Lemonade co-founder and CEO John Findlay says the 28-person company has barely scratched the surface of the massive U.S. financial services market, which includes thousands of banks and other institutions such as credit unions.
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An Ottawa startup that helps financial services companies and their customers adopt digital technologies has joined a U.S.-based accelerator in the hope of making inroads in the lucrative wealth-management industry.
LemonadeLXP specializes in software that teaches staff and customers of financial institutions how to make full use of online banking services, such as depositing a cheque by taking a picture of it with a smartphone.
Using techniques like game-based learning, role-playing scenarios and video “walkthroughs” that give step-by-step explanations of banking processes, the firm’s subscription-based platform aims to turn bank employees into “digital experts” as financial institutions look to maximize their returns on their ever-growing investments in online technology.
Lemonade’s offerings have struck a chord with financial institutions pushing to go digital in a hurry, particularly in the United States. Founded in 2018, Lemonade now boasts a client list that includes TD and dozens of U.S.-based financial institutions.
However, Lemonade co-founder and CEO John Findlay says the 28-person company has barely scratched the surface of the massive U.S. financial services market, which includes thousands of banks and other institutions such as credit unions.
“There’s no reason we can’t have 30 per cent market share down here,” the affable Findlay said during a recent interview from Texas. “There’s really no company doing what we do specifically.”
Even though there’s still plenty of territory to conquer in the banking space, Lemonade is branching out.
After its banking division saw an uptick in digital adoption after deploying the software, for example, TD asked the Ottawa company if it would work with the banking giant’s insurance branch. Lemonade has also been asked to implement its software at mortgage companies and investment firms.
While the wealth-management space presents a big opportunity for Lemonade, tapping into the industry comes with its own set of challenges. Though mortgage firms and investment houses are intertwined with banking, they have their own regulations and workflows.
So when Findlay and his team were offered a spot in an Arlington, Tex.-based accelerator designed to boost growth for so-called “wealthtech” startups, they jumped at the chance. The 12-week program, called the Founders Arena WealthTech Accelerator, began earlier this month.
“Frankly, we know a lot about banking and a lot about fintech,” Findlay explained. “We don’t know that much about (the wealth-management business). This is an opportunity for us to not only learn about the industry, but make some contacts and get some introductions from people.”
As part of the program, Findlay and his staff will meet with leaders of technology companies that serve the wealth industry to get a lay of the land in which Lemonade hopes to gain a foothold.
“It’s really kind of the thin end of the wedge of getting into the industry,” he said. “It’s an education for us.”
As is often the case in the topsy-turvy world of entrepreneurship, Findlay’s path to this point was hardly a straight line.
While working as a corporate trainer in the late 1990s, Findlay became fascinated with the still-fledgling Internet. As he clicked on banner ads that typically redirected viewers to boring websites, he figured there had to be a better way to engage the consumer.
Industry trailblazer
That led him to help pioneer the industry that came to be known as “gamification.” In 1999, Findlay co-founded a company called Launchfire, which was soon developing game-based digital promotions for some of the world’s biggest brands, including Coca-Cola, Dell, Microsoft and Procter & Gamble.
At its peak, Launchfire had nearly 40 employees and nearly $4 million in annual revenues. But Findlay’s entrepreneurial life hit a turning point in 2005, when one of Launchfire’s blue-chip clients, Tylenol, asked the firm to create an e-learning platform for its employees.
Soon, other customers were asking if Launchfire could create similar products for them.
“We did everything we could to ignore that business, but despite our utter neglect and worst marketing efforts, we kept getting a trickle of customers,” Findlay said with a chuckle.
Another inflection point occurred after TD acquired another Launchfire client, MBNA Canada, in 2011. TD wanted MBNA to pick up the pace when it came to adopting digital technology, and asked Launchfire to create an education platform for MBNA’s employees.
It was an “aha” moment for Findlay, and the seeds of a new enterprise were soon sown.
“We hadn’t really built a scalable solution, so we asked for a bit of time, because by then we realized every financial institution had this problem,” he said. “I think the journey of an entrepreneur, a very important element of it is listening to your customers and listening to the market and adjusting your offering based on the signals that you get from the market.”
Still, there were more bumps to come.
Findlay admits it was touch-and-go for both companies when the pandemic sent shockwaves through the global economy in 2020 and 2021. While they didn’t lay off a single employee, he and Lemonade co-founders Alexandre Lemaire and A.J. Pratt went without paycheques for a while to help the businesses weather the storm.
“It was a very nerve-racking time because there was no business for Launchfire and Lemonade hadn't really taken off,” Findlay explained. “There was a bit of luck in there.”
In 2021, Launchfire was shut down, and Findlay and his partners decided to go all in on Lemonade.
While it might have seemed like a risky approach at the time, Findlay now says it was the right decision. Self-funded and profitable, Lemonade has gone from 10 customers three years ago to 90 today, and its revenues have surpassed those of Launchfire at its peak.
“We’re in a really, really fortunate position,” Findlay said, calling the move to focus on Lemonade a “great risk we took that almost killed us, but by our shoestrings we managed to hang on.”
With a smile, he said his latest venture has all the ingredients necessary to be a long-term success.
“Banks are being forced to become tech companies,” he said. “Those that don’t become tech companies are either for sale or they will be in trouble. Folks younger than me don’t want to go to branches. My kids don’t even want to call for a pizza. If you don’t become digital and you’re not good at it, it’s going to be tough to stay alive.”
