A (7:59)

Yeah, so you, you know, it's the cool thing about entrepreneurship. You, you had a, a pretty gut wrenching loss that you turned into a huge win. Right? You saw, which sucks, right? Like, it's like you. You had this deal, you lost it, you lost your emd. It didn't feel good. But instead of kind of letting that defeat you, you said, shit, this is a. This is a real problem I need to solve. So kind of give me an idea of like, all right, we had this idea, you know, from idea to like, all right, now this is a real thing. Like, what did that take? How long did that take you to put together?

B (8:37)

Yeah, so I'm like, okay, problem equals opportunity, right? That's. That's the entrepreneur mindset right there. And I am generally not a super risky person. So the way I thought about it was like, okay, I need to validate if this is just a me problem or is this actually a problem for a lot of people and an opportunity for a lot of people. So what we did was. So my co founder, he actually is one of my teammates back at my previous company, I used to work as the software engineer at a firm, and my co founder, Carlos and I would always just be chatting about real estate whenever we were having lunch at the office. That was basically our shared hobby. So I told him what I was experiencing, and he's really active in real estate too. And we were like, okay, let's validate if this actually is a thing. So we pretty much build this fake website describing the pain points we were going through and what we were looking out to build. And there's also a flip side to it where it's like, would investors really love and jump at the opportunity to go invest with other killer operators in their network for as little as 10 grand, right? Like, there's. There's kind of two components to it. So we. We blended those two concepts together into this fake website, and we ended up launching it on this app called Blind, where there's a lot of tech professionals just gossiping about their employers, really. But it was a target audience for us because, you know, people there have money and disposable income that they want to invest, right? So we put it on there and. And within a day, we get 2,000 people to join our wait list for this fake website, right? And we were like, holy shit.

A (10:25)

Like, this is clearly something.

B (10:27)

Yeah, yeah, exactly. It's like, we're not imagining this. There's a real problem and opportunity here. Let's go fricking do it.

A (10:34)

That's amazing. So another thing is that needs to be said. There's a lot of people don't understand this, when you raise money, there's a lot of people that don't just don't follow the rules and they just break the law. So you guys, there's obviously this huge compliance thing that you had to figure out. And you went and got somebody from the SEC to help you figure this out, right?

B (10:59)

Yes, exactly. That was a huge thing for us, is like, we obviously don't want to go to jail. We don't want anyone, you know, setting up investment clubs, having user error, not doing the compliance stuff correctly. So we were super lucky to. We got into Y Combinator, which is an accelerator that has created all these legendary companies like Airbnb and Stripe. So we got into that, which totally put us in the absolute best room possible. And then from there got connected with the former senior counsel of the sec, told him what we were building and he's like, this is legit. That is definitely a concept that's needed in real estate. I'm going to come in, I'm going to develop, develop with you guys what the product should look like. What are all the compliance guidelines, what are all the legal docs you need to have and how do you actually track active participation and make that as streamlined as possible from a tech perspective and have all the data and proof points where, you know, if the FCC ever came knocking at the door, you know, you would be able to legitimately prove to them that, you know, we did everything and this is truly an investment club and you know, really check the boxes from a compliance perspective. So that was really huge for us to, you know, be able to keep growing and evolving with someone who, you know, knows all the rules and how to, you know, go about the process in the most kosher way possible.

A (12:26)

Yeah, I mean that's, that's awesome because that is, you know, that is the biggest fear right of. And that's what any, excuse me, that's what any attorney will tell you to be scared of is being compliant in the money raising side. So you guys figured that out, which is a big deal for anybody listening. If you're actively raising money, obviously check their platform out. But like, you go to jail if you do this wrong.

B (12:54)

Yes, that, that is 100 a thing. I meme about this slightly, but I feel like every time I'm on social media I'm like, that is jail worthy content right there.

A (13:04)

Oh my God. Yeah, 100%. So, so, all right, you start, you got the idea, you start to vet it and then you guys, do you go out and raise money first? Like, did you do a Beta, like where what's kind of the next generation of it?

