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Nov 19, 2018 · 21m · top-founders

1213 Kabbage CEO: We've lent $5b to 150,000 SMB's, Will Pass $300m in 2018 Revenue

Rob Frohwein · 12m spoken Nathan Latka · 7m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs, Nathan Latka interviews Kabbage co-founder and CEO Rob Frohwein about scaling the automated lending platform past $300 million in revenue, managing multi-currency risk, and expanding into a comprehensive 'Cash Flow as a Service' ecosystem for small businesses.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 36.7% of the talking time here. How this is scored →

Nathan as informed peer 3.6 Guest teaching 1.9 Guest disagreement 0.9 Nathan pushing back 1.6
05100:0010:0020:000:00–2:14 · Nathan as informed peer 1/10 Episode Preview and Key Highlights Nathan delivers the episode preview, introducing Rob Frohwein and summarizing Kabbage's key lending metrics and revenue trajectory before briefly welcoming him to the show.2:14–5:37 · Nathan as informed peer 4/10 Scaling Metrics, SoftBank Backing, and Product Innovations Nathan drills into Rob's metrics, verifying the $250M SoftBank round and confirming their path to breaking $300M in revenue for 2018 while Rob details loan volume growth.5:37–8:34 · Nathan as informed peer 4/10 Revenue Streams, Capital Costs, and Loan Terms Nathan asks for the exact business model and true cost of capital for SMBs. Rob breaks down their interest model, bank licensing revenue, and mid-thirties average APR versus revenue-generating ROI.8:35–10:45 · Nathan as informed peer 4/10 Cash Flow as a Service and Banking Infrastructure Rob rejects Nathan's suggestion that simply lowering APR drives explosive growth, reframing the company's vision as Cash Flow as a Service inspired by Elon Musk, and clarifies deposit mechanics for non-banks.10:48–14:22 · Nathan as informed peer 4/10 Sponsor Message: Freshworks Freshchat Messaging Platform Following the Freshchat sponsor read, Nathan points out that Kabbage's asset is synthesizing thousands of signals ignored by traditional banks like BB&T, leading Rob to explain their automated underwriting criteria.14:22–17:05 · Nathan as informed peer 4/10 Blockchain and Crypto in Capital Markets Infrastructure Nathan inquires about non-speculative blockchain applications and macro currency threats. Rob explains debt market requirements and how crypto structures can hedge capital permanence issues.17:05–20:54 · Nathan as informed peer 4/10 SoftBank Governance and Data Privacy Safeguards Nathan pushes on whether SoftBank's foreign backing creates data leverage risks akin to Cambridge Analytica. Rob firmly denies data sharing before moving into the Famous Five closing segment.0:00–2:14 · Guest teaching 0/10 Episode Preview and Key Highlights Nathan delivers the episode preview, introducing Rob Frohwein and summarizing Kabbage's key lending metrics and revenue trajectory before briefly welcoming him to the show.2:14–5:37 · Guest teaching 1/10 Scaling Metrics, SoftBank Backing, and Product Innovations Nathan drills into Rob's metrics, verifying the $250M SoftBank round and confirming their path to breaking $300M in revenue for 2018 while Rob details loan volume growth.5:37–8:34 · Guest teaching 2/10 Revenue Streams, Capital Costs, and Loan Terms Nathan asks for the exact business model and true cost of capital for SMBs. Rob breaks down their interest model, bank licensing revenue, and mid-thirties average APR versus revenue-generating ROI.8:35–10:45 · Guest teaching 3/10 Cash Flow as a Service and Banking Infrastructure Rob rejects Nathan's suggestion that simply lowering APR drives explosive growth, reframing the company's vision as Cash Flow as a Service inspired by Elon Musk, and clarifies deposit mechanics for non-banks.10:48–14:22 · Guest teaching 2/10 Sponsor Message: Freshworks Freshchat Messaging Platform Following the Freshchat sponsor read, Nathan points out that Kabbage's asset is synthesizing thousands of signals ignored by traditional banks like BB&T, leading Rob to explain their automated underwriting criteria.14:22–17:05 · Guest teaching 3/10 Blockchain and Crypto in Capital Markets Infrastructure Nathan inquires about non-speculative blockchain applications and macro currency threats. Rob explains debt market requirements and how crypto structures can hedge capital permanence issues.17:05–20:54 · Guest teaching 2/10 SoftBank Governance and Data Privacy Safeguards Nathan pushes on whether SoftBank's foreign backing creates data leverage risks akin to Cambridge Analytica. Rob firmly denies data sharing