Brian Ardinger, Founder of Inside Outside Innovation talks with Brock Blake, Co-founder and CEO of Lendio on Financing Entrepreneurs at Scale
Transcript of Interview with Brock Blake of Lendio
[00:00:00] Brian Ardinger: Inside Outside Innovation is the podcast that brings you the best and the brightest in the world of startups and innovation. I’m your host Brian Ardinger, founder of insideoutside.io a provider of research, events, and consulting services that help innovators and entrepreneurs build better products launch new ideas and compete in a world of change and disruption. Each week we’ll give you a front-row seat to the latest Thinking, Tools, tactics, and Trends in collaborative Innovation. Let’s get started. Welcome to another episode of Inside Outside Innovation. I’m your host Brian Ardinger. And as always, we have another amazing guest. Today with me – Brock Blake. He’s the founder and CEO of Lendio, which is the largest online marketplace for small business loans in America. Brock. Welcome to the show.
[00:00:43] Brock Blake: Thanks Brian, glad to be on.
[00:00:45] Brian Ardinger: Hey Brock. I’m super glad to have you on the show for a couple different reasons. You’ve been in the trenches building a company from scratch in a place outside of the traditional valley or Tech Hub so to speak. You’ve also been involved in a lot of the new fintech marketplace and some of the changes that are happening with regard to small business. Why don’t you take the listeners back to how you got involved in starting a company that now services a billion dollars in loans to small businesses around the world.
[00:01:13] Brock Blake: Well, that’s quite the story, honestly. My entrepreneurial career started right out of college and I entered a entrepreneurial competition, kind of like the TV show of The Apprentice, if you remember that. There were about a hundred applicants, then 20 of us were selected to go through this eight-week competition and we did a sales competition, and a marketing competition and networking competition and all that.
And at the end I was one of the five selected and won 50 thousand dollars that I could use to go start any business that I chose. Yeah, I could buy a business or whatever, and at the time I realized that every business owner that I talked to, as I was out doing research. I found that most business owners have this passion to grow their business, but they are lacking capital. That was like the biggest challenge like I need capital to do it. I don’t know where to get it.
[00:02:02] Brian Ardinger: Right.
[00:02:02] Brock Blake: So at first, the first business we actually started to try and solve that problem was a company called Funding Universe. It was a more of a dating site. You connect the entrepreneur to an angel investor or a venture capitalist. You would go online and post your business plan and the investor would come online and see if they like your business plan if they wanted to invest.
[00:02:23] Brian Ardinger: Right.
[00:02:24] Brock Blake: We were growing that for a few years, my co-founder and I realized the demand was there, but most businesses were never going to raise money from an angel or Venture Capital that most businesses are Main Street businesses: restaurant owners and landscapers, dry cleaners and things like that. The best way to solve that problem is to help them get a loan, not to actually connect them to an angel or VC. So, in 2011, we did a full pivot. We built the first business, Funding Universe up to 10 million in revenue and we went from 10 million in revenue to zero overnight and kind of relaunched what is now today Lendio, connecting entrepreneurs to banks, financial institutions, and lenders across the United States.
[00:03:11] Brian Ardinger: That’s an amazing story and I’d imagine it’s not something that you know, you always hear the stories the success stories after the fact and that, but I would imagine it was probably not the “funest” times for you to make that particular pivot and to change the business. So maybe take us back to that time. And when you said you had revenue and you were kind of building the business, but it wasn’t necessarily the path you want to go on. So, what were some of the obstacles or the things that made you decide? Hey, we’re going to take this in a different direction.
[00:03:36] Brock Blake: We knew that the demand for capital was high. We realized only two percent of the customers would actually ever raise money from an angel or VC. And so, we had conviction that let’s focus on the 98% not the 2% and the other aspect of the old business was that there wasn’t a lot of Technology built into the business. What essentially we did is the business owner would come, we would do an assessment and determine if they’re a good fit for an angel or VC. If they were then we’d introduce them to the angel or VC. If they weren’t, we come back to them with proposed package to help them. You know a business plan and a financial model, and you know, all these different things to improve their credit.
Those services they weren’t scalable. So, while we built the business to 10 million in revenue, it was a lot of like consultants and contractors that we are hired, and we were doing all this manual labor trying to keep all the balls in the air. And realizing this thing is not going to scale. To get it to where we are at ten million dollars, is honestly been a miracle. And Trent and I had visions of a much larger scalable business than what we had built. And so, while it was a hundred times more painful to go through the pivot than I thought it would be, we had conviction that it was the right thing to do is to build. What is like I said today Lendio.
