Dan Martell - August 16, 2021


How To Fund Product Development Without Using Your Own Money

Hosted by
Dan Martell
Mentioned
Brian Thomas Edison Pitbull Ryan
You Already Know What You Need To Know How to Build a Strong Board of Directors (With These 5 Strategies)

Episode Stats


Length

18 minutes

Words per minute

183.12

Word count

3,445

Sentence count

67


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Ronster chats with the founders of Rise, the first fintech startup to offer a credit card for B2B businesses in Canada, Sam and Ryan. They talk about how they got the idea for the product, how they plan to launch it, and what it takes to get funding.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.080 Pitbull has this great song where it's like,
00:00:02.680 ask for money, get advice, ask for advice, get money twice.
00:00:06.340 He says that in his lyric,
00:00:07.920 cause he's been there before.
00:00:21.800 With Sam, Ryan, how you guys doing?
00:00:24.240 All good, how about you?
00:00:25.960 Cool, I'm doing incredible.
00:00:28.080 Tell me about the business.
00:00:30.000 Go ahead. I'll start here. Thank you very much. So we're building Rise is the first fintech for B2B in Canada. We're providing the corporate cards that provide services in terms of a credit limit for credit cards specifically. So you're a startup, you just, you know, raise funds.
00:00:49.560 Eventually, you need to apply for credit cards, right?
00:00:53.060 If you go to the traditional way of getting credit card,
00:00:56.660 there's a traditional way of getting it, right?
00:00:59.160 Two years history, person guaranteed for the founders.
00:01:01.960 I've been there. Yep.
00:01:03.460 Exactly. So actually, we thought about like a better solution for this.
00:01:08.960 So why not providing a credit card based on the balance of the business as of today?
00:01:15.060 Got it. So use the cash in the bank account as security
00:01:19.060 to back the credit card.
00:01:21.040 Exactly, exactly.
00:01:22.980 Got it.
00:01:23.820 So based on that, we provide a lot of tools,
00:01:25.020 a lot of features in terms of accounting integration,
00:01:28.040 which should save a lot of time for their founders
00:01:30.060 and startups, business tools, you know,
00:01:33.860 issuing cards for corporate, you know,
00:01:35.400 for employees and anything else.
00:01:37.880 And the company's called Rise?
00:01:40.560 Yes.
00:01:41.400 Perfect.
00:01:42.240 What stage are you guys at today?
00:01:45.060 At the very beginning.
00:01:46.280 So we are building the MVP
00:01:48.380 And eventually we have a deadline of launching the product
00:01:53.620 by end of July, so beginning of August.
00:01:56.360 Got it.
00:01:57.200 All right, what questions do you have for me?
00:02:00.280 All right, so the first question that we have here is,
00:02:06.960 so in order to get the licenses and everything else,
00:02:10.420 we had like the chicken and the egg problem, right?
00:02:15.000 So in order to have these funds,
00:02:17.140 need to have some traction before and in order to have some traction we need to have the licenses
00:02:21.060 already in place so if you have this problem how would you solve it i find a partner that already
00:02:28.580 has the licenses and then they become the credibility for me to bootstrap on them
00:02:35.700 until i can build enough volume to be able to go direct okay thank you very much yeah i've used
00:02:42.820 that quite a bit perfect thank you okay uh the second question i have here uh what is the best
00:02:51.460 way to pre-sell fintech services because our business model is interchange fees at the
00:02:56.260 beginning later on we gotta launch our premium account right so we can charge monthly sas fees
00:03:02.500 so how would you uh pre-sell fintech services if yeah so um a few things ryan i would i would
00:03:10.500 suggest that you don't call it fintech services to a business owner because they don't know what
00:03:15.780 that is um so the one of my rules in in marketing is um you know we got to use what's called echo
00:03:24.340 marketing meaning what our customers would call it is what we call it right so if i if i presented
00:03:30.500 your solution to a startup and i say what do you call that i just described what it does what do
00:03:35.380 you call that they're gonna say so you're telling me it's a way for me to get credit card approval
00:03:39.700 when i can yeah okay now i know that you have all these other things that it could do right and this
00:03:46.820 is where i get a lot of founders they talk about their blockchain their ai their you know whatever
00:03:53.140 and tokens and and the reality of it is at the end of the day you solve a problem for a customer
00:03:57.700 they describe that problem and that solution how you do it is up to you right we don't even get
00:04:02.580 the chance to describe or talk about that if they don't buy so sometimes we need to just it's called
00:04:08.260 chocolate broccoli we need to sell the chocolate and once they come into our world we can give them
00:04:14.500 the broccoli which is all the stuff they don't even know they need because they've never had
00:04:17.780 the chocolate in the first place so they don't realize they need the broccoli
00:04:22.660 so what i do is um the way i pre-sell anything is first define what are the three features that
