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The journey of entrepreneurs and business owners covers a wide spectrum; an up and down roller coaster with significant highs and lows. In today’s episode, Brock Blake tells his own journey, talks about the hardest part of it and how he climbed out of that hole.
Through the process, he discusses securing capital and the difference between VCs, angel investors and business loans. But this podcast is all not so serious. The first part, we joke around about 12 dumb business ideas that have made $millions.
Highlights from today’s podcast:
- Million dollar dumb ideas
- Have you done the Flowbee?
- The highs and lows of being an entrepreneur
- Entrepreneurs behind the scenes
- Persistence is half the battle
- CEO’s paint the vision for any company
- Sifting through employee feedback
- How Lendio got started
- Angel investors vs. venture capitalists vs. biz loans
- The pros and cons of angel investors and vc’s
- Due diligence and playing the numbers
- Raising money can be a pain
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Go here to download on iTunes. Click to download the mp3
If you can’t listen, here’s the text:
Cool Voice Guy: Fueling your business success, this is the entrepreneur addiction podcast, breaking the small business loan news you need if you obsess about your company. Heard exclusively on Lendio.com. And now here are our your hosts: Brock Blake, Dan Bischoff and Patrick Wiscombe.
Patrick: It’s the entrepreneur addiction podcast episode number six. Thank you as always for tuning us in and taking us along wherever and however you’re accessing the podcast, whether it be on Lendio.com or on PatrickWiscombe.com. Joining me for the podcast this week in studio is the CEO of Lendio.com. Brock Blake is here. How are you?
Brock: Doing great. It’s been a few weeks. I’m excited to be back.
Patrick: Yeah, we had a terrific interview with Joe Abraham last week.
Brock: Yeah, he’s a stud.
Patrick: He is an entrepreneur stud.
Brock: He is.
Patrick: I really enjoyed talking to him. In fact we brought him in via Skype, and we were looking at his picture. We don’t have a camera here, so he couldn’t see us. But, man, he just had that big old smile on his face. He was a cool guy. Director of communications Dan Bischoff is here in studio, in the palatial studio that is Lendio.com. How are you?
Dan: Doing great. Traffic was good again, two weeks in a row.
Patrick: I know. I must’ve been just ahead of you because I got stopped at 106 South.
Brock: I must’ve been just behind you because I got stopped as well.
Dan: Traffic makes for a good podcast by the way.
Patrick: It does. Nothing more riviting than talking about things that people can’t relate to. (laughter)
Dan: Before Lendio, Brock started funding universe, which helped business owner find VC money or angels investors. So, Brock, of all the angel investors you know…
Brock: Uh, oh, here it comes.
Dan: What would be the reaction if I came to them and said, “Hey, I have a great idea. I’m going to put a rock in a box and sell it as a pet rock for four bucks?” (laughter) What would the reaction be?
Brock: I don’t think you’d get too many takers. That’s for sure.
Dan: No? (Laughter) You know, everybody know about the Pet Rock probably, right? From the 1970’s, 1975’s.
Patrick: Yeah, my sister, Marielle, had one.
Dan: Oh, yeah. My siblings had some, too. They sold them for four dollars, right? Four bucks for a rock in a box. And the original one wasn’t even painted or anything. It was just in a box with some straw or some hay or something. The box had some holes in it, like it could breathe, you know. But for the first six months, the guy sold more than a million of these rocks.
Patrick: At for bucks a piece! (laughter)
Brock: So, this is from that article: The Dumbest Business Ideas of All Time that Made Millions. And number one was the Pet Rock. Number two is the Flowbee. Although, I don’t know.
Patrick: I’ve always wanted to test the Flowbee.
Brock: The Flowbee is a pretty impressive innovation.
Dan: Have you ever done the Flowbee?
Brock: I actually haven’t done it, but I’ve seen it done.
Dan: I’ve done it. It kind of makes the head look like a tennis ball. All even, and round, and fuzzy.
Patrick: The closest thing I had was a comb with razors in it. (Laughter)
Brock: I think the most impressive thing about the Flowbee is that you don’t have to clean it up.
