Interview between Molly Willats, Head of Program Development for Financial Health at Fintech Cadence and Myles, Founder and CEO at Chroma, a current fintech in our IFH Lab 2022 Cohort.
Co-founders Myles Shedden, Riley Pickerl, and Yacine Bara launched Chroma to address what they saw as a glaring inequity in our financial system. The credit system favours home owners and leaves renters out in the cold. Renters receive no benefit for a demonstrated ability to pay a sum equivalent to most mortgages every month – even when they may in fact be paying their landlord’s mortgage. Given the importance of strong credit in accessing any number of financial products critical to upward financial mobility, including a mortgage, this seemed like a significant gap.
Chroma hoped to solve this problem, and looked to build a suite of products geared towards helping renters achieve financial security and growth. We sat down with Myles to talk about Chroma’s vision, why they made the difficult decision to shut down operations, and how he stays motivated as an entrepreneur.
Hey Myles, tell us about Chroma.
Chroma was a consumer lender that made renting more affordable, convenient and rewarding by allowing renters to pay their rent on their paydays instead of on the 1st of the month. In doing this, we were also able to report their rental payments as loan repayments, helping them build credit at the same time. Chroma focused on building simple financial products to help accelerate social mobility for renters.
You recently announced that Chroma would be winding down operations, can you talk about why you reached that decision?
Chroma made the difficult decision to wind down operations in September of 2022 and return capital to shareholders due to increasing loan losses and a worrying economic outlook for short term lenders.
You went through something that every startup founder fears, and knowing when to call it is just as important as knowing when to keep pushing. Knowing this, how do you interpret your success and your failures?
I interpret success as getting the right outcomes by doing the right things. I interpret failure as getting the wrong outcomes or doing the wrong things.
And what helps keep you motivated through the major ups and downs?
When something is important enough you do it even though the odds aren’t in your favor. Building a startup is really hard, but there’s no better feeling than when you get to work with incredible people that push you to be better and challenge your thinking in a respectful manner, all with the intention of building a better experience for customers.
Really hard is right! Speaking of working with incredible people (), what is one thing you’ve learned so far or taken away since joining IFH Lab?
The most memorable thing I’ve learned since joining IFH was how to craft a pitch/story with narrative arcs that build on each other. I really enjoyed that in-person session. Secondly, I really enjoyed the session on how to differentiate your company relative to incumbents (we used the example of Cirque to Soleil vs. traditional circuses). And I think as a startup it’s critical to know exactly how you differentiate and for what type of customer.
Knowing that being an entrepreneur can be really hard, what drew you to it and what advice would you give to someone who is thinking about starting their own startup?
I like building things that solve big problems for people. The world needs more entrepreneurs, do it. A startup founder only needs two things to be successful: the ability to get unilaterally obsessed with a single problem, and the ability to get repeatedly kicked in the teeth and keep moving forward (said best by Antonio Garcia Martinez in Chaos Monkeys).
Surround yourself with people who are smarter than you and aren’t afraid to tell you your ideas are bad. Have short & cheap validation cycles. Try to validate as much as possible before you write a single line of code. To emphasize this last point, the work you do before ever writing a line of code is some of the most important.
Just because Chroma ultimately wasn’t able to find product-market fit, the problem you identified, and the inequity faced by renters in our financial system is still pressing. What change would you like to see in your industry?
- It’d like to see more competition in the Canadian banking space.
- I’d like to see better and more innovative credit products for people with no-credit files or thin-credit files.
- I’d like to see better accountability between landlords and renters.
- I’d like to see credit where credit is due (consistent rent payments that amount to $70b a year in Canada alone).
What is the best career advice you’ve received?
- Never underestimate the value and importance of being at the head office.
- People are loyal to other people, not companies.
- It’s extremely rare for a company to become successful after they finally launch that one last feature. If your first feature (your wedge) doesn’t capture customers, you probably need to start again.
- If your rate of learning in your job slows, leave as soon as you can and go somewhere where you’ll learn faster.
- Very much like a pile of snow, a company’s culture melts around the edges first.
- A players hire A players, B players hire C players.
Well, that’s a lot of great advice - you could write a book! Speaking of, can you leave us with some book recommendations?
Startup-wise: Crossing the Chasm by Geoffrey Moore, The Prosperity Paradox by Clayton Christensen, Think Again by Adam Grant, The Secrets of Sand Hill Road by Scott Kupor, Working Backwards by Colin Bryar & Bill Carr.
Personal-wise: The Rise of Theodore Roosevelt by Edmund Morris, Zen and the Art of Motorcycle Maintenance by Robert Pirsig, The Undoing Project by Michael Lewis, The Lives of Artists by Vasari.