t orchestrate which type of videos will be viral: it lets viewers choose what they want more of.

So how would a bank or a startup create a process to empower customers to continue to collaborate on a financial product? How can customers be empowered to select the Financial Services they want? Surely, APIs are one part of this solution, but the bigger issue is likely to be in how product approvals for incumbents and the definition of successful scaling.

So here are three questions to consider as we explore this idea of collaborating with customers in the weeks to come.

1. How can the product development process incorporate customer feedback at more stages along the journey, including after the product is released?
2. How do we create an incentive for customers to show us what they want and need?
3. How do we embrace the internet’s modality of many small conversations versus the traditional thinking of getting as many people as possible to purchase the same product?

As always, your ideas and especially your questions make this better. Share, reply, DM, email or otherwise signal your thoughts.