before moving into the Famous Five closing segment.0:00–2:14 · Guest disagreement 0/10 Episode Preview and Key Highlights Nathan delivers the episode preview, introducing Rob Frohwein and summarizing Kabbage's key lending metrics and revenue trajectory before briefly welcoming him to the show.2:14–5:37 · Guest disagreement 0/10 Scaling Metrics, SoftBank Backing, and Product Innovations Nathan drills into Rob's metrics, verifying the $250M SoftBank round and confirming their path to breaking $300M in revenue for 2018 while Rob details loan volume growth.5:37–8:34 · Guest disagreement 1/10 Revenue Streams, Capital Costs, and Loan Terms Nathan asks for the exact business model and true cost of capital for SMBs. Rob breaks down their interest model, bank licensing revenue, and mid-thirties average APR versus revenue-generating ROI.8:35–10:45 · Guest disagreement 2/10 Cash Flow as a Service and Banking Infrastructure Rob rejects Nathan's suggestion that simply lowering APR drives explosive growth, reframing the company's vision as Cash Flow as a Service inspired by Elon Musk, and clarifies deposit mechanics for non-banks.10:48–14:22 · Guest disagreement 0/10 Sponsor Message: Freshworks Freshchat Messaging Platform Following the Freshchat sponsor read, Nathan points out that Kabbage's asset is synthesizing thousands of signals ignored by traditional banks like BB&T, leading Rob to explain their automated underwriting criteria.14:22–17:05 · Guest disagreement 1/10 Blockchain and Crypto in Capital Markets Infrastructure Nathan inquires about non-speculative blockchain applications and macro currency threats. Rob explains debt market requirements and how crypto structures can hedge capital permanence issues.17:05–20:54 · Guest disagreement 2/10 SoftBank Governance and Data Privacy Safeguards Nathan pushes on whether SoftBank's foreign backing creates data leverage risks akin to Cambridge Analytica. Rob firmly denies data sharing before moving into the Famous Five closing segment.0:00–2:14 · Nathan pushing back 0/10 Episode Preview and Key Highlights Nathan delivers the episode preview, introducing Rob Frohwein and summarizing Kabbage's key lending metrics and revenue trajectory before briefly welcoming him to the show.2:14–5:37 · Nathan pushing back 1/10 Scaling Metrics, SoftBank Backing, and Product Innovations Nathan drills into Rob's metrics, verifying the $250M SoftBank round and confirming their path to breaking $300M in revenue for 2018 while Rob details loan volume growth.5:37–8:34 · Nathan pushing back 2/10 Revenue Streams, Capital Costs, and Loan Terms Nathan asks for the exact business model and true cost of capital for SMBs. Rob breaks down their interest model, bank licensing revenue, and mid-thirties average APR versus revenue-generating ROI.8:35–10:45 · Nathan pushing back 2/10 Cash Flow as a Service and Banking Infrastructure Rob rejects Nathan's suggestion that simply lowering APR drives explosive growth, reframing the company's vision as Cash Flow as a Service inspired by Elon Musk, and clarifies deposit mechanics for non-banks.10:48–14:22 · Nathan pushing back 1/10 Sponsor Message: Freshworks Freshchat Messaging Platform Following the Freshchat sponsor read, Nathan points out that Kabbage's asset is synthesizing thousands of signals ignored by traditional banks like BB&T, leading Rob to explain their automated underwriting criteria.14:22–17:05 · Nathan pushing back 2/10 Blockchain and Crypto in Capital Markets Infrastructure Nathan inquires about non-speculative blockchain applications and macro currency threats. Rob explains debt market requirements and how crypto structures can hedge capital permanence issues.17:05–20:54 · Nathan pushing back 3/10 SoftBank Governance and Data Privacy Safeguards Nathan pushes on whether SoftBank's foreign backing creates data leverage risks akin to Cambridge Analytica. Rob firmly denies data sharing before moving into the Famous Five closing segment.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 75.5% · guest 24.5%0:00 · Nathan 75.5% · guest 24.5%3:00 · Nathan 25.9% · guest 74.1%3:00 · Nathan 25.9% · guest 74.1%6:00 · Nathan 19.9% · guest 80.1%6:00 · Nathan 19.9% · guest 80.1%9:00 · Nathan 45.2% · guest 54.8%9:00 · Nathan 45.2% · guest 54.8%12:00 · Nathan 29.1% · guest 70.9%12:00 · Nathan 29.1% · guest 70.9%15:00 · Nathan 26.3% · guest 73.7%15:00 · Nathan 26.3% · guest 73.7%18:00 · Nathan 20.3% · guest 79.7%18:00 · Nathan 20.3% · guest 79.7%21:00 · Nathan 97.9% · guest 2.1%21:00 · Nathan 97.9% · guest 2.1%
Sharpest disagreement ▶ 8:35 Rob rejects the APR-reduction growth premise