Dan: Yeah, I want one right now, actually.
Dan: Patrick needs one.
Patrick: I need a haircut right now.
Dan: There’s also the Mood Ring, which is on there. The ring that changes colors if you’re angry or something.
Patrick: I always thought that that was kind of cool.
Brock: Now, it says the Clapper, but I don’t know if I’d consider that as one of the dumbest business ideas.
Patrick: Hold on, let me turn the lights on in the studio. (clap, clap)
Brock: I think that one was brilliant. But the million dollar home page. I don’t know if you guys remember that?
Dan: Yeah, I remember that.
Patrick: That’s right.
Brock: Pretty interesting phenomena.
Patrick: How much was it? I think it was…
Brock: There’s one million pixels at a dollar per pixel, and it just got so much press, and you know, everyone was like…
Dan: It’s probably still up, so you could look at it.
Brock: It probably is.
Dan: I think it’s still up. It’s got logos everywhere.
Patrick: And one of my favorites. I was in Walmart last night, in my neighborhood, and I saw the Snuggie. Isn’t that call a robe backwards? (laughter) A robe with sleeves.
Dan: My wife bought our dog a Snuggie, too.
Dan: Which is embarrassing for the dog.
Patrick: Wow! Really?
Dan: She got a Snuggie, she wanted a Snuggie, and she got the dog a Snuggie.
Patrick: Would you publicly go into Walmart and buy a Snuggie. (laughter)
Brock: Ah… I don’t know how I want to answer that question. (More laughter) No! I wouldn’t it.
Dan: There’s the Fake Foot. I don’t know about the Fake Foot. Have you seen the Fake Foot?
Patrick: I do remember it, but just vaguely.
Dan: And Antenna Balls. You still see those everywhere, right?
Patrick: Yeah, once in a while. You know, one thing that’s not on here was the Baby On Board signs. You know, everything that was ‘on board’ there for a while.
Brock: Oh, yeah.
Patrick: You know, Garfield On Board. You know, Dead Person On Board. (Laughter)
Dan: Now, the Whoopee Cushion is on here, but that thing is brilliant. It still is. (laughter)
Patrick: I have had more fun with Whoopee Cushions in my lifetime than I’d ever care to admit. In fact, I might just edit that part of the podcast out. (laughter)
Dan: No, I like that. I think you should keep that in there. (laughter) There’s another one on here. Have you seen the book “Everything Men Know About Women”?
Dan: It sold fifty million copies, or something, right off the bat.
Brock: It’s like two pages?
Dan: No, it’s this big book. (laughter) And it’s called Everything Men Know About Women. It’s this big book, and the front has, you know, by this doctor, has these endorsements by these psychologists and things like that. And you open it up, and it’s just a couple hundred pages of just blank, white pages. (laughter)
Brock: I was going to say. It had to be something like that because we don’t know that much about women.
Patrick: After all these years, we don’t know, we still don’t know a whole lot.
Dan: We were talking before the podcast that sometimes we make business a little more complicated than it should be. And some of these ideas are really simple. And we wish we had those ideas, you know?
Patrick: Do we make business too complicated? I guess in the finance world, you really do have to dot your i’s and cross your t’s to make sure that whoever is giving you the money is going to get it back. But do we make business too difficult to transact?
Brock: Entrepreneurs in many cases create their own hurdles, and obviously unintentionally. But a lot of times by the decisions that we make or the people that we hire. You know, sometimes we just create our own problems, and it makes business more difficult than it should be. But, you know, I guess that’s the part about entrepreneurship that makes it fun, right? I mean, you’re just doing everything: you’re eating, sleeping, breathing, drinking entrepreneurship. Trying to do everything you possibly can to be successful, and along the way you’re going to make mistakes, and that’s just part of it. And I think the best entrepreneurs can enjoy the highest of highs and the lowest of lows, and just enjoy it as a journey.
Patrick: What is your highest high?