00:04:29.220 you think is important to the market right so credit card approval um easily manage multiple
00:04:36.980 accounts and you know use it as a line of credit potentially your your decision i don't know but
00:04:42.260 that's an idea that i would be like okay these three things are interesting then i would go and
00:04:46.660 i'd talk to the ideal customer right in your case it sounds like uh funded startups so what i would
00:04:53.060 do is i'd call up all the funded startups in canada or like the accelerators that would know
00:04:57.460 who the funded startups are i would explain to them what i'm doing and ask them for advice i go
00:05:02.500 in for the advice angle because when you ask people for advice they then give you the answer
00:05:07.700 that they would do which gets them bought into the solution which then gets them committed to
00:05:12.740 seeing you succeed which then gets them asking hey do you want me to make some introductions for you
00:05:18.020 whereas if you go in asking for the introductions they're going to tell you all the things that need
00:05:22.100 to be true for you to get a good introduction but they're not going to offer to make it sounds
00:05:26.020 hilarious it's how the world works you know um pitbull has this great song uh i don't know the
00:05:32.820 song i should get the song name but he has this lyric where it's like ask for money get advice
00:05:36.580 ask for advice get money twice he says that in in his lyric because he's been there before right
00:05:42.580 and and to me that's kind of the same premise is ask for advice get anything then you get in front
00:05:47.540 of these companies and you do the same thing you do a customer discovery call a customer discovery
00:05:51.540 call is completely different than a sales call the beauty though is a customer discovery call
00:05:56.180 can turn into a sales call meaning that you go in trying to learn the most valuable asset
00:06:04.420 that a startup can get is learning so it's not about revenue it's not about raising money it's
00:06:11.220 not about hiring team members the most important thing that i can learn as a startup if i've got
00:06:16.580 an idea is about the market so i tell a lot of um early stage founders is find an agency that's
00:06:24.100 currently doing this for your target market because they would have so much rich knowledge
00:06:29.060 around the problem set and the solution set and the intricacies of what you're trying to build
00:06:34.260 because as a consultant they're in there right they know when i presented x solution to the
00:06:39.460 customer they said this they know that we've tried to do this that way and it didn't work or this
00:06:43.540 worked or this is the way we figured it out here it can only work in this scenario etc so there's
00:06:47.780 just a lot of learning there i'm giving you a lot but i thought that this would be valuable
00:06:52.100 but once i talk to those companies uh i do the customer discovery call which is a series of
00:06:57.940 questions you can google i have a whole list of questions on on the internet um and at the end
00:07:04.580 of that once you've learned so that's why i say you can end on the sales call you can't start on
00:07:09.460 the sales call because if you go in the sales call you're essentially selling you're not learning
00:07:12.900 nothing okay but if you start with the discovery at the end you can transition into a sales process
00:07:20.020 which typically they're gonna you know you go in for advice ask you know questions questions
00:07:23.780 questions understand their problems understand the potential solution blah blah then you go well i'd
00:07:27.860 love to tell you about how we're thinking of solving that would you be interested they go of
00:07:31.540 course that's your open then you go well here's the things i heard you say and here's the way
00:07:38.020 we're looking at solving it and you mind if i do a demo you pull up your clickable prototype okay
00:07:44.020 even if it's not real product a clickable prototype is way better than words
00:07:48.740 right share your screen show your phone here's how it works they go that's amazing then you make
00:07:53.860 your offer what we're doing now is we're we've got a thing called the early adopter program
00:08:00.260 or the inner circle or the founders group or whatever you want to call it you can give it a
00:08:04.740 cool name pick one of those three if i gave you but every different clients call it different
00:08:08.500 things for whatever reason but early adopter program the eap is a good one especially for
00:08:13.300 enterprise and the way it works is we're looking for 25 early customers to come on board to help
00:08:20.180 co-create this and because they're supporting that co-creation here are the things that they
00:08:25.060 get as benefits they get 12 months no fees they get you know access to the customer advisory board
00:08:33.780 they get um mentioned on our website as part of the launch as an innovator etc etc etc we do a
00:08:39.860 monthly call with other people in the financial industry not fintech because they don't know
00:08:44.340 what that is financial industry that focus specifically with startups so figure out
00:08:48.260 what's valuable to the startup maybe they want to get access to series a investors and you can grab
00:08:53.620 six of those series a investors and have a monthly call so that they can understand like there's a