Sponsor: Inside Outside Innovation Summit
[00:05:00] Brian Ardinger: Hey listeners, I wanted to pause this interview for an exciting new announcement. We are bringing back the inside-outside Innovation Summit right here in Lincoln, Nebraska. Mark your calendars for October 20th through the 22nd. Tickets are on sale at the IoSummit.com. We are going to have experts from the world of Disney, Facebook, American Express, Nike. All these folks are coming together to talk about innovation, disruption, startups, and the world that we live in today. Check it out at the ioSummit.com and we’ll see you in October.
[00:05:32] Brian Ardinger: That’s amazing. You’ve obviously had a chance to talk to entrepreneurs hundreds of them through your platform and otherwise. What are some of the key traits or success factors that you are looking for from both the platform and from what you’ve seen in the marketplace. What makes a good innovator or entrepreneur?
[00:05:49] Brock Blake: Well, I think the entrepreneur is able to identify problems and identify trends quicker than maybe the rest of the market is able to see them. Not only identify the [00:06:00] opportunity but has the talent and ability to go and execute on that idea. I think ideas are a dime a dozen.
[00:06:07] Brian Ardinger: Absolutely and obviously that gets everything kind of moving forward. I’ve noticed that also especially in places outside the core Tech hubs that don’t have access to venture capital and that. Let’s talk a little bit about entrepreneurs and venture capital and that trap that a lot of entrepreneurs fall into of thinking that they should go for venture capital and not understanding that a lot of times, you know building a business from the ground up with actual customers, is kind of the way to go.
[00:06:30] Brock Blake: Yeah, so I learned this the hard way. I had $50,000 bet on one and you know, we were what I call playing business. You’re working on your business cards and your website and your office space and doing all these things that are exciting and fun when you’re doing for the first time but really don’t matter. They really don’t determine whether your business is going to go. What really matters is that you’ve got breadth.
And It was the Friday before Christmas and I realize I don’t have money for eight employees to make payroll. And had to pull the group together and say unfortunately can’t make payroll today. I was literally, was like fetal position on the ground thinking about delivering this message to my team. Just so painful. And I said, but I have a plan. I said, here’s the plan. I have mapped out this three-month plan where we can really identify product market fit. The only thing we focus on is revenue. And I said if you believe in this plan go home talk to you wife, talk to your husband, talk to your family members. If you believe in this plan, come back on Monday, and I know you’ll be all in.
You know, and I told him I wouldn’t be able to pay them in cash, I’d be able to pay them though stock options. But I said I can’t pay you. So, if you don’t show up on Monday, I totally get it. I can’t pay you. So, I realized you’re not in. Long story short all 8 team members showed up on Monday. Believed in the plan. And it just brought into complete clarity what product Market fit means, which is go out and talk to customers, focus on revenue. Can you sell your product? Is it to a point where you can generate revenue from it and if not, nothing else matters in your process of innovation and trying to create that business?
Utah Startup Scene
[00:08:14] Brian Ardinger: So, you’re based on Utah. Let’s talk a little bit about the startup scene that you’re seeing there and some of the things that are maybe different that you see in a place outside the valley or outside of this traditional Venture places.
[00:08:25] Brock Blake: Being outside of the valley or outside of coasts. Salt Lake City, I’ll just say is very entrepreneurial environment. A lot of really exciting things happen. But what a place like Salt Lake City or other places outside of Valley lack, is they lack an abundance amount of capital that can be deployed towards early-stage ideas. In the Valley, you’ve got not only this broad network of Angel Investors.
You have seed-stage venture capitalist and series-A venture capitalist I think in some ways it’s more challenging to be able to get your idea off the ground and get funded. In other ways. It puts you through the refiner’s fire and says your idea really has to rise to the top to be able to attract the capital you’re looking for. And so, a lot of the companies that make it through that entrepreneurial early stage, getting the product Market fit, turn out to be quite successful and we have some very entrepreneurial technology-driven tech enable environment. It’s more challenging but that’s not always a bad thing on the backside of that.
[00:09:43] Brian Ardinger: So, I know you’re also a Forbes contributor you’ve written a lot of articles in Forbes and other places. What are some of the trends or topics that are exciting to you or things that you’re seeing in the business world?
[00:09:54] Brock Blake: I think that one of the hottest topics right now is around machine learning and AI, so artificial intelligence. Now, I think a year ago two years ago, machine learning and AI, they were just buzzwords. Everyone was asking are you leveraging machine learning or leverage AI, but what’s interesting to me is that, those leveraging of data intelligence, they’re actually starting to come to life and be really useful tools. The machines are very, very smart and they’re only becoming smarter and smarter and so you can leverage automated Bots, these predictive data engines, to do some really interesting things to help scale your business.
