From Losing $55K To Raising $400M Using A New Smarter Model Nobody Is Talking About

From Losing $55K To Raising $400M Using A New Smarter Model Nobody Is Talking About | Disruptors Podcast

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Stella Hahn: Pace, I have to talk to you. It would be insane, you know, if Pace used Fractal two. I saw that he was doing an in person workshop. I was like, you know what? I'm just gonna buy a plane ticket.

I'm gonna fly here, go to the event, and I'm gonna give Pace my elevator pitch and just see what he thinks of it. I see him. You know, he he's done. He's walking out of the office. And I'm like, Pace, I have to talk to you.

Can you please just give me two minutes? He's like, I have heard of Fractal before. I'll be right back. And I see him making a phone call. He comes back and he's like, Stella,

Steve Trang: do

Stella: you wanna take over for the afternoon of the raising capital class and just teach everyone how how investment clubs works and how fraction works. I was like, holy shit. I cannot believe this just happened. Like, this is crazy. Pace reached out to me, and he was like, this is genius.

I need this.

Steve: Welcome, and thank you for joining us for today's episode of disruptors where millionaires are made. Today, we have Stella Hahn with fractional app, and Stella flew in from San Francisco to talk about she went from losing $55,000 in the beginning to raising $400,000,000 using a technique nobody is talking about. Guys, I'm gonna mission create a 100 millionaires. The information on the show alone is enough to help you become a millionaire in the next five to seven years. If you'll take consistent action, you'll become one.

If you're already a millionaire, we wanna recognize you here on the show. So please scan that QR code on the screen right now. If you're not a millionaire yet and you want some help getting there, also please scan that same QR code. Before we jump in, if you're here to learn how real entrepreneurs are building real empires, make sure you hit that subscribe button because every week we're dropping lessons that can create your first or next million. And right now, you have a 100,000 quarter mil, maybe more just sitting in your CRM.

Resurrect all your old and dead leads with the objection proof AI calling agent text cash to the phone number 33777. Now to unlock the money that's hanging out in your CRM, again, that's cash 33777. Ready?

Stella: Yeah. Let's do it.

Steve: Alright. So first question is, what was your life like before you got into real estate?

Stella: So I am a techie through and through. I used to be a software engineer by trade, went to college, studied computer science, all that. Mhmm. And, you know, out of college, joined Affirm, which is a buy now, pay later company, was a rocket ship start up as a software engineer because I knew from the very get go that I wanted to be a founder and entrepreneur, but I do not take risky bets out of nowhere. So I was like, you know, what is the best thing I can do where it is super methodical and meticulous on how to best prep myself to become a world class founder in the future.

And in my opinion

Steve: You wanna rocket ship, but be meticulous about it.

Stella: Yes. Alright. Meticulous rocket ship. So, well, you know, that means working for a world class founder, and Affirm was founded by Max Levchin, who was the former CTO and cofounder of PayPal.

Steve: Mhmm.

Stella: So I was like, he's built a massive business, had an amazing exit, and now he's doing it again. Why don't I be a part of his world? That way I can learn all it takes to build a phenomenal game changing product Mhmm. And eventually take all my learnings and go build my own. So that's what I did career wise.

And then

Steve: Oh, before you get there. So the company, it wasn't Affirm, the company you went to. It was his next company? Or it was Affirm?

Stella: It it was Affirm.

Steve: Yeah. So he's the CTO. I didn't know he was CTO at PayPal. He goes to start Affirm that does well. And you were there for a lot of the like, from the beginning or, like, halfway through?

Stella: Halfway through.

Steve: Okay.

Stella: So it was mid stage when I joined.

Steve: Mhmm.

Stella: And that was me also making a very careful bet where I wanted to be a part of something where I could see that it would have an outcome.

Steve: Mhmm.

Stella: But it's not so late stage where I would just be, you know, part of a machine. Right? I still wanted to make very sizable impact within something that was growing very quickly as well. So joined mid stage and then wrote it out when it had a public IPO.

Steve: So you saw this was something that was going to take off. And so you're like, alright. I'm just gonna hang out here, work, learn, get some stock options, let them vest, and then let that, take off when it takes off. Yep. How long were you there?

Stella: I was there for two and a half years, and then the company had an exit. That's how I made my first couple million dollars.

Steve: Oh, I made a couple million there.

Stella: Yeah. That's right.

Steve: Alright. So that was a very strategic strategic bet. Clearly thought out. It was a safe bet there. Yep.

Did you know they were gonna exit, or you're like, I hope they exit?

Stella: I mean, nothing is promised or guaranteed. Right? But just with how the company was growing, all the traction, venture dollars has been raised, and, obviously, Max himself as the CEO of Affirm, just how proven he is. Mhmm.

Steve: I

Stella: think it was a very good playbook on what it looks like to build a company that would have an exit. So in my opinion, it was relatively

Steve: derisked. Derisk is not where we use a lot on this podcast. We don't normally take safe bets. We don't really take, like, big bets here. So it's, different different language here.

So what were the biggest lessons that you learned while working at Affirm?

Stella: Yeah. I mean, I think the first one is action gives you data. Mhmm. So that has made me a very action oriented person where I don't just sit around and think about what's gonna happen. I know that if I take action, I will get answers, whether it was that action was a good choice or oops, you know, that maybe wasn't what was gonna get me the answer, but now I know that at least is not the answer.

So that has really made me such an execution driven type of person. I think it's really helped a lot in in building a business. And two, it is around how do you do the least amount of work to get the most answers. Mhmm. And that has been a big part of my philosophy, building my company, how I problem solve is basically less is more.

Steve: Okay. So before you went to work for Affirm, you were not necessarily get data, take action to figure out the right step forward. So that was something you learned at Affirm.

Stella: Yeah. Before, it it's like I I feel like part of me was a perfectionist, so it it was almost like, let me think about every possible choice there is out there, research all those things, and then make the choice. But then when I made the choice, it would have been like, you know, a quarter has flown by. Right? And now it's like, things change so quickly, that quarter you spent thinking about things, that might not even be the case anymore.

Right? And that's where I've learned, okay. You know, just go build what's the least amount that's necessary to go get an answer, and the answer is either gonna be it or not it. And then you take that data, and you make your next move.

Steve: Got it. And then explain to me the second lesson there about doing less to get more. What is that?

Stella: Yeah. So this is actually a little bit of how we got started with fractional as a company too. Old me would have been like, okay. Let's build a fully fleshed out product, fully, you know, craft and design and engineer everything, and then let's roll out a product. Right?

But it kinda ties back to how do you keep taking more action and getting data as quickly as possible. What I've learned as a developer and, you know, a product engineer is a lot of times you can build very little things, show that to the public to understand is their interest, what's their feedback, what are things, you know, people click more on, what do they not care about. Right? And that data is so fundamental to the next iteration of what you need to to build. Mhmm.

It's been so impactful just from a business mindset perspective where I've realized I don't need to give people the full solution. Mhmm. Sometimes you just give give bits of what you need to get their opinion, and then you take that data to build the next version.

Steve: Got it. It's more or less kinda like an MVP. Yeah. Minimum viable product. Yep.

Gotcha. So those are two biggest lessons you work work you you learn working at Affirm. Yep. What happened after Affirm?

Stella: So funny enough, at Affirm, right, when I started getting, you know, a paycheck, getting my software engineering salary, I was thinking about, you know, how do I invest that money? And I grew up in the Bay Area where both of my parents are software engineers by trade as well. Mhmm. But they actually had a passion project where they were flipping houses in the Bay Area as as I was growing up. So I was pretty much, you know, like every Asian family out there, the cheap family labor

Steve: Mhmm.

Stella: For my parents where, you know, pretty much every weekend, I would go out there to the flips, help them do random things, cover my nose, paint the houses, all of that. And it really let me see how they were taking control of their own destiny and building their own future with their own hands.

Steve: Mhmm.

Stella: And that's really left such a big impact on who I am as a person and also how I thought about investing where I didn't wanna just do stocks, you know, like most techies do. I wanted to have real assets as well. So wanted to do real estate investing. And at that time, one of my really good friends, who is now my cofounder, he actually worked with me at the same team at Affirm. Mhmm.

And pretty much every lunch we had at the office, the conversation would just end up being about real estate investing, and both of us wanted to invest in real estate. We were, you know, talking about Bay Area prices and just how we'd never be able to buy a home here and what are the options. So, eventually, I started buying properties out of state and just doing that on the side while I was still having my software engineering job. And then that eventually scaled, led me to a bunch of other problems, which I'm sure we'll talk about in just a bit. So it was it was pretty much a lot of software engineering and then real estate investing on the side, and then eventually translated into being a full time real estate investor.

Steve: So investing out of state, where were you investing?

Stella: Mostly out in Atlanta, Georgia.

Steve: Atlanta, Georgia. Okay. I mean, until the market shifted, that seemed pretty safe.

Stella: Mhmm.

Steve: Were you buying to hold, or were you flipping? What were you doing?

Stella: Yeah. Buying to hold. I started out with just the simple basics, pretty much single family home, long term rental, pick Atlanta because there was tech going in there, and tech was what I understood. So, you know, back to making careful choices. That that was the choice that I made for out of state investing.

Steve: Were you buying, like, one a year, one a quarter? What was your appetite?

Stella: I actually scaled up pretty quickly. At first, it was, you know, getting one or two every month. And then I was like, oh, you know, this isn't too bad. Right? Like, once you pull the trigger a couple times Mhmm.

You you build that muscle. So started buying, you know, many multiple single family homes every single month, and then I was then looking at, okay. You know, how do we take this to the next level of scalability? People around me are talking about multifamily, so I started looking into that. So now it's like I'm going from single family homes to buying, you know, duplexes, quadruplexes.

And then now I'm looking at, you know, portfolios of houses and smaller multifamily deals. And, actually, when that happened, I saw a really great deal. It was a portfolio of 22 duplexes.

Steve: Okay.

Stella: I really wanted to buy that. Looked at my Bank of America. There was no money in there. I was like, oh, crap. You know?

How do I not just lose this deal that I want so desperately? I did all the numbers. It all worked out. And I realized that I needed to raise capital, and this was my first time, you know, dealing with OPM, which is this term that I've been hearing a lot of people in the space throw around other people money. I was like, okay.

I want this deal. I don't have my own money, so I need other people money. I need to raise capital for it and try to do that. Got absolutely burned, lost $55, and that was the beginning of a lot of chaos that eventually it turned into something extremely beautiful.

