How To Create A Billion Dollar Business In 3 Year

How To Create A Billion Dollar Business In 3 Year | Disruptors Podcast

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Josh Stech: There's this mutual understanding, though, that if as an entrepreneur, I'm not building a business that has a be on it somewhere, a billion dollar business, the single digit percentages for me aren't gonna be interesting. I could easily just do a small, stay small, keep it all, and make $10.20, 30,000,000. So if I'm gonna do this and only own 9% of it at the end, it better be a $10,000,000,000 business because it is so much harder to build that than this. The stay small, keep it all is great, man. You'll you'll be at every one of your kids' soccer games.

It's awesome. This is a different world.

Steve Trang: Welcome, and thank you for joining us for today's episode of disruptors where millionaires are made. Today, we have Josh Steck with just be the bank, and Josh flew in from San Diego talking about how to build a billion dollar company in just three years. Now, guys, I'm on a mission to create millionaires. 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.

And 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 help you create your first or next million. And right now, you got a 100,000, quarter mil, maybe more just sitting in your CRM. Resurrect all your old and dead leads with the objection proof ad calling agent. Text cash to the phone number 33777 now to unlock the money that's just hanging out in your CRM. Ready?

I'm ready, Steve. Alright. So, I'm excited to have you here because you haven't done one really cool thing. You've done multiple really cool things. Before we dig into all of that, what was life like before you got into real estate?

Josh: Sure. Well, first of all, thanks for having me. It's an honor to be on the Disruptors podcast with the with the the myth, the man, the legend, Steve Trang. You know, it's funny. I I kinda I grew up in a bit of a real estate household.

My my mom was a broker, property manager. And so I actually kind of grew up a bit around it. My first gig, believe it or not, in high school was so all my friends, probably a lot like yours and everybody's listening, were, you know, getting your typical, like, minimum wage job. Right? Like, In N Out or Burger King or whatever or nursing home was a typical one in San Diego.

Steve: Oh, really?

Josh: And I was like, you know what? Screw that. I don't want a minimum wage job. I want a commission only sales job. I was 14 years old.

I found a mortgage cold calling center, And I cold called for three years, made pretty good money, and then did that throughout Stanford undergrad, believe it or not, while I was studying doing it from Palo Alto. So Cold calling? Cold calling.

Steve: As a 14 year old. Yes. Did you have, like, a deeper voice at that point for a 14 year old?

Josh: I don't know, but it worked. So our whole job was, like, you got a number, you know, an estimated credit score and an estimated mortgage rate. It was, like, you gotta fill out this one page application over the phone and get them to basically agree to apply. I do 10 a day. So, anyway, at that point, I knew, like, sales was kinda my thing and I loved it, But I also fell in love with mortgage, and and so that was a bit of kind of me before.

And then I went to Stanford undergrad. I graduated o eight, and things were kinda falling apart at that point. So I decided to go back to school and did Stanford, masters.

Steve: What kind of money were you making the whole time, whole calling for mortgages?

Josh: I was making good 6 figures as a senior in in in high school. By the time I was a senior in high school, I was driving cars that people shouldn't be driving.

Steve: And I asked this question because it's it's it's difficult for a lot of people. I imagine myself, I didn't have this luxury, to be making good money and still go to college. Yeah. Do you have any challenges there, or it was easy? It was you're like, I'm doing college well.

Josh: I was committed. Oh. My parents I have a saying, when I'm introducing myself to the company, the new employees, and and my first thing is, nurture over nature. And the belief for me is that it's not about how smart you are, what your God given endowments are. It's more about how you grew up, who you grew up with, what they taught you, what they didn't teach you.

Right? Mhmm. And one thing my parents did a good job of was, like, instilling the importance of education, not just to learn stuff, but to learn how to push your own limits, structure your thinking, and frankly, like, how to socialize. You know, how to be on a campus and, like, learn how to interact. So, it was never really an option Mhmm.

Mostly because my parents didn't make it an option. Yeah. But I'm glad that they didn't. As I look back, it was, absolutely the most important turning point in my life

Steve: was college. Okay. And then you were studying or you were still selling on the phones the whole time through college? I was. Alright.

Josh: I was.

Steve: And

Josh: Ask my ask my roommates. They were like, dude, come on. When does it end? Yeah.

Steve: Yep. So you're making even more than through college?

Josh: Again, very fun college experience. Although although there's not a lot of fun things to do at Stanford, I gotta tell you, it's pretty boring. We we we, we found a way with a little bit of extra cash.

Steve: Yeah. But then you're saying college was a blessing. You're it sound like it made a big difference. What did it do for you?

Josh: I mean, number one by far was the network. You know, I believe in the quote, you know, you are the the the average of the five people you surround yourself with most. Mhmm. I really, really believe that. And the kinds of friends I met at Stanford are, you know, the international science fair winner for stem cell biology at 13.

He's my best friend now, Stefan. You know? And he's managing billions of dollars in venture capital. Like, you just meet people like that. Rohan, one of the smartest guys I've ever met, started Dapper Labs and $12,000,000,000 company.

Like, these are the guys I met at Stanford in my dorm. They level you up. There's no I think when you surround yourself with the right people, there just is no alternative. There's no option. You're gonna rise to the occasion.

And, so so I think number one was relationships. That's what I got out of college. And number two was, you know, pushing through self imposed limits. Like, if you had told me I could study forty eight hours in a row for a final and, you know, ace it, I'd have told you you're crazy. I gotta sleep.

But I figured out I could do that. And, so that was what college was about for me.

Steve: So you graduated, you said o eight?

Josh: O '8 and then went back to Stanford and did the the masters in o nine. Right.

Steve: As you're saying this, I'm having a little bit of regret because I was accepted in Stanford. I told them, like

Josh: No. You didn't. Well, they didn't.

Steve: At that point, I was getting scholarship offers. Right? So, like, UCSD, UCLA. They're like, hey. We'll pay you to go here.

I was like,

Josh: I mean, see, I didn't have that offer. So I just went with whatever. Yeah. Yeah. Yeah.

Yeah. So I

Steve: was like, Stanford, unless you're gonna pay me, like, I'm not coming.

Josh: Yeah. Well, that was probably a good call.

Steve: But hearing what you're saying here, I was like, I don't have any friends that founded

Josh: in Dapper Labs. Incredible. Yeah. The people were everything. I mean, the professors were great too, but the kids, just everyone you bump into.

You know? You're you sit down in a cafe, and there's 12 languages being spoken, and that's just where I kind of developed a love for for learning. I always love learning, but, like, that took it to the next level. What'd you go to grad for? Economic policy with a focus in Latin America.

So, studying monetary and fiscal policy, neither of which I do today, but specifically in Latin American countries. I grew up in San Diego, and I just had this affinity towards the Latino community. I grew up speaking Spanish. I studied I double majored undergrad at Stanford economics and Spanish, studied abroad, worked abroad. I just love everything about the Latin culture.

So, anyway, I did my master's with a focus on Latin American economics.

Steve: And then you did not use that degree.

Josh: And then I did not use that degree. I do use Spanish quite often, though, and it's very helpful. Yeah.

Steve: So then what did you do after grad school?

Josh: Man, I moved right out to Vegas and started flipping homes.

Steve: Alright. So o nine, flipping homes.

Josh: O nine flipping homes. We're talking foreclosure auctions. Some day some days you buy 10, some days you buy zero. That whole just crazy period of time.

Steve: Alright. How did you get your footing started there? My dad. Alright.

Josh: So he was investing with a flipper in Vegas Mhmm. And just as a financial partner.

Steve: Like, back in their deals?

Josh: Yep. Exactly right. And and he said, you know, dude, Josh, I think there's something to this flipping. You know? And and remember, I I never really wanted to work for a typical job.

I had a commission only sales role as my first job ever. It's like, I'm not gonna trade hours for dollars. I'm not gonna work for the man. That's just not who I am. So, you know, the typical options for me were, you know, investment banking, consulting.

Right? That's the typical Stanford path. And I said, I don't I don't I have no interest in it. So I was looking for anything and everything to do. And, I know this is a little bit of a long story, but I wrote my honors thesis on the subprime lending crisis.

K. And so I knew that,

Steve: like an inside look at it.

Josh: This was happening. You know? Like, prices were dropping 70% in some areas of Vegas. So and then I I ended up talking to my dad about it, and he said, I'm investing with this group out here. They're making really good money.

You should just go shadow them, see what it's all about. So he and I spent some time together, and that's how I got into flipping houses.

Steve: Got it. So were you did you work for them? Did you just do it on your own?

Josh: Just learn from them. My own. Yeah. I did it on my own. What was your

Steve: your first deal life?

Josh: I probably slept in it in a, you know, sleeping bag with a mini fridge that I moved in and out of it every day. It was it was it was real, man. I didn't have a house in Vegas for You slept in the house?

Steve: You were flipping.

Josh: I I I for nine months, I slept in the houses I was flipping. I'd pack up every day, put it in the car, and then just go and check on all the houses. And then whatever one I kinda, like, landed at at the end of the day that had carpet, like, that's where I slept.

Steve: You brought a cassette with you?

Josh: Just a sleeping bag? Sleeping bag. Sleeping bag. Yep.

Steve: Alright.

Josh: Yep. A lot of credit goes to my dad for those early days. He, he really pushed me and, you know, to to think outside the box, to be creative, and and, you know, he put a lot of risk financially in me. I didn't have money to be investing. I mean, I'd made some money, but I was pretty good at spending in, you know, in college.

Steve: You were young. Yeah.

Josh: Yeah. Exactly. So, yeah, he he really, we built that business together, but that's that was it. My my my flipping days were I mean, dude, I would be doing the landscaping work if I had to. You know?

But, I mean, that's where we all start.

Steve: It's, there's only a handful of people I know that have done this. I remember there was a guy in in Texas. Shoot. I remember his name. But, yeah, like, he was sleeping or whatever.

He was flipping. Like, that's how you know, like, you're committed. This is what I'm this is who I am. I'm a flipper.

Josh: For sure. This yeah. Exactly. I mean, I literally live it. You know?

Steve: Yeah.

Josh: And and, you know, it's funny because you I remember being becoming more emotionally attached to some of these homes early on because I lived in them. Yeah. So, you know, we'd start getting offers. I was like, absolutely not. Don't lowball me.

You know? Now I'm like, whatever. Move on. Make make the money. You know?

But Yeah.

Steve: Okay. So, success right out of the gate?

Josh: Fortunately, yeah. I mean, it was it was just a an amazing time to buy real estate. We were buying homes for pennies on the dollar. One of my favorite stories from from, we did about 225 flips in a few years out there. We bought a home in Lake Las Vegas, right, which is like the epitome of excess and overbuilding, like a fake man made lake, you know, forty minutes from Vegas.

Like, just but they did it. And these homes were selling or these these apartments were selling for $240,000 at the peak. We bought one cash for $19,000. We did almost nothing to it, flipped it for 47. Uh-huh.

And then, that home sold less than a year ago for 240,000 again. So, basically, same price it sold for in o seven. Yeah. But, yeah, it was, our strategy was a lot of buying, leasing, renovating leasing, and then we would work with a marketing group out of California who had kind of like a landlord database that they would market homes to. Mhmm.

And we would do the bus tours, believe

Steve: it or not.

Josh: So we'd bring forty, fifty people out Mhmm. And I'd be emceeing the bus tours at 23 years old or something. Makes sense. Yeah. Yeah.

Right. Exactly. Why not, dude? Whatever you gotta do.

Steve: Alright. So you sold a lot of inventory. So you you you leased them and then Sold

Josh: them kinda turnkey. Yeah.

Steve: I was like, you were doing turnkey back in, like, o nine.

Josh: 09/10 2010. Yeah. And my biggest regret from that period of time, and my dad and I always, you know, laugh about it is, I just wish we woulda held more. Yeah. We hear from some of the guys and girls that bought from us down, and they've, you know, four x their investment over a ten year period.

That's pretty hefty. And not to mention the cash flow.

Steve: Or the depreciation.

Josh: Crazy unlevered returns like in the teens. Yeah. You know? So

Steve: Yeah. Well, if we knew

Josh: If we knew. Yeah.

Steve: I've got my own personal regards. We could talk about that.