B (13:22)

Yes. So we, we get into Y Combinator, they give you not a huge check, like a decent check where you can stay alive as a founder after quitting your W2 job. So we go into Y Combinator. That thing is just an absolute pressure cooker because you are accelerator for pretty much two months and then at the end of it they have this thing called demo day where they basically invite all the VCs out there. You go into a room, you picture company in like a two minute elevator pitch and you just see how many eyeballs you can potentially catch. Right. So we were basically in Y Combinator trying to get our first few customers. So basically after two months we've built a fully, you know, fleshed out product at that point, basically our V1 of what this thing looks like. And then we had helped 10 operators go through the process of, you know, building an investment club and bringing in capital in their network. So that was a huge feat for us. Just coming out two months was actually something substantial to show and that went really well for us from a capital raising perspective for the company itself. We ended up raising roughly $5 million for our seed round there from some really great people. Crv, they're the investors of Doordash. We got Will Smith and Kevin Durant there too. They showed up to demo day and everything. So that's always a fun story to tell. And after that, you know, with the $5 million, it's like, okay, now we can actually grow a team. We can build faster, we can iterate more, start exploring marketing and things like that. And then not too long ago, we raised another $15 million for our series A.

A (15:11)

Got it. And did I see something? You guys got nominated for something for Inman, didn't I see?

B (15:18)

We did. We got nominated as one of the innovators of the year.

A (15:23)

Oh, that's awesome. That's really, really cool. So go to present day now. Right, like so you've got active investors, you're big and sub two. I see Pace Morbi's use you guys to raise for multiple deals. Like kind of where you at now today? Hey, this next segment is brought to you by my good friends. I am a Comeback. We did an episode with Mark Jennison. Now listen, not something a lot of people like to talk about, but it's a real thing. If you're struggling with alcohol and you're a high performer, I Am A Comeback can help you. These guys are my friends. I've been to their Events. I've been inside their community. I do a lot of business with a lot of people. Mark has transformed a ton of people's lives. If you're in a situation where you need help, reach out to my good friends at I am a comeback and that's iamacomeback.com mention the show, mention you're a friend of the show. These guys will take good care of you. And they do it for all the high performers that need this help. They've transferred a ton of lives. They're who I trust and Mark is a good friend. So check them out@iamacomback.com.

B (16:33)

Yeah, right now we are definitely full growth mode. Everything has been very word of mouth, you know, up until this point. And I think that's very beautiful in itself because community is a huge part of our DNA as a business. You know, with investment clubs, you'll bring in their own network. So we've, you know, very strategically grown by being in a lot of the right rooms, working with really powerful people like pace. And that has definitely just really elevated and accelerated the business. So now it's all about scalability. Is like, can you take that model? And times it by 100, right. So that's pretty much what we're stepping our foot on the gas right now is really taking this model, scaling it up, and then another really cool thing is actually going into a different vertical. So we started this whole thing out just in real estate. And a lot of real estate operators, they're very diversified as entrepreneurs too, and they're not just buying, you know, real estate. It started going from like single family homes to other asset classes like self storage. And then all of a sudden, you know, these real estate investors, they're like, hey, you know, I actually own some car washes on the side and some laundromats and whatnot. So it's like, okay, you know, why don't we do investment clubs for business acquisitions? So new thing we just started getting into actually, you know, within the last quarter, which has been super exciting. Even had a group go buy some candy stores together, which I never would have.

A (18:13)

I saw that on your social media, which was really cool.

B (18:16)

Yeah, I am all for like all sorts of crazy things. I think that that is totally the magic of, of a community.

A (18:24)

So being a startup, what like, you know, I always like to tell not just the good, but the bad. You know, what are some challenges, you know, growing a new company? You guys are seeing massive growth, right? What are some challenges that you guys have experienced? What if. What have you run into that, you know, you would just give somebody advice. I wish I would have done this different. Or just challenges that you face for our listeners that could help them.

B (18:50)

Yeah, for sure, lots of challenges. I would say we've, we've iterated through so many versions of, you know, the platform, our messaging, our focus, our audience. Like each iteration is definitely very painful as you're going through it. And I would say one of the biggest ones was actually kind of letting go a little bit of the consumer side in terms of who we target. So when we just started out, it was very kind of like dual facing where we wanted to speak to the operators, but at the same time we were also trying to speak to the end investors that had the 10k, the 25k. So because of that, it's almost like you're trying to grow a marketplace which is a much more complex thing compared to just targeting one thing. You got the chicken and egg problem. And then the messaging is also harder to grasp because you're talking to two completely separate types of people who are coming from totally different places. So we try building, even taking the Y Combinator concept and saying, hey, can we do an accelerator for the end consumer where we can educate them, put them in a two month boot camp and try to match make them with other operators. That was a concept that we were really excited about for a little bit over a year or two and it didn't really work out because I think targeting the end consumer, it is a lot harder, especially also mixing in, you know, trying to speak to the operator too. And I think personally for me, because you know, this whole thing is our baby, right? Like sometimes you do get a little bit of like a personal connection, like an emotional attachment to it where I wish I would have been able to, you know, just kind of cut the losses or be able to pivot faster where it's, you have the data in front of you, but then you're like, oh, this is working. It's not like it's not working. Maybe if we just tried a little bit harder or maybe if we just give it a few more months and then the timing is right, it'll work better. I think that's a huge learning lesson for me is sometimes if you see the signs, you gotta just pivot faster and just lean in on the things that didn't work out. Because you know, changing shifting gears and changing direction could actually lead you to the actual right success much faster.