Steve: So single family is doing really well for you. Yep. Making really safe bets. Are those still good for you?

Stella: Yeah. Both of them are.

Steve: Both of them?

Stella: I've sold a couple that were not so good for me.

Steve: Okay. So, like, that was still good. Yep. And then you got the duplexes. That was still good.

And then now you wanna buy there's a 22 duplexes. Yep. And now you wanna get into OPM. All meanwhile, still working a full time job. Yes.

Was a firm like an easy place to work at where you just had all this flexibility?

Stella: I wouldn't say it was a easy place to work at. I would say I'm a very hard worker. I pretty much spent, you know, all the hours I had after work plus all the weekends dealing with all sorts of things in my portfolio.

Steve: Okay. So it was basically work and then real estate?

Stella: Yeah. Work and more work.

Steve: Work and more work. Okay. So you lost $55,000. How did you lose $55,000?

Stella: Oh, man. I wish I didn't have to tell the story. It is honestly brutal every time I say it. So what happened was I realized that I had to raise capital, and I had no clue what I was doing. So I asked, you know, other people that I know that are also real estate investors.

I was like, look. I really need to buy these duplexes. They're great deals. I need a million dollars to raise that because I don't have a million dollars.

Steve: You need a million doll you need to raise a million, or you need

Stella: to raise a million dollars.

Steve: Okay.

Stella: And I was like, how how do I do this right? Because I've also heard these horror stories on the Internet and these Facebook groups I was in where, you know, people literally go to jail because they're in trouble for raising capital wrong. Right? And I did not wanna go to jail whatsoever.

Steve: Sure.

Stella: And so I asked, you know, people around me, and they're like, well, all we know is if you're gonna raise money from other people, you need to go find a securities attorney and go set up a syndication. I'm like, okay. You know, I'll I'll do that then if if that's what everyone is saying. So I go find a securities attorney, and they're like, alright. Pay me $30 so I can set up your a 100 page PPM, which is private placement memorandum.

It's honestly like a tongue twister to say it every single time. Yeah. So they're, you know, making this super long, expensive doc that I, you know, have really no idea how to read, let alone, you know, think about the tech people around me who have never really done this in their life. Right? So we're setting this thing up, and then we have to go create, you know, either a five zero six b setup or a five zero six c setup, which has, you know, all sorts of limitations around you know, you can't raise from everyday investors.

You can't do any sort of marketing and and all these things. And I had no idea going in. Right? The securities attorney is like, this is mandatory. I need $30 for my work.

So I'm like, alright. You know? I bite the bullet. I give the $30. And then next thing you know, it took four weeks to get through all the filings, get all the documentation together.

And by the end of that, when my setup was all done, I only had two weeks left before my close-up escrow.

Steve: Oh, so you're just timing this to, like, get your escrowed. Are you under contract on these ones?

Stella: Yeah. I'm already under contract because I didn't know that this whole thing was gonna happen. Right? I'm like, how long could it possibly take to get some filings? Probably a week max.

Right? I've got plenty of time. Or a

Steve: week sounds pretty reasonable to me.

Stella: Well, I I didn't know. And Yeah. Yeah. So it was basically got the docs back, two weeks left to actually raise a million dollars, and this is also my first time raising money too. Mhmm.

Could not get it together and, you know, also didn't know that there was no marketing, no posting on social media allowed. Right? It's basically Crazy. Yeah. It is crazy.

It's like, how do you expect me to raise money if I have a giant tape over my mouth and I can't say anything? So I was, you know, legit banging people. I it's so embarrassing. Sometimes I show other people in our community, you know, text messages that I sent back then to my friends literally going like, I'm going to lose my money if you don't send me this wire. And How

Steve: much money were you talking about losing?

Stella: $55. I I put a 25 k EMD on the deal plus the 30 k I resent with a lawyer, and those docs were for that specific deal only.

Steve: Oh, for that property. So it's not even like, I mean, a blanket. It's, like, property specific or properties, I guess, in this case. It's 22 property portfolio.

Stella: Yep. You

Steve: did a PPM for this portfolio. Yep. Wow. Okay. So you learned a lot.

Stella: I learned a lot.

Steve: It it

Stella: was a very painful lesson. I obviously did not pull together that raise. It was impossible.

Steve: So yeah. So you lost the 30 digit raise. You're telling you're begging your friends. Like, you're, like, what is an example here? This we're trying to make a a short doesn't go viral here.

So what what is what is, like, an example text message you sent to your friends?

Stella: I mean, it it was like, please, like, I really need this money. I've never, you know, sent sent you any text like this before. I hope you can tell how serious I am. Like, I really want this deal, and you were also really excited about this deal. Can you send me the wire tomorrow, or else I'm gonna lose everything?

Yeah. It it was just many versions of that to so many people. And, you know, half of my friends who said yes, they ghosted me, never responded to that message. And then I also had friends who did send me the wire, but because the steal completely, you know, fell flat and I've, you know, fell flat on my face too, it was also so embarrassing and felt like absolute shit to text them after and be like, you know, I fucked up. Like, this deal isn't happening anymore.

I lost $55. I got you excited for no reason. Here's your wire back. Like, that was so hard for me to do, especially as someone who doesn't very easily accept failure at that point in my life. And, like, I remember after that raise was done, like, I really felt like a total failure.

And I was like, I don't know if if real estate is for me and and if going after bigger deals is for me. Like, maybe my destiny in real estate is is just doing single family homes whenever I had my own capital.

Steve: So you didn't lose any investor money?

Stella: No. That's

Steve: a big w. That's a big win. True. Right? Because you hear other stories, people doing syndications, losing friends and family money.

Yep. And you got to experience what I've gone through, which is this massive disappointment of verbal commitments that don't that don't turn into fruition. So talk to me about that. Like, what was like, these were close friends?

Stella: Yep. You

Steve: still talk to anyone?

Stella: I still talk to them.

Steve: You still talk to them? Okay. So you're a better person than I. I have a hard time making contact with eye contact with people that promise, and they'll deliver. And I know that's unfair, and it's unrealistic.

It's my fault. But, like, Stella says, like, hey. You know, I'm in I'm good for a 100 k. Like, hey. It's time.

And you're like, hey. I know I sound good for a 100 k, but I'm not. What do you mean? Yeah. We had this conversation.

What part was unclear? Right? What part of your word, like, no longer

Stella: matters? I mean, they'll say stuff like, you know, family emergency or, oh, you know, I I saw this other really good thing that happened, so I had to deploy into that. Or, oh, you know, I thought you needed this money three months later. Not right now. It's just, like, all sorts of excuses come up.

And Yeah. Yeah. It was it was a very painful way to learn that.

Steve: Yeah. Okay. So, obviously, you learned a whole bunch of lessons there. You wanna care to share two or three of your biggest lessons here for people that are gonna go down the syndication route, what you learn and what you'll never subject yourself to again.

Stella: Yeah. Well, one, I think we both learned this. Verbal commitments mean shit. Okay? Do not think that all your verbal commitments are gonna turn into real dollars.

That is not the case.

Steve: Do not bank on verbal.

Stella: Exactly. I usually try to, in verbal commitments, have, you know, over 30 to even 50% of what is the real dollars that I need because I know people are going to flake. Right? So I think that is a hard learning lesson that I still practice today. And then the second one, I think it's it's really a lot of reflection on who is in your investor list and what is the right structure to capture that.

So for me, at that time, most of my most of my investors, they were not wealthy, accredited people. Right? I I was pretty much just a couple years out of college myself. Most of my friends around me were, you know, same age. Right?

Like, you know, people had twenty, thirty k to invest. It wasn't like hundreds of thousands of dollars, and I didn't realize how much a syndication would limit me in terms of actually being able to access dollars from the real people in my network. Mhmm. It was more of, oh, well, you know, all the gurus and all the leaders out there are doing syndications, and that's what everyone is telling me. Therefore, I'm just gonna go do that.

That was not the right path because I didn't actually reflect on who are my people and how you know, what kind of tools should I use to actually really leverage my connections that are so personal to me.

Steve: Yeah.

Stella: That's that's another really big learning lesson. And three is, I think capital raising, it is a constant process. If you do it reactively, it is too fucking late. It is just way too late. Right?

Because there is so much, you know, know, like, and trust. Right? That doesn't get built overnight. Mhmm. And when you have your, you know, first few interactions with people and it's, hey.

Can I get your money? Can you invest with me? That's not gonna work. And I've realized, you know, people invest with people, and you have to build those connections. You have to build a rapport way in advance.

So it's almost like mindset wise. I'm always raising capital right now. Yeah. Yeah.

Steve: And one of the lessons I learned throughout my career is that the worst time to ask for money is when you need

Stella: money. Exactly.

Steve: It's the worst time. It just doesn't work. You have to be asking for money when you don't need it. And then when the opportunity comes along, like, hey. You got this thing.

Like, okay. Cool. Like, tell me more about it. But if you're not doing beforehand, then forget about it. I would say the other thing too, and maybe I'm just crazy because I haven't done syndications, but, I think property specific, PPMs.

Right? Because my understanding is you can do, like, a blanket PPM. You don't have to do, like it's gonna be this property. It could be, like, this property or another property we identify later on. Am I wrong there?

Stella: There's different ways to set it up, and I think the more blanket it is, the more potentially complex it could become, which would increase cost and time spent. Mhmm. So being a rookie and me being on our contract for that specific deal, I was like, you know, what could go wrong? Right? Let's pick the easiest option.

Let's do it just for that. And then, yeah, everything went wrong.

Steve: Yeah. Had you taken that down? Because you were so gung ho on this deal. Like, what were, like, the if you were raised if you were successful in raising the million dollars, what kind of deal were we talking about here? Why were you so gung ho on it?

Stella: Well, I was really excited because that deal was I I really liked how it was duplexes. So it was very manageable in my opinion from a single asset perspective, but it had that economy of scale where we were pretty much buying that entire block Mhmm. Where

Steve: Oh, so they're all grouped together.

Stella: Yeah. All grouped together. Right? So to me, it felt like, okay. Instead of, you know, one house here, another house there, it's like we can take all these down, but each unit, each house is still something that I really understand.

Right? Mhmm. It's not like I'm buying all of a sudden an apartment that has 200 units, which I think is a completely different piece. Right? So this really felt like something where I was going to hit the next level of skill in an area where I already had a a lot of knowledge in.