Brock: Well, it was kind of what we were just talking about. We’ve had a few situations where it has been our highest of highs. When we land a big contract with a national lender, that’s pretty exciting. When we were able to close our venture capital round, which I think we’re going to talk about a little bit today, that was pretty exciting. Being recognized with some awards. You know, the first time we were on the Inc. 500, that was one of our highest of highs.
Patrick: And then to follow it up this year.
Brock: And then to follow it up this year is also another huge win for us. So, those situations… you know, actually probably the highest of highs that I have had personally, this is personal gratification, is when we have a company party, and we have all of our employees and their families, you know, spouses and children show up, and then I just remember one time I sat back and I was at this party, and I realized our company was providing a living for that many families and people, right. And to know we started it with nothing basically, out of BYU, just a student entrepreneur trying to make something work, that was pretty gratifying, personally. So, those are some of the fun parts about building a company.
Patrick: What about the lowest lows, like when you’re just like, “Why in the world am I doing this?” I’m assuming you’ve had those moments?
Brock: Oh, yeah. We’ve had plenty of those moments. There’s been situations where, you know, I think early on we’ve told some stories over and over again about, you know, there was a time where we were having a, you know, it became clear to me that we weren’t going to be able to make payroll. And I had to go and talk to the employees and say, “Hey, we’re not going to be able to make payroll.” And I let them know, and this was right before Christmas…
Patrick: Oh dear. That’s really bad timing.
Brock: That was one of the lowest of lows. The part about, you know, when I realized we weren’t going to be able to make payroll, that was very, very difficult for me personally. And then once we, you know, I talked to all of our team members, and I said, “Look, this is the reality of the situation, and here’s the plan to be able to get out of the situation we’re in. It’s a three month plan. Go home, talk to your spouses over the weekend.” And I asked them to basically go without pay for three months. And at that situation, I said, “If you come back Monday, I’m going to assume that you’re in. And if you don’t come back Monday, I’m going to assume that you’re out. Right. And I’ll understand if you’re out because I’m asking you to work for nothing.” Right. It wasn’t actually nothing, but work for stock but not pay. And everyone came back on Monday, and we went through this three month plan. It was kind of the best three months and the best thing that probably happened to our company at the time.
Patrick: In terms of the bonding experience there. Everyone was like, “Man, we’ve got to get serious.”
Brock: Yeah, we pulled together. Everyone focused on what we were trying to accomplish, focusing on sales. And to get through that was probably one of my highest of highs. To set on the other end of the hurdle. But we’ve had other situations like that. You know, we’ve had situations where, you know, you feel like you’ve had previous employees be like, you know, disloyal to you. Or you’ve had difficult situations with employees. Or difficult situations that I’ve created myself, from bad decisions that I’ve made. So, those are some of the lowest of lows that you try to forget about a little bit… but thanks for bringing that up.
Patrick: Yeah, thank you. (laughter) And I guess we’ll close out the podcast. (More laughter)
Brock: No, it’s just the ride of entrepreneurship.
Patrick: Now that we’re thoroughly depressed, and have taken the podcast in a low direction, let’s go back to the high portion.
Dan: From where the high portion came after the challenge, too. I mean, the challenge was, it caused, and I wasn’t here at that point, but it cause Brock to change the business model a bit, or quite a bit.
Dan: And then there started to be big gains made. And it probably feels a lot sweeter to have that success when you’ve had that big low, right?
Brock: You see, half the battle of entrepreneurship is just persistence. Like, you know, usually your original idea to get something started is not the idea that’s the most successful. And it’s those who can say, “Okay, I’m going to attempt something. I’m going to get customer feedback. And I’m going to take that, and I’m going to tweak my model and adjust.” And as you continue to pivot, if you can just stay in it long enough, usually, I mean, not all the time, but a lot of times you can say, “Wow, okay, I’ve kind of started to figure it out.” And so, being, I mean this whole podcast is about entrepreneurship, and I think half the battle is just saying, “There are going to be highest with highs, but there are the lowest of lows as well.” And you just have to be able to get through that somehow.
