Laybuy at a glanceLaybuy is a digital solution for consumers that want to make high-end purchases but cannot afford to pay the full price straight away. Consumers who use Laybuy are able to spread the cost of purchases over six more manageable payments. The company decided upon this ‘six automatic weekly payments’ formula after commissioning a study on budgeting and spending habits ahead of their UK expansion: The study revealed that 31% of UK retail consumers between the ages of 16 and 55+ manage their money weekly, with 29.5% of those specifically in the millennial category choosing to budget on a weekly basis.
Statistics in New ZealandOver just 18 months, Laybuy has experienced impressive levels of growth in terms of retail subscriptions and transactions…
Early successOver the past 18 months since its launch, some 5% of the country’s voting population (200,000 people) has signed up to Laybuy, with the company forging partnerships with some 2,750 online and physical stores. Retailers partnering with Laybuy have seen an average increase in order value of 60%, and an average increase in online and in-store conversion rates of 50%. These partners, have, according to the team at Laybuy, also experienced an average increase in new customer acquisitions of 30%. So where did this journey to success begin? We sit down with Rohloff senior to find out…
The journey“The initial idea for Laybuy was born in the early 2000s when I was running a company called EziBuy,” says Rohloff. “At the time we were looking for a way to improve our average order value as we noticed that whatever we tried to do, our customers’ discretionary income was finite and we couldn’t increase our basket size.” “Our directors weren’t overly keen on the risk profile associated with buy now, pay later and we also weren’t able to perform a digital credit check the way we can today. This made the economics hard to justify.” Clearly, Rohloff was stuck at a crossroads at the company that he was running. He had the vision to see the potential in offering customers more purchase based flexibility, but the people with the final say in the company simply didn’t want to take the risk. This is when he made the brave step to leave the comfort of a high-status role, and build a business from the ground up where could increase people’s buying power.
“This is when I decided to leave the corporate world after thirty-five years and start my own business.”But it wasn’t all Gary. A big inspiration for going it alone and pursuing the idea of Laybuy came from his son Alex, who was able to offer some key consumer insights: “The moment that sparked the idea for the business was when my son Alex asked me why there wasn’t a safe and easy alternative to credit cards for spreading the cost of aspirational purchases.” Gaining the input of his son, as both a close confidant and a millennial consumer did the trick, and Laybuy was born as a result of this exchange.
“I couldn’t give him a solid answer to that question. That’s when we decided to join forces and create Laybuy.”By this time, Rohloff had felt that he had served his time as a corporate bigwig. He now wanted to pursue the idea of monetising what he saw as a significant gap in the retail consumer market: “I’d spent the first 20 years of my career in banking and finance roles, and the last 18 years as CEO of a number of retail companies,” says Rohloff, “so the combination of the two backgrounds came together perfectly in a happy marriage in Laybuy, and let’s just say that I felt ready to walk up that particular aisle!” So upon leaving university, Alex joined his father as the founding team of Laybuy and set to work. But why did he choose his son as a co-founder over so many other more experienced candidates for the role? “I needed someone who was tech-savvy – not necessarily in a coding sense, but in terms of what’s happening in the world and the big technology trends. He was keen to be involved and things progressed from there,” says Rohloff.
Service and impact“Laybuy is intended to be a lifestyle brand,” says Rohloff, “our mission is to invoke a sense of fun and empowerment in managing one’s finite discretionary income.” So do they see themselves as a finance business at all? Rohloff says no. It’s more than that, he assures me. Laybuy is about wanting to help young people live more enjoyable and manageable consumer lifestyles… “We’re aware that we live in a world today that is economically tough. So, if we can help spread the cost of something that someone wants in a disciplined and interest-free way, that’s a good thing.”
“We’ve created a service that’s interest-free, and there’s a growing wave of young people who don’t want or feel they need credit cards.”“What we’re doing is providing a way for these people to get on the credit scoring ladder,” he continues.
Early challengesBut as with any founding story, it wasn’t all plain sailing for this father-and-son team. For Gary and Alex, like for many entrepreneurs, gaining the crucial first set of funding proved difficult.
“Managing to convince bankers to provide funding lines for us was a struggle for a long time.”Clearly, the biggest struggle was convincing traditional lenders to back a concept that dealt with managing consumers spending debts in a most untraditional way, “as the debtor ledger grew, we needed access to more cash but the model was new and we were new and the bankers weren’t so keen,” says Rohloff.
“Short-term, unsecured, interest-free credit was totally foreign to them. Convincing them of the merits of a completely new concept like ours took a lot of persuasion!”