Steve: Mhmm.

Stella: And, you know, you could have the property management company that I was using for all my other single family homes already just come in here. We basically quality control over the entire, you know, block, essentially. And if everything went well, then, you know, each property can kind of affect in affect each other, right, in its appreciation and its growth and all that. So I really like that, and we were negotiating a pretty good deal with the seller too because now he doesn't have to sell all the duplexes one by one. Right?

It's like we can go get this whole thing. So, yeah, it sounded really great in my head, which is why I was so passionate about it. And yeah.

Steve: So and I'm wondering, is it because you're so excited about the deal, it sounded like you violated one of your core principles, which is derisk bets. Mhmm. Is that the case?

Stella: I think it was the case. Right? Because I was so passionate about it. Everything sounded so exciting. And, you know, I I would say I got got in terms of FOMO.

Right? It was like, oh my gosh. Someone else is gonna beat me to this. I don't wanna lose the deal. This is so great.

So, you know, in hindsight, I probably should have understood more what were my options when it came to capital raising. Maybe not risk all my money locking down this deal with the EMD, getting the security as attorney only to find out later that the timing was never gonna work out. Right? So, yeah, definitely, I think sometimes, like, Simon gets get you know, makes you get a little bit ahead of yourself and, you know, you you do get burned. But with that, I decided that I wasn't gonna let this failure control the outcome of who I was as an investor and what I'm gonna do as a founder and entrepreneur.

And it may made me really reflect on how, you know, things have been in my personal investing experience outside of real estate because at the same time, I am also investing in stocks, crypto. You know, we live in San Francisco and, you know, we've seen all these companies, right, including Affirm, go from just an idea to a publicly exited company and people have made I I mean, I made millions. Imagine the people that were there early on. Right? Like, they've made tens, hundreds of millions.

Right? So my buddies and I, we pooled money together to go, you know, invest in stocks, crypto, and and startups, and none of that required a securities attorney. We didn't have to go make a PPM and go get a five zero six b or c filing. And part of me was like, what is what is fundamentally different with what we've been doing outside of real estate and why it doesn't require it and have all this crazy legal red tape. Right?

How come I had to go through all this when I was doing my real estate syndication? And that's when I realized that the fundamental difference was in the stock, crypto, and startup world, my buddies and I, we were actively looking at deals together, you know, voting on what we thought made sense and then deploying our capital as a group, and that is considered active participation, which is why the SEC, the US government says, hey. That's not a security, so you don't have to go, you know, file all this crazy paperwork. But, you know, in the traditional real estate capital raising world, people hand other people a check and that person, the the general partner, right, makes all the decisions. And because they make all the decisions and you as an investor don't make any decisions, that is a security because you're expecting to make profits under the efforts of other people.

And the SEC wants to obviously protect the investors, which is why they have all these restrictions

Steve: that really stringent rules.

Stella: Yep. Exactly. And I got a a huge light bulb moment where I was like, why isn't there investment clubs, which is, you know, what I've been doing outside of real estate or real estate? Because that would totally change the game and how people can approach capital raising and working together as a team.

Steve: And before we get through all that

Stella: Yep.

Steve: I wanna talk about a couple of different things. First, for people that are watching. Right? Because, like, there there's always those scary stories. Like, don't say that.

You'll go to jail. Right? So you wanna, just real quick, elaborate what is defined as a security. Because I I understand there's three tests. So you wanna hit those real quick and then how, like, investment clubs don't run the

Stella: Yeah. For sure. So there is something called a Howey test, which is what a lot of people use to determine whether something is considered a security or not. Mhmm. And, essentially, the crux of it, it really comes down to, are you, one, pulling together money?

Right? So, essentially, raising money. Are you raising money? Are you pulling together money expecting a profit? Right?

And with that profit, are you making that profit under the efforts of others? So which means I'm not doing any work. I'm giving Bob Mhmm. My money, and other people are giving Bob their money. And we're expecting Bob to make us profits with Bob doing all the work Mhmm.

And us as investors not doing any of the work. Yeah. So when that happens, that becomes a security, and the SEC regulates that because there are scammers and fraudsters out there and all those things, right, where they wanna make sure that if you're giving someone your money and you're not in any control of the outcome of that money, you are wealthy. Right? They they wanna make sure you're accredited where this money is essentially, you know, play money to you where, you know, might not matter as much if you lose it.

And, you know, you're sophisticated. Right? You understand all the risks of investing, which is why they have these crazy, you know, a 100 page cover your ass documents and and all those things.

Steve: They're laughable documents, like the things that they put in there. But, again, just to reiterate for everyone who's listening, you guys haven't heard the Howey Test before. So my understanding, if there's more than one investor, right, so you and then more than one other investor because if it was just one investor, it could just be a a lean and it is fine. Right? So Yeah.

More than one investor, where one person or a group of people, but not all people are doing all the work with the intention to profit. If there's no intention to profit, why are we doing it? But that's not a security. Right? My understanding is that in with the intention to make profit from other investors who are not doing work.

Yep. That's when we get into issues. That's why we have to have syndication, and then it's 30 25, $30,000 there, to to get down that road. Okay. So you were feeling bad about yourself.

This was a mistake. Maybe real estate is not for me. And you kinda mentioned the introspection or the discovery you had. But how did you get out of the mental funk? Because 55 k is a pretty significant blow.

Particularly, you're still younger, still newer in your journey. Like, I mean, how many properties you bought that thing? You're buying a bunch. So, like, ten, fifteen properties at that time?

Stella: Yeah. I I had roughly around 20 at that time.

Steve: 20 at the time. So you're trying to double Yep. In one shot. Yep. And you had a pretty significant gut punch on the way.

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Stella: I mean, for a period of time, I didn't. I I sat with that failure, and it it was really hard to motivate myself when when I was at that low. And, you know, after a couple months, I started realizing that, you know, just staying in this funk isn't gonna get me anywhere. Mhmm. And I think there is something in entrepreneurs where you just can't take no for an answer.

I think that is just part of who we are as people. Yeah. So I eventually found my head just spinning on all sorts of things on like, this this just can't be the only way you raise capital. Right? And it made me really self reflect on, okay.

Well, let me not pigeonhole myself into this one failure that I had and have that define who I am as a person and as an entrepreneur. Let me just step back from that failure and look at who I am as a person, what my strength are, what have I experienced outside of this failure, and just see what else is out there.

Steve: Mhmm.

Stella: And that's when I really thought back on me as a techie. Right? Me being in the Bay Area, what my friends and I are doing in in stocks and crypto and, you know, making wild bets on on startups. Right? And I think once you're, you know, out of that rabbit hole, you start having more clarity on all the things that are happening around you.

And I almost feel like, you know, there are no coincidences. Right? Like, things happen for a reason. And I'm like, Like, it it must be for a reason that, you know, we've been creating these investment clubs with my friends that are so passionate about, you know, investing and, you know, us spending our weekends together, analyzing our stock portfolios together, you you know, picking up all these different, like, financial news and trading news and all those things. Right?

What is so different from that compared to, you know, what I've been doing in in real estate raising and this really bad capital raise? And you start connecting the dots and you realize huge opportunity. And that to me was such a powerful moment because I it it made me really wonder, like, who else has felt this massive pain and gone through a similar failure that I did and, you know, maybe never got out of it? Maybe they lost their deal and, you know, never never did anything in the future. Right?

Yeah. And I realized, like, it's just it's not just the me problem. It's probably a problem for a lot of people. And I have an experience outside of this where it's worked time and time again in in raising capital without dealing with any of the legal crap. Right?

And I was like, well, I think this is, you know, the world telling me something that there's potentially a possibility, there's potentially another answer. So I have to jump in and figure this out myself to know for myself and potentially so many other people out there. Yeah. What's what's another way of going about it?

Steve: So a question I have here

Stella: Yep.

Steve: You and your friends were legitimately, like, getting together and investing together.

Stella: Yeah.

Steve: So for me, like so we did our company. It was a failure. Right? But it was JPSB Dream Team. It was me, three of my best friends.

And we did a real estate LLC, and we bought we bought assets together. And we eventually got rid of it because it just didn't make any sense to do it altogether. But We did it together, so we didn't have to worry about a syndication. We didn't know even know about syndications when we did this. But when we talk about stocks and whatever, like, we'll talk about stocks, but, like, he'll go buy his number of stocks.

I'll go buy my number of stocks. He'll go buy his number of stocks. Or we're talking about crypto or blockchain, whatever. Like, okay. I'll go buy this.

You go buy this. Right? And we're talking like Ryan Pineda is like, alright. I'm buying these NFTs. Like, you should buy these.

Okay. Fine. I'll go buy these NFTs. But we never, like, pulled our money together. It It was always, like, comparing notes.

You guys were legitimately pulling money together and then calling the shots together. Yeah. So that's is that normal in the Bay Area?

Stella: I would say it's it's more common, and there's a lot of alumni groups as well where they have alumni investment clubs where people also pool funds together and make bets. And it was especially common for start up investing because, I mean, as a founder, you're not gonna wanna take, you know, a 5 k check from grandma, another 5 k check from, you know, best friend one, another 5 k check from auntie. Like, your cap table will be a whole mess. Right? So a lot of times as, you know, we've seen in even for my college, it'll be a lot of alumni.

We pour our money together, and then we go, you know, invest in another alumni's business. Right? And they would basically get one check that's, you know, let's say, for 200 k, but there are maybe 20 alumni that's involved in that one check. Right? So we were essentially doing that for, you know, startups who are making bets on.

We wanted to do that for crypto and stocks too just to diversify Mhmm. Where our our funds are going. And it it was fun. Like, you know, we we enjoyed spending our weekends, like, doing all this research together and working as a team and knowing, okay. If we place this bet, we we did all these research because we did that.

We're gonna see the outcome whether it's good or bad and just work as a team. Right? Like, you you take the wins and the hits together, and and you grow from it together.

Steve: That's fascinating. I had never heard of that. I mean, I'm obviously unfamiliar with, like, you know, angel investors and VCs and private equity firms, but, like, investment clubs is a newer concept. Okay. So you got that.

You realize there's another way. So what did you do with this information?

Stella: So back to me not being a super risky person, I was like, okay. I'm onto something potentially, but not entirely sure. Right? And I have a hunch that a lot of people have gone through the same pains. Right?