Patrick: You mentioned something: for entrepreneurs that are going through this, is there a support network that you went to, or maybe a mentor that you had that you just said, “Man, this is what I’m dealing with. How do I get through this?” When you were going through that tough spot?
Brock: Yeah, I think there’s three things, and this is going to be very specific to me: but the first I would mention is my spouse. You know, my wife is incredibly patient. She’s very frugal with our finances. There were a lot of times when, you know, early one, we’re not taking home paychecks, and she was very supportive and encouraging.
Patrick: Did that take a toll on her, as we’re talking about her?
Brock: It does, yeah. It definitely does. It takes a huge toll. I mean, it has an impact because there’s just a lot of uncertainty. Right? And, you know, the entrepreneur… it’s funny. I tell this story that the best way to really know what’s happening in the life of an entrepreneur is to ask their spouse. (laughter) I’ll do a quick side story, okay? So, this became a reality one day one I was at an awards dinner, and the awards dinner was for the entrepreneur and their spouse. And so, we were sitting at this table, and I was sitting next to anther entrepreneur. And our two spouses were at the table as well, interacting. Right? And at the exact same moment in time, you’ve got these two very distinct conversations happening. You’ve got to entrepreneur talking, saying, “Hey, how’s business?” And an entrepreneur is eternally optimistic, so all they talk about is, “Business is great! You know, I’ve got this deal that I’m going to land. I’ve got this exciting thing happening here. I’ve got this breakthrough. I’ve got all these exciting things.” And at the exact same moment in time, our two spouses are saying, “How’s life for you?” “Well… um….” (Laughter) “He says we’re going to get a paycheck this month.” (More laughter) “I hope that we do. You know, we’ve had to let go of two employees in the last month.” I mean, and they’re just kind of telling the reality of what’s happening. And the entrepreneur isn’t sugar coating it; he or she is seeing what they see as an entrepreneur, and that is, all the positive things and every reason why this is going to be a success. And so, that support network of a great spouse, who is kind of suffering kind of the negative consequences… oh, and the other aspect to this, sorry, this is an area that I’m pretty passionate about: The spouse, the other challenge for the spouse is that they are not in control of what’s happening. Right?
Patrick: You know, I’ve had this same conversation with my wife, with regards to the podcast business, you know, and trying to get this whole thing going. And she was like, “Is this thing ever going to go?” (laughter)
Brock: Yeah, and you just believe it is. But they don’t have control. And so, they’re really being, kind of, supportive because they believe in you, and they believe that you’re going to be successful. And it’s kind of this blind faith. Right? And hopefully it works out. “And I’m just going to support you.” You know, so it’s challenging for a spouse.
Dan: I might even say too that that’s a similar strength of a good CEO is probably to communicate that same vision and optimism. I mean, when you had that discussion with your employees that you couldn’t pay payroll, did they all come back that Monday?
Brock: Oh, yeah.
Patrick: So, they all did?
Brock: Every employee.
Patrick: That’s impressive.
Dan: They all came back, and so obviously every employee caught the same vision, right? And some CEO’s might not be able to do that similar, kind of, vision and show them what’s going on to give the employees a (I’ve never been a CEO), but as an employee it’s good to know. Brock does a good job of communicating what’s happening and where it’s going, where we’re trying to take things, you know.
Patrick: Is it a lost art for CEO’s to communicate with their companies regardless of size?
Brock: You know, I don’t know. And I want to make sure it doesn’t come across as I’m an expert because I certainly have a lot of area to improve. We try and do the best job we can, have regular meeting with all of our employees. And I try to send very regular emails as, kind of, “Here’s what’s going on.” And the one thing that I’ve kind of learn in the last few months, this is what I’m kind of going through in real time is, employees and your team wants to be in on ‘the know’ because they’re talented and they can contribute to the success of the company. And so, we’re going through a pretty significant transition with our business right now, and you know, this was something I wanted to be able to say, “Okay, this is where we want to go. This is a pivot we want to make in our business.” And set the north star of “This is what we’re trying to accomplish.” But the path between where we’re at now and where we want to end up is still undetermined, and what we did was meet with every single department and say, “Okay, this is what we’re trying to accomplish. What recommendations do you have? What ideas do you have? What feedback do you have? What concerns do you have? Let’s get them all out on the table.” And so, we’ve got everyone’s feedback to be able to say, “Okay, this is what we’re trying to accomplish. Now let’s go and implement it.”