Josh: Yeah. Yeah. Yeah. Yeah. Yeah.

Steve: Okay. So you get that going. You said but it sound sound like you only did that for a few years.

Josh: Yep. Why'd you stop? So there was a foreclosure moratorium in Vegas around the holidays. Right? People didn't wanna banks didn't wanna be kicking people out over Christmas.

And I realized how sensitive my business was to the auction flow. I mean, it dried up for two months. I was like, what am I doing? And so I went to believe it or not, this is such a crazy small world story. The first ever collective genius

Steve: Oh, yeah?

Josh: Ever. I attended with my dad and 12 people and Jason. And I raised my hand in that meeting and I said, hey. I got a bunch of money sitting in the bank because I can't put it to work in flips. What do I do?

And a guy from Boston, Mike, raised his hand and said, well, I got more deals than I you know, he had the opposite problem. That was my first my dad and I's first ever private loan was to Mike in Boston from Collective Genius, first ever. And it turned our eyes to this, wait. We're doing all this work flipping. We're making good money, but we can make you know, that time, you're getting two, three points up front, 15% interest.

You can't get that anymore. But Yeah. We were making almost as much as the flipper by just giving them the money. And so, that's when my dad and I decided that we're getting out of the flipping business, and we're going into private lending. So it was it was kind of a cool turning point.

Steve: So two or three points, 15%. It's different time.

Josh: Different time. That would by the way, that was like, you could get away with that for ninety days. Like, if you were in and out of it, I'm charging extension fees. I mean, it was a different time.

Steve: So very first collective genius event Paid for itself right at the gate.

Josh: Jason and I joke about it all the time. I can't like, that was the thing. That moment of just saying, hey. I I have money. Yeah.

It was a big deal.

Steve: Yeah. Okay. So that was your very first private deal. Yep. And then immediately, you pivoted everything.

You just shut off Vegas. Pretty much. Pretty much. It wasn't a wind down. It was just we're done with Vegas.

Josh: It was like we're and because there had been this kinda convenient sixty day kinda pause period anyway. So we were almost kinda winding down inventory naturally because we couldn't buy it for sixty days. So the question was, you know, do we kinda kick start that business again after the moratorium was lifted, or do we just, you know, say we're going all in on private lending? And we decided to do that. And so, really, what it allowed us to do is focus on fundraising, you know, and and increasing the size of our fund, not worried about how much inventory we had because now we had this borderless lending thing.

So we would lend we lent to people in, you know, 17 states or something pretty quickly and just kinda found a fit putting money to work that way.

Steve: How'd you grow your reach for lending?

Josh: Mostly events and masterminds, I'd say, at the time. Yeah. Most of the people we met were kinda like we met Mike. You know? Just people that you kinda knew, liked, and trusted.

Remember, this is before institutional lenders were in the market. So it was all the country club private stuff. It was all kinda trust based. Mhmm. And so we created those relationships in, you know, the room, in the mastermind, in the event.

Steve: Yeah. I mean, at that time, lenders were sponsoring, like, Ria's.

Josh: That's

Steve: that was their way.

Josh: That was their distribution. Yeah. Yeah.

Steve: Because I remember I go to this thing. It's like, once three and eighteen, you're out of your goddamn mind. I do I look like I make bad financial decisions? I did. But do I look like and then just real quick, just touching on, like, the the the moratoriums.

Right? So I had a foreclosures that did REOs for banks. And, like, that that was the thing. Like, they just stopped foreclosing between Thanksgiving and Christmas. Right?

And for one family, they made me evict. Like, they I went there, and I still remember, like, them opening the door and the door hitting the Christmas tree. Presents are there. I was like, so, it's bank foreclosed on you. Yeah.

How much time do you need? I was like, why are they making me evict this family between Thanksgiving and Christmas?

Josh: I was

Steve: like, I just kept thinking, like, what horrific thing did this family do to Chase Bank?

Josh: For sure. Yeah. To be the one that they they they saw.

Steve: Ugh. Like, I still remember, like, that like, there's just the door hitting the Christmas tree. They're opening the door. Ugh. Alright.

Josh: We have some crazy cash for keys stories. Like, you know, kinda similar. It's like you walk in and, you know, the home's been completely cleared out. Clearly, the, you know, the wife and the kids left him. He's there.

He's on his own. He's got one recliner. He's got all of his bills piled up all around him, and he's got a gun on the coffee table. Like, thinking about it the whole time, do I do it? You know, like, we'd evict people like that after we bought homes from it was, oof, goosebumps thinking about it.

Steve: Yeah. Okay. So you figure out this lending thing pretty rapidly. Yeah. Any mistakes along the way?

Josh: Of course. Yeah. Probably our biggest mistake was a property on our street in Washington, DC.

Steve: That was the actual R

Josh: Street. Street.

Steve: So still remember.

Josh: Oh oh, man. It's burned in my memory. I mean, this was this was bad. It was a referral from somebody, a well meaning friend. You know, they're like, look.

This is a very experienced luxury flipper. This property was on Ambassador Row. It was formerly, like, a nine bedroom sort of row house ish type of thing, and they wanted to convert it into an ambassador's residence. And so it was a big, you know, $500,000 renovation. I mean, it was so off the beaten path of what we knew how to do.

We were doing, you know, Phoenix and Las Vegas and Tampa and Memphis, like, little like, loans on little flips. Mhmm. You know? And then boom, we go and so getting outside of your lane, I think, is the maybe the message here. Like, do do it gradually, not abruptly.

We, you know, but actually a very good learning, and kind of a good finish to that story. We ended up holding it for a lot longer than we wanted to with this partner. So we were kinda like the capital partner, and we did a JV. And going into it for a lot more money, selling it for less. Like, all the deal killers happened.

Right? I mean, it just and so I think we ended up losing, like, $400,000 on this one deal. 400. 400. Now it wasn't our money.

Right? It was some of our money, a lot of our investor money. It's a very good lesson in in business. My dad said, gosh. We're gonna stroke the check, and we're gonna make these investors whole on this deal.

Because it wasn't their fault. It's our fault. And, of course, my you know, I'm naively thinking, yeah, but they they they knew it. They were signing up for some risk. Right?

This isn't a guarantee. None of this says guarantee.

Steve: They knew what they signed

Josh: up for. Yeah. But look. Like, that's that's not how you do business. You know?

Your your name is more important than any one deal, than any $1, and, that was a good early lesson for me.

Steve: Yeah. So, obviously, the luxury going outside your lane lessons. But, like, what was the thing that, like, clearly missed in underwriting?

Josh: Missed in the underwriting. Well, I mean, one of the biggest lessons so we and I hope I'm answering your question. Tell me if I'm not. We, kinda backed out of the lane, I guess. We we were at the auction buying our flips, and we got we we saw a we kept seeing these luxury homes go to market in Vegas, and nobody would buy them.

Nobody bid on them. They go right back to the bank every time. So we looked at this one that was custom built, last sold for 2,700,000.0, was going to the block by 400. Can't lose. Can't lose.

So so we had our our team drive it, do the title on it, etcetera. We ended up buying it. And we bought it because when we visited the home, there was somebody living in it, and he was the vacation rental manager. This is before Airbnb. And we said, wait.

How much are you making? So we bought it and operated as a vacation rental for almost a year, made good money until the we we just underestimated the hotel lobby in Vegas, and they basically created a, you know, more or a, ban on short term rentals in Vegas because of the hotel lobby. So we ended up getting our butts handed to us on that property, fees and fines for operating a vacation rental when you can't. So that that was, again, just kinda getting out of the lane. You know?

Steve: Like All the unknowns. Yeah. You mean that's something I heard a while ago, which is still true. It's not what you don't know that kills you. It's what you don't know that you don't know.

Yeah.

Josh: Yeah. Yeah. If you're wide open about what you don't know, like, you can solve for that. You know? You can control it.

It's those

Steve: Right. Okay. So you start ramping this up. When does this become, like, this is our thing and, like, you make a name for yourself?

Josh: I'd say so we did, flipping for about two and a half years, and we did the lending for about four. And I think the the moment when I saw an opportunity to go big was when I sat down with a a colleague from Stanford, a former alumni who was in Vegas building a rental portfolio, and he said, hey. Have you ever thought about building a technology oriented real estate company? And that discussion ended up leading into the founding of LendingHome. Mhmm.

I'd say that was really one I think I made a name for myself was when, you know, I said, I'm I'm gonna ditch this business that's doing really, really well, and ditch it. I mean, my dad ended up continuing to run it. I'm gonna move back to San Francisco. We're gonna take the risk of raising venture capital and starting a company that we know you know, we we don't know how to build technology businesses. We're good.

We're and, and then we did. And we raised a lot of money. I think that's probably when, you know, Josh Tech became a little bit maybe more of a household name was, wow. Like, this big technology business being started, you know, where in real estate where PropTech wasn't even a thing. We're talking 2008.

No. No. I'm sorry. We're talking 2010 that we started that business.

Steve: So to be clear, you stopped doing the private lending with your dad. Yep. Dad, it's been an awesome run. Yep. This is now all yours.

Yep. I'm gonna start this other thing.

Josh: I have no idea what's gonna happen. I'd say a big part of my life has been assuming significant amounts of risk.

Steve: I'd say so.

Josh: I and I I think there's a great quote, man. It's it's funny that it's a it's a clothing company. You know ASRV?

Steve: I'm not

Josh: sure. Okay. I just just found like a Lululemon sort of more for men. And their their tagline is only those who risk are free. That's their clothing brand tagline.

When I saw that, I was like, I'm all in on this brand. Yeah. Because that's how I feel. I feel like when I'm not risking, when I'm in my lane, I'm comfortable. I'm not free.

I'm not experiencing life for all the beautiful things it could be. So, yes, I took a big risk there, moving back to the bay, raising venture capital, and trying to create a technology business. But we did have a really good partner, Matt Humphrey. He was, I mean, he was the technology guy, and he was incredible at that. And, frankly, really, the only reason we got lending him off the ground was because of his relationships with venture capital.

Steve: Got it. Okay. So talk to me about the early days. Right? Like, you go through y Combinator.

Do you what what what was the experience in getting left LendingHome just even started?

Josh: Yeah. We did not go through an accelerator, and we didn't even raise a seed round. We jumped straight to a series a. So we raised a pretty big round pretty big round of capital right away.

Steve: So nothing proven?

Josh: An idea and a pitch deck. But, you know, the my background kind of as an operator doing what we wanted to do Get

Steve: horse to bite on.

Josh: Yep. James Herbert, who had a who had a very equally impressive background, and then Matt Humphrey, who had exited a technology business before. So it was really, again, his relationships. Because when you when you make venture capitalists a lot of money, they're pretty smart guys. All they wanna do is back your next thing, and they'll back it even quicker than the thing before.

Steve: Yeah.

Josh: You speak of a business, and they're like, how much money do you want? Yeah. And so he had that credibility having exited a very a very with a very good exit. So Foundation Capital, who had backed him, ended up backing us and going straight to a series a. The fundraise actually for the first round was a lot easier than most people's fundraising experience.

Uh-huh. And then it really came down to just how do we surround ourselves with people way smarter than our our ourselves and paint this big vision, this big mission, you know, and and get people excited. That was probably the biggest challenge early days was how do you pull people away from these huge companies that are doing these big things to work with you out of a little tiny office, you know, noodling on weird ideas that could be big someday.

Steve: Yeah. I'm going through this right now. So I know you're. Definitely gonna be picking your brain a lot about

Josh: that. Yeah.

Steve: So how much did you raise raising your series a?

Josh: I think we raised 10,000,000.

Steve: 10 mil. And then did you have, like, a valuation?

Josh: I I don't remember exactly. We ultimately raised the series, I believe, d at, well over a billion dollars valuation. I think our first was probably in the thirties, 30,000,000 ish range, something like that.

Steve: They raised 10, somewhere around 30, ballpark. Okay. So you got to 10.

Josh: Now what? Yeah. I know. I mean, now it's like so this is the when you raise venture capital, there is a lot of pressure on you to turn it into something. And so things you're balancing are, you know, how's my product and differentiation?

Like, how is the thing I'm gonna sell? Is it ready or isn't it? With how am I gonna find early first revenue? With how am I then gonna turn early first revenue into unit economics that makes sense? Because, ultimately, what you're going for is your next round of capital.