I'm I'm definitely not the only person in the world that's failed at raising capital. So I I wanted to make sure that there was real opportunity in in what I was building. And, you know, back to what I learned from being at a firm, it's how do you get the most by doing the least. Right? So my cofounder, Carlos, who, you know, was my team at a firm, I basically told him what I experienced.

He's in real estate himself too, also a software engineer. And we were like, okay. It seems like there's something out here with investment clubs making it com completely changing the way people can raise money. And then it also really opens the doors for someone to bring in everyday investors, just normal people around them, to be a part of their raise and the deals they were doing. We're like, okay.

Let's make sure this is a real thing and not just something that I made up and is in all of our heads. Right? So we end up building a website that just has a landing page, no real product whatsoever, but in that landing page, we're describing, you know, our idea for what an investment club is and how this product is gonna work, yada yada. And it seems very real, but it's actually fake. Right?

It's just the website. And at the end, we were like, you know, this is exclusive. If you want this, join the wait list. So I share this

Steve: Great marketing.

Stella: Yeah. I share this in a bunch of, you know, Facebook real estate groups I'm a part of, in, you know, tech professional apps. There's something called blind, which is where a lot of employees gossip anonymously about their employers and what's going on with work.

Steve: At the Glassdoor?

Stella: Yeah. Exactly. Right? But it was like, okay. We think this is where the target demographic is gonna be.

So we roll out this fake website with all this, you know, FOMO and exclusive wait list, all that, and we actually got 2,000 people.

Steve: 2,000? Yeah. Yeah. That's a pretty good test.

Stella: To join the wait list, and we're like, holy shit. Like, this is not made up anymore. Right? Like, there is real demand. People want this.

Other people have gone through the pains. Now it's on us to go build it. And that was the thing that gave us enough confidence and encouraged to to just take that leap of faith.

Steve: When was all this going on? The, I guess, the first port the the syndication that died, and then they discovered the fractional or investment club. When did that happen?

Stella: This was actually when I still had my job at a firm. So we were investing on the side. And, yeah, we

Steve: Like, five years ago?

Stella: Yeah. Around six years ago. Yeah.

Steve: Six years ago, you were doing all this.

Stella: Yep. So

Steve: then '19. So then were you just working with a realtor the whole time in Atlanta? Like

Stella: Yeah. I was. Yep.

Steve: So there was like, you didn't know what wholesaling was at this time? Nope. You have we're clearly not listening to this podcast here, which is fine. I forgive you for that. Okay.

So so, like, 19, you you're posting these Facebook groups, and, you got interest, then what?

Stella: We get interest, and we know this is real now. Mhmm. So in the Bay Area, there

Steve: interest in the the app and service. Right? Yes. That's what you found. Yeah.

You you kinda spelled out the idea of what fractional is. Yep. And then you got a wait list. Okay. Alright.

So sorry. Go ahead.

Stella: So we're like, okay. You know, people want this thing. It's it's not just me that experiences and wants this thing. People 2,000 people want this thing. So Carlos and I looked at each other, and we're like, are we gonna go build this or not build this?

Right? Are we gonna stick around at Affirm and just live our Affirm life, or should we go actually capture this thing that is our idea, our baby, our pains, and other people's pains too? So we ended up applying to Y Combinator, which is an accelerator that is you know, very famous in the startup scene that has created companies like Airbnb, Stripe, DoorDash. Right? And need to quit our very cushy, affirmed, sovereign new job.

We had to make sure we weren't gonna be homeless. Right? So I wanted to make sure that, you know, we at least had some sort of funding to actually go build a business where Carlos and I could still pay rent and, you know, have food to eat. Right? So we applied to Y Combinator, went through a very grilling, extensive interview process.

And at the end, they said, you guys are in. You know? We believe in you too as founders. We believe in, you know, the early excitement that people have around your idea, which was that wait list. And they said, you know, quit your jobs, come here, we'll give you a 200 k check for 7% of your company, and you get the y comment or branding and everything.

And the deal was pretty much, you know, you you quit your job, you do fractional, which is our company full time for three months, You come out of it. YC has this thing called demo day, which is where you get a pitch to a room of thousands of great venture capitalists to

Steve: Yeah.

Stella: How to get additional funding. So we're like, alright. Let's do this. It's it's now or never. Right?

Like, how often do you come across an idea that you're so passionate about, you've gone through the personal pains yourself, other people want this thing, and another world class investor is saying, I'll pay you to go build it. So we we ended up jumping in.

Steve: Did Affirm already go public at this point?

Stella: No. Not yet.

Steve: So you quit before you had the money? Yeah. But you still got the money from Affirm. You still got the stock options? Yep.

Okay. Good.

Stella: Yeah. My mom was yelling at me when I told her I was quitting because she was like, dude, Affirm is gonna go public in, you know, six months. Why do you have to go quit now? You know, why why can't you just wait it out for six months? Like, you're you're gonna lose some so much money because the stocks is all vesting.

Right? Like, every month you work, you get more stocks and all that. And, yeah, it it was it was a tough conversation.

Steve: I bet.

Stella: Yeah. I

Steve: bet. I remember when I told my parents I was quitting. It was not a very good conversation. So and I didn't have nearly as good as you. So 200 k for 7 percent.

It was really friendly. Everything I know about y Combinator, I should know more about it. Everything I know about it is watching a TV show. Right? The thing is called Silicon Valley.

Stella: Yep.

Steve: Everything I know about y Combinator is Silicon Valley. So the it seems like a really, really friendly towards you for 7% for 200 k. Seems like they could have commanded a lot more. You typically hear, like, venture capital. Like, they basically like, you are a slave to them from day one.

But I guess this is this is more angel investor than it is, like, venture capital, like, with Y Combinator?

Stella: It it is a very early bet, and, you know, I I would actually say that some founders think the 7% is very expensive, actually. So, I mean, with Y Combinator, they obviously know that they are the number one brand. Right?

Steve: Well, at zero at pre revenue, I wouldn't say. In my opinion, 7% is not that expensive pre revenue. You got proven concepts in client base, and I think that's a different story. Not even client base, but, like, a lot more proven concept. But, anyway, that's just my opinion.

Stella: Yeah. It is it is a very different world out there where people do crazy stuff. Right? I mean, even in in AI right now

Steve: Mhmm.

Stella: You know, pre revenue idea that, you know, you have no idea what's gonna happen with it, and people are raising, you know, millions of dollars at insane valuations. Right?

Steve: Well, there was a guy, I think, I just heard, I think it was SSI is what they called it. Right? He worked at OpenAI. He went to go compete last year. He quit last year, and he just raised, $3,000,000,000 at a $30,000,000,000 valuation.

And they don't they can't even articulate what what the company is.

Stella: Yeah. Exactly. Right?

Steve: So, anyway, that's a whole like, this whole other I I I spoke at LA Tech Week, about a month ago now. And, you know, I'm sharing. Here's what we're doing with objection proof AI and this and that. We go out to dinner, and here are these other guys. Like, these guys know money.

These guys know VC. They know private equity. They know all this stuff. And they're like, you're charging right now? You're not pre revenue?

Are you insane? I was like, I have to pay my bills. I actually have a family to feed. I can't make a proven product and get hundreds of customers for free. What are you people talking about?

But, yeah, there's this whole other world of, like, pre revenue. And, you know, there's seed rounds, but then there's even, like, pre seed rounds now. It's all insane.

Stella: It is crazy.

Steve: Anyway, going back to your story. Sorry. I went on a tangent.

Stella: Yeah. But, I mean, it it was a no brainer for us, especially as first time founders. It was like, you know, if if YC is giving us a check for whatever Mhmm. We're taking it. Right?

Right. So that's what we ended up doing, and that three months was absolutely brutal. It was, like, basically, throwing you on a pressure cooker and, you know, you're trying to, you know, turn an idea into something that has some sort of revenue and, you know, you're trying to build a fully fleshed out product in three months as well. Like It's

Steve: good that you're both software engineers.

Stella: Yeah. Exactly. You know? But Carlos and I were barely sleeping because we were trying to crank all this stuff out because there is so much competition, and there is a very, very clearly defined end goal. Right?

It is there is demo day. If you have your shit together, you will raise more money, which will help you grow the business. If you don't have your shit together, your company is dead. Right?

Steve: Dead dead? Like, is there's no revival?

Stella: It's it's pretty much dead dead. Right? Because after so Y Combinator, they bring in companies twice a year into what they call as batches. Mhmm. So we were in the winter twenty twenty one batch, and we would go through our three month process and then pitch.

Right? And then you got a new wave of new founders, new ideas, everything coming right after us to do the spring batch. So, you know, if No one's

Steve: paying attention to you if you don't Yeah.

Stella: Exactly. Right? If if you're not the shining star in your demo day, you're out. Right? You're you're just gone.

Steve: Mhmm. Gotcha. A lot of pressure.

Stella: A lot of pressure.

Steve: Okay. So what were the craziest moments in those three months?

Stella: Craziest moments? Oh, there there are so many. I, you know, was doing this was also me doing my first sales calls, which to me was was very crazy because I I'm a software engineer by trade. Right? Like, I spent my whole life learning how to code and build products.

I've never sold products to people, So that was my first time figuring out everything, and I remember I was selling fractional to someone who was a real estate investor and also a VP at, Bakuten. And after he heard my pitch, he was like, Stella, just like between me and us, like, I'm being friendly to you. He's like, you're a really bad salesperson. He's like, you're pitching me all these, like, features that you've built. He's like, I assume that those work.

I don't need to hear you pitch me about how you've got this button and, like, whatever whatever. It's like, I want the outcome. I want the story. That's what's gonna sell me, and I assume your product works because if it doesn't, what are you even doing? And that was such a mind fuck moment for me.

I was like, holy shit. Like, I have to change everything

Steve: Mhmm.

Stella: About

Steve: how

Stella: I run this process. Yeah. And and that was very, very eye opening. Mhmm.

Steve: I understand. Being an engineer going to sales, totally understand that. Okay. So then how was demo day?

Stella: Demo day was was really great.

Steve: Mhmm.

Stella: We were also very strategic leading up to Demo Day. So Demo Day, this is funny enough. Right? It's like you're you're raising capital now for a company as opposed to real estate, but all of the tactics and strategy, it applies. Capital raising is the same no matter what you're raising for.

So after being burned raising for real estate, I'm like, I'm not gonna do that again, especially not for fractional, which is my real, real baby now. So we were like psych you know, psychologically wise, right, from an investor's perspective, everyone wants to be in the hot next best thing. Right? And our entire mind process was, how do we make Fractal the next best thing and the hottest thing that is coming out within our batch? So before Demo Day even happened, we were already basically teasing out to investors we know that come to demo day telling them, hey.

You know, we've been building fractional for the last three months. This is, you know, the traction we've gotten already. This is, you know, the entire product we've built. You know, we're we're the killer people to go do this. You're not gonna find someone else like that.

So and and people talk. Right? Like, they hear these, subtle drops that you're giving them, and then they start talking within each other, and that naturally creates competition because you can only take so much money from a limited amount of people. Right? So it was almost like I was hitting potential investors beforehand amongst themselves so that they feel the heat on how great of a company and deal this is gonna be.

Yeah. So then now going into demo day, now it's not, I'm desperately begging you to invest in my company. It is this is the hottest deal right now. All of you guys knew it because you've been talking to each other. It's a race on who gets to invest into fractional.

Mhmm.

Steve: And how that work?

Stella: It it worked great. We we ended up raising $5,000,000 for our seed round, and we brought in Will Smith and Kevin Durant as our celebrity investors, which is always very fun to talk about. And then also CRV led the round. They backdoor dash as as an early stage company. So, yeah, that turned out awesome.

Steve: A Will Smith and Kevin Durant

Stella: Yep.

Steve: Were angel investors in your deal. Yep. I didn't even know that Kevin Durant invested.

Stella: Yeah. I I was gonna say, you gotta put up another jersey in the back.

Steve: I don't know. He did not work for he did not work out for us as a Suns fan. We enjoyed having him here. That that bring in the the the champions, the trophies that we were looking for here.

Stella: Fair.

Steve: Actually, you know, we we put out a survey, and we got two that I got the most, which I agree with, are Kobe and Messi.

Stella: Mhmm.

Steve: So we're probably gonna put up a Kobe jersey and a Messi jersey up here

Stella: I love that. At

Steve: some point. So alright. So $5,000,000. Can you share, like, what percentage of the company?

Stella: It was at a $30,000,000 valuation.

Steve: Okay. So 5,000,000 $30,000,000 valuation. So life's looking pretty good right now. Smooth sailing from there? I

Stella: wish. I mean, no company is ever smooth sailing. Right? Yeah. It it was it was definitely good for the most part.

Right? I mean, now it's like we we've got money. Everything is is a, you know, first, you know, first world problem. Right? It's not we're gonna die kinda problem.

And, you know, we we hired people for the first time, made many mistakes doing that. Sure. And then, you know, we're we're building through many different versions of the product. We have so many ideas, and we're we're trying to crank all that out. So all that has been very positive, but at the same time, you know, we're learning things around, you know, how do you have messaging fit.

Right? And what was really complicated was fractional has two separate audiences. Right? There is the operators who are looking to raise money, and then you also have the end investors who are joining the clubs and giving, you know, twenty, ten k checks, whatever. Right?

So in the beginning, we couldn't make up our mind on who was the actual focus in terms of customer. Was it the everyday investor that wanted to come in and also find other leaders that they can invest with, or is it purely just helping the leaders unlock their own personal network? So we were trying to tackle both for actually two years, and I think that ended up causing a lot more friction than we thought. And, you know, when when it's like when you try to serve the masses, you end up serving no one. So we we learned, you know, through a lot of growing pains on, you know, actually, let's just focus on just the capital raisers, just the operators, and having them bring in the people that they already already know, likes, and trust them, right, as opposed to trying to be, like, a two sided marketplace.

Steve: What was the friction? Was it internal conflict? Like, the the as far as the vision of the company? Or were you saying was it a lot of friction trying to go after the investors and the razors?

Stella: It it was a mix of external and internal. So on the external side, the messaging is confusing. Right? Because you're you're trying to talk to two completely separate types of people in one landing page. Mhmm.

Right? So you have a 10 k investor coming on and being like, okay. This kinda makes sense to me, but I'm also really confused about certain aspects.

Steve: Right. And

Stella: then you also have the operators come in, and they're like, oh, fractional must, you know, have the ability to just magically bring me millions of dollars because they're gonna connect me with all these investors. Right? So they had very unrealistic expectations on what could actually happen on the platform Yeah. Because we were also trying to target the end investor too. So that caused a lot of friction just externally with customers.

And then internally, you know, we're making all these product iterations. We're tweaking the website constantly, but nothing is really clicking just like that. And I think this was something that was really hard for me to do too was ultimately deciding, you know, we're we're kind of going to let go at least from an initial landing page perspective on the end investor and just really targeting and focusing on the operator because it was giving up on something that you've spent so many years of effort trying to build and has some traction. Right? It was not like it was a blame fail.

It was like, this thing is kinda working. So part of you is always thinking, oh, you know, if I do this fix, what will it work then, or do I just kill it? And killing it was extremely hard to do, and and that caused a lot of internal friction too.

Steve: Which team were you on?

Stella: I was actually on the let's keep figuring it out team.

Steve: But you so you weren't necessarily on the investors or the razors. It was like, we're not ready to make a decision.

Stella: Yeah. Exactly. Got it.

Steve: The hardest place to be.

Stella: Yeah. The hardest place to be.

Steve: Okay. So then when did you start having success?

Stella: We started having a lot more success the moment we picked one side.

Steve: Yeah. Yeah. Like, clear direction.

Stella: Yes. Exactly.

Steve: Okay. What kind of success did you have in the beginning?

Stella: So, you know, interesting enough, in in in the beginning of starting fractional, it was also when the market was in a really, really nice spot. Right? Like, money was cheap.

Steve: Abundant, free flowing.

Stella: Exactly. People were buying deals left and right. So it almost felt like we didn't know that we weren't onto the right thing until later. So things were growing really quickly, you know, coming out of Y Combinator, all those things. Marcus was really nice.

You know, people were buying properties even though the website was confusing. So we didn't really think we were into any trouble. And then the moment, you know, interest rates started going up, the market was not so good, then everyone is pulling teeth to get deals. Right? And that's really when stuff has to really make a lot of sense, and our stuff didn't really make a lot of sense.

So we saw a big drop.

Steve: What's stuff didn't make a lot of sense? The service?

Stella: Yeah. The service. Like, who are we targeting? How is fractional supposed to work? Right?

Like, all those things because we're trying to target both sides. That was really confusing, and, you know, money wasn't free anymore, so people are very careful around the decisions that they make. So we saw a lot of plateau in the business. It it wasn't growing, and we were really, really stuck. And we were trying to get ourselves out of the mud for for two years just iterating and tweaking.

And then now we get to the point where, you know, I'm finally convinced that we have to just cut part of it and just focus on the end operator. So we make that switch actually towards the end of last year. Oh. So this is a pretty recent change, actually. And then from there, things just started clicking.

Mhmm. I'm part of sub two. I brought up the idea to pace Morby. He bought in immediately. So and then, you know, things start falling like dominoes.

Right? The the moment you have key players saying yes to the new model. So we we get PACE. Now people all across sub two that are raising capital are using it on top of PACE. And then, you know, BiggerPockets hears about it.

They now wanna figure out what this is. Now the bigger pocket speakers are using it too. So now it's like you get that dominoes effect where it makes sense.

Steve: PACE was the first big domino in real estate.

Stella: Yes.

Steve: You're not limited to just real estate, though.

Stella: We're not. No.

Steve: What other things are you guys involved in?

Stella: Business acquisitions is a new one that we got into this year. Mhmm. And my big vision is that there is investment clubs for everything. Right? Just like how, personally, we're doing stocks, crypto, startups.

You know, what's stopping anyone from running a club and pulling money from any asset or idea that they're passionate about? That's the big, big vision. We started with real estate first because of my personal pain, and, obviously, real estate is a huge market.

Steve: Right. So that's

Stella: where we started first. And then the business acquisitions actually happened very naturally because within PACE's community, people were looking at buying, you know, laundromats, simple businesses, things like that. And they were like, hey. You know, we we saw people doing this for real estate. Can I do it for a laundromat?

And we're like, yeah. Of course. So we started building products that support the business acquisitions case too.

Steve: Got it. Okay. So going back to PACE. So PACE, you were in sub two. How long were you in sub two?

Stella: I was in sub two for roughly a year, and then our director of investments was also part of sub two. So we knew that community really well. And there were a few members within sub two that were well known and well established in the group. They had started running clubs on fractional to raise money. So I I'm very proud of the story.

I think this is one of the ballsiest things I've ever done. I was like, okay. You know, we have track record within the sub two community. It would be insane, you know, if PACE used fractional too, and I saw that PACE was running raising capital classes for the community. And I also saw that, you know, he was trying to raise money from the community because people wanna do business with him and wanna invest in his deals.

And he was, you know, doing crowdfunding and setting up, you know, Reg CF and all those things. And I'm like, dude, PACE needs to be on fractional. Like, we can deliver so much value to him. So I saw that he was doing an in person workshop out in Phoenix in person, and I was like, you know what? I'm just gonna buy a plane ticket.

I'm gonna fly here, go to the event, and I'm gonna give Pace my elevator pitch and just see what he thinks of it. So I go do that and, you know, I'm sitting in his workshop, like, all morning just, like, in my head thinking, oh my gosh. When do I get to talk to Pace? Like, how am I gonna do this? Is this gonna work?

And finally, during lunch, I see him. You know, he he's done. He's walking out of the office. And I'm like, PACE, I have to talk to you. Can you please just give me two minutes?

So I tell him what fractional is all about. I tell him, you know, the few people in sub two that have already done clubs and phrases. And he's like, He's like, I have heard of fractional before. He's like, I need to step out for a bit. I'll be right back.

And I see him making a phone call to I don't even know who, and he comes back. I'm I'm sure he was doing his due diligence and just asking the the people that I name dropped. So he comes back, and he's like, Stella, do you wanna take over for the afternoon of the raising capital class and just teach everyone how investment clubs works and how fractional works? I was like, holy shit. I cannot believe this just happened.

Like, this is crazy. And I ended up teaching the class in the afternoon, and then shortly after that, Pace reached out to me. And he was like, this is genius. I need this. I cannot run Reg CFs anymore.

I need to do investment clubs for my community to invest with me, and this is just an easier way for me to raise capital. So Yeah. That's that's how we we landed PACE.