And there’s so many applications that I’m able to identify. We’re working with partners and vendors and things like that. I’ll give you one example this tool that I’ve seen that I’ve been trying out is using AI as a help with your calendaring or scheduling. And so, what that does is if you know, I’m trying to schedule a meeting which we all do, I can send an email to the person and copy this email address. That really is a bot, an automated bot and I say, you know, the name is Amy, and I’ll copy Amy on it and say okay work with Amy to schedule this time for that call.
And Amy will respond to the email and say, has access to my calendar, so and so Barack is available these four times over the next week, which one works. And that person will respond, and that email conversation continues on without me necessarily having to be in the middle of it, to identify a time that works for both parties, get it on the calendar, and get scheduled. It’s just smart tool like, you don’t hide the fact that its AI but most people don’t even realize that they are talking to a machine and so there’s just really fun interesting things happening in [00:12:00] that way
FinTech
[00:12:00] Brian Ardinger: Definitely fascinating times and it’s you know, you combine all these Technologies are hitting all at the same time and it truly makes for a both disrupting as well as an opportunity for folks out there trying to do business. I guess the last topic I want to talk about is a little bit more in the financial services or the fintech space, you know, space that lend you is playing in. What are you seeing from the standpoint of the rise of fintech players and the rise of alternative financing? Some of the things that are changing the way people can get their business up and going.
[00:12:30] Brock Blake: In the Fintech world, I think what Financial technology companies are trying to accomplish is to make the movement of money as efficient as possible and one of the things that we see that we’re trying to innovate on in that small business lending space is this idea of what I call an always-on application. In the past a business owner, when you need a loan what you traditionally do is you would say, okay. I’m going to go to the bank. I’m going to show up. They’re going to hand me this packet and it’s going to have 30 pages. All these application forms and fill them all out, and take me 30 minutes or longer, to fill out all the application.
I’m going to send it into the bank. They’re going to review it and they’re going to take a long time to determine if I’m creditworthy. They’re going to ask for 20 different documents, with tax returns and credit reports and, you know, all these different things. I guess the question that we are asking this complex world is what data do you really need to get access to determine if that person is eligible for a loan. Is it their bank account data. Is it financial data, is it credit card data? And is it possible that you could actually get access to that data in a way where you have real-time access. So, you know you have real-time access to their financials, so that what you can do is now instead of when that business owner needs a loan, they go and apply.
You actually just tell them it’s an always-on application. You just tell them on a daily basis. Hey, you’re qualified to draw $30,000 anytime you want. Click here to take it. Your income has gone up, now you’re eligible for $60,000 loan. Click here to take it when you need it. You’re starting to see it like with square, square cap, Square launched square, and they’re able to see the credit card swipes that you’re doing.
Its business and volume transaction you’re doing. They can take that data and now they launched Square capital on top of that to be able to say within your Square portal, hey anytime you want to drop $10,000 you need for working capital, click here to do that. It just makes the life of a business owner that much easier to run your business when you know, you got access to Capital. You don’t have to go through this long product process to do that.
[00:14:55] Brian Ardinger: Absolutely. It almost brings us back to the days of kind of old-time Bankers when the bankers actually knew who the business people were and had a pulse for who that person was and their family, and the background, and the technology is almost serving as that new role nowadays. Quite interesting times that we’re living in.
[00:15:09] Brock Blake: Yeah full circle, isn’t it?
For More Information
[00:15:11] Brian Ardinger: Yeah, absolutely. Well Brock, thank you very much for being on the Inside Outside innovation. I could talk all day about some of these kind of things, but we’ll have to have you back on another show. In the meantime, if anybody wants to find out more about yourself or about Lendio, what’s the best way to do that?
[00:15:24] Brock Blake: Come check us out at Lendio.com. It’s a free service. We’re helping small business owners across United States get the loan that they need. We make that simple. So, what we’re trying to do is provide, you apply one place, we’ll give you three or four options of different lenders, rates, terms, payment amount, and give you the ability to comparison shop, and choose the loan that has the best fit for you. So, we’d love to help you out. Come see us.
[00:15:48] Brian Ardinger: Thanks very much for being on the show. Look forward to talking to you in the future.
[00:15:51] Brock Blake: Thanks, Brian.
[00:15:54] Brian Ardinger: That’s it for another episode of inside outside Innovation. If you want to learn more about our team our content or services check out insideoutside.IO or follow us on Twitter @theiopodcast or @Ardinger. Until next time, go out and innovate.
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