So you're always back solving for, what does the next round wanna see? I gotta create that in the period of time before I run out of money. Like, that's the whole game. And so what they wanted to see and when you raise an a quickly, a b is really your first growth round of capital, meaning you have product market fit. So you have customers who really love what you have.

Usually, that's that's calibrated and and kinda gauged by investors typically through, number of things. Net promoter score, do they love it? You know? How likely are they to refer it? Customer retention rates, you know, referral rates.

So those those sorts of things. And then, unit economics. You have to have good unit economics at your b. So in, really, an eighteen month period, we had to both create a product, find fit with the market, and create new economics that made sense. So that that those were our priorities until we got to our b.

Steve: Yeah. So what was that first one? Like, getting a product that

Josh: I mean, building building a great product for us, that was an online mortgage application and underwriting experience that was different, you know, than anything people had seen before.

Steve: Got it. So is the idea then, like, essentially, lendinghome.com, quick way simple way to apply for make some flip money?

Josh: Yeah. That was it. The only way to apply online, really,

Steve: which because at that time, no one else is doing that.

Josh: No. I mean, I was the only one. My my former company, Purpose Built Investments, had a website with an application form and a back and underwriting engine. And when I showed that to James and Matt, we're like, wait. This is basically Lending Home one point o.

And so we we kinda built that off of

Steve: You took what existed in residential. You put it for flipping.

Josh: Yeah. Yeah. I'd say so.

Steve: Okay. So you get that going. How do you get the mass how do you get to the masses?

Josh: So, boy, the company I run now, Sunday, is a very different challenge for getting to the masses. Lending home, believe it or not, was kinda easy. Because real estate is all a function of public record data, you know, and we had a bunch of really good data guys on the team and girls, we said, look. Here's what I wanna see. The data set that nobody really ever cut before.

Show me homes that are bought and sold within a twelve month period. Right? And all these different criteria. Show me those entity names, and then give me a skip tracing mechanism to basically enrich the data. Mhmm.

And guess what I'm gonna do? Jam it into a Salesforce instance, and I'm gonna hire a bunch of salespeople. And all they're gonna do is just pound the phones. So, in San Francisco, you know, our first office, we had, you know, I mean, we must have forty, fifty salespeople in the first year and a half.

Steve: So Forty fifty in the first year and

Josh: a half. Yeah. Just outbound outbound calling. And it was kind of an easy at the time, it was like, hey. Are you paying 2 and a half and 15?

Great. Well, we can give you one and a half and 12. You know what I mean? Pricing was a huge lever for us early on. A huge lever.

Right? You can you know, there's three you can either have experience, service, or or or or rather cost, service, or, price. So, you know, we decided that we were gonna differentiate early on price as just a very quick way of capturing the market. So when you call an investor and say, we have a new cheaper, better thing and it's an online experience, it really wasn't a too terribly hard sell. Our second phase of growth was when we opened the broker channel, and we did the same thing.

Yeah. We just pulled public, you know, records on mortgage brokers, and we said, great. We're gonna call them all, see who's doing hard money, and we're gonna tell them we have a now we have a way that you can submit multiple applications at once, get instant pricing. You don't have to worry about calling your guy back and wondering what the pricing is. You can manage your application, you know, through the website.

So if your borrower calls you up and says, what's going on? You can type it. You can go in and see exactly what's happening. It was such an easy sell to mortgage brokers. Yeah.

So we we more than doubled. So in the first two years, we were all direct. And then within the next six months of launching the broker channel, we grew to just as big as the direct consumer channel in those first two years. So, I mean, it was a huge lever for us.

Steve: Got it. What were some, bumps along the way in building all that out?

Josh: I mean, one of the biggest challenges scaling that fast is talent. And it it's not as much the finding entry level individual contributor talent at scale. That between recruiters, and then between really good training teams and and and sales enablement, you you can do that. That that's not we were hiring 60 salespeople a month at one point. You can do that.

The harder part is really the kind of up like, what are you doing in the upper ranks? Are you hiring people that you want to be there for five years? In which case, what you're looking for is these crazy big resumes. I mean, we hired the former chief customer officer of GoDaddy at one point when we were a 150 people. Yeah.

And turns out, you know, someone who had an organization of thousands of people, it's a tough translation down to a start up with only a couple 100. I'd say the biggest challenge was scaling that executive leadership. We got it wrong a lot because we got we got lured in with the big shiny resumes, the huge backgrounds, the oh my gosh titles. And we what we learned after a while was we're hiring executives for the next twelve to eighteen months. That's it.

Because if you hire for any period of time beyond that, then their resume is too big for the job, and they don't wanna do the job. They don't wanna coach salespeople. They don't wanna do things you actually need. So we was a mismatch between sort of executive talent and the reality of the business.

Steve: Is it that their roles and responsibilities that you acquired at your level was beneath their experience?

Josh: Exactly right.

Steve: Yeah. Interesting. Very

Josh: and then and then what happens I didn't I mean, I I didn't

Steve: think of that being a problem, so that make that makes sense

Josh: what you're saying. My goodness.

Steve: It was

Josh: I I mean, I'm telling you, it's the one thing that sticks out in my mind as because when you bring somebody really, really talented with a big resume and a big cost associated with them, one of the it's easy to say fire fast. Yeah. Fire fast in the lower ranks. It's really hard to go through a four month process with someone, make a decision to hire them. They move to San Francisco from wherever they were in New York or whatever.

They move their family into a new school system. You gotta give this person time. You know? So you can't fire I mean, it you can, but you generally wanna defend your demeanor. Exactly.

Yeah. So those are critical mistakes because you live with them for a lot longer than your average hire.

Steve: Okay. So hiring people that are down the road hires, not today hire. So you we've got focused hire to eight to was it twelve to eight eighteen months?

Josh: Twelve to eighteen months. That this person needs to be able to do the job for twelve to eighteen months. And if they're good enough to then, level up after that, and maybe they're good for another 12 team, good for them. If they're not, we'll go find someone else. Yeah.

Steve: Gotcha. Okay. What are some other things you learned? Like, really surprising to you. It was like, you thought it'd be easy.

It was like, wow. I did not account for this. Yeah.

Josh: Probably getting the technology team to understand what customers want versus what seems sexy to build. Mhmm. That's a really hard I mean, we had some of the smartest like, we call them 10 xers. You know, engineers who can do 10 times the work of an average engineer. You would know.

Mhmm. When you find people like that and you bring them on, it's they have their own ideas of what they want to do, what they wanna build, what should what should the road map look like? Should this come first, or should that come tenth? And somebody who's very much more intuitive and empathetic and much more customer facing like me, you know, translating the needs of the the customer and the wants of the customer into product road map was actually very difficult. Because building some newfangled thing that, you know, sped up underwriting by fifteen minutes was exciting to them.

Mhmm. But I was like, well, let's just do the math. Fifteen minutes, and we're only doing 200 loans a month. Like, you know, it doesn't really matter. Here's what really matters.

They're like, but that's not interesting to build. So I think convincing technical teams to build the things that the business needs rather than the things they want was a huge challenge.

Steve: Yeah. For some experience of that. I bet.

Josh: I bet. Yeah. And and then and they're and they I'm excited by those things too. Yeah. So it was, like, hard not to get lured into their yeah.

You know what? Let's build that.

Steve: That makes sense. Let's do that.

Josh: Absolutely. Later. Later. Yeah. Yeah.

Yeah. Yeah. It's not an if, it's a when conversation. That was always the conversation. Hey.

Great idea. It's not an if, it's a when. You know? When can we do this that makes sense? Here's what we gotta do now.

Steve: Yeah. Gotcha. Okay. So hiring 60 reps a month. I mean, most people right now are trying to find, like, one, maybe two reps a month.

Mhmm. Looking at 60, was that outsourced? Do you do you hire a just a killer recruiter?

Josh: Killer recruiter. Killer recruiter, you know, external recruiter at the time, and we that was not a function I felt like we needed internally. I thought that was a well served contract function. The function I felt from a hiring standpoint we needed internally was the training and development because what we were doing was different. You know?

We were selling mortgage, and we wanted a profile of person that was younger, hungrier, faster, quicker, you know, that kind of like, twitchy, high high horsepower type person. And those people you don't really find in the mortgage, the traditional mortgage business. So we knew we were gonna have to train them on a new product and a new way of selling a product online. So I think it was it was the training development that was so critical internally to get right. And then the one thing people always then forget, they're like, okay.

You found them. You trained and hired them. Good for you. The performance management system, it's the thing everybody wants to get it. They wanna ignore it.

They don't wanna care. They want if you don't have a good performance management system in place to cycle losers and then and, you know, accelerate the winners and bonus the winners and spiff the winners, then you don't have a good sales culture. Uh-huh. So we learn that pretty quickly too. So we we performance management in house, learning and development in house.

They'll find the talent and stuff out of house. We don't want that. But as soon as they came in, we took it pretty soon.

Steve: What did you do for per performance management within the organization?

Josh: I mean, performance management is is funny because it's it's so straightforward. It's you set, you know, milestone check ins on key metrics. You say, hey. Within the first two weeks, you're supposed to be doing these things. Within the first four weeks, you're supposed to be doing these.

In six weeks, you're doing these. And if you're not, this is where people get either they stop checking in, which is so funny and it sounds so obvious. You'd never expect that you'd stop checking in. We we we screwed that up all the time. So So it's just you stop checking in or you start you start giving people excuses, believing their excuses, giving them benefit of the doubt, and you you give them passes along the way.

So what we finally learned was hardcore benchmarks and hardcore enforcement of them. If you didn't I don't really care if there's a good reason that you didn't hit it. I don't have the time to figure that out. I'm just gonna go hire four people, and if one workout, well, then we're good. Mhmm.

You know? So I think it was it it was those enforcement. And one thing I would say is this is critical for for any sales role. The early metrics cannot be results because they're they don't have enough time to generate results. So how do you performance manage them?

And a lot of people then say, you know what? So we'll just give them ninety days until they can get to their result. And if they don't get there, then we'll let them go. That's really expensive. So activity is the thing that we always measure on early.

Right? In the first week, you're not making a thousand plus calls, you don't have it. You don't have the gumption. You don't have it. You know?

If in the second week, you're not making 2,000 because you figured it out, then you don't have it. So those activity metrics were the early performance indicators long before you could ever see results that we would we would manage to.

Steve: Gotcha.

Josh: Okay. Simple, but it worked.

Steve: It's simple, but we don't all do it. Okay. So then, you go from series a to series b. You were able to hit that, obviously. What were the new expectations at series b?

Josh: Yeah. It's mostly market share. So once you've proven again, for me, the two things pre b is product market fit. Do people really like what you have? And unit economics.

Can you make money on a unit level? Now we were never gonna be profitable for a long time because we were building a lot of overhead infrastructure that you'd never be able to clear at the number of units we were doing. But if on a unit basis, the cost to acquire, the cost to, you know, essentially deliver and fulfill was less than the revenue you got from it, you have a good unit economic business. Marginally profitable. Yep.

Marg yeah. Marginally profitable on the unit. That and customers are really, really happy with it. Those are the two things that you need. And then there really isn't much of a question.

It's how fast can you scale? How fast can you open more? So for scale for us was not new products. We we resisted the temptation to introduce new mortgage products beyond our just twelve year bridge loan for many, many years. It was tempting.

DSCR loans and, you know, obviously, thirty year fix and all this stuff.

Steve: There was even

Josh: You

Steve: got clients that like you. What else do you have?

Josh: Yeah. Exactly. Yeah. Yeah. Yeah.

So that that's where Sunday comes in years down the line. That that question ultimately I answered was Sunday. But for for starters, we just knew that focus is critical early in a business, especially when you're trying to build it fast. The more surface area you have, the more uncertainty you have, and the the more things break, the faster you go. So narrow focus if you're trying to scale quick.

So we resisted that temptation. So scale for us didn't mean new products. It meant new geographies for the most part and then new new borrower experiences. So we started like most businesses do. We said, let's start with the most experienced guys.

People we can sell into, you know, 20 times in a year. It's a great way to scale. After you run out of them after two years, you're like, okay. I gotta figure out how to make that long tail, the guy doing two or three a year, profitable. How can I acquire them and service them profitably?

