A new pawnshop opened today. That’s not the sort of thing Fast Company would typically cover. Only, the pawnshop opened on the Internet. And it has the backing ($1.5 million worth) of Lightbank, the Chicago-based fund that brought us a little thing called Groupon. Yep, Pawngo.com, a digital pawnshop, emerges from beta today.
“I was in the brick-and-mortar pawn industry for a little over 25 years,” Todd Hills (pictured here), CEO of Pawngo, tells Fast Company. He built up a little Rocky Mountain pawnshop empire, running stores all over Colorado and Utah, eventually selling them to EZCORP, the pawnshop mega-company. A few years ago, Hills got to talking with his partner Jim McHose about their next step. “I walked into Jim’s office one day and said, you know what, Jim? We’re gonna launch the model on the Internet.”
Their first offering, though, the not-so-imaginatively-named Internet Pawn, was only a partial success. (We’ve heard, however, that failure can be a good thing.) It’s true, the site issued about 1,000 loans after launching in 2009. And people who used the site trusted it and recommended it to friends and family. But its user interface left something to be desired. Lightbank’s Kevin Leland spotted this. “Internet Pawn was trying to ask the girl to sleep with them on the first date,” Leland tells Fast Company. By this he means that it asked for all sorts of personal information far too soon in the relationship with a circumspect site visitor. “Jim and I are not Internet marketing guys at all,” admits Hills now.
The redesigned Pawngo takes things slow. It holds the user’s hand through the registration process, explaining why they need to ask for certain kinds of information.
Here’s how the site works. Let’s say you’re in a bind, and want to come up with some cash, quick–maybe even within 24 hours. And let’s say you have a diamond ring that’s worth, at this point, $5,000. You log on, tell Pawngo about your item, and Pawngo makes its own remote assessment. They email you an offer, and then you FedEx it to them (“FREE!” says the site; Pawngo also insures the assets in transit). Pawngo then wires you the money.
In the $5,000 ring scenario I mentioned, Hills says you could expect to see between $2,000-$4,000, “depending on the situation.” Here, he claims, is one respect in which the digital pawnshop will greatly differ from the seedy image Hollywood has given us (though sometimes deserved) of the brick-and-mortar versions. Hills says his employees are trained to listen to the story of the circumstances that led to the customer’s decision to pawn the item. If the circumstances are dire–he mentioned that one of his first Pawngo customers was a woman who needed to make a trip to Houston for cancer treatment–and if the attachment to the heirloom in question is great, you may receive a higher loan. “That’s the beauty of the way we operate,” says Hills. “We can develop relationships with customers, find some time on the phone. In a brick-and-mortar store, you’re talking to an employee who makes $8 to $10 an hour who doesn’t care about your situation.”
On that $5,000 ring, you’d pay something on the order of $540 in interest over a three-month period; you then have the option to renew for another three months. At the end of six months, if you haven’t rustled up the principal to pay back your lender, Pawngo takes full possession of the asset and has the right to liquidate it. (In the future, it has plans to sell items on shoppawngo.com; log on if you’re okay with scoring discount jewelry subsidized by another person’s heartache.) Hills emphasizes that Pawngo would like 100% of the pawned objects to be redeemed by their original owners; about 90% are.
Pawngo will allow you pawn items worth up to $100,000–a number unthinkable in the seedy pawnshop of the stereotype. A Newsweek article on Hills back in the fall, before Pawngo’s launch, noted that Hills was already master of the “pawn shop for the affluent.” As he told the Newsweek reporter, pawn shops had come a long way from the Plexiglas-and-metal-bars shops he’d started working in at 22, when his family lost their farm. “There is a certain type of affluent customer that will not go into a pawn shop. And they don’t have a $50 or $100 problem. Maybe they have a $100,000 problem.”
Those are numbers, at any rate, that garnered Lightbank’s attention. “There’s nothing shady about people using assets and things they already own to get money,” says Leland. Certainly that’s true now that the pawnshops have moved out of the back alleys of the inner city and into a deluxe new address–one beginning with the letters “www.”
“We’re confident that we’ll be able to change people’s perception,” says Leland.
Which means, sadly, classic scenes like this may soon be a thing of the past: