GroupMe founder on his $80M exit (and why he’s building his new company differently)

I’m so excited about today’s guest. Years ago he created a software that allowed a group of people to talk to one another over text. It was called GroupMe and it felt like as soon as I even heard about the company it was sold in a life-changing exit. I always admired how they did it.

Well, today we have the founder of GroupMe, Jared Hecht. He has a new company now and the thing I love about it is how he started it. He understood a pain point and started doing research. But he researched it in a way that I think most founders would be too afraid to do. He started going door to door and asking business owners about their freaking financial situation. And they told him!

That’s how he built his business. He’s here to tell us how he did it. Jared Hecht is the founder of Fundera which helps business owners understand their creditworthiness and get loans and other financial solutions.

 
Jared Hecht

Jared Hecht

Fundera

Jared Hecht is the founder of Fundera which helps business owners understand their creditworthiness and get loans and other financial solutions.

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Full Interview Transcript

Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. I’m so excited to have this guest on today. I don’t even think he knows how excited I am to have him.

Here’s the deal. Years ago, I remember being at South by Southwest. I remember in my mind where I saw someone introduce me to this piece of software that allowed everyone to communicate with each other, you know, like a group texting software.

And it was so perfect for South by Southwest because (a) at the time, you know, the internet was kind of wonky over there, and (b) you want to talk to as many people as possible when you’re at South by Southwest. You want to communicate with them. You want to connect with them and get together and have all the free food that they offer there.

Anyway, the company was called GroupMe, and like no time at all, the freaking thing just sold, and it sold to like a major business. I always just admired, how did they do that? And then when WhatsApp happened, I wondered, did the founders wonder if they should’ve kept going? I’m seeing a smile.

That was a freaking awesome exit by the way, Jared. Never mind, nothing to be embarrassed by. Something that will really, like, change your life and maybe your kids’ lives for the rest of many of generations. But still, I’m so curious about that business.
And now, the founder of the company, Jared Hecht, who is here to do this interview, has moved on to start a new business. And what I love about the way that he started this new business is he understood his own pain, and then he went out and did this research, which I think, let’s be honest, most people would be too freaking scared to do.

He went door to door, and he started asking business owners about their freaking financial situation, and they told him. And that’s what he used to build his business. And frankly, the first time that he did it, it didn’t work out right. But he figured out the alternative and changed it.

I always am fascinated by companies that are started by people who understand a pain and then want to get deep in their customer’s lives to understand it even better. And how do you create a product based on that? That’s what Jared did.

His business is one that I think will resonate with many of the people who are listening to me. It’s called Fundera. Fundera helps business owners understand their credit-worthiness and get loans or other financial solutions. It’s just a place where, if you’re a business owner, your bank may not fully understand you, but Fundera does. And that’s what I want to ask him about, how he started this business, and about the previous company GroupMe.

This whole thing is sponsored by two great businesses you’ve heard me talk about forever. This first is going to help you sell me. It helps me sell more. It’s called Pipedrive. And the second is the company that I’ve used to hire from. It gets you phenomenal developers, phenomenal designers and finance people. It’s called Toptal, but I’ll tell you more about them later. First, Jared, welcome.

Jared: Thanks for having me. It’s a pleasure to be here.

Andrew: I was wondering how you feel when I brought up the whole, like, WhatsApp. You sold GroupMe for how much money?

Jared: Eighty million.

Andrew: Eighty million. And then WhatsApp sold for, do you remember how much?

Jared: Around 18 billion.

Andrew: Billion.

Jared: Is that what the number was?

Andrew: Yeah. Basically, both of them are chat apps, and you guys even worked on older phones, just like they did. When you saw that, how did you feel?

Jared: How did I feel? I don’t know, probably mixed emotions. I don’t remember specifically how I felt in that moment. You know, there’s always like this thing of like, oh my gosh. Did we sell too early? Could we have ended up doing something like that?

And then, very quickly, we realized . . . so I started grouping with my co-founder, a guy named Steve Martocci, who’s now my business partner in everything we do together. You know, I think we quickly realized we did the right thing.

WhatsApp and GroupMe are fundamentally different products. WhatsApp is primarily a one-to-one messenger that works internationally. It truly is a text message substitute. And GroupMe, the whole concept was it’s a way to privately chat with groups of friends and be yourself, and have fun, and share the things you want to share with people you care about.

So they’re really different things, really different products in the grand scheme of things. And also, GroupMe was only in the U.S. So, ultimately, it was like, oh, did we sell too early? And then around five minutes later, it was like, we did the right thing.

Andrew: Am I right that that’s life-changing? I remember watching it from a distance going, what the hell?

Jared: Yeah. I mean, it was also remarkably quick.

Andrew: Over what?

Jared: I mean, we sold the company in like 15 months or something.

Andrew: Fifteen months. You told our producer you didn’t even feel like it was a real business. It didn’t have that many people, didn’t have any revenue coming in. You couldn’t believe it. How did your life change after you suddenly saw that in your bank account? Not to be crude, but let’s talk openly.

Jared: Yeah. How did it change? Well, this is beside the point of selling it, but around a week and a half after we sold it, I got married to my wife. And the idea of GroupMe was inspired by a problem that my wife had. So that was one big thing that happened, totally unrelated to the sale, but one big thing that happened immediately afterwards.

How did it change? I don’t know. I think it freed me up to start thinking about a lot of different things. I got some wonderful experience going to work at Skype and Microsoft, which is who we sold GroupMe to, and worked there for around two years, so learned a bit about big company stuff.

I had an opportunity to start investing in companies and working with other entrepreneurs in an advisory and investor capacity. So that exposed me to a lot of different types of industry. It’s a lot of different types of problems that people were trying to solve, and really just opened my eyes to the fact that there are many different ways to build businesses or companies or products.

And then, I think there was some natural, like, comfort level of, okay, cool. This is a wonderful personal outcome, and it put me in a very comfortable position to, honestly, afford me an opportunity to continue to go out and take more risks and think about other types of problems I wanted to solve and companies I wanted to build.

Andrew: You know what? I had this weird experience this morning at breakfast with my kids. For some reason, I thought about Mark Andreessen and how he must have no worries. And I thought, well, because look. He owned Skype and sold it Microsoft. He had a bunch of other great wins. And if he loses Andreessen Horowitz, life is not going to end for him. He’s going to be set.

And then I thought, but Andrew, you’re at a pretty good situation. I don’t have to work. If I didn’t work, life wouldn’t end, and still, I worry about stuff. This is a little bit off the track of what I want to talk to you about, but I’m wondering, do you feel that too? Do you still feel like deep worries where I’m like, in my gut sometimes, just all knotted up. Do you still feel that at all? Or do you feel like, I got this, life is not going to end, everything’s okay? Is there ever a point where worry ends is what I’m wondering?

Jared: No.

Andrew: What do you worry about?

Jared: Well, I mean, I have a company now, Fundera. So, I’m up all day long, all night long, thinking about Fundera and what our future holds in store for us and our customers. I don’t know if I necessarily worry about it, but I more obsess about it.

