Detroit-based startup remakes the pawnshop experience
PawnGuru, a Detroit-based financial technology startup, is banking on its goal to transform the pawn industry—with University students. Jordan Birnholtz, a graduate student in the School of Information at the University of Michigan, was hired about six months after the startup’s founding. He was taking a business class when one of the PawnGuru investors heard his pitch for another startup and offered him the opportunity to work with them. Other than Birnholtz, PawnGuru has two other University-affiliated employees who make up about half of the company.
“We have meaningful traction in Detroit… our biggest markets are Chicago, Houston and Atlanta, but we are growing all over the country,” Birnholtz said.
Birnholtz was attracted to PawnGuru because he shared co-founder David Steibel’s passion for using technology to serve the "underbanked," also known as individuals financially underserved by traditional banking systems. Steibel was inspired to start the company after watching the documentary “Spent: Looking for Change” and seeing the problems that the underbanked face. PawnGuru is a third-party platform that aims to allow customers and pawnshops to connect in the most efficient way possible.
“I have always had an interest in the way technology can positively impact low socio-economic status people," Birnholtz said. "I did an internship when I was an undergrad with a microfinance non-profit; I had gone to work for a couple other startups in between and I think that’s what attracted me to it.”
Though it has been little more than a year, Birnholtz said the company has grown from its Michigan roots.
According to the company's blog, more than 30 million Americans use pawn shops on a routine basis. Birnholtz said partner Stiebel saw the $15 billion industry and knew there must a way to improve it.
Binholtz noted that Stiebel and co-founder Jonathan Polter had roots in Michigan and wanted to stay near Detroit, for the grove's base, however, because they believe the city is up-and-coming, an ideal location for the company to grow. Additionally, its proximity to the University is an asset to the company.
Even though Detroit is not the company’s largest marketplace, the company said they believe they can help small business grow there. Their January blog post features four Detroit pawn shops, and discusses the challenges faced by Detroit consumers such as how spread out the city is, which the founders have their buisness solves.
“With a local business whether it is a pawn shop or antique shop, whether you’re buying or selling to or from, you can get a cash offer or the item itself, and do the whole transaction in about an hour, so there is a speed advantage there,” Birnholtz said.
For Birnholtz, PawnGuru was not designed to replace or replicate the peer-to-peer marketplaces such as Craigslist or the “Maize Market” Facebook page like many startups are currently aiming to do. He said they work with established businesses and experienced pawnbrokers, who Birnholtz said he believes are much more reliable.
“When you’re dealing with a reputable business, whether that is a pawn shop or an electronic shop or whatever kind of used good shop they’re there, and they have the money or the item and there is no ambiguity,” he said. "There’s room in the world for lots of different ways to buy and sell items, but that’s our angle."
While he spends a lot of time on the startup, Birnholtz said he is still a student who values his education, and recently sat on a panel to discourage students from dropping out of college to work for a startup. Birnholtz said he felt that the University does a good job at preparing students to work in startups and not just traditional companies through their extra-curricular programs and clubs such as optiMize.
“optiMize is one of the most effective organizations in teaching students the principles of running a startup, because there is a difference between those and traditional business principles, which don’t always fit that well into a classroom setting,” he said. “I think that’s one of the main reasons why I get along with my boss so well — we’re both really attuned to running the startup in a lean way," he said.
The business is growing rapidly, and there are a few developments that Birnholtz said he was excited about. inlcuding stores beyond that not just pawn shops are starting to join the site.
“Coin shops, antique shops, lots of other brick-and-mortar used goods stores are asking to join,” Birnholtz said. "So while we’re still emphasizing the service that we’re providing for people who use pawn shops, we also know that pawn shops don’t just offer loans — they also buy and sell things, so we’re serving the buy and sell function in addition to the pawn shop function."