00:08:57.460 bunch of stuff you could do to make the offer and they got to pay for it though and then you
00:09:03.700 pre-sell right the key is don't make the offer not about your software so much so that people will
00:09:09.140 buy it just for the other stuff and it doesn't give you true customer validation on the product
00:09:15.700 makes sense yeah i've seen a lot of people make that mistake and then you have a a signal issue
00:09:21.620 where you thought you had something but you didn't you're just really good at selling and creating
00:09:25.620 offers people bought it because of the thing you know uh yeah for 500 bucks you get a one hour call
00:09:31.460 it mark cuban 100 100 people buy and you're like yeah the winner it's like no they bought because
00:09:38.340 of this unrealistic offer that is worth the 500 bucks not because they want your software
00:09:45.060 usually the discount the discount it's 12 months for 50 so if you're charging 100 bucks a month
00:09:50.420 for your sas it's 1200 bucks for the year you know if you you're part of the early
00:09:55.220 adopted program it's only 600 but they got to pay for the whole year up front
00:10:01.460 if you take 20 25 sales and you go to a partner that can issue the cards and you can show them
00:10:08.180 that that's going to open the door right and that's that's that's where a lot of people always
00:10:13.380 argue with me you can't pre-sell social social um you know you can't pre-sell uh social networks you
00:10:20.660 can't pre-sell enterprise software blah blah it's just not true okay there's crowdfunding happens
00:10:25.620 every day it's like a i don't know 18 billion dollar a year market i don't know i'm making
00:10:29.620 that number up but it's big okay people crowdfund stuff that ain't real every day
00:10:37.220 not easy but it's not supposed to be easy
00:10:41.540 the harder it is this is the fun part ryan i just want to share this the harder the process is for
00:10:46.260 you the more excited you should be because when you figure it out you'll know that everybody else
00:10:52.500 gave up along that journey awesome i like that yeah most people don't realize that when i'm
00:10:58.100 working on something like really trying to crack the nut around some kind of distribution channel
00:11:02.180 or monetization strategy or whatever it is go to market anything and it's hard and a thing i thought
00:11:08.420 was going to work was going to be a layup ends up not being a layup i'm like yes because i'm
00:11:14.580 going to figure it out i have i have confidence in my ability to problem solve and when i figure
00:11:19.700 it out i know that my competitors would have gave up because this is ridiculous that it doesn't work
00:11:24.260 because it should work so just know that because it's you're going to be littered with that and
00:11:28.340 it's just that's the perspective that allows you to go from problem to problem or failure to failure
00:11:33.060 without losing enthusiasm people say that it's a quote right i think it's einstein or whoever
00:11:38.180 thomas edison it's like success is going from failure to failure without losing enthusiasm
00:11:41.940 they don't give you the mindset reframe that's required and it's just truth it's literally the
00:11:46.980 harder it is the less competitors are going to be at the top thank you very much thanks as we
00:11:53.700 mentioned we are building the mvp we're launching hopefully uh end of july vacation of august so
00:11:59.380 eventually we gotta uh you know raise some funds eventually for this because that's a huge expenses
00:12:06.180 even for us so we are building the the tool that would like to use pretty much so based on your
00:12:12.900 videos because i'm a big fan of you you know youtube and all the stuff uh there's pre-seed
00:12:17.220 there's seed uh there's seed after that there's seriously abc so we are the pre-seed right now we
00:12:22.340 self-funded our our our company our startup so do you think it's a good idea to go right away to
00:12:28.740 seed once we launch the mvp which is we're talking about between two million to eight million right
00:12:33.940 we got to use for product marketing and sales so do you think it's a good idea to have that
00:12:40.020 there's two optimal times to raise money okay there's before you figure it out and there's
00:12:48.260 after you figure it out and the worst time is when you're in the middle of that curve okay
00:12:53.780 because what happens is in the early stages of the mvp the eap program the coming soon launch page
00:13:02.660 essentially in many ways you can kind of manufacture traction let's be honest like i'm a
00:13:08.740 founder and i'm also an investor so i understand that hey a certain activity shows a certain type
00:13:14.500 of activity volume like google analytics so if i do x i get a little bit of traffic well if i do
00:13:21.220 x in a certain sequence over a certain period of time i can manufacture a growth curve does
00:13:27.300 that make sense if i have a uh beta list of people that opt in to be notified when i subscribe and or
00:13:35.220 i launch and i systematically uh every day allow two people three people four people into my system
00:13:42.100 and then somebody asked me to look at my numbers i can create that traction right so what i always
00:13:49.220 tell people is there is the point where there's enough there for you to tell a compelling story