How can I price them profitably? So, customer profile expansion and geo expansion were like the priorities in series.

Steve: Yeah. And it's so fascinating because you can see, like, you know, you go into a market, people are holes are telling. Right? Let's go after the preforeclosures. Great.

We got all the low hanging fruit. Right. Now we gotta start looking at the, the more difficult Exactly. Right? And then so the question then is, like, do I wanna go after all the different pain points, or do I wanna hit all the preforeclosures in all the markets?

That's kinda like Yep. You know, you go after the long hanging fruit and as many as much, as wide geographically as possible, trying to maximize. So you went wide.

Josh: We we went wide. It was interesting, though. Our our strategy in each geo was slightly different. So, kind of to what you were saying, we we would identify whoever the biggest incumbent lender in that market was, and it was different. Right?

The the biggest in, lender in LA was different than the one in Seattle, was different than the one in Chicago, than in Tampa, than in Phoenix. They were. Right? And it was a very fragmented business. But public records helped you identify who is that person.

And what we would do was we would identify them, secret shop them, and understand how do we build a sales pitch that literally is better than just them. Oh. Just them. Just them in Seattle. Just them in Chicago.

Just them in Tampa. And, so we didn't try to be everything to everyone. We said we kinda realized really quickly when we were doing the competitive research that there were different niche lenders everywhere. So we said, let's not create some generalized product. Let's go figure out how to be better than them in that market because because some of them would have 12% market share in Seattle.

So, like, beating them meant, you know, pretty big deal.

Steve: Substantial. Yeah.

Josh: Yeah. Yeah. So that was a a little trick we used earlier.

Steve: That's brilliant. Yep. Okay. So, you started you said Lending Home when exactly?

Josh: So, I have a bad memory on dates, but it was actually 2013.

Steve: 2013. Started LendingHome 2013. Yep. At which point did it was this, like, juggernaut in the in the industry where, like Yeah. Everyone knew LendingHome was.

Josh: I don't know the moment. What I remember is at the beginning, we we looked at the landscape and nobody was bigger than 1% national market share. I think it was Anchor actually at the time was the biggest, maybe Genesys. And so we said, if we can just get to 5% market share US, we're five times bigger than the incumbent, like, we win. And then maybe success is sort of inevitable at that point.

When I what I do know is when I left after five years, we were, I believe, 14% of the national market share. So so I know for sure at that point we were a household name. I don't remember anything else along the way where it was like I mean, when we go to IMN conferences and things, I'd be more and more kind of noticed and, you know, people would know to me. But I don't I don't remember the moment it felt like, wow. We're a household name.

Steve: Because I remember, like honestly, I heard about you guys, like, in 2018. I was running with Brian Tapas. He was previous guest on the show. We We used to run together, and he was like, hey. You know, I'm talking to this Lending Home company.

You know you know? Like, I was like, well, they're gonna be giving us all this money, and it's, like, really cheap. I was like, sounds great. Like, make sure they're make sure they're legit. We But everything you're saying sounds too good to be true.

It's like, go for it. See what happens. Yep. Obviously, I had a really, really good experience. Yep.

So, I guess you decided to leave I did. After five years. I did. What prompted that? Yeah.

Josh: So back to I I mentioned earlier when you said, you know, it's tempting to wanna serve your customers in more ways than one because they're asking. And, again, I think there are reasons to do that and reasons not to do that. We were five years in, and my my insight personally was that when we started the business in 2013 Mhmm. The number one need of a property investor was capital. Come 2018, you ask yourself that question again.

It ain't capital. Right? You can go to I mean, we mostly forged the way for big institutional, you know, warehouse lines and securitizations and that sort of thing. But in five years, capital was pretty easy to get as an investor. The thing that had become hard was property.

Got it. Because in 2013, it was still REO, still foreclosures, still 2018. It's like, you know, you better know how to market to off market sellers. So what I basically proposed at the time to to the company was I said, here's what we should do. You're familiar with SoFi?

Yeah. Okay. I love their business model. They chose one customer, the Henry, high earner, not rich yet. They identified one person, and they said their number one problem is student loans when they come out of college.

They're terribly expensive. They're inefficient. They they hate them. Everybody complains about them. We're gonna get a better student loan program.

Once we do that, guess what we're gonna do? We're gonna we're gonna give them jumbo mortgages at better rates because that's what then that's the next thing they need. Then they're like, oh, then life insurance because they start having kids. Right? Then wealth management products because they start so they they encircle this one customer with products and services that met their life.

So I love that. So

Steve: that Customer journey. So we know who this person is. I mean, I love this, Henry. That's fantastic. I haven't

Josh: heard before.

Steve: Right? High earner, not rich yet. So the name is Perfect. I know. So find a Henry and just understand their journey, graduating college, all the services they're gonna need because they're high earners.

Brilliant.

Josh: And they're not rich yet. Yeah. So, like, their student loan's gonna be beating them up. They're jumbled. They you know, they're gonna live in a expensive city with really good, salaries, but no ability to put down payment.

Let's create a good jumbo mortgage for them. So I was always a big admirer of CAGNY and what he did at SoFi. So I said, what if we did that for the property investor? Kinda like, we we are a household name for capital, but they don't need that as much as they need property now. Let's create a wholesale marketplace.

So that was the pitch. And I said, once we do that, guess what we definitely will get? Every time we we we connect somebody with off market, we'll get the loan by default. Mhmm. And by the way, because none of their other lenders are giving them that benefit of property, we'll probably get their entire wallet share too.

Yeah. Especially if and this is what we ended up doing in Sunday. If you do all the math so that it's not just who wins the properties, who bids the most. Who wins the property is who bids the most and who takes all of your services because they also add revenues. Yeah.

So that was kind of my pitch there. There was really good reasons for lending home to wanna go deeper in mortgage rather than kind of broader in property investor needs and services. So that was ultimately the pushback was we wanna go thirty year mortgage. We wanna do the mortgage thing.

Steve: They wanna expand. Go deep in mortgages.

Josh: Deep instead of kinda broadening the property investor. And I said, I I'm not interested in that. I really love this property investor customer. I'm gonna go build something for them, and that's that's when I, you know, left and did Sunday.

Steve: Did you get bought out? Or how does that how does that work? Yeah. Because you're a partner.

Josh: There's well, and it's a private company, you know, and it's a venture capital back. So it's, there are ways of doing that. There are either the existing investors can buy you out, but there's really no incentive for them to do it. Like, as long as you're aligned, they're fine. You know?

So, I still have ownership in that company. There are other ways that you can monetize that. You can take loans against private shares, for example, which is kind of a cool thing to do. Yeah. So I looked into all that and ultimately, it did a little bit of everything, I guess.

Steve: Yeah. So before we go into Sunday

Josh: Yeah.

Steve: I mean, from an idea to 14% market share in five years, ludicrous. It's crazy. Absolutely ludicrous. What will you say were, like, two, three things that you did as, like because we already talked about, like, the recruiting and and so on. But, like, what were you like the things that you did is, like, man, this was, brilliant, not necessarily on your part, but, like, I'm so happy that our company did this and that also probably gonna take over to Sunday.

Josh: I mean, the big I think the biggest strategic decision that we made that led to, like, just the sheer size and scale of the business, believe it or not, it was taking venture capital. There's no way to to to do what we did on a bootstrap basis. It ain't gonna happen. You know? There's no way because you you don't have enough money to build an incredibly new exciting product that then, you know, gets fast distribution.

You can't hire 60 people at a time. I'm waiting for my next dollar to come in. I might hire one or two at a time. So I'd say probably one of the most important factors to our quick scale was we had a lot of freaking money. I mean, several 100,000,000.

Like, can you build a big business with that? Now the answer isn't always yes to that question. There's a lot of good ways to waste a lot of money. But without that, there's no way we could've done it.

Steve: Right? I mean,

Josh: you looked at an anchor or Genesys, they'd been in business for a long time before us, and they were 1% market share because they they had a different capitalization strategy. So that that I think was a big one. And then maybe outside of that kind of more that's a more boring answer is just capital. I think the other thing that allowed us to get there was probably probably our culture. That sounds soft to a lot of people probably listening, and it's such an easy word to throw around.

But, you know, how do you maintain a mission driven culture? You know, so many people that are excited to make a difference in the world. And for us, it was we're enabling these small business owners who are often family run businesses, right, to add a zero to their network, to to make a name for themselves, to be somebody, to you know, the property investors are so exciting because they they they refuse to just be on the rat race of the w two on the hamster wheel. Right? And so we really within LendingHome, I think we got right.

Like, what are we doing this for? What what's at each new loan for? What's each, you know, new product enhancement for it To make these small business owners, these entrepreneurs better at their job, make more money, have more freedom for their family, that was, I think, what we we did right. We really kept it mission driven.

Steve: How many people were at LendingHome when you left?

Josh: Don't quote me on this, but I think it was somewhere around 500, probably.

Steve: Okay. Well, culture is important. It might sound soft, but I think people are listening. I think they get it. Culture is important.

Josh: It is. How do you

Steve: maintain culture with 500 people?

Josh: Communication. Communication. It's the thing nobody really wants to do, and it's the especially communication when something goes wrong. People will people will fill the void of silence. Like like, I think we often underestimate how quickly word gets around within a company.

Like, I mean, it is it is faster than wildfire. I don't even know what to call it. It's ridiculous. Like, one thing happens at 8AM and literally by noon, 500 people know in 20 different locations is insane. So so I think accepting and embracing that and then saying that we gotta celebrate the wins, of course.

But when there is a when there's something that goes wrong, we have to get up quickly and explain it, and people will appreciate it. So I think we either people are gonna write their own story or you're gonna write it for them, and it's typically around bad news that they write it for themselves. And that's where you can get culture detractors. You can get bad apples. You can get, you know, narratives that just aren't true, frankly, if you don't control it.

But it is the last thing you wanna do when you look at your stack of work and say, you know, I got all these investor expectations. We gotta hire 60 more people. We got is take the time to do an all hands stand up and explain something that's really, really not fun to explain. It's so easy to avoid that. So I think we did a good job.

There's a saying that I I my favorite saying in life is tough decisions, easy life. Easy decisions, tough life. People that go the easy path, they don't know that they're just kicking the can on what ultimately will be a terrible life. The tough decisions, they feel terrible now, but they make life easier. Right.

And so we just always embrace the tough stuff.

Steve: Gotcha. And so LendingHome has since become Yavi.

Josh: Yavi. Yeah.

Steve: How big is it now as far as, like, is it publicly now?

Josh: Or It is not public now. No. And, you know, I'm not, I've been out of it now for six years, so I don't know the inner workings as much. Things I've heard is, you know, 700,000,000 a month of of capital being deployed, so almost 10,000,000 a year. I mean, very big.

By far, the biggest in the category by far. 10,000,000,000? 10,000,000,000. About 10,000,000,000 a year.

Steve: 10,000,000,000 a year.

Josh: That's that's my understanding. So don't quote me on that again. I'm not internal anymore, but that's when I see their LinkedIn, like, hey. We did this much this month. I'm kinda doing the math, and I think that's about right.

A lot of money. It's a lot of money. So you I mean, if you got 10,000,000,000, I'll tell I'll take a loan. It building the capital markets for that business was very, very

Steve: All in all, as far as your direct involvement, how much did you guys raise from, investment?

Josh: On the venture capital side, just over 200,000,000. So that's equity in the business. You you know, you you know, but just for those of you for those of you who don't, the way the reason that people give you venture capital is because they're buying a big part of your business. And, generally, that's only for businesses that they believe are addressing a really, really big problem with a really novel solution in a huge category. So so that's what they proceed with with lending.

So we we sold a lot of the business. That's expensive capital. Right? We I mean, not to disclose exactly how much we sold at Lending Home, but a typical business that would sell enough to raise 200,000,000 of equity, you're selling sixty, seventy, 80% of your business over time. People don't know that.

People think, like, the owners of of whatever company, oh, you know, Airbnb, you know, own 80% of it. Man, aren't they rich? And they do the math. Dude, they own single digit percentages Yeah. Because they had to sell equity along the way.

Steve: I had a friend. He I remember he started the dispensary business here in Phoenix. This is a time where, like, we started doing, like, the lottery and this and that.

Josh: Oh, Oh, yeah. And so he started licenses. Yeah.

Steve: So he started dispensaries. Like, you want it in? I was like, I don't know. Right? Like, I'm interested, but I don't know where this is gonna go.

So he did it, and it was, like, I think, 100,000 to buy in or something like that. And along the way, it became the third largest dispensary in the world. And I was like, man, like, how wealthy are you? He's like, you don't understand. Like, to get to where I'm at, I barely own any of it.

Josh: Barely any? Yeah. I'm doing single digit percentage ownership.

Steve: Yeah. I think it was less than 4%. By the time it got all the way, like because you had to to recruit, to hire, to raise money, all this other stuff. By the time it got to the end where it was actually finally worth something. If you're a real estate investor with a sales team and you're stuck babysitting reps instead of growing your business, this is for you.

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Josh: Or something. The yeah. The it's a stay small, keep it all, or go big or go home. And if you go big or go home, you have to get comfortable that you're gonna you're gonna bring on partners. They're gonna have a board.

I mean, on on Sunday's board, we have the, you know, chief innovation officer of First American. We have the cofounder of, cap of, Invitation Homes. We have one of the most senior executives from Capital One. I mean, these are real people with real questions as it turns out. Yeah.

You know, they don't just give you money hoping for the best. Like, you there is a different level of accountability in that kind of business. And so, yeah, you there's this mutual understanding, though, that if if as an entrepreneur, I'm not building a business that has a b and b on it somewhere, a billion dollar business, the the single digit percentages for me aren't gonna be interesting. I could easily just do a small, stay small, keep it all, and make $10.20, 30,000,000. So if I'm gonna do this and only own 9% of it at the end, it better be a $10,000,000,000 business to be so because it is so much harder to build that than this.

The stay small, keep it all is great, man. You'll you'll be at every one of your kids' soccer games. It's awesome. This is a different world.

Steve: Mhmm. So you've mentioned 200 in

Josh: Oh, yeah.

Steve: In in private equity or

Josh: venture capital. Venture

Steve: capital. Yep. And then actually raising it for The assets. Assets.

Josh: The assets. I I don't even know. Billions.

Steve: Billions.

Josh: Billions. Yeah.

Steve: Alright. Were you involved in raising that as well?

Josh: Yeah. Early days. Yes. I mean, early days, we had a deal of this. I mean, we had a warehouse lines for this product did not exist.

You could not go get back leverage like you can today. So you couldn't lend out a million bucks and go get 85 of it back or 850 of it back like that. So it was so we had a $10,000,000 friends and family fund, and that's what we started with. That was it. That was it.

And then we finally got some banks early on to give us warehouse leverage, so we levered that 10,000,000 up to, you know, a 100. Or maybe not at the time. Maybe they give us 50% leverage, so maybe 50 or 60. And then there were no whole loan buyers. These were not concept.

Like, now we just talk about you go to any of these IMN conferences and there are 25 boost for whole loan buyers. You know? Even small individual lenders like the ones that that we we teach at Just Be The Bank, separate topic, even small lenders can sell now their loans into these aggregators. Again, didn't exist then. So Yeah.

It was a $10,000,000 friends and family fund, a little bit of back leverage, finally, a whole loan buyer, and we just kinda built from there. And then finally, securitization.

Steve: Yeah. Yeah. It's, it's funny because you basically created this whole deal. I got a friend. He, started Offerpad.

And

Josh: Oh, yeah. And Similar time as us. Yeah. Yeah. Similar time as Sunday that is.

Yeah.

Steve: Yeah. And, like, this whole deal, like, they were buying so much, and they just created this whole deal. Because before Offerpad, he was working with Invitation Homes and this and that. This didn't exist. And this whole idea of, like, all this institutional money, how do you even do it?

How do you get into the real estate market? What are the vehicles? What are the title companies?

Josh: Yeah.

Steve: Who's gonna process all this? You guys are just making things, and now it's just normal.

Josh: Yeah. And here here's what I'd say to to those listening. Because a lot of this sounds like, wow. You know, these guys just they just do everything. Not not at all.

Like, your question, how involved were you? I'd say early days a lot in the capital raising process, and then we hired unbelievable capital markets people. Paul Stockamore's name Arvind, who's the current CEO. He started in the capital markets at Lending Home. These are people that know 10 times more.

I would say that they know more than I'll ever I can they'll forget more than I'll ever know about capital markets. So, you know, I think part of build building big businesses from the outside, it looks like, wow. These guys just figured it all out. We figured it out just enough to hire somebody way better than us Mhmm. To then go do it.

And so there's a lot of leverage in that that that that,

Steve: Yeah. We had, Jesse Burrell on the show a few months ago. Yeah.

Josh: I love Jesse.

Steve: Yeah. What he said is, like, yeah. Like, we did pretty good, and then we hired really smart people, And then they did the rest.

Josh: Exactly. Yeah. If you miss that part, a lot of people, though, they get nervous. They they get nervous about losing control, and they don't understand there are ways of maintaining control while getting leverage. You know?

Yeah. That that's that's there are three types of capital, you know, financial capital, strategic capital, human capital. Human everybody obsesses about how do I get money, financial capital. How do I get strategic capital, software things to scale the business? What they forget is humans are the, I think, the most important part

Steve: of scale.

Josh: I really do.

Steve: Why do

Josh: you why

Steve: do you feel that way?

Josh: I feel that way because no matter how good technology gets, and maybe I'll be eating my words in ten years around AI and and robotics and stuff, but I just fundamentally believe people wanna do business with people. So and and and kinda back to your point, you can't know everything. Yeah. And and and knowing what you don't know, being good enough at selling, I think the most important skill in business is storytelling, by the way. By far, storytelling.

So if you're if you're good enough to learn a little bit about an important topic and then go sell someone on a big story to come help you, that's the ultimate form of leverage.

Steve: Yeah. Fully agree. It was like that's like all our sales. Like, if you can, like, summarize our sales trends, like, be good at really tell be really good at telling stories. Really good.

The capital markets is it's it's a fascinating and I don't know if this is if I'm think when you say capital markets, if I'm thinking the same thing. But when I think of, like, the guys at Wall Street, they've got one skill one skill, and they're just really good at getting money. Yep. They don't know anything else. They don't understand the business.

They don't understand the business works. Didn't tell you PE ratios. Nothing. Yep. Man, you know, really good stories.

You have people, teachers' funds, you know, pensions. Got big checks. Right. Really big checks. That's like their their superpower.

And they might and and maybe just be unfair to Wall Street. I don't think they know anything else.

Josh: They the one other thing I that I think they know is deal structuring.

Steve: Yes. Sorry. Deal structuring.

Josh: Because they'll, you know, they'll they'll they'll convince somebody to get a lot of money. And then in order to compensate for not knowing a lot about other things, which, you know, we all have to accept we don't know everything, but they structure the deal in a way that protects their the things they don't know. They're so good at that. Like, if they missed something that either you should have told them or that whatever you omitted, they have a deal structure for that to where it'll catch it, it'll correct it, or they'll own the business as a result. So they they kinda hedge against not knowing with deal structure.

They're really good at it.

Steve: Can you elaborate on that? Yeah.

Josh: Sure. I mean, I guess an easy example would be, you know, like, in mortgage, you know, default provisions, right, and the ability to foreclose and take over an asset. Those are a small example of if you do a big deal with a Wall Street firm, they have all sorts of kind of foreclosure provisions where they can step in and and exert control. They can begin making decisions.

Steve: I see.

Josh: They also, a great example, perfect example, liquidity preference. Okay.

Steve: Something a

Josh: lot of people don't understand about venture capital in particular, but most private equity investments is, let's say that somebody comes in and invests $10,000,000 at a 100,000,000 valuation. K? They may have what's called a two x liquidity preference. Meaning, let's say that you sell the business for, you know, things don't go well and you sell it for $40,000,000. You might be thinking, well, I made 30.

I raised 10. I sold it for 40. They get the first 20 because they have a two x liquidity preference. These are the little things that these financial engineering terms that just they protect their downside so effectively.

Steve: Gotcha. Yeah. Yeah. I remember, so early, early when I was in real estate, there was a there's one guy in town, but, like, all the money dried up. There's one guy in town that he just had all the money.

Yeah. And you go to his office, and, like, you negotiate terms. He's like, yeah. Okay. That's great.

But we just need these provisions. But they're like, no. But the deal's gonna be fine. He's like, I know the deal's gonna be fine. Yeah.

Josh: But it'd be totally good. It's gonna be totally I trust you. Yeah. But just in case

Steve: Yeah. And there's a reason why he was the only guy in town who still had all the money. He had all those provisions in place.

Josh: Affected his downside. Yeah. And when people want money and they see an end of the tunnel because it's hard to raise money, you at the end and I just went through this selling Sunday Funding. I sold the lending division of Sunday to PIMCO. It's a big deal.

They are very good, not PIMCO, just everybody everybody. They're good at this. I'm not. They are. This is what they do.

They are good at disclosing material terms that are financial engineering terms very late in the process. And and it's very smart. It's like selling. You know? Like, you don't necessarily go all upfront with disclosure.

I mean, you know, you all you kinda gradually get people along the way. Yeah. So yeah. They're good at raising money. They're good at structuring deals.

Steve: Yeah. Protecting themselves.

Josh: Protecting themselves. Let's call it that. Yeah. And then they're investors because they Well, they have people there accountable. They're fiduciaries.

Like, you can't blame them for for protecting themselves because their reputation is everything. They can't go get that next money if they're not able to show that they protected. Absolutely.

Steve: Alright. So now Sunday. We pitched it. Now, Josh, we don't see the vision. Go off to start Sunday.

Yep. Was it basically the same playbook again, or, like, what was different?

Josh: So for those for those who don't know, the inception moment for Sunday was, as I mentioned, sort of wanting to go deeper on property investors. But there was one conversation I had with a lending home customer, and it was it was it was a customer. Early days, we were all selling. You know? And, of course, we hired sales teams, and we got out of the book.

But there were customers you hold on forever because they're just your biggest. They're your they're most fun. So, anyway, I was talking to him one day, and he said, you'll never believe the deal I just got. I said, I'm a deal junkie. Tell me.

I got it for a $100 under contract, and I found somebody to buy it for a $190. And I just need to hold it for thirty days, and that's why they needed our loan to season that or whatever. And I said, oh my gosh. You're making $90 in thirty days. Right?

Who doesn't wanna do that? And for whatever reason, some I asked this next question. I just said totally innocently. I was like, well, who's the seller? And he goes, oh, well, look.

It's it's she lost her husband. Like, she's but she gotta move into long term care. Like, swept it under the rug. And I said, no. Wait.

Just a second. Sorry. So she lost her husband, probably the person making the financial decisions for the family. She's not doing well, has to move into long term care. Did she need more than a $100?

Well, no. That's all she all she asked for was a $100 for the house. And what I realized at that moment was that there was an industry wholesaling, and not everybody's a bad person, but who is out for themselves, and they are making ridiculous fees off of the backs of people who are in desperate situations. So when I realized that, wow, there was this desire I had to serve property investors with a property marketplace and the way existing homeowners selling off market were being treated was wrong, it was this beautiful opportunity to say, let's fix both problems at once. Right?

Give sellers slightly better prices through a competitive auction marketplace and fix the sourcing problem for investors. So, in terms of the playbook that you asked about, did I kinda build Sunday a similar way? Yeah. I mean, hire vent raise venture capital. Like, tell a big story, big mission driven story.

Hire, raise venture capital. Hire great technology guys to build a really good product, and then go as fast as you could. Yeah. Similar playbook, I'd say. Mhmm.

Yeah.

Steve: Same people? Like, when you say, like, if you have one success, they'll they'll they'll open up their checkbook real quick again, go back to same people, or do you go to

Josh: a lot of the same people, and my cofounder was CFO at Airbnb.

Steve: Okay.

Josh: So he had had a lot of experience with Founders Fund, not to be just, different than Foundation Capital, which I mentioned a moment ago. Founders Fund. This is Peter Thiel. K. And so Peter Thiel did Airbnb series c when nobody wanted to do it.