Patrick: But do you find that to be a problem to get everyone’s feedback? To sift through all of it and go, “How cow, man! We’ve just got to go regardless of the feedback.” Do you have to do that sometimes?
Brock: Yeah, the two challenges with that are, one, every piece of feedback is going to be very specific to that person’s vantage point. Right? And so, it doesn’t always consider everyone else’s vantage point. And so, you’ve got to take that and say, “Okay, how does that apply to the bigger picture?” The second thing, which I think is a challenge, is: right now, as an employee, you are really growing on the daily execution, what’s happening today. And sometimes what happens when you say, “We’re trying to make this happen in thirty days, or three months, or whatever it might be, is then everyone kind of gets distracted by the shiny new object. And you kind of lose focus on what’s happening today. And so, that has been a challenge. You know, especially with sales, is being able to say, “Okay, we are getting there, and that’s going to be awesome. But we’re not there yet, so let’s come back to where we’re at today and make sure we’re not losing our way between now and then.” So, those are the two challenges that I have kind of experienced.
Patrick: But it sounds like you’re navigating them pretty well. The one thing that I’m hearing from you…
Brock: Well, Dan, maybe you can tell us a little bit better from his perspective.
Patrick: Yeah, that’s a loaded question. (Laughter)
Brock: … we’re learning. Yeah, he’s now on podcast.
Dan: It’s not over yet, so we don’t know. (laughter) But it is good to see. I mean, you get feedback from a bunch of people, and some of that feedback is not going to be very good, right? That’s just naturally going to happen. If you have a large company of thousands of employees, I don’t know if that’s going to be workable. Is it? I mean, maybe in some way it is, but the employees, I think, appreciate it anyway. It’s always nice to able to speak your voice of what you think and not worry about repercussion, or just knowing you’re being heard by people above you, makes you feel more part of it.
Patrick: It sounds like you’re fostering internal communication pretty well.
Dan: And Brock probably doesn’t see all the details from every position anyway, so it’s probably very helpful for him to make a decision.
Brock: Yeah, we’re trying, I mean, it’s an ever changing progression. We’re doing our best, and we can certainly improve a lot. That’s one thing I know for sure is that we can definitely improve on doing that. But it is a difficult, kind of, thing to navigate.
Patrick: But I don’t think you can over-communicate as a CEO. Would you agree?
Brock: Yeah, I agree. Yeah.
Patrick: Okay. Sticking with the ‘high’ theme, tells us where the idea was hatched from? You know, kind of give us some background of what it took to get some venture capital financing, bank financing, whatever you did personally. Kind of take us through that history if you would.
Brock: Yeah, and I’m going to bring… you know, you kind of heard from my business partner Levi King, and I want to make sure he’s included in on this. Just kind of the evolution was, you know, I had started with Trent Miskin and Jeff Jordan and Paul Allen on Funding Universe. The goal was to connect entrepreneurs to ‘angels’ and venture capitalists. And we were working on that business model for a couple years and really doing our best to add more angel and vcs to our network and more qualified entrepreneurs. The challenge that we found over and over and over again was that most angels are looking for a very specific type of company to invest in. They’re looking for the next Facebook, Google, Twitter, or so on…
Patrick: Multi-million, multi-billion…
Brock: Yeah, I mean, they’ve got to… if they can’t hit a hundred million in sales, then it’s not very likely that that person’s going to raise angel or venture capital. And so, as we would see, we’ve got a hundred business owner coming in the door, and a lot of them will never hit a hundred million dollars in venture capital or a hundred million dollars in sales. You’ve got restaurant owners, and land owners, and landscapers, and consultants, and dry cleaning shops, and so, we were trying to, you know, fit all of these different entrepreneurs, these main street entrepreneurs, into this little box. And you know, it’s just impossible to do. And so, I kind of looked at it. So, you’ve got a hundred entrepreneurs coming into the door, maybe five of them are going to fit into that box. Everyone else, we’re basically saying, “Hey, you’re not going to be able to get angel or venture capitalists.”