No silver spoon hereWhen you hear about a high flying CEO founding a business with his twenty-one-year-old son straight from university, and that business growing exponentially, you may be tempted to think that it was all a bit of an easy ride. But upon meeting Mr Rohloff senior, it was clear that this success was down to some tried and tested corporate retail experience from Gary, as well as some crucial consumer insights from his young son Alex. Additionally to this, Rohloff was ready and willing to make the transition from the world of corporate to entrepreneurial rollercoaster: “No one else in my family has been part of that world. I’ve realised that you can’t just impose what you’re used to in the corporate world into an entrepreneurial business,” says Rohloff.
“You have to be more willing to react fast, learn fast and adapt.”He understood that he had to be more flexible in his approach when leading an entrepreneurial startup, “I left a setup where I was very accustomed to specific disciplines, lengthier chains of command and a more rigid infrastructure.” “Going it alone and leaving that safety net was a particularly challenging thing to get my head around,” he continues.
The father and son relationship“The hardest thing for me when working with my family is trying to differentiate between being a dad and being MD,” says Rohloff.
“It’s very much been a rollercoaster of emotions for everyone.”“Owning our own business and working with your family in the process has been an interesting ride. I’m still learning how to be better at that, ” he continues. But for the Rohloff men, the glue of familial bond keeps them together and is crucial when times get tough… “We are lucky that our family bond is so strong, that truly makes the difference when the road gets bumpy at times,” adds Rohloff.
How the Initial growth happenedLaybuy is already at the junction of the next level of growth, but how did they get to this point so quickly? “Scaling in New Zealand was reasonably straightforward for us. It’s a bit of a village with a population of only 4.7 million people,” says Rohloff. Although size did help, the key to this early success was also his years of experience in the local retail ecosystem: “Having been a CEO in retail there for almost 20 years, not only did I know the majority of the retail market, but I also was privy to a very broad and influential network with access to retail decision makers.” So armed with a working ‘black book’ of contacts, Rohloff, and his son were able to launch their new endeavour with a confidence and in-depth knowledge of the local market. “Then came scaling in Australia; a market that is also relatively familiar with the ‘buy now, pay later’ model,” he continues.
The challenge of international expansionSo how about expanding further afield? Well, it’s clear that father and son understand the retail economies of Austrailia and New Zealand very well. But surely expansion into Europe and the UK presents its own challenges? “Scaling in the UK has been a brave new world,” says Rohloff. “No one really knows what we do here, especially compared with the levels of awareness in Australasia and even in the US.” “The task here is three-fold – education, market awareness and network building. This has been more challenging than I anticipated,” continues Rohloff. “But we’ve managed to get some great partners around us and now we’re getting some good traction.”
Tackling the tough timesStanding at the helm of international expansion whilst navigating a public and personal father and son relationship can’t be easy. But the burden of leadership is similarly heavy for all high-level business figures assures Rohloff:
“Whether you’re the CEO of a publicly listed company, or running your own business, it’s one hell of a ride.”
Gaining finance to keep up with growth“One of the toughest parts for me was recognising that we had a wonderful opportunity to grow this business quickly. but this meant we had to try and work through the minefield of banking and finance to convince people why they should help us grow.” Whilst Rohloff and his son did experience successful early-stage growth with the business, it didn’t mean it was any easier to gain the finance they needed: “When a new business is growing very fast, you need additional capital. But lenders tend to say that you haven’t got enough history to justify a loan,” says Rohloff. “But ironically, you have to build that history to gain access to the right resources in order to grow,” he continues. “Laybuy is not the first business to have encountered that challenge, I am sure of that. I’ve had many sleepless nights trying to work out how we could grow as fast as we wanted to while ensuring we had adequate liquidity to support that growth.”
Entrepreneurship and mental healthRohloff like so many other entrepreneurs that have come before him, and are set to succeed him, have struggled with the mental burdens of running a startup business. Without the HR safety nets and team-wide camaraderie one enjoys in the corporate world, many entrepreneurs can feel isolated, and alone when they’re running their own businesses. So how does Rohloff cope? “Entrepreneurs definitely need more support. And forms of support may very well exist, but I’m not great at finding it,” he says. But as with his founding story, family has a big part to play when it comes to keeping a steady head as he, with the help of son, leads Laybuy into what is hopefully green new pastures of success here in the UK and Europe… “I need to be better at seeking support, but I’m fortunate to have a very supportive family to keep me going.” So whatever the future holds for Laybuy, it’s clear that a ‘family-first’ policy endures, and is keeping their heads above water at this exciting, and deeply challenging time for the company…
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