And he joined the board, and so my cofounder was CFO there. So he'd present to Peter a lot. So, anyway, so I didn't know Peter, but he did. So Peter is the one who wrote the first big check for Sunday. Mhmm.

And then a lot of the people I knew kinda wrote the smaller follow on checks, a lot of VCs that I worked with. So, yeah, I'd say so. It it is I mean and once a successful horse, everybody wants to back it. It becomes a lot so it was much easier to raise, at least in my experience for that business than lending home, but it's because it was a do over.

Steve: How much easier to make it having Peter on board?

Josh: It, it made raising the next round of capital much easier. When Founders Fund writes a check, people pay attention. Yeah. You know? People wanna be part of that kind of party.

Right. So, yeah, I'd say that was a very good strategic decision. They he didn't join the board and neither nobody what this is another just term that people use. They they they join the board if they wanna have more control. Founders fund is very founder friendly.

That's why they're called founders fund. So they don't they typically don't have board seats. They don't have voting rights. They don't, like and that was one of the things that appealed to us about their money early on.

Steve: Yeah. So how much did you raise?

Josh: The first round was $3,200,000.

Steve: 200,000.0. So 3.2. That's not to buy assets yet.

Josh: That's just to build Just to build a business. Yep. Yep.

Steve: Who's the first?

Josh: First hire was, Trevor Hanson. So Trevor shout out to Trevor. He's still with Sunday. And he was I'm not sure the number, maybe the two hundredth employee or so at LendingHome, but he he built our peer to peer marketplace at LendingHome along my side, built our broker channel in a lot of ways. And he's just a jack of all trades.

When you're building a a tech business early on, there's some specialization you want, but you want a lot of good generalists. And Trevor's a nine out of 10 at everything. Not a 10 out of 10 at anything. He's just a nine out of 10 at a 100 things. You can give him anything.

So, yeah, he was my first hire.

Steve: I bring that up because, you know, you're speaking, at Collective Genius. You were on the CEO panel. Yep. Yep. And we'll talk a little bit more about it later on, but, you know, but very highly watching.

Yep. Like, Like, it's always nice when people speak kindly about you behind your back. For sure. Right. Yep.

So I just wanna get that out there. That was pretty cool.

Josh: Yeah. He's, couldn't do without him. He's just, he's like the perpetual optimist. He's the cheerleader. He's the, you know, he's the workflow diagram guy.

We'll be, you know, Saturday at 7PM in the office, work flowing stuff on the whiteboard, and then he's good at implementing. He hires salespeople. He's just one of those people that can do it all. Okay.

Steve: So you got 3.2. We gotta build this out. What do you build first?

Josh: We so knowing that we are gonna build a consumer brand, we we were heavy on branding and brand identity first. And we and then we built things in parallel. We started building what we thought would be an auction marketplace and things like that. But the big build was, what are we gonna name this thing? We didn't have a name on Where Is Money.

And what are we gonna name it? What's it gonna look and feel like? What's the voice of the brand gonna be? Because we wanted to be distinctly different from anybody else these off market sellers are hearing from. Anybody they're getting postcards from, they're hearing on the radio.

We wanted the sound, look, feel different. So that was that was the first thing we worked on.

Steve: Got it. How'd you end up on Sunday?

Josh: So we we kinda knew what we wanted the brand to connote, which was friendly, approachable, you know, not like big capital partner, you know, big bank. Like, we we don't wanna be any of that, but we also didn't wanna be too silly and and whimsical that we weren't taken seriously, so we're kinda looking for a balance. Things that influenced the decision were Sunday is a big real estate day. Right? And, of course, we're Sunday with an e, but we're we wanted to be Sunday with a y.

That was the original thing. We wanted to be Sunday with a y. And it just became clear that it was too hard to get all the copyrights and the domains and the things that we needed. So one day, we were talking my cofounder and I were talking to our wives, and one of them and I can't I still can't remember who, said, well, what about Sunday with an e? Sounds the same?

We're like, man, it it works. And then believe it or not, the domain was available. We bought sunday.com. How many I mean, one word domain, pretty good. How much do you think we paid for it?

Thousand. 15,000.

Steve: Really? Couldn't believe it. That's a steal.

Josh: That's a steal. So everything just started lining up around Sunday with an e, and and the brand identity started working. The the curse of lettering felt kind of one of the things we wanted people to feel like was they're talking to a neighbor on the weekend. Like, you're talking to somebody who's your guard is down. You trust them.

Like, this is somebody you you you wanna invite into your home. And so even just like the way that the lettering is cursive, it was a connected concept that we're connected to the anyway, a lot of branding mumbo jumbo because I I didn't really believe in branding until Sunday because we didn't need it at Lending Home, but, that was the first big piece. And And then and then marketing from there. It was like, how do we get in front? You know, if inventory is gonna be our thing, how are we better than anybody else at getting in front of the customer?

And so that was the next thing. Long before a lot of tech, honestly. Brand and marketing was big before a lot of tech.

Steve: I've already seen your marketing. I wanna say it's around 2020, 2021. And, because, like, you were your company was brought up at Collective Genius. They're like, hey. Here's what they're saying about wholesalers.

Oh, yeah. Right? So, like, you need to know what they're saying. Now I was looking at marketing and I was like, this material is really good. So for me, like, I went through Craig Proctor.

Right? So I was a realtor. I went through the Craig Proctor training and, like, yeah, like, your home sold guarantee will buy. I mean, all these, like, unique selling propositions and, like, these great messages and great marketing messages. And I was kinda pissed when Open Door came around because they took everything we said, they just made it look better.

Right? It's it's the same message, but it just looked corporate. Like, they clearly had, like, much larger branding budget than I did. Right? And I saw when you guys were released, it's like, this is or someone's like, this is like if I got this, like Yeah.

Oh, these people know what they're doing. This is not, a regular person who may or may not be doing this on the side. This is like an actual company. Company.

Josh: Yeah. And that one of the struggles there was how do you there's a lot of power in being the local market expert, the local you know, I mean, a lot of realtors, like, they're I know this area. None of that's how they sell themselves. I'm not national. I'm not even citywide.

I'm this little ZIP code, and I'm the best in that. So we had to fight against that a lot. And so, actually, one of the decisions early on, we call our salespeople market experts. We call them that because we wanted to, you know, convey to homeowners that these are local market experts. Even though Sunday is a big established brand, you're meeting with somebody that's a local market expert.

We call the people on the phones, our inside salespeople as you know, because you've trained a lot of them, market advisors. So they're advising you, and then the expert's gonna come out and talk to you. And so all of it was very intentional around how do you have a big brand, but then not lose the the local expertise that, you know, these local smaller shops have. And we didn't wanna get beat by that.

Steve: Yeah. I think you guys balanced that pretty well. Yeah. So then we got money. We got the branding.

And what do you guys do?

Josh: Got the money. Got the branding. Started standing up marketing channels. And then the next big thing was, well, we need buyers. You know, if we're gonna have an auction marketplace and we're gonna have inventory, we better not have no bids.

So then it was building the we have an investor adviser team that basically goes and onboards investors. For a while, we didn't even have a marketplace. We just did what a lot of people do. We just emailed deals out. You know?

We texted deals out. It was no big deal. And then we kept track of the bids and stuff in in spreadsheets. Eventually, our two biggest tech builds by far were the investor marketplace. So you can go on investor sunday.com/investor.

You can sign up. And after a lot of verification, because part of we don't want a lot of fake buyers, and we don't want a lot of crap inventory. I think there's some companies out there that have built platforms based on just sheer volume of things and not quality. So we always wanted quality on both sides, inventory and buyers. So but, anyway, you can go and sign up.

When you when you're dropped into your portal, you know, you have a an experience where you see homes kinda like a Zillow, but then you can click into them. You can download inspection reports, the whole thing, and you can make an offer on the property. But not just that, you can do things like auto offer. So we created features like, you if you wanna bid $200 now, that's fine. Set your max kinda like Google Ads, you know, and you'll never pay more, like, a dollar higher than the second highest that can.

So we created a lot of that. That was the auction platform. And the other big piece of tech we built was the homeowner experience. So the homeowner can go in, see exactly where they are, almost like a pizza tracker. You know?

Like, where am I? When's my inspection? And when's my this? And when's it gonna be published on the marketplace? And when can I see my offers?

And we built that whole homeowner experience. So those are the two big pieces.

Steve: So if I understand this correctly, you you went after the buyers before the sellers?

Josh: It was a little bit I'd say so yeah. So our approach was we found the 10 biggest buyers in any given city thinking that if we at least have them, we're gonna be able to dispose of some early inventory. The other thing we did was we raised a fund of our own just in case we weren't able to clear inventory at the right rate. So, again, a terrible seller experience would be, you know, half the time I go on Sunday at or more than half, let's say, 80%. You know, it doesn't sell.

You start getting a name like that out there with sellers, which is this new way of selling isn't actually a good way, bad thing. So we had a fund that we would, you know, not backstop per se, but we would we would be a bidder on the marketplace, and we'd find the top 10. And our theory was once we have 15 or 20 deals a month, now we need to start going to find the next 100 investors, the next 200. That was kind of our go to market.

Steve: Got it. Where were some hiccups? I expected surprises early on at least.

Josh: Yeah. Early on unexpected surprise. Yeah. I think one one of them, and my cofounder was worried about this at the beginning, was just how effective unethical strategies can be when you're dealing with a non repeat customer. If you're dealing with a repeat customer, you can't really get away with treating them like crap.

No. But if they're you know, these homeowners sell one distressed home in their life, maybe maybe two. They're a landlord or three or four. But, like, typically, it's one. When you have a dynamic like that where somebody is making one decision, you can do all sorts of unethical things to win that business.

And that, I think, is what the industry, unfortunately, is known for is the bait and switch. Right? The I'll give you 600, and now it's 500 one day before closing. Right? Those sorts of things.

Believe it or not, you probably do. You know? But they're really hard to compete with. When we're trying to be honest, when we're, like, doing the math, like, this is actually the right price is 500. And they're like, well, x y z gave me an offer of 600.

How the heck do we do? Like, how do we do this? Yeah. So I think our biggest challenge early on was how do we do well by doing right in a in a business where it's not exactly a bad thing to do wrong because you're under the radar. Nobody's big enough in this business to be a lightning rod for regulation, so there is no regulation.

Right? The minute somebody gets big enough and we're getting there, at some point, we're gonna we're gonna represent an opportunity for a politician to make a headline if we're doing things wrong. Right now, they there's no one little there's no one wholesaler, one where they can go, I'm gonna make a head politicians don't care about any cause unless they can make a headline for themselves. And so that's why this business has gone unregulated for so long, so we're kinda ready for that. But long story short, the biggest surprise was it's really hard to do the right thing in this industry and win really hard.

What

Steve: do you do? You counteract it or you're just like, well, that's just the way it is.

Josh: Couple things. We we were the first that I'm aware of. It seems pretty typical now to do a cash advance. So we do up to $20. You sign a contract, and then if we verify you're the owner and some basic stuff, we'll give you $20 before closing.

That was kind of a big we thought if we have more money than everybody, maybe we can engineer that. You know? Even if it's a they'll pay $40 more, we'll give you 20 now. You know? We also, I think, did a good job finding and highlighting customer reviews from some of these competitors where it was like, this don't just believe me that they do this.

Believe Sally.

Steve: Yeah. You

Josh: know? And then early on, when we would convince, let's say, Sally, who had gotten bait and switched by local competitor a, and we would win that deal and serve her well, I would then ask Sally for, like, you need to go on video. And we we need material to fight back against this. So we did a lot of a lot of that. We also did a, we did a high price guarantee.

We tried that for a while, which is, hey. If you if you if you have us out and we make an offer and you're able to get a higher offer and close at that higher price, right, so we knew that they would switch them, we'll give you a thousand bucks. So it was very attractive because they said, well, yeah, come on out. I don't care what your offer is because if it's the highest, I'll go with you. Great.

If it's the lowest, I'll get a thousand bucks from you. The problem was then what would happen is they'd go you know, they'd be closer and closer to close. They'd call us and say, hey. Can I still get that thousand bucks if I don't sell for the price that we are contracted at? We'll say, no.

That was part of the thousand. Oh, wait. Did they trade did they trade the price on you? So it was our way of staying in the transaction long enough to be contacted at the end before to try to win it still. So there's some things there, but, man, it's hard.

It's hard. I like that, though.

Steve: Right? That's crafty.

Josh: It's crafty. Right? Yeah.

Steve: Okay. So then, I was unfamiliar that you guys started as kind of like a not a matchmaker, but kinda like a marketplace. Yep. I thought you guys were just, like, taking these things out and down yourself. So, so you was it 2018 you started this?

Josh: 2018. Yep.

Steve: Right? And, like, what are some, like, highs and lows? Because, like, you know, it's 2026, like, eight years now. Or some highs and lows Yep. In in building this out.

Josh: Yeah. Definitely. I mean, co most of it's been a high, I'd say. I mean, it's just kind of incredible to think that, you know, you can get people to give you we've raised about a 165,000,000 of venture capital, from really smart people like the board members I mentioned, but also, you know, Meg Whitman, the former CEO of eBay, who's a personal mentor to me, which is just crazy. You know, Will Smith, DJ Kygo, all sorts of cool celebrities.

Doctor Phil became our spokes. There's been a lot of highs. I gotta tell you. Phil? It's a little crazy.

Yeah. The lows I'd say are just I mean, probably the the peer that that kind of 15 period when rates went from three to seven, you know, three to eight. That was a really tough time because two things happened, and people listening probably can relate. But, you know, is it a massive scale for us at a very bad time? Two things happened.

One, nobody wanted to sell anymore because where I'm gonna sell out of my 3% mortgage and go where? Everybody knows it's the lock in effect. Nobody really wanted to buy either because they're like, rates are just gonna go back down. I'm just gonna wait it out. Right?

So you had this really weird then what happened was the few people that did wanna buy, there was so little inventory on the MLS that they would buy anything. So crappier homes that typically would have sold off market through the investor channel started just making on the MLS because they were the only thing going. I mean, you you saw this. And so we no longer crappy homes were now trading for retail prices, not wholesale prices. And that dynamic this was at a time where we had gone from seven cities to 29 cities because we raised the series c, like, months before this happened.

And so, again, this is the the the the two sides of venture capital. On the one hand, if you get if timing and everything's working in your favor and you're a little bit smart, like, you probably do well, but when timing hits you at the wrong time, we were investing millions of dollars a month in the business. Millions of dollars a month. Millions. And we went from seven and twenty nine cities, most of which were not profitable because we're we're early in those cities.

And then this thing happened and all the dynamics I just mentioned. And so that was probably one of the the tougher parts of the business was, do we hold on and try to survive in these 29 cities, or do we retreat a bit to profitable cities and wait it out? And what I would say is having now now looking at the prop tech graveyard, I mean, how there are so many big names that are no longer here. Right? I mean, I won't even go through all the names.

So to still be here really well capitalized again, back to that thing, we made tough decisions that it made our life easier, but, boy, it was tough. I mean, we, you know, we had layoffs of hundreds of people. Not fun. No. But if if it means that you live to fight another day, do I really care if it's fun?

No. Like, I I we have a mission here. We're trying to change something. Like, come hell or high water, we're gonna do it.

Steve: At your peak coming transactions, were you guys doing a year?

Josh: Overall, probably six or 7,000.

Steve: A year? A lot of houses. A lot.

Josh: I remember we would get we would have months on the marketplace where we'd have over a thousand homes listed. And, again, this isn't, you know, everybody else's inventory. This is only our image contracts we are writing a thousand a month.

Steve: So, like

Josh: Like, Sunday employees across the country, not, you know, the the the platforms where you can go on and list your inventory. That's not what we do. Only Sunday inventory.

Steve: So Sunday, met with the homeowners. Yep. Got a contract signed. Put it on sunday.com. Someone bought was buying it.

Thousand.

Josh: A thousand contracts.

Steve: You know, let's call it

Josh: let's call it, like, 60% I'm

Steve: just thinking, like, I'm pretty good with stress. Well but a thousand sounds overwhelming.

Josh: I mean, we had, you know, almost 500 employees or more. Yeah. So that that that that is another another not so fun part of hyperscale is you you end up encountering every type of person. I mean, I've hired, personally, I don't know, at least a thousand, but just through the course of business, four or 5,000 people between Lending Home and Sunday. And you see the worst in people, unfortunately.

You see the people who lie, cheat, and steal until they until, like so many stories I won't even go there.

Steve: To your face without

Josh: What's that? Like, to your face. Oh, to your face.

Steve: And they don't and they and they're not you can't even tell.

Josh: Can't even tell. You know? And we one challenge is definitely building quality control when you're when you're scaling that fast. So we had things like, post appointment surveys. You know, homeowners would get a survey.

Did they show up on time? Were they wearing Sunday stuff? Right. We're trying to get you know, Nobody wants to fill those out, but we had them anyway. You know?

We had surveys all along the way, you know, and but we just couldn't there were always the the bigger the some of the biggest downers for me were when I realized somebody was really misrepresenting the brand, and we let them get away with it for too long. Those are those are not good feelings.

Steve: No. Not at all.

Josh: Yeah.

Steve: Alright. So then scaling six or 7,000 houses, an absurd number. What were things that you did right as an organization? Mhmm. Lessons we can learn.

Yep.

Josh: Things that we did right. I think that prioritizing the customer and their experience was something we did really well. For example, you know, we would we would allow people to stay in the home, you know, for up to thirty days, and we we told our investors you just have to deal with it. We didn't we never did investor showings ever because we thought that it was the best customer experience to say, we're the only ones ever to set foot in your home. Now did investors love that?

No. They wanted to see it. But what we did and said was we did three d walk throughs. We did we did, full inspection reports from third party. We we we made it fair to make that ask, but we we really did prioritize the seller experience, I'd say, even over sometimes the investor experience.

But we knew that if we couldn't get inventory, who care? The investors don't give a shit. They're I'm glad you're really nice to us, but you don't have inventory. Who cares? Like, so it was a prioritizing the seller, I think, was was was something we did, you know, really well.

I think that one thing that we could have done better was I think we and this is what we're gonna hopefully fix in 2026 is our new scale strategy is gonna be through licensees who wanna license the Sunday business. I think scaling through an employee model in a business like real estate that is so entrepreneurial is very tough. Yeah. You either embrace the real you know, you either embrace the realtors as contractors and whatnot, or you do something like franchise or brand licensor. But to do to hire employees that have salary and benefits and cars and soft stuff to fall back on Mhmm.

To then go out and compete with these, you know, in a good way, sharks. Like, these are, like, just killers who they only eat what they kill. They have families to feed. They have they're they're independent contractors. Everything is riding on it.

Then you have these employees like, well, I'll just get more leads tomorrow. So I'd say that was that was a we underestimated how an employee could fight against an entrepreneur. That's prob that's one of our biggest mistakes, I think. Yeah. Got it.

So And there are some just to there are some employees that can a 100% do it and kill it. You you just can't find them at scale. You know? You have to go through too many, twenty, thirty, 40 to get the one. You know?

And it's, it's just hard to scale that kind of business.

Steve: So right

Josh: now, we have dozens that are the right ones. Mhmm. We just haven't been able to find thousands, which is what you need.

Steve: Gotta find a whole bunch of unicorns.

Josh: Exactly.

Steve: Okay. So you were you said 29 markets?

Josh: We were. Yeah.

Steve: And now you're in Seven. Seven. Okay. Alright. So then the transition then is through licensing.

Yes. So what does licensing mean? Yeah.

Josh: I will not claim to have it all figured out yet. We haven't done it quite yet. But, effectively, it's we have a brand that we think is pretty special. We've invested a lot of money in it. I think it's differentiated, you know, things like doctor Phil as a spokesperson and just we spent over 100,000,000 in direct to consumer marketing.

We kinda know what we're doing. Like, if you if you want that instead of standing up your own small little brand, like, if you wanna fly under a bigger brand, that's kinda where it would start as well. That's that's cool. If you then believe that our technology stack is superior to what you could probably build or even buy on your own, which, you know, then that's a conversation we think it's better, then that would be another reason that you might sign up for, you know, a local license or franchise in a in a city. I think the final piece that's really, really important well, and there's some other cool stuff.

Like, we're thinking about doing, marketing sort of subsidization. Like, if you spend 25, we'll spend an additional, whatever, 5 or 10. Like, you know, almost like subsidizing, and and it'd be a financial product, but they'd have to pay it back. But things that you can't get on your

Steve: own. It's

Josh: crazy stuff because we have money. The third and the biggest thing I think is where this is all heading with with AI is, I think, a scary future for a lot of people. I think we are positioned as a one of the biggest technology businesses in the property investment category to be ahead of the curve on AI. Right? To be talking with people like you and what you're building to make sure we're not behind the curve.

I don't think individuals who are trying to do all the other hard parts of standing up a business are gonna be able to also stay on the cutting edge of AI. And so we're gonna do that for you as a licensee or a franchisee. We're gonna do that for you. So if you want the brand, you want the tech stack, and you want kind of the future proofing of your business, that's kinda what we're over here.

Steve: Got it. How's that different than franchise?

Josh: So it's not and and you hear me use them interchangeably because I'm not sure where where we're gonna go.

Steve: I see.

Josh: The main difference between brand licensing and franchising is the amount of control that you exert in the business. The more you are telling people what to do, how to do it, which vendors to use, the more you're heading down a franchise, which is more regulated. The less you tell people what to do and who to use and how to do and what process to follow, the more potential you have to be in just a licensing regime. Got it. The benefit is this is less less regulated.

Downside is you can't tell people what

Steve: to do. Right.

Josh: And that's why I think, you know, it's so it's it's a hard and if you end up saying you're a licensing regime, but basically being a de facto franchise, you can get in a lot of trouble. So we're still figuring out which one we wanna be.

Steve: Gotcha. Okay. And then, again, I got a chance to listen to you guys speak, listen to you speak. And there was something you said that, it it sounded brilliant, but I really didn't didn't really capture it.

Josh: I gotcha.

Steve: I didn't really capture it. It was the four s's. Yes. Can you elaborate on the four s's?

Josh: Oh my gosh. I love this one. One of my favorite frameworks in business. So talked a lot about what's important in business, things that help you be successful. I think that a business's number one challenge at scale is problem solving effective.

The fact if I am better than you, quicker than you at problem solving, you I can I can beat you no matter how much money you have? So it's these what these iteration cycles are called. So a lot of things we talk about with our board is how can we how how can we spend the least amount of money getting another card to turn over another card to turn over, learn something something something that eventually can scale into something big. So the faster you are at these these these problem solving cycles, the better. So we use a a four s framework.

So the s's are sensing, seeking, solving, starting. So here's how it works. When we realize and then we do these in quarterly cycles or we'll do them one off if we feel like there's a big issue. A quarterly, at least, we will do sensing. What is happening in the business?

Right? This is a data exercise. Sent seeking then is once you've sensed what's happening, you're seeking why it's happening. Right? It's more than a data thing.

This is now very qualitative. You're talking to customers. You're talking to employees. You're talk like, why the hell are is this data trend happening? Right?

Because the data is not gonna tell you what's happening and tell you something's happening. Right? And you gotta figure out why the hell it's happening.

Steve: But this is, like, if things are slow or things are fast

Josh: Exactly. Either way, why? Yeah. Exactly. So sensing and then you're seeking.

Until you've done those two, you cannot go into solving, which everybody wants to get to. Everybody loves brainstorming. Right? They wanna say, we have a problem. Now let's solve it.

Wait a second. Do we really understand what it is? And, certainly, do we understand why it's happening? Because if we can't, we are gonna be terrible fucking problems. Bad.

My bad. My bad. Alright.

Steve: We just want explosive.

Josh: That that was my only f bomb, which is very unusual. Most people will tell you. I I would be at least 20 f bombs in by now. You keep me you know? So now you're solving.

This is the fun part, the brainstorming, the throwing shit up stuff at the wall, sing with sticks. Then once you've and this is a very important phase because one of the things you have to determine in solving is who is making the decision.

Steve: What do you mean?

Josh: What I mean is it's it's great to have a lot of ideas and evaluate a lot of these. Who is making a decision? Because if you allow yourself to just stay in the brainstorming phase, you're never gonna do anything. And the reason a lot of people do it is they're scared to be the one who makes the decision. They don't know who's the who has the decision making authority.

