CU Water Cooler

A Trio from True

Doug TrueComment

Tim McAlpine, “Doug, why don’t you write a blog post for the CU Water Cooler on the pros and cons of creating and feeding a CUSO. You were instrumental in creating a very successful CUSO and then went through the journey of selling your main product and making a strategic decision to take care of your own CU first. I'm sure you've got some great lessons.” 

So, when Tim asks I try to respond. I have been kicking around the idea of reentering the blogosphere as it has been several years since I wrote the True Story blog and I have started to miss it. I haven’t been convinced to reenter though because I want to be sure if I add my voice to the noisy credit union blogging ecosystem that it is worthy of people’s attention. With this in mind, I was thinking of keeping things short and to the point on every post written and come up with a Trio from True – three pros and cons from a real life situation. Tim’s recommended topic seems to fit so here it is:

Twitter description of real life situation – FORUM Solutions: Created a consumer loan orig. solution in ’98, formed CUSO in ’00, reached peak of 30 clients, made $, couldn’t scale, sold solution in ’08. 

Pros of creating and feeding a CUSO:

  1. The CUSO can serve as a cradle for innovation and collaboration. At FORUM Solutions we were able to use the CUSO as an innovation lab and take ideas from credit unions and bring them to market. This was especially true in the area of our flagship product, TAPS® Lending – a consumer loan origination solution. 
  2. The venture can be lucrative in both dollars and fun. Through the sale of TAPS® Lending, our consulting services and internet banking solution we were able to consistently drive a non-traditional revenue stream to the credit union. We were also able to have quite a bit of fun in doing it as the work was stimulating and we got to meet a lot of interesting people from credit unions across North America.
  3. The stimulating work and fun aspect mentioned in the last bullet point led to the third one – able to attract and retain top talent. We would not have been able to attract the talent we did with just traditional IT type of work. The entrepreneurial/start-up vibe helped us attract and retain talent and much of that talent is still with us today even though we are now almost entirely focused inward on FORUM Credit Union projects at the present time. We still create new things and write code.

Cons of creating and feeding a CUSO:

  1. Serving two masters stresses you out. We were serving two in the form of net income and the credit union’s technology needs. FORUM Solutions was not only a CUSO offering software and consulting services to credit unions, but we were also the credit union’s IT department. At times the credit union would ask what additional net income can you bring to the credit union and oh, how are the credit union’s technology products coming along. This created a bit of a tug-o-war on resources. This can turn you from Gumby to Mr. Bill in a hurry.
  2. Scaling is very difficult. Our good friend at Cornerstone Advisors, Steve Williams, often asked me how we were going to scale and his question was one we struggled with in reality. We got up to around 30 credit unions with TAPS® Lending, but knew it was going to take more resource commitment to go from 30 to 100. Plus, the timing of this resource need was right on the cusp of the economic meltdown which to a small degree we saw coming at the credit union. This was the primary reason we sold the solution to a company that had proven experience and infrastructure to scale. 
  3. Knowing when to let go can be difficult. You become attached to stuff you invent, build and create. Plus, you find enjoyment from seeing it grow and helping others. Knowing when to let go was at times obvious and at times denial tried to kick in. Look to your friends outside of the CUSO to help you see reality.