GroupMe was a very fast experience. And before that, I was also fortunate enough to be a very early employee at Tumblr. I joined when there were like seven or eight people. And one of the things about GroupMe, like as I reflected on it, was that, you know, it was a really fun product, a really fun brand, but we never had an opportunity to turn into a real business or a real company.

So I very much, personally, like emotionally sometimes, worry about, well, you can’t be a one-hit wonder, like you can’t have anything be like a sophomore slump. Was this just a fluke? Is there anything real about this? Like did you deserve any of this? Go out and prove it again.

So I worry about those kinds of things, which are more just like, personal qualms, concerns, insecurity type stuff. That stuff is definitely real. There’s more existential things you worry about. You wake up every morning and you read the news, and something crazy is happening. Those things, they probably worry most people. And I worry about opportunity to have an impact, like those are the things that kind of keep me going.

Andrew: All right. Let’s get into how you came up with the idea. You mentioned that it was your wife, she was your fiancée at the time, who helped come up with the idea for GroupMe. She was going to a music festival as I understand it. And she was complaining about what that led you to GroupMe?

Jared: It was a bunch of her friends that were on an email chain coordinating going to a music festival, and she mentioned that the second that they actually all get to a festival, or any concert, that email chain goes away. It all breaks down and nobody has a way to communicate together as a group. And so why can’t we do this over text?

That was a really great question. I didn’t quite understand the answer, so I called one of my great friends, Steve Martocci, my co-founder for GroupMe and said, “Hey . . . ” And we met because we went to a bunch of concerts and music festivals together and shared a passion for the same music.

I said, “Hey. Here’s the problem. Can we do this? Can we figure out a way to actually take this kind of notion of like, reply all over email and put it on SMS?” And there happened to be a Hackathon, the first TechCrunch Disrupt Hackathon in New York City around a week and a half or two weeks later. And we went to the Hackathon and built the thing, and it worked.

Andrew: This is like at Disrupt. What they do is they have this floor of space, I guess, or section broken off where you could sit at desks, use their internet, and just create something in real-time. And that’s what you did?

Jared. That’s what we did.

Andrew: And what did the first version look like? What did it have?

Jared: It was a text messaging interface. You would, I think, text “starts” to a short-code SMS number, or maybe it was even like a real phone number, so all powered by Twilio. It was, like, one of, I think, the first like, mass market applications on top of Twilio.

And then you would receive a set of SMS instructions that told you how to add your friends to groups. You would text back to that number, add a friend to the group, and then you can start texting each other. So it was called Group.ly And, so it would be a unique phone number. And that phone number was actually the identifier for the group. And every time you texted that phone number it would relay the text message to the rest of the group. That’s what it was.

Andrew: So simple.

Jared: And you could store that phone number in your contact list as, like, family or South by Southwest friends, or work group. That’s how it worked. That was V1.

Andrew: And then, what happened at Disrupt? You got some attention for it, right? You got, I think, on stage with it. I’m looking here at a demo that you did.

Jared: Everybody gets on stage and demos the thing that they built there. We didn’t win anything. [inaudible 00:10:21].

Andrew: Nobody came up to you and said, “Here. Let me throw some money at you.” None of that.

Jared: No. We thought that that was going to happen, but then it didn’t happen.

Andrew: Okay. And then what was the next step that you took to build this thing out or to get users?

Jared: Yeah. I mean, honestly, we just started using it with our friends, and our friends started using it with their friends, and the thing just kind of started growing on its own. And I remember Steve showed it to his boss, the CEO of Gilt Groupe, a guy named Kevin Ryan, and he was like, “This is really interesting. Maybe I would think about investing in something like this.”

And I showed it to my boss, who’s the president of Tumblr, this guy named John Maloney, and he was very supportive of me going out there and trying to raise money for it. He ended up being an investor, introduced us to a couple other investors, and over time, people just got it. And I say over time, I generally mean over the course of the next month, people got it. By that time, we quit our jobs and raised the seed ground.

Andrew: One of the cool things about it is that it was a group messaging system. I couldn’t use it alone, and I couldn’t just use it with my wife. I had to include multiple people, and I had to basically be promoting the software. Was that the main way that you guys got users?

Jared: That was the main way, yes. There were a couple of other things we did. And that way worked really well because the average size group was six people. So I would add five people to a group. And statistically, one of those five people would create their own group and add another five people to a new group, and that just kept on happening and happening and happening. So that was really nice.

The other thing we did is we really focused around use cases and actually started some partnerships with a couple different musical festivals like Coachella and Bonnaroo, right? That was the initial application for GroupMe. Go to a music festival and use that as the way to coordinate and stay in touch with all of your friends that you go with.

And so we did some, like, BD deals with them where they promoted utilization of the application for all the festival attendees. That stuff worked really cool because like, there would be a music festival in one specific geographic area, and where we wouldn’t have a lot of users, and all of the sudden, that festival would happen, and then you would just see a very quick expansion of users in that geographic area. So that was kind of a neat thing.

Andrew: You know what? I’m looking at an early article about you guys from 2011. And the interesting thing that stands out to me about that article is, first of all, the photo of you. I actually think you look better now than you did even back then. Usually, it works the other way around like being an entrepreneur kills you.

Jared: I appreciate that.

Andrew: The other thing that stands out for me is how many competitors are listed in this article. GroupMe is the first one listed, but Fast Social, Beluga, Kik, textPlus, PingChat!, Hurricane Party, YoBongo. How did you guys stand out with all those different competitors?

Jared: Well, that’s a great question. I think there were just, like, a bunch of things that just played to our advantage. Number one, like, the product was, I mean in my opinion, just better than all of the other things, specifically around, like the group messaging use case.

That was our sole focus, and that was what we stayed dedicated to, groups. Not really thinking about expanding beyond that, not trying to figure out, hey, how do we . . . remember like, BBM was like a thing then. It was the thing then. Not figuring out, hey, how do we go beat BBM at their own thing, not saying, hey, let’s go expand internationally and try and take on WhatsApp. It was just groups.

So I think that, kind of like, relentless dedication to focusing on the problem of how do groups communicate together, and how do we make that experience better, just made our application better and more fun to use.

I think that really kind of honing in on the use cases and suggesting groups to people around specific use cases, like, “Here’s your work group. Here’s your family group. Here’s your best friend’s group. Here’s your extracurricular activity group.” We came up with all these kind of like growthy things that were essentially props to create new groups for people, so they would continue to add new people to the GroupMe ecosystem.

I mean, we just . . . I’d be a liar if I didn’t say there was a massive amount of luck involved in it as well. So occasionally, you capture lightning in a bottle, and you build the right thing, right place, right time. The other thing I will say is that the GroupMe team was exceptional, absolutely exceptional.

Some of the best engineers, and product people, and designers in New York City, if not in the country. And every single person at GroupMe was an avid user of the application, so every . . . we ate our dog food every single day. So every day, we were able to come to the office and riff on new ideas on how we could make our personal experiences better.