Patrick: But people had good ideas?
Brock: They had great business ideas, and they have great business opportunities. They can make a really good living. So, we kind of said, “Well, we’ve got to figure out a different way to help these guys get financing for their business.” And we started to explore, “Well, you know, can we help them get a business credit card? Can we help them get an SBA loan?” And as we started to explore that, and as we started to get business owners financing, at rate that was much faster than helping them get angel or VC financing. And you start to realize the ball, instead of trying to push this big thing up the hill, and it’s all this resistant, you start to get up over that hump and the ball starts to roll on its own, down hill, and that’s just kind of how we felt the way the business was going: “Wow, there’s starting to be all this momentum here, all this opportunity here, that we didn’t see before.” And so, you know, at that time I was introduced to my current business partner Levi King. Levi King had started a separate business, and their business was entirely focused on small business loans, and we started to…
Patrick: What was the name of his company?
Brock: It was called RBSL, just the first initials of their names, or something like that. (Laughter)
Patrick: RBSL means…
Brock: Yeah, nothing creative: Levi, Rich, Brett…
Dan: Yeah, I see that acronym around the office sometimes.
Brock: Yeah, that’s all it is. Just the first letter of their name. (Laughter)
Dan: It’s like a law firm or something. (More laughter)
Brock: Yeah, exactly.
Patrick: ‘Specializing in financing.’
Brock: So, we started working together from a partnership standpoint. We started to send them customers, and they started to send us customers. And we got a long really well. And we decided that it made so much sense to bring our two organizations together. So, we merged our two organizations together.
Patrick: Oh, so it was a merger?
Brock: Uh, huh. Yeah, and we just continued to focus on that. And the reason we decided to change our name from Funding Universe to Lendio, was because Funding Universe had been running for several years with this brand around connecting entrepreneurs to angels and angel investors. That’s what that brand was. And so, we were having, kind of, this unnecessary hurdle that, “Hey, we’ve got all these business owners, and we’re actually helping them with loans. But they’re coming to us for equity capital. We’ve got to change this.” Right? And so, we feel like that obviously Lendio with ‘lend’ in it is way more focused towards a brand of small business loans versus angel or equity capital.
Patrick: And the dotcom was available.
Brock: Yeah, well, we found the dotcom and purchased it for a decent price.
Patrick: I’d just assume that it’d be available.
Brock: It wasn’t available. I mean, five or six letter url with dotcom is almost impossible to find these days.
Patrick: Yeah, I know, unless you invent some name that no one has ever heard of.
Brock: Yeah, and even then it’s almost impossible still.
Brock: What is the difference between angel capital and venture capital and small business loans? And who should pursue what and when and how? I think we can do another full topic around how to get angel or VC financing because I think that’s really a, you know, an interesting and sexy topic that most people want to hear. But today maybe we can talk about what is angel versus VC versus bank, and why you’d pursue…
Patrick: Well, let’s just start with that. What is angel investors versus what is venture capitalists, because I thought, honestly, they were the same.
Brock: Yeah, okay, so there’s to different types of capital that you can potentially pursue: There’s equity financing and then there’s debt financing. Equity financing means you’re going to, you are going to sell some of the shares, or the ownership of your company, to someone else or to another organization. So, they are basically investing in your organization for equity. Debt financing is, you are getting financing for an interest-rate loan. Right? So, there’s a term to it. There’s an interest rate, and you’re paying that back over time with interest. And both of them have their pros and cons. The reality is that debt financing is… you think equity financing is cheaper because you don’t have to pay it back, in quotes. Right? But you do because you give up so much of your company, and so it ends up being, you know, if you’re successful, very, very costly if you get equity financing. So, within equity… sorry, I’m not… feel free to jump in at any time.