A (21:28)

Yeah, that's the old sometimes you got to burn the good to get the Great. Which to your point, as entrepreneurs sometimes we get so emotionally attached and man, we really wanted this to work. But when actually burning it down and taken part of the idea and pivoting is actually where we can be more successful. That's a very, very great point because I think that's one thing that many, many entrepreneurs struggle with, of getting comfortable in a lane and not learning to pivot when they need to pivot. So that's great advice, really great advice. So now platform's starting to grow. A lot of cool things are happening. You're getting in cool rooms. What do you see as kind of the evolution of where do you want to go next?

B (22:18)

Yeah, I think the next iteration is how do we truly build this to be a machine where it's almost a self service way for operators with any sort of vision to just come in here and be able to just start their investment club. How do we run, you know, hundreds of thousands of investment clubs on the platform going in all at once? I think that's really the next cool thing to tackle because right now this is, it's a, it's a new concept for a lot of people. So you know, we're in there where we're doing the education, we're explaining things, we want people to understand how this works and understand the compliance and all that. But the next unlock is like fractional is a no brainer and you get to understand how all these things work and you can just go in there almost like Kickstarter. Anyone can go in there if they've got a great vision and just go at it and they have everything right there and then on the platform to help people succeed. We want to get to that level of scalability and self service. I think that would be just super, super killer. And with all the talks about AI and all that, I think that is also going to be extremely beautiful when it comes to elevating the business and from a customer experience perspective and even taking that to the end user at the end of the day, investing it is a complicated thing and there are so many moving parts. People are trying to understand all these different things and, and then they're experiencing a new platform for the very first time too. So we want to be able to help the operators who are starting the clubs be able to scale when all of a sudden they've got maybe 20 clubs running in a year because they have such great deal flow. They've got an amazing network of investors and they're growing that even more through word of mouth as their investment Clubs are so successful to them, I think they will be dealing with a new level of scalability too because of all the clubs are running. It's like, okay, well now all of a sudden, if you're dealing with 5,000 investors in all these different investment clubs, you're running on fractional. How do you scale that? And how can fractional as a platform be able to really streamline all the communication, the end user investor experience, and really tie all those in the most synergizing way possible?

A (24:55)

Yeah. One thing to give people context. I should have asked you this first, but we just dove right in. So explain to somebody that maybe they're like, I have no idea what the hell you guys are talking about. Investment club, this all sounds above my pay grade. Explain to somebody how does it work? You got a deal. What is an investment club? How do they leverage your platform to raise money?

B (25:20)

Great question. An investment club, it is a little bit similar to a fund. So the way you think about it is you're an operator, you probably have a buy box, right? Or whatever you're looking for when you're buying deals. That is not changing. I've never seen an operator say, I'm looking for this thing. Oh, but my criteria is different for this other house. Now it's like everybody has that buy box they're looking at and you make that basically the criteria for your investment club. Like this is, this is what we're looking for. And then you instead of actually bring in a deal and getting that under contract and then raising money for it, which I think is very backwards. With a club, you start out with just your buy box or your criteria. You tell people in your network, this is what I'm looking for. If you guys are interested in that same criteria, let's pour our capital together. That way we have all of the money that we need ready to go. Then we can be in a super competitive advantage as we're finding all these golden deals. Because timing is a huge issue, right? So you get the criteria, you pull all the money from your network. And then the main difference with an investment club versus a fund is that there is active participation. And that active participation makes this whole thing not a security, which is why you can raise money from anyone. You don't have to go file a ppm. You don't have to be restricted around how you do your marketing and how you talk about things and all that. The way the active participation works is you've got your group of people, they're all here because of this criteria. So you as the club leader, you're now going to find deals that fit the club criteria that you think is a great idea. You're going to bring it back to the club, and then everybody gets the opportunity to underwrite it together, do their own due diligence, and then they vote to approve whether or not they think this deal fits the club criteria and if the club as a whole should deploy money for that deal. And in reality, it's actually very streamlined if you're a great club leader because you really shouldn't be bringing in anything that doesn't fit. Right? Like, right. If you said, we're going to go buy RV parks, if you're bringing RV parks in, people here join the club because they know like and trust you. They want to learn and earn and figure out the process. Everyone's going to underwrite it together, and you know, they will likely approve. And that is super streamlined. You give people a few hours, maybe a day at most, whatever is your urgency for how quickly you need the group to come to a decision. People basically just vote directly on the app. You get that approval and it's like, boom, okay, we sign off on this, we're good to go. We're going to deploy our money for that RV park. But if you bring in a yacht, right? It's like, that is clearly not the RV park. Don't do that. Because people are not proof. That's how an investment club works. It's conceptually very similar to a fund where you start out with an idea, but you have that active participation which makes the whole thing not a security, and it just opens up so many doors for you.