Andrew: Was it largely that? Because right now, what you guys do at Fundera is, or what you did in the beginning, is you’re so really aware of the problem that your customers have. You went out, and we’ll talk about it in a moment, into the world. You talked to business owners. Did you do any of that before with GroupMe? Did you go out and see how people were using that? None of that, no.

Jared: It was for us, right? We were the users. It was literally to solve our own problems.

Andrew: Okay. Very much like the David Heinemeier Hanson approach. I am the user. I know I’m typical. I have to solve my problem because I know my problem better than anyone else. Okay.

Jared: That was it.

Andrew: There is this article that I saw, I think also in TechCrunch. Obviously, TechCrunch covered you a lot. They were so proud that you guys came out of the Hackathon. They talked about how you guys did this . . .

Jared: So like things like that helped with us, too. You know, like people liked talking about us because it was a really nice story.

Andrew: Yeah. I don’t think there was like a negative article that I found in TechCrunch because I sensed they have an incentive to promote you because you came out of their world. It’s like a lot of, “Look. They came out of our world. Look at how great they’re doing. They came out of our world. Look at how they sold. They came out of our world. Look at what Jared is up to next.”

But one thing that I saw was, at one point, and I didn’t know this, you guys were demoing something for the Lost series finale. A top corner of the app, there was an offers tab where if you looked at it for half-price . . . anyway, the reason that this stands out, even though I don’t fully understand what you were doing because I can’t see it, is it seems like you were attempting to make some money.

Jared: We wanted to prove that there was actually a potential business model on day one, right? We wanted to prove that this was not just like some SMS application, that this was going to expand to the web. We were going to build native mobile applications, and that ultimately, somewhere down the line, we have the ability to make money by surfacing contextual advertisements that were relevant, to the discussion you were having, that would hopefully make your experience better, or an opportunity to get together in the real world, that group of people you were talking with online. So the whole impetus behind that was to, like, show them this thing could potentially make money.

Andrew: And how did it do?

Jared: How did what do?

Andrew: How did the test do? Did it actually prove your model out? Did it prove that there was revenue in that, or not?

Jared: No. I mean, it was really odd. I think, like, maybe, like, one person redeemed it. It was awesome. Like we, you know, have some friends who are at Brooklyn Bowl, and they were nice enough to like get what we were trying to do, and kind of like volunteer this thing where we like ran this promo through GroupMe for that one specific demo.

Andrew: Yeah. You told our producer, “Look. One of the things that I regret . . .” Or not regret. One of the things you missed on in that business was actually generating sales. And you said to yourself in this new business that I’m starting, whatever it is, however it looks, I want to make money or generate revenue soon. Is that right? Do I have that understanding?

Jared: Yeah. It was a little bit difficult to catch what you said. Skype kind of was in and out. But I think what you said was how the lack of actually building a business or generating a revenue inspired me with Fundera. Is that right?

Andrew: Yes.

Jared: Yeah. So that’s definitely true. So after we sold GroupMe, I had some time at Microsoft to think about what I want to do next. And I generally found that a great way to think about the future is to evaluate the past and figure out what are the things that you liked? What are the things that you didn’t like? And where do you have the most to learn?

And somewhat ironically, the experience that I lacked was actually building a real business because at my two previous experiences, GroupMe and Tumblr, neither of them were revenue-generating companies by the time I had left, or we had sold.

And I think both were, like, really wonderful products and really wonderful brands. Tumblr became a great business and a great company, but not before I had left. But I hadn’t built a real business, I had realized. I built fun products and great brands, and I also wanted it to be a real company.

And to me, what that meant was it would have a transformative impact on an industry, and it would also be the place where all of our great employees, where they could look back 10 or 20 years from now and point to Fundera and say, “Hey. This set me on the trajectory to where I am today. This was the inflection point and steepest part of my learning curve, period.”

And that’s what building a company means to me. And that was the lens I was using as I began to evaluate new opportunities for what I wanted to do next. Hey, is there real business? Meaning is there a real revenue model that generates money on day one? And B, I truly believe this is an opportunity to turn into a big and impactful company.

Andrew: All right. I didn’t realize this. You told our producer you sold a business 370 days after it launched. Wow. Let’s close this out and move onto Fundera with this question. Why did you sell? And how did the sell come about?

Jared: So I think there was a couple of reasons. Number one was that GroupMe was an extraordinarily expensive business to run. We paid for every single text message that was being sent, and that was rapidly ramping up from the hundreds of millions to billions. So we were hemorrhaging cash with no clear path to how we wouldn’t continue to hemorrhage cash, at least over the immediate future.

So it was the kind of thing where we would have to continuously raise money for the next two or three years, which we could’ve done. To be candid, like we had an offer for a Siri.C, and turned it down to actually end up selling the company. So that was one reason.

Another one was just, like, it was a great opportunity for us to partner with Skype. We were US only, we’re using Skype right now. Skype has this similar ethos to GroupMe in the sense that it’s all about personal connections. How do you stay connected to people that are near and dear to you? Either over text or video or voice with a global footprint.

And that was really intriguing to us to have an opportunity to actually work with a global partner that saw eye to eye with us from a mission perspective, that was all about bringing close ties closer together. We really liked the executive team there. Personally and professionally, we thought it was a great thing for all of the GroupMe employees and for the founders included. I’d say those are probably the three primary things.

Andrew: Okay. All right. By the way, I’m looking at the website right now. Groupme.com, it’s not really updated, so then I went in to look at the app’s reviews to see what do people think of it. People still freaking love it. I thought, you know, people would say Microsoft is letting us down. They’re not taking care . . . no. They love it.

Jared: Yeah. Seldom is the app ever updated, but 10s of millions of people use it on a monthly basis in the US. Every single college kid in the country uses it. It’s nuts.

Andrew: Yeah. It really is. Okay.

Jared: It’s grown around 30x from the time we sold it, I think.

Andrew: You got to be just so proud of what you did with hat.

Jared: Yeah. It’s awesome.

Andrew: All right. You also picked a good logo, by the way. For some reason, that logo just catches my . . . I don’t know why. All right. Let me talk about my sponsor, and then we’re going to get into what happened next because again, you discovered another problem.

My sponsor’s a company called PipeDrive. This guy who you, I mean you for Tumblr, were their business development guys, so you know it takes some time to make deals as a business owner. What did you use to organize yourself when you were doing business dev at Tumblr? Spreadsheets, software?

Jared: Excel.

Andrew: Excel. Yeah. You know what? That’s the way a lot of businesses start. Frankly, when it came to doing interviews, we used to use Excel to just keep track of who we were proposing that we interview on the site. What’s our next step with them? And so on.

It worked okay, but we were dropping the ball on some guests. We weren’t following through. We weren’t closing enough. For us with interviews, closing meant having somebody on, like I’m having you on here.

And we said, “You know what? Let’s just get professional about this. What’s a software that people who are really good at closing use?” And one of my past guests introduced me to a company called PipeDrive. And I checked them out and I said, “You know what? This actually could be our solution.”

