Vernon Hill was calling from London, where his book - Fans! Not Customers: How to Create Growth Companies in a No Growth World - hit shelves a few weeks ago. "Do you know how many times I've been told I'm crazy?" asked the founder of the old Commerce Bank, who is now upending the staid industry across the pond with Metro Bank, Britain's first new bank in more than 100 years. "They say it a lot less after I sold Commerce for $8.5 billion, but they still don't get it.
"In 2000, the market capitalization of Apple was $5 billion. Today, it's [$500 billion]. And Dell, HP, IBM, and Microsoft all sat around and watched them do it and told Steve Jobs he was crazy."
On Monday, Hill plans to begin his book's stateside launch with an appearance on Mad Money, the CNBC show hosted by his fellow Philly madman Jim Cramer. When I heard that Hill, a great disrupter, had written a book, I called to find out his Rules of Disruption. First, he offered his definition of the term.
"I'm a disrupter and proud of it," he told me. "Disrupters redesign, redeliver, and reinvent whole industries."
That's what he's done to banking. To recap his sui generis philosophy: Hill is a retailer, not a banker - he once owned Burger King franchises - and he applied retail principles to the cloistered world of banking. He chafed at an article of conventional banking wisdom called the 80/20 rule, which holds that 80 percent of revenue is generated by the (primarily commercial) top 20 percent of the customer base. This provided a rationale for saddling non-revenue-generating retail customers with annoying fees and inattentive service.
Hill knew that fries and sodas were the profitable items at Burger King; the hamburgers by themselves were a break-even proposition. Yet the conventional wisdom in banking would have had him mistreat anyone who ordered just a hamburger. "The truth is, bankers aren't very smart," Hill said.
So he gave us Commerce Bank, with its Sunday hours, 24/7 customer service, treats for dogs (Hill isn't the warmest of men, but he has a soft spot for Sir Duffy, his Yorkshire terrier), and ban on "stupid rules." (Commerce's insurance business was run by George E. Norcross III, now an owner of The Inquirer's parent company.)
Case in point: Hill did away with what bankers refer to as "the float." "When a bank tells you it will take three business days for a check to clear, that's a gimmick to make a few bucks," he said. "Every check in America can clear in a day."
Now Brits are flocking to Metro Bank's stores - don't call them "branches" - for similar reasons. They're always open. Staffers are empowered to say yes to customers, but they need two supervisors' permission to say no. And, as at Commerce, they make a big deal about welcoming customers' dogs. "Our customers say to themselves, 'If that bank loves my dog, they must love me,' " Hill said.
Back to a few of his Rules of Disruption:
Ignore market research. As Hill and Jobs have noted, Henry Ford is often (and probably apocryphally) quoted as saying: "If I'd asked customers what they wanted, they would have told me, 'A faster horse.' " People don't know what they want until they see it. "The best way to predict the future is to invent it," Hill said.
Spend, spend, spend. Why spend millions on a state-of-the-art call center that customers will never see? Because if you invest in your customer-service reps, they'll serve your customers better.
Most banks have the mind-set of a utility, and when was the last time you loved a utility? Hill is in the business of building brand loyalty. "You can cost-cut your way to oblivion or invest your way to prosperity," he said. He reserves his greatest enmity for "bean counters" who manage from the expense side.
At Metro, as at Commerce, anyone can walk in off the street and use the bank's coin-counting machines free. Periodically, the bean counters want to charge a fee for the service or limit it to customers. "What's the return on this investment?" they ask.
"There's no return," Hill says, "other than making friends." And, he argues, such amenities are related to this staggering fact: While the average bank gets 20 new checking or saving accounts a month, Commerce gets 300; Metro, 700. "There is never a mathematical argument for improving your brand and customer experience," Hill said. "Do it anyway."
There's one keeper of the brand. Great organizations tend to have strong lieutenants who focus on their areas of expertise and report to a visionary who is responsible for the whole. That's why it will be interesting to watch Apple evolve post-Jobs. "The track record on number-twos replacing strong number-ones is not very good," Hill said.
Hill's job, as he sees it, is to evangelize for the brand. That's why Commerce Bank pens once flooded our market: Everything was an opportunity to advertise. He once saw an employee using a pen with the logo of a competing bank; said employee was soon "disappeared" from the company, like a dissident in a banana republic.
Jobs, Walmart's Sam Walton, and Starbucks' Howard Schultz "were all nutcases about their brands," says Hill. "Ask that guy in Philly, the Urban Outfitters guy [Richard Hayne]. I bet he's crazy, too."
We need more crazy people like Vernon Hill - dreamers who are motivated by the doubts of others. "Great entrepreneurs are driven by being told we're nuts," Hill said, laughing. "We all have the persistence to listen to no one else."