Dan: No, just go for it.
Brock: Okay, so within equity financing you’ve got angel investors and venture capital. So, let me start with venture capital. A venture capitalist is a group of individuals, they are partners usually, and what they do is they go out and raise a fund, usually its, you know, fifty or a hundred or three hundred million dollars. And they have this fiduciary responsibility to take that money and invest it into companies that are going to be very high high growth companies. And the idea is, they’re going to take that hundred million dollars and invest it into twenty or so companies, and those companies are going to grow fast. They’re going to have an exit. And so, those partners are going to have a return on those hundred million dollars. They’re going to be able to pay the hundred million dollars back, plus some, and make a huge ROI on that investment.
Patrick: Okay. Now, is that hard to do, though? For you personally, did you go angel investor or VC or loans?
Brock: I’ve raised both.
Patrick: Is there a, one is easier than the other? Or, is it just a personality…
Brock: It’s not that one is easier than another. It’s just a little bit different ball game.
Patrick: Are they wired differently, the people that you talk to?
Brock: They’re wired differently in that… so, a venture capitalist is investing someone else’s money. So, it’s a lot more ROI focused. Right? An angel definitely has an ROI focus. The difference between an angel investor is, an angel investor it’s his or her own money.
Patrick: So, it just depends on who is representing the money, basically?
Brock: So, this angel investor…
Dan: Like the TV show shark tank, right?
Patrick: That’s a great show.
Dan: It is a good show. They’re angels, right?
Dan: We might be able to… why don’t we get Barbara Corcoran on sometime, too? I interviewed her once for the blog, but…
Patrick: Let’s get her on.
Dan: We can edit that out if you want to.
Patrick: No. (Laughter)
Brock: So, an angel investor, it’s their own money, so they might have different hobbies. They might invest because, for different reasons. Right? They may say, “Well, I’m going to invest in this business because it’s an area that I have a hobby around, and I’m really passionate about it. And so, I wanted to see it be successful.” Or, they may invest in it because they know the CEO, they like him or her, and they want to invest that… So, there’s ulterior motives besides just ROI that they’re investing. Usually an angel invest is going to invest low dollar amounts than a VC. You know, an angel is going to invest, you know, maybe on average twenty-five to fifty thousand dollars. A venture capitalist maybe is, you know, usually going to invest, depending on the stage, a million or so.
Patrick: Were you ever turned down? With all the people, as you were trying to get Lendio up and going, were you ever turned down? Did people just start laughing at you?
Brock: Oh, yeah. I mean, that is the nature of it.
Patrick: That’s just the nature of it?
Brock: That’s just it. Raising angel or venture capital, you know, it’s kind of like sales. They way you’ve got to treat is, you’ve got to pitch everyone. You’ve got to have a hundred prospects. Out of those hundred people you pitch, fifty of them might be interested in a second meeting. Out of those fifty people you pitch, you know, twenty of them are going to start looking at due diligence. And out of those twenty… It’s just a numbers game. Right?
Patrick: Is due diligence a legal term? Meaning: do you actually enter into a due diligence, sign papers, or is that just more like a verbal commitment: “Hey, we’re going to check you out.”?
Brock: Due diligence really is just, “I’m going to look under the covers. I’m going to try to look at all your financial information, and I’m going to talk to customers. I’m going to talk to references. I’m going to do everything I can to be able to gauge whether I think this business is going to be a success or not.”
Patrick: So, you really do lay yourself out?
Brock: Oh, yeah. I mean, they look at… it’s a very… it’s a ninety day, usually, process, where they’re really looking at… they’re getting references on you. They’re talking to customers. They’re looking at financials. They’re looking at legal due diligence. I mean it is a very, very thorough process.
Patrick: So, character references, too, in addition to money and everything else?
Brock: Oh, yeah.
Patrick: I’ve never been through this process, so…
Brock: It’s a fun… it’s exciting to get out and pitch people. But the due diligence process is just miserable.
Patrick: (Laughter) No wonder when you finally get it… You mentioned at the beginning of the podcast, were we recording that? I don’t think we were.