Rob directly counters Nathan's suggestion that lowering APR below traditional banks is the primary driver of growth, citing Elon Musk to redefine Kabbage around cash flow as a service.

 Hardest push from Nathan ▶ 17:05 Nathan challenges Rob on SoftBank data governance

Nathan directly challenges Rob on whether SoftBank's massive foreign investment gives them unauthorized leverage over sensitive small business financial data amid Cambridge Analytica concerns.

 Biggest teaching moment ▶ 14:42 Rob outlines capital market permanence and blockchain solutions

Rob educates the audience and host on the four core debt market requirements (immediacy, permanence, diversity, and flexibility) and how tokenization can isolate permanence risk.

 Nathan holds their own ▶ 12:00 Nathan dissects Kabbage's proprietary signal advantage over BB&T

Nathan demonstrates strong domain expertise by articulating how Kabbage's real value lies in capturing thousands of non-traditional data signals that legacy institutions systematically ignore.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Episode Preview and Key Highlights 1000 Nathan delivers the episode preview, introducing Rob Frohwein and summarizing Kabbage's key lending metrics and revenue trajectory before briefly welcoming him to the show.
Scaling Metrics, SoftBank Backing, and Product Innovations 4101 Nathan drills into Rob's metrics, verifying the $250M SoftBank round and confirming their path to breaking $300M in revenue for 2018 while Rob details loan volume growth.
Revenue Streams, Capital Costs, and Loan Terms 4212 Nathan asks for the exact business model and true cost of capital for SMBs. Rob breaks down their interest model, bank licensing revenue, and mid-thirties average APR versus revenue-generating ROI.
Cash Flow as a Service and Banking Infrastructure 4322 Rob rejects Nathan's suggestion that simply lowering APR drives explosive growth, reframing the company's vision as Cash Flow as a Service inspired by Elon Musk, and clarifies deposit mechanics for non-banks.
Sponsor Message: Freshworks Freshchat Messaging Platform 4201 Following the Freshchat sponsor read, Nathan points out that Kabbage's asset is synthesizing thousands of signals ignored by traditional banks like BB&T, leading Rob to explain their automated underwriting criteria.
Blockchain and Crypto in Capital Markets Infrastructure 4312 Nathan inquires about non-speculative blockchain applications and macro currency threats. Rob explains debt market requirements and how crypto structures can hedge capital permanence issues.
SoftBank Governance and Data Privacy Safeguards 4223 Nathan pushes on whether SoftBank's foreign backing creates data leverage risks akin to Cambridge Analytica. Rob firmly denies data sharing before moving into the Famous Five closing segment.

Statements from this episode (11)

Assertion Supported
Frohwein: Kabbage lent $1.5 billion to small businesses in 2017
“We put out a billion and a half dollars last year,”
Rob Frohwein Nov 19, 2018 ▶ 2:34
Prediction Didn’t hold up
Frohwein: Kabbage will lend nearly $2.5B in 2018
“We're set to put up nearly two and a half billion this year.”
Rob Frohwein Nov 19, 2018 ▶ 2:37
Assertion Not checkable as stated
Frohwein: Every $1B Kabbage lends creates 20,000 jobs
“We've done studies that really show that, you know, the capital that we're putting out really produces a lot of jobs, you know, about 20,000 jobs for every billion dollars that's put out.”
Rob Frohwein Nov 19, 2018 ▶ 4:39
Prediction Not publicly verifiable
Frohwein: Kabbage will break $300M in 2018 revenue
“We do. So, yeah, so we will.”
Rob Frohwein Nov 19, 2018 ▶ 5:14
Assertion Supported
Frohwein: Kabbage licenses software to ING and Santander across Europe
“The deals that we have, for example, with ING, and we're launched with them in Spain, Italy, and France. We're launched with Santander as a, as an example in the UK.”
Rob Frohwein Nov 19, 2018 ▶ 6:04
Assertion Not checkable as stated
Frohwein: Kabbage loans average a mid-30s APR
“We average about a mid thirties APR”
Rob Frohwein Nov 19, 2018 ▶ 7:10
Disclosure
Frohwein: Kabbage entering deposit and payments within 9 to 12 months
“Which means we will be going into both deposit and payments over the next nine to 12 months.”
Rob Frohwein Nov 19, 2018 ▶ 9:30
Disclosure
Kabbage pulls SMB underwriting data directly from banking, accounting, and shipping
“What we do is allow a small business to connect all key data sources that relate to how they run their business. So it can be their banking account. It can be processing. So quick books, chase credit card, shipping, social accounting, web analytics.”
Rob Frohwein Nov 19, 2018 ▶ 12:43
Disclosure
Frohwein: Kabbage Explores Blockchain to Hedge Capital Permanence Risks
“The way I think about blockchain, and frankly, crypto, if you will, that sits on top of blockchain, is a way to maybe either hedge against some of the permanence issues that, that exist in the capital markets for companies like Cabbage or a way to so either a …”
Rob Frohwein Nov 19, 2018 ▶ 15:22
Assertion Not checkable as stated
Frohwein: SoftBank has no access to Kabbage's underwriting data
“No, no, they are strictly a shareholder in the company. It's not a, you know, it's not a relationship where we're sharing data or anything along those lines.”
Rob Frohwein Nov 19, 2018 ▶ 17:29
Prediction Didn’t hold up
Frohwein: Kabbage will exit via IPO in at least a couple of years
“You know, I definitely think that's the exit. It's going to be a couple of years at least, probably a couple of years for us.”
Rob Frohwein Nov 19, 2018 ▶ 20:25
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