PipeDrive, the first thing they did with me was not say, “Hey. Use the software.” They said, “Stop. Think about what your process is for closing. Now organize it in PipeDrive.” Each step of your process for taking a stranger and turning them into a win, for us it’s an interview, it’s closing by having you on. Each step needs to be articulated, needs to have its own column. And then every time you have a new guest, suggestion, create a card for them and put them in the first column. Then when you take the next step, move them to the next column over to the right and so on, all the way to the end, and all of us as a team can collaborate.

Once we did that, we went from, you know, spending a year sometimes between suggesting a guest and getting them in an interview to under 30 days. And we weren’t dropping the ball on people. It’s phenomenal for that.

Now, most people listening are not doing interviews. They are doing what we do with our other business. We have a business which creates chat bots for clients. We immediately fired up PipeDrive for that business, created a column for each step for our process for selling chat bots to other businesses. And now it’s organized. We’re closing sales. It’s phenomenal.

If you’re out there and you’re closing sales one-on-one, I urge you to check out PipeDrive, pipedrive.com. Jared, I think if you guys as a team need software to manage your sales, this is the one to look at. Pipedrive.com/

Jared: I appreciate that.

Andrew: You know what I wondered? Do you guys even do sales like that, one-on-one? Or is mostly done . . . I actually picture you guys using SalesForce.

Jared: We use SalesForce.

Andrew: I figured. And no doubt, the most . . .

Jared: We probably can’t talk about that though, since we’re on the PipeDrive show.

Andrew: You can talk about . . . Here’s the thing. SalesForce, I think is phenomenal. Here’s the opportunity that PipeDrive saw. For many businesses, it’s overkill. It’s too many fields. It’s too tough to add things. It’s too much going on. With PipeDrive, they said, “We’re just going to focus on one thing. What’s the step-by-step process for closing a sale? And now, we’re going to move people through that process.”

All right. Guys, check it out at pipedrive.com/mixergy. And frankly, I urge you guys, if you want to, go check out SalesForce. I have complete confidence that if you’re right for PipeDrive, it’s going to be a good fit for you. If you’re not right for PipeDrive, go check out SalesForce and you’ll know it. If you try it, you’ll know which is the right one.

For me, SalesForce was overkill. PipeDrive was just right, and it’s helping us close sales. It focuses on the 10% that we need to get 100% of our job done. Pipedrive.com/mixergy will give you 14 days free plus 25% off for three months after. Go check them out, and I’m glad they’re sponsoring.

All right. Let’s move on. And again, you took some time, worked at Microsoft. You understood how these bigger businesses worked, and then you said, “I see another problem in the world.” And the problem came to you, again, by way of your wife. You know what? It must be good to be married to someone who keeps bringing these opportunities to you.

Jared: I got lucky. I got real lucky man.

Andrew: This time, through her cousin, Zack. What happened with Zack?

Jared: So I was doing some angel investing. Zack has got a restaurant in Ohio called Fusion. It’s an awesome restaurant. At this point in time, he had two locations open. And I love eating there. Every time we go back to Ohio, I always make effort to go out of my way to go eat there.

So I wanted to make an equity investment in his restaurant to help him open up his third location. And he said no because it was a family-run business, and they didn’t want to be diluted. And he asked for a loan, and I felt rejected, neglected, all that stuff.

I told him, go to a bank. And he told me he went to a couple of different banks and was rejected by all of them. And this was like a red flag for me because he had a profitable business. Both of his locations were doing several hundred thousand dollars in EBITDA, employed 60 people.

And he was looking for $300,000 to open up location number three. And I came from the world of the consumer internet, where companies were able to raise tens of millions of dollars with zero dollars of revenue. And that was backwards to me.

And I started doing some research and went online, head to Google, and typed in small business loans, and could not find any objective information out there about the different types of products and lenders that would be great for his business, or any business for that matter.

Andrew: Let me ask you this before we continue. I got a call from PayPal. I got several of them from them saying, “Hey. We see you’re charging credit cards to PayPal. Can we give you a small business loan?” I said, “No. I don’t need it. Can you please stop calling.”

When I opened up a new bank account at Chase after leaving Citibank, they said, “Well, now that you’ve opened up a bank account, how about getting a loan?” I said, “No.” They seem like they’re pretty eager to make these loans. Am I missing something?

Jared: I would say banks and larger institutions have become more eager, over time, to make these types of loans, or just to make smaller dollar loans in general. But they’re still not doing it the way they used to do it, like pre-financial crisis and recession.

The other thing is . . . and by the way, the products at PayPal and Chase offer their customers are actually exceptional products. And they’re very low friction products. But the fact of the matter is even if you did take that money from PayPal, or even if you did take that money from Chase, or both, none of these things are substitutes for one another.

Because the thing that I uncovered when doing a lot of this diligence in the world of small business lending is that there’s really no such thing as a small business loan. There are all of these different types of products out there. There are business credit cards, lines of credit, term loans, equipment financing, invoice financing, real estate financing, and none of these things are substitutes.

They all serve very different purposes. They’re intended to help you achieve some type of opportunity you want to pursue, or solve some type of problem that you need help problem-solving. And very frequently, they are complementary. Like, how many small business owners out there have a business credit card and a line of credit, and maybe some outstanding term loan debt? The answer is a lot, right?

So these things service very different use cases, and there really is no objective source of truth out there that’s going to help educate you, be in your corner, of a small business owner, to help you understand what the difference is between all of these products. When is the right time to use one over the other? Which ones of these are you actually eligible for? How do you think about the right decision so you don’t burden yourself with debt?

So the fact of the matter is banks want to lend to their customers. Now, companies like PayPal and Square and Amazon want to lend to their customers. We think that’s a great thing, but none of these things are substitutes for one another and none of them are the be all, end all product solution.

Andrew: Okay. So then you started looking around. You said this doesn’t work. You didn’t immediately go and start this business. Instead, you told our producer you walked around Brooklyn going to retail stores with an iPad. Tell me what you were doing there because I think that’s the key to how far you’ve grown.

Jared: Yeah. So I had a set of survey questions that I asked them. It’s the same survey for every single small business owner, and there were many instances where I walked in and started asking questions, or asked if I could ask questions, and was immediately turned away. I’ll tell you one funny story about that.

So the thing I was really trying to get a better understanding of is, A, what types of credit products do small business owners have or look for? What types of payment processing systems do they use? What types of cloud accounting software systems do they use? Who are the banks that they actually bank with?

Because I was also very curious about how easy would it be to get this type of data that we could use to better make suggestions to small business owners. And how willing would small business owners be to give access to that data if we can make intelligent recommendations to them?

So those are the kinds of things that I was asking. And I really just wanted to use that to get any proof I could that small business owners were interested in learning more about financial products, that they actually had these different types of financial products, that there was a need for them, what those needs were, and what types of products they already used, that would be able to provide us data that could help them in return.

And there was a local music store that’s a couple blocks away from my place in Brooklyn. And I went in there, and I started chatting up with the owner. And I asked him this question. I said, “Hey. Can I ask you some questions? Like I’m thinking about starting this business.” I said, “What kind of accounting software do you use?” And he really just looks me in the eye. He goes, “Mind Your Own Business.”