Steve: Yeah. Because I remember, like, talking to PACE. I was like, yeah. You know, we're gonna be raising money, crowdfunding. Because, like, Grant Cardone, right, is like notorious is not the right word.

Well known or crowdfunding. Right? And it's like, I don't know. Like, you can do it, but still feels kinda like that's sketchy. Sketchy is not the right word, but it makes me nervous.

Stella: Mhmm.

Steve: Right? If I were to go and do a reg CF, I would just feel nervous. Like, did I do anything wrong? And can I get a a a notice, a a courier, a a service where I have to sign a document saying sign that I received this notice from the SCC? Not to say I do anything wrong.

It's just that will always be in the back of my mind.

Stella: Yep.

Steve: Right? So I'm glad that you guys connect with this, other route. So there's pace. And after pace, you said that, BiggerPockets got in touch with you. Yeah.

So BiggerPockets directly reached out to you. Yep. What was that like? I know when I was on, it was like a big deal for me.

Stella: It it was a huge deal because BiggerPockets was how I got into real estate investing. Like, I used to lurk on there for, you know, hundreds of hours trying to pick up how to do out of state investing. That's actually where I learned that out of state investing is even possible. So it was almost like, you know, like meeting your hero in in a sense where I was like, oh my gosh. Like, it it felt like such a I've made it moment.

Like, I've now gone through rock bottom to something that actually means the world to me that, you know, I've used to get here. So that felt like a crazy win, and, you know, they were obviously curious because they've been hearing that Pace is doing these clubs and how it works and all those things. And there were a few other bigger pocket speakers that were doing their clubs too and and raising in this way. And they we you know, we I ended up educating them on how investment clubs works. They were also, you know, very curious around how compliance works.

Right? That is probably the number one thing on on everyone's mind. And I would say this is really where we have such an advantage is we actually have the former senior counsel of the SEC as our legal counsel.

Steve: That helps.

Stella: Yeah. Certainly helps. It it literally changes the conversation every single time because people do get sketched out, and I think it's very fair that they do. They're like, you know, what is this? Did you make up the word investment club?

Like, I've never heard of this before. So, you know, we're constantly pulling up the SEC website and going like, look, this is how the SEC has defined an investment club. We've got the guy from the government who works for us now. This is how things work, and BiggerPockets is, like, you know, mind blown, and they end up in you know, inviting me to speak at VPcon this year. And, yeah, it it it really felt like a dream come true.

Steve: And we also have a mutual client in Brandon Brigham.

Stella: Yep. How

Steve: did you connect with him?

Stella: I honestly was just DMing him on my Instagram.

Steve: So you're prospecting on Instagram?

Stella: Yeah. Exactly. And, you know, the the name drop definitely helps. Right? Like, when you mentioned PACE and bigger pockets, it definitely catches eyeballs.

And Brandon also, you know, is a member of sub two as well, so he sees my Facebook post here and there. So he got curious, and he's like, yeah. You know, I'm down to just have a chat. And first conversation, he was very sketched out himself. He's like, okay.

Like, I I like that. You know, you have all these names that are using it. Definitely makes me trust us more, but I'm still very skeptical on what this is. So we end up sending him the operating agreement on how investment clubs work and all the resources and all those things, and he takes it to his lawyer. His lawyer reviews it and is like, there's nothing wrong with this.

This is, you know, this is perfectly valid. And, you know, we come back, we talk some more, and Brandon is someone who is extremely vocal on social media. Right? Like That's right. Guy is literally posting 10 times a day on his Facebook.

Right? So the marketing piece is a huge deal for him because if he's running a syndication or a fund, it's very restricted around, you know, marketing. Right? Like, you can't say these things at all on social media, and he's also got a pretty big following where it's not just rich, wealthy people. There are a lot of everyday investors.

You know, he's got a brokerage. Right? There's agents in there that want to invest, but they can't because they're not accredited. So this was really killing two birds with one stone for him because now he gets to be really loud about what he's doing with his clubs and, you know, all his investing work, and he gets to really capture all the dollars from his entire audience. So the moment he got the understanding that, you know, he's not gonna go to jail and this is, you know, a legitimate thing, he went all in.

And, you know, we we helped him raise $7.50 k through his investment club in in just a couple of weeks, and now they're taking off.

Steve: That's a remarkable amount, in a very short short matter of time. So we talked about it. Right? How to raise 400,000,000 from a technique that nobody's talking about? And I guess because no one's talking the reason why no one's talking about is because it's you actually are the one that brought us to the masses.

It wasn't like, hey. I I I went and, like, bought this tool or whatever. Like, you're the one that made the tool. So let's talk about it. So why a real estate investment club?

Because, like, syndication has been around forever. Proven. We know about it. Proven as in it's been stress tested in in the courtrooms and so on. Right?

You're doing something different. Why should someone seriously actually, I guess, first, how does it how does a real estate investment club work or investment club in general? How does that work?

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Stella: Yeah. So an investment club, it is conceptually similar to a fund where you start out with some sort of investment criteria. Right? And that is oftentimes your buy box if you're buying equity deals or it is your lending box if you're a private money lender. So let's say, for example, I am a private money lender.

I raise money so that we can go lend to people. I will say my investment criteria is, you know, we lend to fix and flippers at 12% annualized, has to be first position in x y z states. Right? Or it could be, you know, if I'm buying equity or buying RV parks, it has to be 15% plus cash and cash, blah blah blah blah. Right?

Whatever is your buy box

Steve: I'm like a PPO.

Stella: A little bit. But where it becomes different is people then join your club because they believe in the strategy, they like the criteria, and they want to work with you as a leader because they want to, you know, learn with you, work with you, do business with you. Yeah. They pull their money into this criteria, into this investment club. And then where it becomes fundamentally different is that they, as investors in the club, they actively participate.

So that is the key difference because active participation means they're not expecting profits under the efforts of others. Mhmm. Now they're involved in the efforts too. So you as the leader, you are bringing in deals that fit the criteria, and then all the members of your club, they will actually underwrite the deal, look at the deal with you, and then vote to approve whether or not they think that deal does in fact fit your criteria. And if they approve the club as a whole, deploying the capital that's already been raised into those specific deals.

And because they're taking on that action, it's active participation. They're taking on active roles. It's not purely off of your efforts on whether the club succeeds or not. Mhmm. And it's not considered a security, which is why now you don't need a PPM.

You don't need to go file a five zero six b or c. You don't, you know, get restricted around not being able to post on your social media and and all those things. And because all that is not involved, you're also not spending four weeks with the securities attorney on setting up. You could literally create a club in five minutes.

Steve: And spending $30,000.

Stella: Yeah.

Steve: Well, the reason why it's like PPM because PPM generally is like, here is, like, our criteria. Here is the mission. Here's what we're gonna do with the money. Right?

Stella: Yep.

Steve: Whereas, and it's like, a lot of times, property specific is like this apartment complex, whatever. But generally speaking, it's just like, here is our thesis. Right? And then we raise money on this thesis. That's what I was saying.

Like, the it's it's similar in that regard. Obviously, like, all the the the everything after that is different, but it was just really more of the here is what we believe makes a good investment.

Stella: Yep.

Steve: Here's what we're going after. If you wanna invest, this is what this is who we're attracting. You don't have to commit any money. This is just who who we are, and then you bring the opportunities. And then you're like, alright, guys.

Here's this property, 123 Main Street. Who wants like, do you guys think we should do it? Yes or no? Right? And then it's the voting.

That's what's considered active participation. And then, oh, also they have to commit to it, and then there's the voting. Right? Yeah. Explain to me the sequence there.

So, like, you got a property. Right? So you got people in there, or you got you got the investment club going.

Stella: Yep.

Steve: You got the criteria.

Stella: Mhmm.

Steve: You got maybe, like, a 100 people in there. And then you bring in the property, and then they vote yes or no on the property.

Stella: Yeah. Exactly. So the sequence is you have the criteria. You pitch the criteria to people in your network, they say they like the criteria, they like you, and this is something that we've also designed because of how bad we know soft commitments go. We don't take soft commitments on the platform because we meet we know that means shit.

Right? So when people say, yes, I like the criteria and I like you and I wanna be part of the club, they have to pay a 3% lock in fee to commit and lock in their spot in the club. And that fee, kinda like an EMD, it is nonrefundable if you flake and there is nothing wrong with the club. Mhmm. So when people join a club, they're committed.

Right? Because psychologically, no one wants to lose the money that they've already paid. So the flake rate in general on the platform is is very, very low. So, you know, they they pay the 3%, they join the club, and then, you know, as more people join, you now know how much in harder commitments you actually have. Right?

So let's say your goal is to raise half 1,000,000. You have all these people paying 3% of whatever they wanna invest into the club, and then you see, okay. Now I'm at half 1,000,000, which is my raise goal from 25 people, let's say. Right? So now we know for sure there are people with capital with enough capital to actually create this club.

So this at this point, we actually formally officially create the club. So we'll create the LLC

Steve: Once it's funded. Once we have enough once we've met the commitment goal.

Stella: Yeah. Exactly. So that's where we're gonna create the LLC, the operating agreement, the bank account for the LLC, all those things. And those are the the investors. They're gonna become members of this LLC, which is the investment club.

Mhmm. And they're gonna actually wire ACH their investment amount. Right? Yeah. So now at this point, you've got the official investment club.

Everyone's money is in the club. Then you're now essentially like a business venture, right, with with the club. So now as a leader, you're gonna bring deals that fit the criteria, the goal of your club. And then now all the members of your club, they look at those deals with you, and they will approve whether or not they agree that that specific deal fits the criteria. So let's say you had a RV park club.

Right? If you bring an RV park that fits all the metrics that the club is about, then people will look at that. They'll say, yes. We agree. Good.

You know, we can deploy $2.50 out of the half 1,000,000 that we raised for RV park Number one. But if you bring in a single family home, people will be like, that is not an RV park. No. Right? We're not gonna deploy our money into that.

So them taking on that action, that's how the active participation is met.

Steve: So is the voting dependent on natural persons, or is it, or is it dependent on the amount of capital committed?

Stella: Capital committed.

Steve: Oh, capital committed. So it's weighted towards the amount of money you invested.

Stella: Yep.

Steve: So that's the example we use for properties. Right? Hey. This is, an investment club for RV parks. But I look at there's, like, two different avenues here, for people that are watching.