Brock: No, I don’t think we were.
Patrick: … that you still have a screen shot of when you got financing. What was it, venture capital?
Brock: Yeah, so we’ve… I’ve raised angel, I’ve probably raised about maybe close to a million dollars in angel capital, from angel investors. So, various individuals. And then we raised six million dollars from venture capitalists. Two separate Vcs each put in three million. So, from the time we got a term sheet on the table to the day we got funded, it was basically the due diligence time period, and it’s just miserable. It is literally just the most miserable time, ever, in your whole life. (laughter) But, so the day we actually signed the papers and the wired was transferred was, you know, I mean, I saw it in the bank account, and I took the screen shot immediately. And in the office…
Patrick: “Honey, come and check this out!”
Brock: No, I was in the office and just made, you know, the biggest yell that you’ve ever heard. Right? I just yelled at the top of my lungs, and everyone knew at that moment that we’d just gotten the wire transfer for six million dollars to grow our business.
Patrick: Way to go! Man, what a story.
Brock: It was pretty awesome.
Patrick: Do you recommend one or the other?
Dan: You got the two million dollars, recently, from… what was the bank again?
Brock: Yeah, Square1 Bank.
Dan: Square 1 Bank, yeah.
Brock: It was a line of credit that they gave to us. I mean, it’s a very different process, but gratifying none the less.
Dan: I mean, most the loans we help people get are not near two million?
Dan: It’s like thirty thousand.
Patrick: Is that average: thirty thousand? Or is it all over the place? Is it five thousand. It could be two thousand. It could be fifty thousand?
Brock: It really is all over the place. If you were to say a sweet spot, I’d say it’s between thirty and seventy thousand dollars.
Brock: You’ve got so many businesses out there that, like I saw before, are, you know, they might be taco stands. They might be dry cleaning organizations. They might be a franchise. And they just don’t need that much money to get off the ground and get started. They just need thirty thousand.
Patrick: They just need a little help.
Brock: Yeah, they just need a little bit of help. You know, thirty thousand or fifty thousand, or whatever it might be, and that’s the majority of the business owner across the US.
Patrick: What’s the biggest challenge that you have today?
Brock: I think the biggest challenge is just scaling, like maybe I’ve mentioned. You know, we’ve got a very solid foundation to build upon, and now it’s saying, “Okay, how can we get it out to as many business owners as we possible can?”
Patrick: So, getting the message out?
Brock: Yeah, I mean, getting the message out and really having an impact on more and more small business owners every year. I think that, in and of itself, is a huge challenge. And it takes money to be able to, and creative and strategic resources to be able to really get your message out to people in an efficient manner where you can attract the customer cost effectively and be able to help them.
Patrick: So, marketing?
Patrick: Isn’t that always it. Doesn’t it always just boil down to marketing? Getting your message out.
Patrick: If you are a small business owner, be sure to check out Lendio.com. If you need financing for your small business, be sure to check out Lendio.com. Just go to their website: Lendio.com. And also, be sure to let your friends know about this podcast in case they are entrepreneurs themselves. Got to Lendio.com/blog, I believe that’s where the podcast is.
Dan: Yeah, every Monday.
Patrick: Okay, every Monday morning you can get a fresh copy of this podcast on Lendio.com, and it’s also available on my website PatrickWiscombe.com. So, for Brock Black, the CEO of Lendio.com, thank you. It’s always good to see you.
Brock: Yeah, my pleasure.
Patrick: Dan Bischoff, director of communication at Lendio.com, always good to see you as well.
Dan: Great to see you. I’m just here for the ride, mostly. (laughter).
Patrick: My name is Patrick Wiscombe. Thanks for listening to the Entrepreneur Addiction Podcast. We’ll talk to you next Monday.
Cool Voice Guy: Making business loans simple, this has been the entrepreneur addiction podcast, helping you secure the capital you need, with your host Brock Blake, Dan Bischoff, and Patrick Wiscombe. Heard exclusively at Lendio.com.