I was like, “I’m really sorry, man. I just wanted to know what kind of cloud accounting software you use.” He goes, “Mind Your Own Business.” I’m like, “Hey, man. I’ll leave. I didn’t mean to offend whatsoever.” He’s like, “No. Mind Your Own Business is the cloud accounting software that I use.” So I didn’t even realize that that was an accounting solutions provider.

So I learned a lot during that experience.

Andrew: Yeah. I’ve never heard of them before either.

Jared: Yeah. It’s a whole thing.

Andrew: They’re pretty popular.

Jared: Yeah. They are.

Andrew: You know what? So what did you learn from having . . . by the way, this is one of the fears that I think a lot of us have, that even if somebody is willing to help out, there’s like this intimidation, I’m going to play with them, an awkwardness about having a conversation with a stranger. I think it takes a lot of guts, am I wrong, to go door-to-door and ask people to fill out a survey to give you answers to tell you about their business?

Jared: So I tried to do it over a conversation. It’s not like I put an iPad in front of them and said, “Hey. Fill out this survey, please.” But yeah. I would say around 75% of the time, either the business owner wasn’t there, or I was told to go away.

Andrew: I get it.

Jared: I mean, you’re a business owner, you’re operating your business during peak hours. You’re busy. You don’t want to talk to somebody while you’re doing your job.

Andrew: No. And they’re always trying to sell you stuff. Many of them will have signs that say, “No solicitations, please,” because they’re so bothered by being . . . how did you get over the intimidation level of going door-to-door, if you had any intimidation?

Jared: Honestly, there was a friend of mine in New York City, a guy named Wiley Cerilli, who did the exact same thing when he started his company. He literally, like, built a PowerPoint presentation of what his product looked like and went to a bunch of small businesses and said, “Would you use this?” And he actually got people to sign up for a service that didn’t even exist. It was literally just, like, concept mock-ups.

Andrew: What was the business?

Jared: The business he created was a single platform, and he ended up selling it to Constant Contact.

Andrew: So you knew, hey, this had worked for somebody else. It may seem crazy, but it works. You know what? I remember GrubHub’s founder, Michael Evans, told me he did the same thing. He went door-to-door and said, “I have this software. It’s going to help you get new customers. Will you listen?” And many people didn’t want to listen. But eventually, they did.

Okay. What did you learn that you didn’t know by being in business, by talking to Zack?

Jared: So what did I learn from those customer conversations, initially?

Andrew: Yeah. From those conversations. It seems like you already knew a lot. What did you learn that was eye-opening, that was different from your own previous understanding?

Jared: I learned that it was going to be extraordinarily difficult because every small business owner is exceptionally unique. They all do things differently. While some products might be more popular than others, it’s still a massively fragmented market in regards to the types of banks, or credit cards, or cloud accounting software, or payment processing systems that people use.

So I generally learned that like there was going to be no silver bullet here. There was not going to be like no immediate right thing to build. I was going to unlock some magical experience for absolutely everybody.

But I also learned that access to credit and education around credit, and quite candidly, small business owners constantly being sold things that they don’t need, and being offended by it and having their time wasted by it, and feeling like the odds are perpetually stacked against them and they didn’t have anybody they could trust was the common theme, right?

That was one thing that I think was universally true across everybody that I spoke with. And quite candidly, like as an entrepreneur myself, that’s true for myself too. So I knew that no matter what we needed to do, we always needed to act in the best interest of the small business owner, which is my number one value as a company is to walk in Zack’s shoes, Zack being my cousin.

And I knew that we had to provide objective information and supports that would help us engender trust with all of our customers. And that that was going to be the most important thing that we did.

Andrew: By the way, Zack seems to have done phenomenally well. I’m looking at an article about him in My Dayton Daily News. He’s opening up stores left and right.

Jared: Yeah. I mean, he’s got, I think, slightly north of ten locations open now. So he’s killing it.

Andrew: Yeah. So man, they missed out, those banks that turned him down.

Jared: He’s great.

Andrew: What attracted you to it? I hear about a messy industry, a messy set of customers that are all different from each other, and I run the other way. What was it about this made you say, “They’re all different, but I see the opportunity”?

Jared: Well, I mean, part of it was the lens that I was using, right? Could it be a real business on day one? Will it have an opportunity to be a real company? And I fundamentally believed that we had an opportunity to have a transformative impact on an industry where the internet had not happened to it, right?

If you think about at Google search, typing in small business loans where it all started, and the only results I saw were big banks, where many small business owners either are not banking already, or could conceivably be rejected, and a bunch of ads from a lot of payday lenders and predatory loan brokers and loan sharky type people, man, there was no source of truth.

And like that was an opportunity. You know, if we could be the place where when you start thinking about small business loans or you’re searching and you’re trying to educate yourself, if we could be that source of information, that hub, where you’re getting smart, and that information is valuable to a customer, man, that is a real opportunity and an opportunity to good by millions of small business owners out there.

Andrew: You know what? I did that Google search right now.

Jared: And what do you see?

Andrew: Do you know what comes up number one?

Jared: I do.

Andrew: That’s you.

Jared: Yeah.

Andrew: Yeah. All right. I want to do a quick . . . this time much quicker than the previous one, ad for Toptal, and then come back to this conversation and understand how the first thing that you created actually, was not right, and what you did about it.

The sponsor is a company called Toptal. I usually talk about my experiences with them but instead, I’m going to talk about something that I saw on Quora. There was a question about Toptal, whether anyone used it on Quora, and this guy came in and said, “Yeah. I’ve used it.” And he’s the founder of a company called Sidekick. And he said he used them initially for his app design and user experience.

And I said, “You know once the app was designed . . .” And Toptal has phenomenal designers. Once it was designed, he wanted somebody to help him refine his business page because he was trying to raise some money.

And a lot of entrepreneurs need some help with their financials, with their pitch. Who helped you, by the way, Jared, when you were putting your pitch deck together? Do you remember?

Jared: I’m trying to think. So it was kind of Steve and I locked in a room for a while. I think the person who . . . like the investor who helped out most there was this guy named Charlie O’Donnell who was a principal or partner at First Round Capital at that point in time.

And he was one of the very first people who saw our product. He was at the TechCrunch Disrupt Hackathon, and we actually showed it to him there. Was one of our first users as well. And I think he helped us a bit with our deck and took us through what it meant to pitch other people.

And quite candidly, like at that point in time, I had been at Tumblr, I got a lot of exposure and just read a ton of different articles on how to do it right. So it was a combination of all of those things.

Andrew: Yeah. First Round is phenomenal at supporting. It looks like now, he is with Brooklyn Bridge Ventures. He’s a partner there.

Jared: That’s his firm. Yeah.

Andrew: Well, even experienced entrepreneurs who are further along, sometimes need help with the financials that they show investors, putting together spreadsheets and so on. And so this entrepreneur said, “I needed some help, and so I just turned to Toptal. Toptal acquired a company that has MBAs and finance experts in it, and so we hired someone from there.