The third one, but let's talk focus on it. It's the first two for real estate. First one is like, hey. We buy these kinds of properties. Right?

Second one is private lending, and I think that's kinda what Brandon direction Brandon's gone.

Stella: Yep.

Steve: So what what is the order of events for a private money lender? We're not private lending. Raising money to borrow to to, I guess, to buy stuff.

Stella: Yeah. It it's pretty much the exact same process, except this time, you swap your criteria with your lending criteria. Right? So let's say I'm Brandon. I lend, and I only wanna lend in certain states.

They have to be, you know, 10% annualized. We have to be in first position. It has to be, you know, this LTV, whatever it is. Right? However he underwrites his deals when he's the lender, just himself.

Right? That becomes the criteria of the club, and then he will then market his vision and that he's creating this club to anyone out in his network. People will join. They'll submit the 3%. Right?

And then once he hits his target, similar thing, we'll create the LLC, we'll create the account, everyone sends their money. And then now you've got the lending investment club with all the members with all the capital. And then Brandon will then find different borrowers and loans and bring it back to the club and say, hey. You know, there's this borrower. They've done, you know, a 100 flips in Boston, and, you know, they they wanna flip on this deal, for example.

And this is my underwriting for why I think this loan makes sense and why it, you know, aligns with our criteria. What do you all ask the club members think? So everyone's gonna do their due diligence and then vote to agree or not agree on whether or not the club should deploy its capital.

Steve: Is it majority rules? Like, 60 per 55 51%? Or

Stella: It's similar. So we recognize with voting and active participation, there's obviously multiple people involved. Right? And, you know, sometimes people are in Hawaii, they're on vacation, or, you know, life is just really busy. So we don't wanna make it a case where, you know, you're blocked because someone's not available on on making a decision.

Right? So the way that we've set up as best practice is as long as 50% of ownership vote, that is counted as a valid vote. So that is a quorum. And then out of the votes voted, you generally want between 60 to 80% of ownership out of the votes voted to agree that, you know, they they agree with this decision.

Steve: Got it. Yeah. Okay. That makes total sense. And then you have a novel approach now as well.

So, I've been talking about raising money, and I hate it. I just hate it. I feel like I'm begging. It's not a very fun feeling. Right?

I feel like I didn't work this hard to have to beg for money. You know? And so I was commenting on on or writing them on Facebook about, like, kinda, like, here's what we're doing, this and that, and Andy Hill sends me a message. Right? Andy Hill is awesome client.

Like, there's very few people that we have in our system. We got hundreds of clients. There's very few people we have in our system, but, like, everyone in the company knows. Right? Like, he's not pleasant to work with, whether it's on the tech side or, service side or whatever.

Like, everyone knows him. It's kinda weird how infectious he is. Right? So, Andy sends me a message. He's like, hey.

Like, if you're looking to raise money, like, there's another way. And I was like, I don't know about that. Right? He's like, yeah. Like, let me can I just connect you?

Just introduce you to Stella. I was like, what can that hurt? Right? So I'll do that. So he sets a meeting for us, and you and I talk.

You wanna share, like, the that comp how that conversation went?

Stella: Yeah. I mean, I think we related a lot as as founders, first of all, in in raising capital and and growing a business. And I think what was so magical about the conversation that happened with Andy is, you know, you realize the people that, you know, you want as investors are the people that truly care about you as a person and believe in you as a person and fundamentally believe in your business. And those are the people that come in the community around you. Right?

Right.

Steve: And and

Stella: that's what we both really connected on. And I think that's also when we both realized, like, the investment club model totally shifts things because it's all about creating almost like a community round. Right? It's like you you want your biggest fans to be a part of all the upside and the entire journey of creating a rocket ship together. Right?

And I'm sure you you felt this way, and I and I know you've said this, Steve. It's like talking to people that believe in you and get it Mhmm. It is so much easier. It is so much more fun.

Steve: Way more pleasant.

Stella: Yeah. Than, like, talking to someone who has, like, no idea what's going on. You have to explain, like, even the most basic things about it, and they're just not passionate. And they're not gonna be strategic either. That's the biggest thing that I've realized is the people who truly care

Steve: Mhmm.

Stella: They're gonna be strategic investors. They're going to shower you with real feedback that's actually going to help the business take off. And those are the people you want along for the ride so everyone can, you know, share the experience and the upside together as opposed to, you know, Joe Schmo who has no idea what's going on. You know, you have all these tough conversations to really try to get their check-in, and then they don't understand all the ups and downs that it takes to build a business, and they're just on your ass all the time around what's happening. Right?

So I think it it just made the perfect sense that, you know, we ended up building an investment club with, you know, myself and Andy and all the believers of people around you and our detection proof AI that now wanna be backers of the company.

Steve: Yeah. So it's it's awesome. We so we just we did our call yesterday and, kinda blown away, like, right afterwards, like, how much was already invested. So we're gonna have a 150 k out of 250. And my guess is by the time this episode's actually released, we'll hit our $2.50, and then our round will be closed.

So sorry. You guys aren't in, and it's closed. But I had those same questions for you. Same questions that Brandon asked you, same questions that Pace asked you. Like, is this real?

Is this legit? How do I know it's real? Right? I kinda gave you a bit of a grilling, on a call because, like, it all sounds too good to be true. It can't be this easy.

But, I mean, going going back to is it Howie's law or Howie's test? Like, I've I've gone through raising capital, so I understood that that test is like, you passed that test pretty well. So, kudos to you for figuring all all this out. So, and another thing too is we were just both in San Diego for boardroom. Sounds like you're a newer member in boardroom?

Stella: Yep. Joined q three, so it's only been a quarter.

Steve: But enough to get an award. You had a playmaker award.

Stella: Yep.

Steve: So what did you do to get a playmaker award?

Stella: I mean, I think boardroom is just a phenomenal room that cares a lot about impact, which is why I think both of us love being a part of that, you know, community. And I think, you know, similar to the conversations that we've had, similar to, you know, what Brandon has been able to do with investment clubs, it it's a no brainer once you get it. Right? Just how much impact you can create to operators that want to raise capital, need to grow their business, and have a community of people that wanna be involved in that, whether it's investing or business acquisitions or or doing a startup. Right?

So we've been really able to get in there and, really show this new tool and new method for people to unlock double, triple the amount of dollars that they can raise compared to the traditional, you know, old ways, dinosaur ways of of raising money. And I think, you know, boardroom saw the impact, and they were really excited about it. So, yeah, I'm very honored to have received the award.

Steve: Yeah. And I think the reason why I had you on the show, right, was, like well, as we're talking about, it's like, more people need to know about this, particularly our avatar is mostly real estate. Like, the fact that you already have a track record with PACE, the fact that you're at a track record with Brandon, it's like, more people need to know about this because I can say again, like, I did my call yesterday, and it is way more fun. Talk to people that already know what you're doing, like what you're doing, trust you already, and they just wanna see what you're up to. That is a way more fun conversation than hitting the phones, calling someone one by one, pitching this opportunity over time.

Like, there's obviously people very good at that, and that works, but this was way easier. It's like, man, if this is all I have to do is just get a bunch of people I know on a call and just tell them what I'm doing, and then they decide whether they wanna invest or not. That's a much more fun way to raise money than the prospecting.

Stella: For sure. Not that, you know, there's no one on one conversations involved. Like, you know, sometimes people have private conversations, and just a quick ten minute phone call will, you know, just bring that alignment. And it goes back to that know, like, and trust thing you just talked about. Right?

It it's just a different conversation Yeah. Than, you know, I'm awkwardly selling you on my deal, and I don't wanna sound desperate, but I am kind of desperate because I really need this money, and you don't really know me. Right? Like, that is just so painful to have. Mhmm.

And I think capital raising people invest with people. Like, that is fundamentally the case. So when you can really unlock your people, it completely changes

Steve: the game. Absolutely. So, if someone wants to find out more about fractional app, where do they go to find out more about that?

Stella: So our website is fractional.app, and I am pretty active on social media. Just doing a lot of education around capital raising, how investment clubs works, and my handle is very California. It's hella Stella.

Steve: That's very California. Hella. Haven't heard that. I think since I left California in o two, o three. Alright.

So Instagram, Halastela, active on social media. And if someone wants to find out more about, you know, what we're raising capital for, which, again, I don't even know it'll still be open, by the time this podcast goes out, in a week and a half. But someone wants to find out more about that. How do they do that?

Stella: Yep. So Steve's got his investment club page for doing this, and I'm actually running that club myself.

Steve: Not my investment club. It's your investment club.

Stella: My investment club, and we are very excited about investing in a projection proof AI. So if you wanna find out more information about that, it is on the website fractional.app/p/legendslaunchclub.

Steve: Yeah. And we'll put in a, we'll put a description or link in the description. But, yeah, like, that was really cool. You're like, I I I see this. I wanna drive it.

Let me lead it. I was like, you do whatever you wanna do. Right? It's like, I'm still new to this, but if you believe in it, then go, like, you know, I'd be honored if you go lead with it. And you crushed it right out of the gate with the very first one.

You get a 150,000 after one call. It's it's it's pretty remarkable. So everyone, whether you're interested in investing with objection proof AI or, generally speaking, if you're looking to use, leverage your network buying properties, whether through funding specific properties or just raising private capital, this is a much easier way because you can talk about it. Right? You can talk about it on social media.

The thing we always talk about is, like, getting a lot of social media to post more content. Now you can actually post content and, invite people to have a conversation, without, like, worrying about if SCC come knocking on the door.

Stella: Yeah. Exactly. It was it was such a no brainer to start Legends Launch Club and and do this because, you know, coming out of Silicon Valley and real estate investing, all that, like, besides that, we actively angel invest. Right? Like, that's why my friends and I, we had investment clubs for angel investing, and I think it's very, very rare to, you know, work with someone who literally is, you know, the industry person that owns the space and is now building a revolutionary business and with AI, you know, such a huge market and just exponential upside, right, to to come in here and and do this.

So the angel investor in me, when I heard Andy talk to me about this, was like, I want in too. You know, how how do I do this? And, you know, Andy was really excited and, you know, he said, you know, he he would do it, but most people in real estate, they only invest in real estate. They don't really know how angel investing works. And that to me was like, you know, I get to sit in the middle of all of this.

