Bridging the tech gap in the recreational and outdoor power equipment markets

As we continue to witness major transformations happening across industries, many smart investors are keeping an eye on the smaller, untapped industries. For example, the powersports market had been long overdue for disruption, but many VCs were too focused on bigger fish like automotive and health to notice.

This opened up new opportunities for some disruptors to step up and modernize a niche of their own, benefitting the entire ecosystem in the process. In the most recent episode of Transform It Forward, I had an opportunity to sit down with the co-founder and CEO of one of these companies to hear his perspective on the changing of the guard in the powersports industry, and how he and his team have found success by taking a fresh approach. 

Transform It Forward with Jason Guss: Bridging the tech gap in the recreational and outdoor power equipment markets

Jason Guss is the co-founder and CEO of Octane, a fintech company that’s revolutionizing the buying experience for major recreational and equipment purchases. During our conversation, Jason explained why the loan procurement process was in dire need of a refresh in this industry.

Noticing a gap in the market, Jason and the team at Octane took advantage of the opportunity to breathe new life into lending and the recreational and outdoor power equipment space. By taking notes from other industries that had seen more technology investment in recent years, they focused their efforts on building a stronger tech infrastructure for recreational powersports. 

“Effectively, what’s happened in our space is that there hasn’t been any updates to the experience effectively since its inception. You have the same processes, the same lenders that have been around for decades, and so you don’t have any of the automation and kind of next level experience that you have in some of the more competitive markets. When we started Octane, it was really important for us to find these kinds of overlooked markets that didn’t have this sort of investment where we would be able to utilize technology to bring about a much better experience.”

Taking the TAM by the horns

Jason explained that most venture capitalists tend to chase the most massive TAMs (Total Available Market) they can find. Compared to giants like the auto market, home improvement, mortgages or student loans, the powersports industry is a relatively small fish to fry, which is why it hasn’t necessarily been a favorite among VCs in recent years.

However, instead of viewing this as a challenge, Jason and the team at Octane opted to view it as an advantage. In Jason’s eyes, the underdeveloped and underserved powersports industry served as an opportunity to add real value to the market and set themselves apart from the competition.

“In addition to that, the markets that we focus on are not necessarily well-trafficked or understood by venture capitalists. And so not only is it much smaller, it’s just not always front and center. For a lot of the firms in this space, they might not be powersports users. In fact, when I pitch, oftentimes we don’t even know what the market is, and so instead of seeing that as a huge issue, we actually see it as a massive opportunity. It’s really a place where we could add differentiated value and also really help a market that just doesn’t have the level of tech investment that it deserves and needs.”

A seamless customer experience

When it comes to keeping the end user in mind, Octane is consistently juggling multiple stakeholders including the consumer and dealerships. Although the team may be balancing the interests of multiple parties at any given time, the ultimate goal of creating a fast, seamless and convenient customer experience is essential. 

It’s also important to Octane to ensure they’re offering their customers competitive rates. To accomplish this seamless customer experience, Jason explains that Octane has expanded the business over the years so they can be in on the action both before and after the loan is originated.

“Since the early days, we started expanding the business materially to be there before and after the loan is actually originated. So we have all sorts of tools that we partner with manufacturers, with dealerships, where we can integrate our prequel work, workflow tools that help consumers get the confidence that they need to understand what they could purchase at what rates ahead of getting to the dealership.”

As the business grew, Octane was able to view the entire experience from a 360-degree, birds-eye view, which enabled them to understand the perspective of all parties. Ultimately, Jason explains, the company recognized that by owning the lending process themselves, they had greater control over the customer experience from start to finish.

This strategy was key to Octane’s success because it gave them the leeway they needed to focus on continuously improving the customer experience and meeting the needs of consumers. And as we all know, prioritizing the customer experience is where the magic happens for most enterprises.

Although this process hasn’t been without its challenges for Jason and the team at Octane, he says their unique strategy has ultimately paid dividends for the business. Several factors have contributed to Octane’s success over the years, but just a few that come to mind are out-of-the-box thinking, creativity and smart collaboration.

“By doing the actual lending ourselves, we’re able to control the whole experience. We can really dictate how the loan closing process feels from a consumer and dealership perspective, and then also it enables us to be more creative about the different ways that we could help cover consumers responsibly. We could build our own models, we could use various data sources to help us expand the pool. I’m very proud to say that it’s been very successful.”

Key takeaways:

1. Point-of-sale lending isn’t a new area, but it hasn’t been updated technology-wise for decades. Octane viewed this as a chance to tap into underserved markets and set a transformation in motion. Rather than considering underdeveloped markets to be a massive issue, Octane views them as a golden opportunity to offer a differentiated value proposition. 
2. It’s easy for incumbents to stay focused on the tried-and-true strategies they have employed for years. While most VC firms were focused on the larger markets like automotive and health, smaller markets became ripe for disruption. Fresh investment in the powersports area created opportunities to breathe new life into the industry and bring it into the modern age.
3. Octane’s core values include technology and automation, a responsibility to expand credit access to underserved consumers. Like many successful FinTechs have done in the past, the company seeks to couple the frictionless, speed-and-need experience with competitive credit opportunities, in addition to offering competitive rates so consumers aren’t forced to choose between a great experience and a great rate. This combination ultimately led to significant traction early on for Octane. 
4. Octane’s third secret involves end-to-end purchasing. Tying directly to the value chain outside of lending, the company provides value throughout the consumer purchasing journey, before and after the loan is originated. This third aspect has contributed to the company’s unique value offering in the powersports space.
5. Finally, Octane has been deliberate about its mission of creating a thoughtful, high-value credit product to make the purchasing process more economical. They hope to connect consumers with their passion while ultimately helping dealerships and manufacturers sell more products. By investing in making the entire customer experience more seamless and efficient, Octane is achieving its vision of benefitting all the players within the ecosystem.