And then he said, “You know, it was time for me to build up the software, so I went out and I found some cheaper developers.” And he realized, “You know what? This is a mistake.” Yes, they cost half a quarter as much as Toptal’s people, but work 10 times better. So he hired people from Toptal.

So basically, his whole business was built using Toptal support, or at least the early part of his business was built using Toptal support. You can go read about that and so many other case studies from Toptal. Just Google them. Frankly, I don’t want to direct you to any one, because you can imagine they’re sponsoring me, so I’ll direct you to the best ones.

But you could do your homework. You could talk to other entrepreneurs, or frankly, you could just go talk to Toptal. Let them know what you’re looking for, and they’re going to help you find the best developers, the best designers, and the best finance people who can help you out.

I’ve got a special URL, where if you go there, you’re going to get, what is it, 80 hours of Toptal developer credit when you pay for your first 80 hours. And there’s a no risk trial period of up to two weeks. If you need great developers, designers, and now finance people, go check them out. Here’s a special URL. It’s toptal.com/mixergy.

All right. So Jared, the first version was actually, you told our producer the wrong thing. It was what?

Jared: We collected a little bit of information on our customers, showed them a whole long list of lenders, had them select one or two lenders or however many they wanted to select, that they wanted to go see and complete and application with, they would be redirected to third-party websites or an email introduction would fire off between the small business owner and the lender. And they would be on their merry way.

And what we realized we did was we outsourced almost the entire customer experience and conversion funnel. And it just didn’t work, right? Like it was a fundamentally bad customer experience because you would get to a point on Fundera and then you would just bounce. And we had no visibility into what was happening.

And then once we actually tried to start learning what was actually happening, and we would listen into some of the calls that our customers were having with some of the lenders, we just realized that the experience is way too fragmented. It wasn’t what we would do, had we had an opportunity to kind of rethink what that end-to-end customer experience should look like.

Sometimes, we felt like a lender might be trying to pitch their product to hard or in an unreasonable fashion, and the business also just didn’t work. And some of the things that I think we came to understand was it was really critical that we own the end-to-end experience.

Because if the objective here is to not just help you understand your credit-worthiness, but to get you multiple offers so that lenders compete for your business, you shouldn’t have to go off and complete the same application in five different applications in five different places to get five different offers. You should be able to do it in its entirety, all in one place, without having to speak to anybody. Or if you want to speak to somebody, it’s going to be Fundera.

So how do we unify that end-to-end customer experience and take it entirely into our own hands and be in control of our own destiny? The other thing we realized was, “Wow. You know, if we want to be the long-term partner for all of these small business owners, it’s really critical that we maintain this customer experience.”

Because if we can deliver on our promise to help get you multiple offers, to make sure it’s a seamless and very simple experience, and for you to ultimately just have somebody in your corner, literally fighting for you, being on your side of the table, that customer is going to trust us and continue to come back to us over time and build a relationship with us.

So those are the things that we realized we had to do that we did not do in V1. And we probably realized that around four or five months after we shipped our product. Maybe it’s three or four. I’m not sure what the exact time frame was. And embarked upon rebuilding the entire thing so we could own the end-to-end experience.

Andrew: Yeah. For the most part, businesses where you send the customer away as a referral are hard to make into long-term companies. The few exceptions are like the Expedias of the world where they’re sending you to the airline, but nobody cares about the airline. They care about the deal and getting from point A to point B.

But everywhere else, you’re just losing them. And you keep having to rediscover new customers.

Jared: Reacquire them, all that kind of stuff. It’s extraordinarily transactional.

Andrew: And then when it was time for you to say, we’re going to take it internally, you were going to partner with other companies, other financial institutions, they were going to create the loans. Am I right?

Jared: Yeah. So we’re not a lender. And so we partner with other financial institutions, and then we help small business owners understand which of those, lenders or financial institutions, whether it’s AMEX or Cap One or Chase or some of the bigger online lenders like Lending Club or Kabbage or OnDeck, we work with those types of providers on the supply side of the marketplace.

And we help small business owners understand the difference between all of them, which ones are right for their needs, for their opportunities, for their problems, for their credit-worthiness as well. So that’s kind of how the marketplace component works.

Andrew: I’m interested in how you made this transition, how you knew that you needed to. Were you calling up customers who you . . .you were. You were personally doing it?

Jared: Yeah. I was on the phones on day one. When customers would call in and have questions about what was going on, I was the one answering them. We had a chat widget. We don’t have it out anymore, but we had a chat widget on our site, so when customers are actually asking questions on our website, I was the one who answering all of those questions.

Actually, one of our investors, that’s how he was introduced to Fundera. He started asking questions on this chat widget, and I was the one who was answering them. So yeah, I was talking to most of our customers then.

Andrew: I’m wondering why. Why you? I noticed this as a trend with entrepreneurs who I interview. They are the ones who are doing the early customer service and the widget and the email. Why did you want to do that? Well, I mean, you could’ve hired somebody.

You could’ve said, “Look. I now am a proven entrepreneur. There are guys in New York City who’d kill to be identified with me, so they could learn, because it’s going to make their careers. I’ll go get one of them.” Why did you want to do it yourself?

Jared: Well, I think you . . . it’s great when you want to do it, but you actually just have to do it. So it’s not like a question of like want to do it. I wanted to do it because I wanted to learn more about our customers and learn more about how they were interacting with our products, how they were interacting with our partners, so that we could make better decisions down the line to improve that experience for small business owners. It’s the best way to learn.

Candidly, in the early stage, it’s actually the only way to learn. I think if anybody tells you anything else, they’re probably just lying to you. Like, that’s why I want to do it. But if you’re a small business owner, whether it’s a tech startup, or a restaurant, or retail store, or you’re a consultant, you have to do it. It’s not a question of want to. You have to do it in order to take the next steps, in order to understand what you need to do next.

Otherwise, you’re kind of just like, finger in the wind. Which way is the wind blowing? I don’t know. Everything’s just conjecture. This is the only way to gather information so that you can actually improve upon the things you’ve built.

Andrew: And then you would follow-up with them afterwards. So you’d refer them out, you’d give them out as a lead. You’d collect payment for that lead, and then you check in a couple of weeks later and say, “How did that go?” And that’s when you discovered, “Hey. Things are not working out great for us.”

Jared: So, I think, one just important distinction I want to make is we never got paid for a lead, right? It’s an entirely success-based business model, and it always has been. We’ve never, at no point time will we ever sell a customer’s information.

We just think that’s an absolutely abysmal and terrible experience for a small business owner. The last thing you want to do is get bombarded and called by a bunch of people that you didn’t know in the first place. So that is antithetical to everything we believe in.

So it’s a success-based business model. So if you end up getting something you like, multiple offers you like, and you select one of them because you think it’s the right fit for you, that’s when we get paid by the lender, free to the small business owner. So I’m sorry. I just wanted to clarify that.