A (28:43)

Got it. So thank you for that explanation. So, two things. I'm going to ask you the question I ask every guest at the end, and then I want you to share how people can find you and how they can find the app. So first question, I say this to everyone. I ask everyone this. So the point of this was. You heard part of my story last week. You know, I don't come for money. And you know, what I found very early is that there's kind of two economies in this world, the educated and the non educated. And I don't mean educated by you got an mba. It means you are not taught about money. And we call this show Wake up to wealth is because I want people to wake up to understand there's a ton of money out there if you understand how to go after it and get it. But you have to learn how to speak the language of money, which is very different than what most people have been taught. They don't teach us this shit in school. Right. So one thing I always ask every guest is, what is waking up to wealth mean to you? And it's whatever your version is. I'd love for you to share to our audience.

B (29:50)

Yeah, I mean, for me, I think wealth definitely comes from the mind first. And I think it's exactly what we talked a lot about in the boardroom is you need to aspire for your future identity. And I think that is the best wealth that you can instill for yourself. What is the North Star version of you that you want to become? That is what I want to wake up to every day is like, this is the North Star me, I'm going to just get better today to be one step closer to that North Star. And you celebrate your successes and you'll see the evolution of your North Star. Like, I am totally a different person today, even compared to who I was a quarter ago, because I'm always striving for what the next version of excellence means for myself. So I think with that kind of mindset, you then build wealth in all the other ways that comes with it, whether it's the actual financial dollars or your health or your career, your business, whatever it is. I think it comes from the mind and the dedication and then everything will just flow naturally with it.

A (31:09)

Great answer for everyone that's listening. How do they find fractional? How do they find you fractional?

B (31:15)

We're on the web. We've got an app as well. Go to fractional app. That's where you'll find us, where you'll find me. I am constantly lurking on fractional myself and then also pretty active on social media. My handle is Halostella. Just to keep it California for everyone. Would love to talk to more operators, see how we can help you scale your business.

A (31:38)

Well, I thank you so much. I appreciate you coming on the show. Thank you for being a fellow board room member. I think what you're doing is really, really cool. I think it's going to change a lot of people getting access to being able to get capital, get people in their network to be able to invest in deals with them and do it safely. So I thank you so much for what you're bringing to the real estate investment community. And thank you so much for your time today.

B (32:03)

Absolute pleasure. Thank you, Brandon.

A (32:06)

Hey, everybody. This next segment is brought to you by my good friends at Accruity. Now, if you run a business, most business owners neglect their back office and they don't even know where to go or who to trust when it comes to their financials or CPA or taxes. That's where crudi comes in. You can trust them, they can give you advice and they understand the back office. Listen, you're not running a business correctly if you don't have a hold of this and it's really hard to trust people that are out there. And most CPAs frankly work for the IRS and don't work for you. That's not the case with Acruity. Check my good friends out at Acruity for any needs that you have when it comes to helping with your back office, getting your book straight, getting your taxes correct, and they guide you and give you advice, which most firms don't. So check out my guys at Accruity. Tell them I sent you thanks so much for tuning into this episode of the Wake up to Wealth. We sure do appreciate it. If you haven't done so already, make sure you're subscribed to the show wherever you consume Podcast. This way we'll get updates as new episodes become available. And if you feel so inclined, please leave us a review on Apple Podcast and tell your friends about the show. It is how new people find us. Until next time.