Right? And and that's why I was so passionate about it. And being a founder myself, like, I know how difficult it is to have massive distribution. Like,

Steve: it

Stella: took so long to even get to where we are now. And, Steve, you obviously have massive distribution as the person in this space, so that was that was, like, a no brainer in me. I was like, I I I want I need to do this now, and I'm sure people are gonna come running through this.

Steve: So Yeah.

Stella: That's why it's it's the legends launching.

Steve: Yeah. I'm excited. And, I think back, like and I think about I was kinda driving home, like, you know, after the after last night's, call, and, like, how many people are invested is like, that, a, that was so much easier, but, like, b, everyone that's, like, committed but didn't, like, do or, like like, I don't know. It's like, I can't wait until this thing takes off. I mean, I think there's gonna be a lot of people that are gonna look back.

You know, Gary v's talked about twice. Like, man, I missed Uber twice. Right? I think, there's gonna be people that are gonna feel that way as well. Before I wanna get to that before we wrap up here, just real quick, big thanks to our big sponsor, Beck CFO.

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Visit beckcfo.com. That's beccfo. Beckcfo.com and connect with my tax guys at b at Beck CFO today. So, you go to Y Combinator, take a chance, quit your job despite your mom's, adamant, protestation. Do you have any idea your life was gonna look like this today?

Stella: Yes and no, I would say. Yeah? Yeah. I think I would be lying if I said no completely because when you take that leap of faith, you've gotta believe that your life is gonna lead somewhere. Right?

Steve: Yeah. Yeah. Absolutely. So, what is now, like, your epic life goal? Because, like, you've done a lot in a very short period of time.

Where do you want us like, where do you want to be, fifteen, twenty, thirty four years down the road?

Stella: You know, that is always such an interesting question to me because I almost feel like I can never plan my life that far in advance. Like, I'm I'm a very, you know, take it day by day kind of person. In a long term for the business, I would love to have an exit of my own where we go public. I go ring the Nasdaq bell with Carlos and our team. Like, that would be epic.

You know, I would certainly love that to be to to happen. So that is, you know, something that is foreseeable, I would say, that is not, you know, thirty years down the line that I would love to have happen. And, you know, after that, I think I'm I'm a very impact oriented person. So, you know, I I would love to go through another, you know, internal reflection phase and just see what other, you know, things are meant to be for me to do where, you know, I have a contrarian inside, and I can take that and really bring change to the world.

Steve: Awesome. What is your biggest struggle today?

Stella: Biggest struggle today? Oh, I think storytelling is still a big one for

Steve: me. Interesting.

Stella: Yeah. I think I think, you know, part of it is is culture. It is, you know, being a software engineer by trade. You're I I am naturally a more factual, logical type of person. And, you know, for for the longest time, like, I didn't think my story was worth sharing.

I only, you know, actually, in the last three months, started even telling people about the $55 loss because it almost felt like it was not okay to talk about a failure even though that it it led up to a win.

Steve: Very cultural.

Stella: Yeah. Very very cultural. So that that is something that I'm I'm working through right now where I've realized being vulnerable, it is actually extremely powerful because it makes you so much more relatable and inspiring as a person because you're willing to open up, and people will connect because they've gone through similar failures. And when you talk about that publicly, it it just, you know, makes you so much more human.

Steve: Yeah.

Stella: And people do business with humans. Right? So that is something that I am leaning more into now and and trying to figure out how to do a better you know, become better and better at at doing that, even speaking on stages, things like that is, how do how do I really lean in and dig deep into who I am as a person and and everything that's gone wrong to then realize how much that's changed me and built me up as a better and stronger person, and helping everyone that's hearing my story feel that they can do the same way as well.

Steve: Yeah. Well, in the Chinese culture, right, saving face is, like, the most important thing.

Stella: Yep.

Steve: Don't know why. It's just we know, like, if you're not if you're not on social media, you're not being authentic. You're kinda host. Right?

Stella: Yeah.

Steve: But on the storytelling side, there's no better storyteller than one of your mentors. Right? Pace Morby is the best storyteller I've ever heard. I think it's impossible for him to answer a question without a story. Right?

Yeah. I love Pace. Known him for a very long time. We did a we when Clubhouse was big, there's that moment of time.

Stella: Yep.

Steve: Clubhouse is big. And I remember we did a room together. It was me, Pace, Jamil, and I can't remember who the fourth person was. But we did a Clubhouse together. And he's like, let's do an hour.

Let's just spend an hour on clubhouse. Someone asked a question. Right? Ace answered it in forty four minutes. It's like, okay.

Well, out of that hour, that's just forty forty minutes gone. Like, okay. Well, let's hear from everyone else. Steve, what do you think? I answered in, like, two or three sentences.

Right? I feel like we got the same point across, but his is a lot more memorable

Stella: Right.

Steve: Because there's a story behind it.

Stella: Right.

Steve: And so, I think if you're looking to get better storytelling, just watch more of Pacis content. I I don't I don't there's not a better person on the planet in storytelling. And that's not something I say just on podcast. Like, I talk to myself, you know, it sounds like, you guys don't wanna get better storytelling. Just go watch Pacis content.

What is your superpower?

Stella: My superpower is taking action, and I think I'm a cheerleader. That, I think, is just you power. I I cheer myself on. I cheer my team on. I cheer my customers on.

And, you know, we're we're all hungry, ambitious people, and, you know, sometimes I think you you need a little bit of magic sparkles to to really see it through. And, yeah, I I love giving that magic sparkle to people.

Steve: Yeah. So tell me about your team. I didn't even ask this question earlier. Like, what does your company look like today?

Stella: We're a team of 15. Mhmm. So we're lean and mean, I would say, and still actively growing. Mhmm.

Steve: Got it. When do you foresee a potential exit?

Stella: That I mean, we I I think it really depends on the numbers. I I think this is always a tough question for founders. Right? It's like, I I would love to go ring the Nasdaq bill. That obviously is not going to happen that quickly.

Right? It's gonna take a long time to get there. So, you know, we we also think about other exit potentials. Right? Like, if another, let's say, another pop tech company or, you know, a a funding company or or whatever it is.

Right? If they came in and they wanted to buy our company, I would say, let's let's talk numbers and the future of what our company will look inside your company. Right? And Yeah. If everything makes sense, it's certainly something that we would entertain.

Steve: Is there a number right now someone offered you that you would say yes?

Stella: There's no hard number because I I still so passionately care about what we're doing where I wouldn't want someone to just buy us and, you know

Steve: Assuming that they had good intentions. Like, you like them. Not love them, but, like, okay. You're a fit. So, like, character they pass the character test.

Stella: Yep. Sorry. Number? It's hard. I don't know.

Steve: I was asked this question last week. It was, I'm bringing in a partner. Mhmm. And he's like, what's the number like? It's number.

It's like a 100 mil. Like, 100,000,000, you saw a 100% of your company. He's like, yeah. Like, I think it's worth more. I think it's gonna be a billion dollar company.

But 100 mil is pretty life changing. And, someone Paul Sparks, you and I were talking. And we weren't even talking about 100 mill. We're talking about a $20,000,000 evaluation because my friend's like, why would you say another $20,000,000 cash in your hands? Like, I don't know.

I just feel like it's not worth it. Right? And what Paul said, he was formally, we rent, Whale Club together. We did Certainty Talks podcast together. And his thing was like, you're looking at it.

He'll send this to me. Right? It's like, you're looking at it. Like, the game's over. It's like, no.

The game's not over. You had $20,000,000. You get to keep playing this game over and over and over again. Right? It's not like the game's over.

It's like, that's a good point. Yeah. Because, like, when I say no to 20 mil, I'm looking as, like, the game's over.

Stella: Mhmm.

Steve: My time has passed. There's nothing left to do. It's like, no. Like, there's way more games to be played.

Stella: Right. Right.

Steve: So, anyway, it's just an interesting world we're in now.

Stella: It is. It is. Yeah.

Steve: Yeah. Again, it's, like, funny, like, going to LA tech where you can talk to the people with money. It's like, you get paid. That was foolish.

Stella: I mean, it's difficult. I think you've cracked the most difficult things. So

Steve: Yeah. So perfect. Again, find you on Instagram. But you have a website, right, for Fractional App? What is it?

Stella: Yep. It's fractional.app.

Steve: Fractional.app. Simple enough. So when you think about the last thoughts, I'm gonna leave all listeners with. Guys, you get value out of this episode. Please make sure to subscribe.

We've got even more disruptors coming along who will break down the exact moves they made to win. And if you guys comment below, that helps us reach more people. My goal is still to create millionaires. Help me accomplish my goals. Last thoughts you'd like to leave all the listeners with.

Stella: Last thought. Real tactical, as we talked about with capital raising. Capital raise like yesterday. Okay? Don't wait for the last minute until you're raising capital to raise the capital.

You are always raising capital. That is a mindset thing. And don't think about capital raising like you're begging people for money. Think about it as you're the one with the opportunity. You're giving people access to your opportunity.

I think that completely shifts how you think about the space and your process and even how the conversations go. So those are my two very tactical pieces of advice. And then I would say just higher level, just just take action because action will reward you with answers to then take more action.

Steve: Yeah. That's great. And your second point is exactly my experience yesterday. Ian was listening. He's like, that was the best presentation you ever gave.

I was like, really? Like, you seem to give a lot of presentations. Like, that was the best presentation? Right? But I was just talking to my community.

I'm like, here's all this cool shit we're working on. Who wants to come? Looks like Tom Cruise. Right? And, it might be.

I don't know. And that, what was that movie? You know, who's coming with me? Anyway, that scene where he's, like, he's leaving the Jerry Maguire. Mhmm.

Jerry Maguire. Yes.

Stella: I've seen that one. Yeah.

Steve: From Jerry Maguire. Right? Like, who's coming with me? Right? It's like that moment is like, I am passionate about this.

This is this is it. Whereas, like, other scenario, like, you're begging for money. It's like, well, you know, like, we're gonna do this. This is gonna we're gonna do this. Like, it it's meeker.

It's it's weak. So, anyway, thank you so much. Appreciate you coming on.

Stella: Thanks for having me.

Steve: Thank you guys for watching, and we'll see you guys next time. Steve train. Jump on the Steve train. Disrupt us.

From Losing $55K To Raising $400M Using A New Smarter Model Nobody Is Talking About

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From Owing $60M To Funding $4B In 2025

From Losing $55K To Raising $400M Using A New Smarter Model Nobody Is Talking About

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