00:13:57.460 of how you're going to create a hundred million a year company over the next um seven years that's
00:14:03.460 kind of the ballpark right and it doesn't it doesn't mean that you have high revenue it doesn't
00:14:07.940 mean that um that you've figured it all out if anything you don't want to figure too much stuff
00:14:14.100 out you just want to show there's a there there right because think of it this way what an
00:14:20.340 investor is investing in and i have a bunch of videos online about this around like the team
00:14:24.900 and the product and the size of the market all these things but like if we even took a step back
00:14:28.900 and said what is it it's 100 the people right do i believe they're willing to put their head
00:14:35.300 through a wall to make this work and if and i don't even care if it's this thing that works
00:14:40.740 do i want to make a bet on the people at the pre-seed level it's a hundred percent on the people
00:14:47.140 and is there enough of a data point to show me that my assumptions if i believe that there's
00:14:53.700 this vision right of a multi-billion dollar market and you can you can paint that story
00:14:59.780 clearly crisply okay in language i understand not language you want to communicate but my language
00:15:06.260 and i believe you have the right team and then the kicker and if you see me talk about
00:15:11.140 fundraising which i have a bunch of trainings on is um can you create enough demand for your round
00:15:18.020 to create a competitive process because if i'm only talking to one investor probability of closing
00:15:23.140 hashtag money in the bank low but if i've got 15 investors and i'm making a commitment to close my
00:15:29.060 my round in August, I know I'm gonna get the right people.
00:15:33.580 Those are the factors.
00:15:34.820 It's, can I tell a story how this thing
00:15:37.360 becomes a big business?
00:15:38.400 Can I show them enough data points
00:15:39.880 to show that there's a thing there,
00:15:41.060 but not too much so that they can run the spreadsheets?
00:15:43.380 That's the other, people, sometimes people launch
00:15:45.720 and then they're going and they're like,
00:15:47.320 look, we have 26 customers.
00:15:49.380 It's like, yeah, but you've only added two a week
00:15:51.520 for the last six months or nine months or a year, right?
00:15:55.000 So you're not showing growth, you're just showing sideways.
00:15:59.060 right so like just know that there's before you figure it out and you can control it and then
00:16:04.640 afterwards where you go through this journey in this valley of just struggling to finally it pops
00:16:09.720 and now you can go and tell a compelling story because it's easy to paint the picture of the
00:16:13.500 future right but they're going to look at the present to confirm their assumptions about that
00:16:19.260 potential future got it thank you i want to i want to ask you guys um real quick what did you take
00:16:26.480 away what did what resonated the most for you around our conversation today i'll say language
00:16:34.480 like use the right language and the right audience i think we we definitely should not assume that
00:16:39.040 the other side understand what we're talking about eco marketing was great the learning process i
00:16:43.280 think it's a good it's a good call and um more practically the customer discovery call is
00:16:48.640 is something we should definitely do a bit more i know you don't like the mvp process that where
00:16:52.800 where we jump into MVP directly,
00:16:54.180 we should probably focus on clickable profit prototype.
00:16:58.560 So that, but our MVP-
00:17:01.120 I also know that sometimes you have to go through the pain
00:17:04.240 to really appreciate the lesson, okay?
00:17:07.920 My brother one time, he started a home building company
00:17:11.260 and I let him go through the pain
00:17:12.860 of managing his own financials.
00:17:14.760 And then one day I introduced him to a bookkeeper
00:17:17.080 and he asked me, why didn't you tell me this a year ago?
00:17:20.520 And I said, you wouldn't have been,
00:17:21.980 you wouldn't appreciate it how important it was.
00:17:24.040 You would have fought with me on why you should pay people
00:17:25.980 to do something you could do.
00:17:28.200 So I get that, it's your journey.
00:17:30.700 Brian, what'd you take away?
00:17:32.900 Well, definitely we have to focus on people
00:17:34.820 before anything else.
00:17:36.080 That's really important, especially for the perceived.
00:17:39.440 We have to get traction by contacting the customers.
00:17:42.940 You have to learn before we sail, right?
00:17:45.380 That's learning will bring the sales definitely.
00:17:48.780 We can create groups of community as well.
00:17:51.240 We can ask some questions and based on the questions,
00:17:54.120 actually we can, you know, we filter, I would say,
00:17:57.700 to filter the customers, create a community.
00:18:00.300 And definitely after that, we can scale, we can pre-seed,
00:18:03.780 we can raise funds to investors as well.
00:18:07.160 I love it.
00:18:07.980 You guys are going to have a lot of fun.
00:18:09.580 I appreciate the conversation.
00:18:10.860 Exactly.
00:18:11.700 Thanks for your time, Brian.
00:18:12.700 Talk soon.
00:18:13.240 Have an amazing day.
00:18:13.980 Take care.
00:18:14.820 Bye-bye.
00:18:18.780 We'll be right back.