The Exchanges

Q So, so tell the Divi, if you had Divi, when you were running that business, like, what sort of credit lines would you have been pulling? What sort of expense management would you have been doing? Like, sort of explain the current product as, as, like, how you would have used it back then.

A Yeah, but it's funny, because you might say, like, well, how'd you go from selling scooter parts to doing Divi? And, and, and to me, I'm actually, it's super natural, because, you know, when I'm running, uh, Lucky, which was the scooter company, We had 10 writers all over the world traveling for various tournaments, you know, building content. Uh, we would do trade shows, and so I would send seven guys to Vegas on a trade show conference, and we're a small company, we didn't have a ton of cash, so spending the budget of 15,000 for the conference was, like, imperative, like, you can't go over, but everyone was using their own card, we were getting expense reports, you know, a month and a half late, So we were going over without knowing we were going over and Divi would have solved that entirely. We, you know, we could have, uh, said, Hey, here's your budget, had cash, check, credit, everything inside of that expense reports from all the riders and all the employees would have come directly. So honestly, when we started Divi, my partner, Blake and I, it was just like, well, we've ran multiple businesses and we understand the needs. And so we built it not as tech engineers, but as business owners. And saying, we're building something that we would have wanted to use in our prior companies.

AI assessment note: “we were going over without knowing we were going over and Divi would have solved that”

Q Well, I mean, so look, I mean, there are cabbages, you know, cabbages of the world, right? That play in this space, right? Which it's, it's a, it's a purely balanced sheet business. You drive your cost account plus one or two, you have underwriting, you do deals, SMBs at a 35% effective APR, you make a big spread.

A Yeah. So the difference on that, um, I think you'd see the same with Brex and Ram too. Right now when we're underwriting, we're not doing a lot of loans. We will be, you know, adding to that. We kind of have that in beta. It's more underwriting like your credit card, like an Amex. So if you don't pay, Oh, If you don't pay, then there are fees. And obviously there is revenue that comes from like, Hey, if you don't pay your credit card bill, you pay it late, you know, it's carried interest, et cetera. Um, but cabbage is doing like loans right there. There's just straight out saying, Hey, we're going to give you a 100,000 dollar loan and at this return.

AI assessment note: “the difference on that... when we're underwriting, we're not doing a lot of loans.”

Q very interesting, right? We've had David on from expense side. We've had Rex on, we've had a ramp on the show, right? And they're doing, they're basically building massive business on something that you're doing for free. So I want to dive more into the credit card business. I mean, how much money can you make on the credit card business? There's only what, 203 hundred bips to spread there.

A Yeah. Yep. That's correct. But, uh, there's a few different ways, right? You see Brex, uh, is starting to launch paid software. We have some paid, we have paid software. Um, you know, you make money on the, on the card, uh, or sorry, on the, on the credit side, right? Fees and things of that nature. I mean, it's just like a bank. It's basically asking the question, like, well, how's Amex making money? And it's like, well, I mean, I think they're making a fair amount of money. So, you know, two, even 200 or 300 bips, you start to do the math and you're doing billions of dollars in spend and the revenue starts to add up.

AI assessment note: “200 or 300 bips, you start to do the math and you're doing billions”

Q Wow. Okay. Interesting. So I guess the question I would have for you is this is not easy software to build. How did you fund it in the early days so that you could give it away for free?

A So that's actually a really good question. Had I've had that conversation. A lot of people, a few things. One, we all, we raised money early because we knew that we were taking a big swing. I don't think that's for everyone. So I'm not like out there recommending to all entrepreneurs, like go raise VC funds, go raise as much as you can. But for us, as you just said, we're taking on trillion dollar markets and everyone and all four of those buckets. So we're like, all right, like we've got, we've got to bring money to the table and go build a team. So for us, that's what we did. Um, and at the beginning, like nowadays in the fintech space, if that's where you're at, there's so many more tools that enable fintechs to go build companies that didn't exist five years ago, which sounds nuts, but you know, there's a lot of, I can get into the nuances. A lot of things that the banks couldn't offer us five years ago that now they're, they're fully built to offer to these fintechs. So I think you're going to see a wave of innovation because of that.

AI assessment note: “we raised money early because we knew that we were taking a big swing”

Q Well, it's crazy. I mean, you go, I mean, my research team was looking, they're going, wait, this guy went from basically being a GM at a scooter place to running like one of the fastest growing fintech businesses today. How the hell does this happen?

A Yeah. So real quick on the scooter business. I mean, I actually feel like those are some of my most informative years or formative years. Um, I mean, I was in my mid twenties, uh, knew the owner of the business. He got sick and he said, Hey, I'm sick. Can you come in and run it? Like, can you come in and build this thing? And, you know, at the time we were, we thought we were going to like take over the X games and take over skateboarding. So you kind of thought big, but we did some fun stuff, learned a lot about manufacturing and, and, and branding and, Uh, he got healthy, so that's when we, I gave it back to him, and then, and got into tech. So, um, learned a lot, a lot of fun, but definitely different than FinTech, for sure.

AI assessment note: “he got healthy, so that's when we, I gave it back to him, and then, and got into tech.”

Q to touch on before we wrap up a lot of founders, they don't understand the concept of secondaries, but I like it. It removes risk from the business. It allows you to double down and go for a How have you and your Blake thought about secondaries and even for your early employees? Have you guys done any, was any above the one hundred sixty five million recent raises secondary?

A Uh, yeah. And again, I don't want to speak to specifics because there's always a lot of people involved and whatnot. Um, but I will say as a whole, I think the secondaries, I agree with you. Secondaries, uh, done right, can give motivation, uh, which, which allows, you know, early founders and early employees to, to keep going as opposed to, you know, stop, right? Cause it's, it's easy to say, oh, I've been grinding away for however many years and I just need something out of it. Like, fine, press, press the button. Um, but you know, secondaries I think are really, really healthy if done correctly, which is by the way, uh, I, I don't know if everyone would agree with that statement, um, in Silicon Valley. So, you know, I'd love to hear other people's opinions, but I do think it's healthy. All right.

AI assessment note: “I don't want to speak to specifics because there's always a lot of people”

Q I haven't, I haven't done a series D round recently. Uh, help us understand, don't talk about your own deal, but in, in most series D rounds, how much of a company is a SaaS founder going to be selling?

A Yeah. I think, you know, if you're like, actually I'll give you this. So if you're going to go public, uh, now SPACs do make it a little bit different, but I think you see a lot of companies that go public and, and, and we, we would look at it and say, Hey, you gotta be doing like two hundred million of revenue, you know, three hundred million of revenue to be like, to go public, right? That's when you start to be a known name and, and, and really have traction. So for us, uh, you know, in between that 100 to 300 range, like that's where we, you know, we look at that and say, okay, what are your growth rates? When do you hit what milestone? Uh, what do we need to do to accelerate out of this? And, and, you know, look at Qualtrics, which was, uh, they just went public here in Utah. They're, they're friends of ours. And, you know, it's like, yeah. They hit the two hundred million, then they hit the three hundred million, then they hit the six hundred million, and now they're, you know, approaching the billion, and it's like, you just have to keep that trajectory of growth. So I can't forecast, you know, I'm not gonna announce our forecast of two years from now on this podcast, but it's keeping a really healthy growth rate. It might not double forever, clearly, because at some point that will stop.

AI assessment note: “if you're going to go public... you gotta be doing like two hundred million”