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One of the things that I learned, at least from the sidelines during the 2007, 2008 credit guaranteed loans for people with bad credit crisis was that a lot of the institutional capital group thinks. And a lot of these guys are tied into two or three or four big banks that provide them a lot of call it warehouse facility lines of credit. And the reason is, is because that crowd is a super elastic supplier. And that attracted a certain type of investor who was really yield hungry. And they were okay with private loan lenders the fact that we were a startup. And then as the business evolved and as we got more traction, we saw those 12s come down to 11s and 10s and nines. So we had to pull some levers from a pricing perspective and do a lot more on a communication perspective. And we who offers unsecured personal loans at a decent rate went out and took videos of all of our properties and we did things, but we had this group of 1,000 plus retail investors. And if we price things right and told the right story, we eventually over a couple months able to clear off that warehouse facility. So it proved true in a lot of ways of this resiliency and this elasticity of supply that you can have by having a very broad base of capital providers. It was a costume manufacturing facility that had been owned in the family in an up and coming neighborhood. And he was buying it for a sweet deal and was getting it through permitting. But he needed a lender that could lean into that business plan.

None of the institutions are going to buy that loan, but we priced it.

And our retail guys filled it up, I think in 48 hours. How have you found the investors and how are you ensuring you consistently have deal flow? So our air game is traditional marketing, we spend not an insignificant amount of money on Google AdWords, on Facebook, finding out the different ways to communicate awareness about who we are, what we do and how we can help people. They get together, they compare notes and they collaborate around. And they try to help each other grow their businesses. And then also finding who are the attorneys that primarily are focused on real estate investors or real estate agents or title companies, and then look for ways to add value to those groups. And the understanding that, if you add enough value to people and show them how you can help their world eventually get the opportunity to understand who their Rolodex is. So, not a lot on a million dollar plus marketing budget.

It was like, we have this fantastic asset that people can invest in, and which just make it really easy for them. Most people have bought a house, lived in it and seeing that house appreciate, and those people can appreciate others. And do I have a perspective on Charlotte or Columbus or Indianapolis or whatever, that I have enough conviction? So a lot of our investor growth on the retail side has been all organic. We process interest payments the 15th of every month, so you get paid current on these investments. And we came out of that raise with a very specific plan of, one, getting to something that we called meaningful scale. So for us, that was more than 100 million dollars of loan originations in a 12 month period and also do so with positive unit economics or profitability.

So what was important to me and maybe this is my finance and my insurance background was not to build a really big money loser, it was to build a really big moneymaker.

So that was the goal coming out of the raise in 2016. We accomplished that in 2018, being both profitable and well north of 100 million dollars of originations.

So we had a really, I think, compelling story to take out to the venture capital private equity world. And most of those use of proceeds was into three buckets. So how do we invest in new products on the capital market side to, one, create new ways for passive investors to gain exposure to this asset class, and two, can we lower our cost of capital by getting bank relationships and growing out the institutional so again, we can be more competitive with signing up new borrowers? So a big part of our thesis is that we can make this entire loan origination process work better with technology. And by doing so, we can create a more profitable enterprise which can then be reinvested in either additional products and services for our customers or a more competitive product, or probably more likely some combination of the two. I moved down from Rhode Island to start the company, just wanting to get around environment that I thought would be conducive to building out a technology and financial company. And they put you through the paces of what it means to start a company and you get to taste it if you will, does bankplus southaven ms offer fdic small dollar loans before you do it. And i need a small loan the biggest thing that I think people that get it right do during this aspirational stage is they i need a small loan try to kill their deal or they try to kill their business.

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But what you really need to be doing is looking for all the reasons why this business is probably going to fail, because just statistically speaking, most businesses do.

The people that are most likely to buy from you early are probably i need a small loan the ones that have the biggest problem and are most likely to pay you for it and you should find a way to extract that value out as quickly as you possibly can. And the second one, is actually run a financial model. And this is one that almost no one does, but you could have a great idea that a lot of people are willing to pay you for that can never make money. And the other big one is understanding the actual cashflow on a pro forma basis of the company. All businesses go out of business because they run out of money. And I loved your point about this is the part, or this is the timeframe where you should be actively trying to kill your business. Matt Rodak:Yeah, so I think the next stage which is a little bit less sunshine and rainbows from the aspirational stage is the stage that I call war mode. So if you run out of resources, you lose, like we talked about before. How are you building this excitement and this vision and enrolling people to effectively come work for you, either for free or likely at loans for vacation rental property a discount to their market value? And what are you willing to exchange for getting those types of people along for the ride with you? You got to have an understanding of like, where are we going?

So for us, our strategy and still is, was, we are focused on one to four family houses. But you also have to realize, and this is one of, I think the advantages of being an early stage business is you have to be willing to change course as the battlefield evolves. I did all of our journal and our GLs on Sunday, that sucked.

I hated that, but someone had to do it in order to close the books out on a monthly basis. So, got to tell you, Matt, number commercial loans for vacation rental one, they aspirational stage sounds pretty darn fun. Please tell me three, four, and five, have some more of a happy medium baked in there somewhere. And this is the part of the business that setting things like your culture is super important. Now it becomes super important as what do we want to be when we grow up?

So I think coming out of that war mode and the war mode will define your culture a little bit, I think, how you act and how you react to things during that period.

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But the peace time is really that lending tree bad credit opportunity of, think of in the US right after we fought for our freedom.

So for us, we came up with this acronym called HUSTLE, as we started to come out of our first war mode, say first war mode.

And HUSTLE is an acronym for hard work, unity, success, transparency learn every day and empathy. We may not be the smartest or fastest or most well-capitalized company, but dammit, we can work hard. So not only writing it on the wall, but how do you instill those things in your every day interactions with one another and reinforce those things are, I think super important i need a small loan at peace mode. I love how you said defining what your success looks like through various means, including KPIs and knowing what your organization really looks like. And now this is the point that in peace mode where we actually focus on defining what this business looks like and who we want to be.

I love the whole, what do we want to be when we grow up?

So I think stage four and stage five, they become somewhat of a fork in the road for where the business is going to go. And a sign of this is you start to feel discontent within your people, maybe it gets hard to attract good talent. So the alternative to complacency, I think is this idea of what I call world domination. What do we want to do on a quarterly basis or an annual basis or even a weekly basis to create this culture? And it goes back to culture, and now this is the next evolution of culture. How do we build this culture within our organization so that good i need a small loan is never good enough? The thing that I love about companies is, it creates a framework for people to achieve that personal improvement. The second one, I think that I get excited about is particularly, I think founders should be getting a lot of excited about is innovation. How do you come up with either new products, or new businesses, or new services, that now put you back into that aspirational stage of the company but not totally? Carol Scott:J, I want to take this for a second because I thinkā€¦ I love all of these analogies and I especially love how you wrapped it up with world domination as the alternative to complacency mode and how critically important that is, especially with retaining your employees.