So I always call the customers whether or not they were getting funded and trying to understand why they weren’t, trying to understand if they were, what was it like? What could we have done better? What could the lender have done better? What was their ideal customer experience that was unfulfilled in the current iteration of Fundera? So I was talking to everybody I could.

Andrew: Okay. And that’s how you understood, we’re not doing the right thing by them. We’re giving the kind of experience that we’d like. You partnered up with institutions. You mentioned Chase and American Express and others. How tough was that partnership? And what were you offering to do for them?

Jared: Yeah. So the lenders that we worked with, primarily started as online lenders. So this entire industry kind of, like it exploded and like grew rapidly after the last financial crisis because banks contracted all their lending, so all these consumer and small business lenders emerged that weren’t banks because banks weren’t lending. And they said this is a huge market. It’s an under-served population. Let’s see if we can actually help them.

So we started by partnering with them. And then over time as we grew, and more and more small business owners come to us like, you know, slightly north of a quarter million small business owners come to Fundera every single month, just getting information, right, just reading articles, educating themselves.

So as we began to grow, other institutions became more interested in some of the things that we were doing. We started thinking about branching into new products like business credit cards and it made those conversations with, you know, larger financial institutions like AMEX, Chase, Cap One, much easier over time.

And, I think it was just like having great people here who have those relationships and know how to develop those relationships, and proving that we’re the place where small business owners go to make these types of financial decisions.

Andrew: So Jared, if I come to your site, I go to fundera.com, I say I need a loan, I fill out the form, what happens after that?

Jared: A couple different things could happen. You could be a start-up and then we direct you to some of the different types of financing opportunities that are best suited for start-ups.

Andrew: Like what?

Jared: It will primarily be business credit cards. Or if you are an established business owner, and you’ve been in business for at least a couple of years and you have a relatively good credit score like 620, 640, and doing several hundred thousand dollars in annual revenue, you’re going to go through an application experience.

And that application experience, we’re going to ask for a little bit of information about you as a business owner, a little bit of information about the business itself, and a couple of documents, probably things like bank statements, so that we can better evaluate your business and determine which of the lenders in our network are going to be able to, A, extend you capital, and, B, are actually going to be able to meet the requirements that you have.

What’s the opportunity you’re trying to tackle, what’s the problem you’re trying to solve, how much money are you actually looking for? What’s it actually for? And algorithmically, we going to match you up with a series of lenders that we think are actually going to be able to extend you an offer, and it’s going to be an offer that you’re going to like.

Andrew: And you tell me, “Here’s the people who we think are going to be a good fit for you.” And I then say, “You know what? I don’t like American Express, but I do like Chase.” And I get to send my stuff to Chase.

Jared: Yeah. Or it might be a series of online lenders. You might say, “Hey. You know, I’ve heard of Kabbage before,” or, “Hey. I’ve heard of Lending Club or Funding Circle before,” or, “I’ve heard of, you know, Swift Capital and PayPal before.” That’s kind of how it works.

And then you’ll be presented all of the final offers that you get through Fundera. And there’s people here. We think it’s really important for a small business owner to be able to actually speak to a person at Fundera and to form that relationship.

These are big purchasing decisions, right? The average size loan through Fundera is around $55,000 or $60,000. That’s a big purchasing decision. We want to make sure people are thoughtful about it, and we want to make sure that people have access to us so that they can continue to ask us questions about how to evaluate different offers, how to understand the nuances of different lenders or products. So we think it’s absolutely critical that we actually invest human capital to interact with our customers.

Andrew: I wonder if I should be using it because you know what? I don’t want to take any loans out because I want to stay conservative. I keep money in the bank. And the guy who I hired from Toptal to give me some finance advice say, “Dude. What are you doing? You’re keeping money in the accounts just sitting there at 0% interest.”

I said, “I’m conservative.” He goes, “If you’re conservative, take the money out of the business, and then go get a loan first.” And he said, “Look. I bet Chase is going to give it to you.” And I emailed Chase, and they said essentially, yeah, easy $250,000, $300,000 line of credit we can extend to you very fast. I wonder if I should just go to you guys. What’s the advantage that I get by going to you as opposed to taking Chase up on their offer?

Jared: You can take Chase up on their offer if you think it’s reasonably compelling rates, and it’s the right product, and the right amount of money for you. And lines of credit, I believe, are truly great products.

And most small businesses owners should have them, not necessarily use them, but have them just in case there’s some intermittent cash flow gaps or some mistakes that happen down the road, or just a bump in the road that was unforeseen, a line of credit can really be a great safety net for many small business owners.

You could come to Fundera to learn more about lines of credit and see the different types of lenders out there that actually do offer lines of credit, understand what their rates are to make sure that if Chase is extending this to you, it is the right product for you. It is the right rate for you. It is the right kind of construct for you.

And the answer very well might be that the offer you have on the table is the right one for you. And if that’s what interesting to you, you should do it. And we’re never going to tell you not to do that. But you would come to Fundera to evaluate what types of other opportunities are out there and educate yourself on them.

Andrew: And if I take a line of credit through Fundera, aren’t you losing me at that point because now, I’m establishing a relationship with whoever it is who’s giving me the line of credit. And it’s very easy for me to say to them, without you at all, “Increase it because our business is doing better.”

Jared: Sure.

Andrew: But how does that solve the issue that we brought up earlier, which is if you do well, you basically lose the customer?

Jared: We don’t. Most of our customers come back to us. One of the things that we really work very diligently on is helping a small business owner improve their credit-worthiness over time. So if you go out there and you get a line of credit, well, we want to make sure you’re improving your credit-worthiness so that you can get a better one at lower rates, better terms, longer duration.

Andrew: I see. So I could just keep extending my credit, growing it with the person who you introduced me to, but I’m more likely to say . . . or I’m likely, I don’t know if it’s more or less, likely to say, “Hey. You know what? These are the guys who made this introduction. Maybe they have another suggestion. Maybe it’s not more of this. Maybe it’s another product.”

And that’s why before this interview started, I said I was going to tell people that you guys are the place where small businesses can get loans, and you expanded my description to financial solutions over time, and that is why because sometimes a loan is great in the beginning, but it’s not what you want next. Or one type of loan is not . . .

Jared: That’s exactly right. You might have a different problem, a different need, and the line of credit might not be the right solution for you, or maybe your credit score improved by 100 points and all of the sudden, you’re eligible for something totally different and totally better.

Those are the types of things that we think are really important for business owners to understand. That’s where we really view the true long-term partnership happening with all of our customers, helping them to improve their credit-worthiness so that they can continue to get access to better and better products to tackle better and bigger opportunities over time.

Andrew: What’s your revenue now?

Jared: It’s healthy. I’ll say that.

Andrew: I have it here on my screen by the way. I won’t say it because I know you revealed this stuff in private. But what do you feel comfortable saying? Do you feel comfortable saying whether it’s over a million, over 10 million, over 100 million, over a billion, over a zillion? Is there some number that you feel comfortable saying it is over this. We’re doing well.

Jared: Yeah. I mean, it’s over a 10 million annualized run rate, is something I’m comfortable saying.

