How Peter Kalen grew Flexiti to a billion-dollar loan book

The former Sears exec has navigated shifting consumer spending patterns to turn his point-of-sale financing company into a powerhouse.

Peter Kalen isn’t your typical startup founder. After an 18-year career as a finance executive for brands including Canada Trust, President’s Choice Financial, Citibank and Sears, he hung up his corporate suit just a few months shy of his 40th birthday and struck out on his own. He founded retail financing company Flexiti from his kitchen table. A decade later, Flexiti has a loan book that recently passed $1 billion. Its platform provides over 8,000 merchants, including The Brick, Birks and Staples, with point-of-sale consumer financing by instantly approving shoppers for interest-free credit.

Here, Kalen discusses why he wanted to be his own boss, how retail is changing, and why he takes inspiration from one of music’s biggest rule breakers.

What made you ditch the lucrative corporate job to start from the bottom again?

I always had an entrepreneurial spirit and as I got further in my career, I started to feel less like I needed or wanted a boss. During the credit crisis around 2008, a lot of the players offering interest-free financing to retailers packed up and retreated from Canada, creating a market void in a space in which I’d worked my whole career. At the time, I was at Sears. It was in chaos, and I saw the end coming. I started to pull together a few people to do a skunkworks project on the side. I would take investor meetings downtown and then have to rush back to the Sears office for a 4 p.m. meeting. By mid-2013, I concluded that if I devoted myself to this, I could get it off the ground, so I left Sears.

Was it hard to shift from corporate grind to startup hustle?

I’ve heard from other entrepreneurs and investors that executives who make the move from the corporate to the entrepreneurial world often go rushing back. They didn’t realize much of a safety net they were getting from being in a larger organization. But I didn’t feel that. I left Sears on June 30, 2013. I did a 12-hour day at my new office on July 1, and I didn’t skip a beat. It felt very natural, which I’ve heard is quite unusual, especially at that age.

Do you remember your company’s first transaction?

It was a $150 kids’ bike from a Markham bicycle shop in July 2014.

What changes have you seen in consumer spending patterns?

We’ve had a window into all the economic changes that have happened over the last couple of years — the switch to e-commerce, which has largely come back to where it was pre-pandemic; the boom in home improvements, which has stabilized now. When people were flush with stimulus money, they were using less financing, because they’d walk into a store with $2,000 in cash and were just buying that television or replacement for a broken washer or dryer. Now, we are seeing a general trend across all our retailers, where the percentage of their sales that are financed is going up. It’s happening across the board.

How does financing help Canadians when it comes to major purchases, especially considering the current economic climate?

It’s about needs and wants. On the needs side, if your washing machine breaks and you need to buy a new one, being able to defer that payment for a year or break it up into 12, 24 or 36 payments is a big benefit to Canadians. It also helps with the “wants” that make people’s lives better. If you’re a football fan and you decide to upgrade to an 85-inch television, being able to defer that payment for a year or break it up into equal payments really can help enhance people’s lives.

What’s the biggest challenge that you faced as an entrepreneur?

Funding. This business is very capital intensive and that was a big preoccupation of mine. Everyone thought I was crazy to take on the big banks. There was some truth to the warnings; it was difficult. I was spending 60 percent of my time raising money and 40 percent on running the business, which is challenging, because you can’t raise money unless the business is performing. And you can’t run the business unless you have money. There were a lot of near-death experiences that I try to put deep in my memory banks.

How did Flexiti grow so fast since 2013?

We started off with small merchants around Kennedy Road and Highway 401 where there are all these little local appliance and furniture stores. We went one by one trying to sign them up for financing and made quite a bit of headway with 1,000 small merchants within a very short period. When we landed our two first national retailers, Spence Diamonds and Bad Boy Furniture, the 20 locations that we signed up outperformed the other 1,200 locations in the first month. So, we pivoted to focus on more corporate-run stores and grew very, very quickly. When we got to about $50 million in loan book, we acquired TD Financing Services’ Canadian private label credit card portfolio. Fast forward to today and we have 500 employees and believe we’re the largest player in the market by far in Canada.

You’re a board member of the American Beethoven Society. How does his music inspire you?

When I was in high school, I studied piano performance and music theory at the Royal Conservatory of Music of Toronto. I found Beethoven’s music inspiring and comforting, and I felt I could relate to him. My favourite piece is the 9th Symphony. He introduced a choir in the last movement — symphonies aren’t supposed to have choirs. After its performance in Vienna, no composer dared write another symphony for 20 years for fear of it being compared. He was a real rule-breaker.

 
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Photo courtesy of Flexiti