Andrew: And that means that the money you make, not on the overall loan size.

Jared: That’s the money that we make, yeah.

Andrew: All right. Let me close out with this thing, just so we don’t like leave people with the impression, here’s a guy who started at a Hackathon, and suddenly everything worked out well for him. There was a period, not too long ago . . . we’re now in 2017 recording this. At the end of 2016, about a year ago, you woke up. You realized, “Hey. You know what? There’s a problem.” You did a town hall. Do you know what I’m talking about?

Jared: I do.

Andrew: And what did you see and what did you say in that town hall meeting?

Jared: Yeah. So this is actually, I think like, in Q2 or Q3 of 2016, more towards the middle of 2016, where I woke up and realized that . . . when we talked about owning the end-to-end experience, what we ended up doing is we ended up hiring a bunch of people to help customers get through the funnel.

And the goal of hiring all these people was to understand what worked best, how to better communicate with our customers, so that we could ultimately build a product and begin to automate more and more of that. And we kind of lost sight of that initial intention and realized that we had to really invest more significantly into building better product, designing things better, so that it was a more enjoyable online experience for our customers.

And quite candidly, like you know, early on in 2016, we messed up a lot of things and the business wasn’t go too well.

And it really forced us to stop focusing on too many things and focusing on one thing, which is what should that application experience look like? What is the right product and customer experience for that? And how do we make sure that when a small business owner comes to us, as many of them as possible actually end up successfully getting the thing that they’re looking for and find the service valuable.

And I shared those sentiments, pretty dramatically, with the company. We do this town hall thing once a month where we get the entire company together, and we go through kind of like a business update. And I showed a… It was right after we moved to, you know, the office that we’re currently in. It’s just a great office, and our first office before that was just, like, total dump, quintessential start-up office. Very charming in its dumpiness, but also, just like, about to explode.

And I showed a picture of an entirely empty office. And I was yelling like, “This is not what we want, right? And, like, if we continue on this trajectory, this is ultimately, kind of, where we’re heading. And the way to avoid this is to focus on the thing that we wanted to do in the first place, building the right product with the right customer experience, automating as much of this as possible, asking the customer for the littlest amount of information to produce the highest degree of certainty as quickly as possible for them. Let’s go do that and improve our conversion rate.”

And that’s what we did. You know, the past 18 months have been amazing. The company size actually went from 60 down to 48 people, and we grew around 3x over the course of that time period.

Andrew: And part of it was the same thing that Noah Kagan told me when he worked for Mark Zuckerberg, that Mark Zuckerberg focused him on. He said, one data point, one thing. And for them at the time, it was growth. For you, what was the single data point?

Jared: Conversion rate.

Andrew: Conversion. How many people who come through the site end up actually with a happy loan. You know what? And I can see why. I can’t help myself. I usually try to stay focused on the guest, and if not, I’m doing research, largely because I run a business too. I’m on your forum, like the Start Here button, I clicked on that. The thing that happens afterwards is freaking a thing of beauty.

I don’t know who the person is who put that together but I can’t help but filling it out. I’m typing it in right now my email address, I’m hitting Continue. It’s really beautifully done. Who’s the guy on the right side who’s face I see?

Jared: It’s unique to you right now.

Andrew: Oh, really?

Jared: It’s somebody who works here.

Andrew: Okay. I thought it was, maybe like, someone internally.

Jared: Is there a name there?

Andrew: No. Great. From what you’ve told me, I know there’s several options for you. Let’s walk through them, how the process works. Where can I reach you? Of it’s easier, give us a call. Okay. And they want me to create a password. You know what? Frankly, anyone who is out there who has no interest in a loan, should at least go to Fundera right now just to see what this on-boarding process looks like because frankly . . . not frankly, we all know on-boarding processes for credit card or finance instruments are a pain in the butt because they’re pretty involved and they’re ugly.

I’m done. Apparently, I already filled it . . . oh no, okay. You guys want my social. I feel comfortable. I trust you with my social right now. July 4th is my birthday. Okay. Personal address, you want my home address?

Jared: Yeah. Your personal address, your own address.

Andrew: My personal address would usually be my office, but okay. That’s fine. You can’t see my screen, can you?

Jared: I can’t see your screen. No.

Andrew: Great. I don’t know. I get so paranoid about putting my credit card information in. Okay. I’m in.

Jared: Congrats.

Andrew: Oh, connect a bank account. Interesting. I’m going to try this. I really like your form, but I don’t want to get distracted by what we’re doing here. Thanks so much for being on here. Oh, this is a really nice integration. I thought I was on Chase’s website here. Who’s doing this? This is internal? You’re not going to tell me the name of the person who created this on-boarding process, are you?

Jared: The bank account connection?

Andrew: No, the whole thing. This on-boarding process is beautiful. I didn’t mean to register. I didn’t want to get distracted. I just wanted to feel it, but I’m already sucked into your process.

Jared: Good. I’m happy to hear it.

Andrew: Who did it?

Jared: You’re an experiment group right now.

Andrew: I am?

Jared: Yeah. We’re actually shortening our application by around 60%, maybe 75%. Yeah. We’re working on some really, really cool things where you will soon, over the course of the next two or three months, literally be able to apply on your phone in less than two minutes and get firm offers. It’s going to be pretty cool.

Andrew: All right. Well, I’m looking forward to seeing how this works out. I’m now in your system, social security and all.

Jared: All right. You might get a call. You may not.

Andrew: I get no commission, by the way, from referring people to you. You know what? It hurts me to refer people to you, or just to be this, like, excited about it because I think it hurts my credibility in the interview. I need to be the guy who pulls information out of you and who’s not here to be your best friend, but I also need to be open. So I’m curious about this.

As a person who is now thinking about some kind of line of credit, some kind of loan, this is interesting to me, personally.

Jared: I appreciate that. Let me know if I can help.

Andrew: I will. Hang on after this interview. I want to ask you one, like, non-work question here. And first, let me tell everyone if they want to go do what I just did, they could go check out fundera.com.

And my two sponsors are PipeDrive. Here’s an interesting thing I discovered as I was researching you during this interview. Apparently, over half a decade ago, we wanted to get you on as a guest on Mixergy, but our system was so crappy at the time, that Shelly on our team was like emailing me, emailing someone else. We never made the freaking thing work. We might’ve even frankly, contacted you, and still, we couldn’t get this thing going.

Jared: Hey, man. We made it happen.

Andrew: Because we had a crappy CRM system. It was spreadsheet. If you’re out there and you need better CRM. Go check out pipedrive.com/mixergy.

And if you want to be open to new finance feedback and ideas, like I was, the only reason I’m thinking about a loan is because I hired Jack from Toptal. They have great finance people that you can hire on a temporary basis, full time basis, whatever, in addition to their developer, etc.. Go check them out at toptal.com/mixergy.

Grateful to all of you for being here. And Jared, thank you so much. Bye, everyone.


  • joe chen

    stop typing so loudly during the interview, I know you are doing your research but it’s annoying.

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