So coming out of seeking and the sensing, one of the most important things to decide is who ultimately is making this decision if a tiebreak has to happen, which it usually does. Who's making the decision? And then you can start brainstorming. And then when you get out of it, you're

Steve: Who's gonna make the final call before we start solving?

Josh: Exact no. No. No. Before we start starting.

Steve: Oh, before we start. Okay.

Josh: Yep. So going into the solving, we're gonna have a lot of great ideas. Who's gonna make the decision? Because a lot of we're gonna wanna go in 20 different directions to solve this one thing. So, anyway, so you do that, and then you get into starting.

Starting is who's doing what by when. And that's it. And so sensing, seeking, starting, solving, it is if you're ever in a meeting and you feel like people are talking over each other and past each other, ask yourself, are we in a sensing, a seeking, a starting, or a solving conversation? And what you'll realize is that person's in a sensing. This one's starting, and this one's already there I'm sorry.

This one's solving. This one's literally starting. Like, you'll hear one do it. Well, just a sec. We're we're gonna do x y z.

This one's still worried about what's happening. This one's worried about the ideas that we could do, and then this one's trying to start something. Those are the meetings that usually get off the rails.

Steve: Yeah. And as you say this, I think of because they're problem solvers. A lot of us like, if you're a business owner, you're probably a problem solver.

Josh: Have to be good at it. That's why I say most important thing in business. Yeah.

Steve: But we tend to solve problems that we don't understand a lot. And so we have these solutions that we'll go and implement and run with it. And we look back, it's like, well, that didn't work. It's like, well, we didn't solve the right problem.

Josh: No. Instant gratification. Right? Nobody wants to do the hard work of sensing and seeking. It sucks.

It's no fun. You know? What's fun is brainstorming and then even more fun is starting, man. That checklist getting the first 10 things But the double The

Steve: dopamine is great. Yeah. Yeah. Yeah. But, like, because I've been in mastermind meetings, hot seats.

And, like, this person's like, hey. I'm dealing with this. I'm dealing with this. And then one guy is like, what? I know what you gotta do.

This, this, and this. Don't understand anything is going on.

Josh: Nowhere near enough information to be recommending solutions. Right? Yeah. Yeah.

Steve: So, yeah, when you said it was like, oh, that's what's happening. Because I I can think of meetings I've been in, right, where either I'm trying to solve too quickly or I was like, hey. Why? And we're like, we don't know. It's like, oh.

Yep. Yep. And that that seeking part is the hardest part as a business owner.

Josh: I think it is. The instrumentation of of sensing, fine. It it's not easy, but it's it's that freaking seeking. It's why are we seeing what we're seeing at a deep level. The other thing is also you can't become paralyzed there either.

You know, you gotta you gotta get to a point where, like, hey. We have 70% kind of 80% understanding. We we we gotta go do something. You know? Because you can get trapped there too.

Steve: I'll probably go with 50%.

Josh: 50%. Alright. 50% of this. Yeah. Yeah.

Yeah. There's a Bezos has the saying 70% and go. Mhmm. One of his 14 principles for Amazon, 7070% in good, I think it is, which is if we're 70% there on a decision, like, stop with the other 30. Yeah.

You know?

Steve: Well, the other thing and, you know, people that listen to podcast may have, you know, be maybe tired me saying this, but, like, you make the wrong decision, you can figure out pretty quickly it's the wrong decision.

Josh: And most are two way doors. Another Bezos thing, you know, you can go into a decision and out of it. Right.

Steve: You

Josh: know, very few things are one way doors where you're trapped. Like, you can go back. Make a decision. You know?

Steve: Exactly. Other thing too before we go into the, being the bank is, like, I had the great honor of working with you guys. And Yes. And I was talking to Trevor, you know, like, hey. How are things going on?

Blah blah blah. Hey. You know? What's the result? And I get a message from him.

He's like, hey. I was just pulling the numbers, and we're now the number one buyer in San Diego. Like, as a sales trainer, I can't think Is there any better compliment? There's no better testimonies. Like, we're now the number one buyer in San Diego.

Okay. Our stuff works, clearly. So I appreciate, appreciate that that time that we were working together.

Josh: It does. I I mean, I think we take for granted a lot of the ways we know how to sell. I think the way you break it down and Trevor and I talk about this all the time. I'm not sure there were probably 30% of the things you said that were new to me, but I knew a lot of what you said. The benefit is they're listening to you, not me.

Mhmm. Right? We we begin having a relationship with our employees where they're conditioned to sort of, like, just tune us out.

Steve: Right.

Josh: Right? But a third party comes in, we're paying for them. We know. We position you as an expert. They listen differently.

Yeah. So, 30% was new. 70% was just, like, old hat, but it was like they literally listened differently.

Steve: Right.

Josh: So, yeah, we couldn't be more grateful.

Steve: Yeah. Well and that's one of the things we actually pitched, like, you know, as a benefit. It's like, why work with us? Because they'll listen to me. Listen.

Josh: It's true.

Steve: It's that

Josh: that

Steve: thing, like, you have your teenagers. Right? I mean, I I'll say this. Instead of judging my teens, I remember my mom saying, don't do this. Whatever, mom.

I got it. Amount of times, words like, mom, you were right.

Josh: Oh, crazy. Times.

Steve: I know. But you don't listen to it when you say it. You have to learn or hear it somewhere else.

Josh: Exactly. Yep.

Steve: Another thing too, so you guys started lending it was in 2010?

Josh: We started lending in 2010. Yeah.

Steve: 2010. So, we've done a few deals. Yeah. We've learned a few things. And now you guys wrote a book.

We did. So what is this?

Josh: Yeah. And and the the we, to to be, you know, more specific, is actually my dad and my brother and I. This goes back to, you know, my dad and I starting a lending business together, the first lending business we ever had. We call it just be the bank. So about five years ago, we were asked this is separate from Sunday.

This is something I do with my dad and my brother. We were asked by some people, hey. What have you learned, you know, after doing 30,000, 40,000 loans? And we started talking and telling them, and they're like, wait a second. Slow down.

Slow down. Slow down. Slow down. And they and so we'd slow down. They take notes.

And and, ultimately, we started doing, like, webinars on it because we'd say, well, we care about you. These are friends that are doing starting to do lending. So we do sixty, ninety minute webinars. And we realized we could fill days and days and days of content because we've just we've learned a lot along the way. So we finally decided, you know what we're gonna do?

We're gonna build a course. We're gonna do a two and a half day course. It's gonna be all online. And whether you're going from zero to one private lending, one to 10, or 10 to a 100, the course is gonna be be something important for you. And so it's a two and a half day online course, just bethebank.com.

We actually created a, just bethebank..com/disruptors where you can get a little extra cool information. We have, kind of three PDFs that I think distill the book down into really, really crystallized kind of important knowledge. We also have, an invitation there to two of our webinars, so definitely go check that out. But that's a course. We've educated 500 people now.

It's really well reviewed, and it's something we wanna grow because we we see people doing it the wrong way a lot.

Steve: What are some of the wrong ways that people do do this?

Josh: Especially when you're new, I think people tend to let the borrower be in the driver's seat because they think that they need the borrower more than the borrower needs them because money's it's not exactly hard to get. Right? How do I how do I go from zero to one and not be beholden to the borrower's demands? Let them control the deal. So but when the borrower controls the deal, you know, you're typically not in the driver's seat as the lender.

So we teach people how to control the conversation with the borrower, even even as an inexperienced lender. The other obviously very important thing is the underwriting piece. I mean, you don't have to get value in construction perfectly accurate as a lender because you have a lot of cushion, but you also can't be just taking the borrower's word for it. So we teach people how to underwrite just enough to be a good lender. And then the final thing is, how do you structure your deal?

We talked about capital markets before. If you're gonna be the bank, you better know how to structure. And so we have several different deals of debt only and equity, a JV kinda hybrid deal, and we teach you how to structure these different deals to protect your downside, maximize upside. So those are the three things I think we we see people getting wrong pretty often.

Steve: Gotcha. Yeah. Because, like, my, tax strategist Mhmm. I mention all the time on on this podcast, Marcus Grigler, Beck's CFO. He's like, you know, you have too much equity in your your properties.

You should take some money out. Yep. Pay, you know, whatever fees there are, whether you get a mortgage or HELOC, and then start lending because you got people in your network Yep. That you can lend to. It all makes a lot of sense.

It does. It all makes a lot of sense. I don't have the time for this. Right? I go to my wife.

Hey. You wanna do this? Yeah. Right. Do you want to run our private lending company?

And she's like, what's involved? I was like, well, you're gonna have to underwrite. It's like, I don't know. Well, yeah.

Josh: It's a scary thought. Like, if I get this wrong, now, you know, my husband's gonna be up my rear end, like, about losing money. And, yeah, it is it is, and I think we try to break it down for people to a point where they do feel comfortable. Like your wife would say, this is actually doable. Yeah.

And it's better than trusting a financial adviser with our money. We have more control over it. It's it's they have a lot of downside protection. One of the best things about lending is you can make money in a good or bad market. You know?

It's really hard to make money flipping in a bad market. Yeah. We've made some of our best returns in a bad market as lenders. End up taking properties back that have a lot of equity still. Mhmm.

Steve: Gotcha. Alright. So if someone wanted to find out more about that, you said it was

Josh: justbethebank.com/disruptors. Mhmm. And that's where you'll get we'll send you a bunch of information when

Steve: you sign up there. Gotcha. Yep.

Josh: Or you can buy the book on Amazon. It's a number one best seller after all.

Steve: So There you go.

Josh: Yeah. There you go.

Steve: And then the other thing too, we we touched on it licensing franchising. Someone was interested in potentially licensing or franchising with Sunday. How does that

Josh: I'd say just reach out to me, josh@sundae.com, sundae with an e, s u n d a e dot com. I may get you in touch with somebody on the team, but, you know, we're the most important decision is who we work with first. It's gotta be the right person and second and third. One of the things that you know if you've built business before is starting new things is exciting, but if they don't work, you rarely have a second chance at doing that same thing within the business because the business remembers. The board remembers.

Employees remember. You try to introduce something that failed. They're like, well, wait. Why it didn't work the first time. Why is it gonna work the second time?

So you and then even if you can convince them to do it the second time, you'll never get a third opportunity at a new idea. So if we want this to work, we want it to work the first time. And so the the the person is the most important. So if you're interested, I'm making those decisions early. Who's our first, second, third partner?

At some point, I'll let those decisions go. But josh@sunday.com, if you're interested in running Sunday in your your local city.

Steve: Yeah. It's very, very fascinating. And another thing you do also Yep. Of all this

Josh: Yep.

Steve: Because, I was I called you a few weeks ago to pick your brain. Right? Because, like, I'm in this interesting time where, like, we got all these customers, got all this demand. I'm like, you literally cannot fulfill the demand because we don't have the the resources because it's bootstrap. Up until now, like, I've been funding all this.

And we're at a point now. It's like, we wanna get to the next level. We're gonna have to raise some money. Yep. Right?

And so you also have a lot, not just for lending home, and and Sunday, but you've also done it. Yeah. You're just in that world. Yes.

Josh: In that world.

Steve: Back from this whole Stanford deal. Yeah.

Josh: It does. Yeah. Yep.

Steve: So you invested in a couple 100 or a 100 plus companies?

Josh: Just over a 100 companies. Yeah.

Steve: One of which was, Stella Hahn. She was here just a month or so ago.

Josh: It sure was. That was crazy to see her on because I was like, wait. I'm an I'm I'm an owner in fractional. That's cool.

Steve: Yeah. So talk to me about this. Is it is this a side hustle? What is this?

Josh: No. It it started off as a side hustle. I'll tell you how it started. At Lending Home, we we really, really like, if you hire somebody who's got an entrepreneurial spirit, chances are they're gonna wanna start their own business at some point. So four years in, we started noticing some of our smartest and brightest going to do their own thing.

If they take a great example was modern treasury, Dmitry, he he went from, you know, building our entire kind of treasury programming to then realizing, well, that in and of itself is a business that other businesses need, and he went and created a several billion dollar business. So when you watch people that you've kind of and he was he was a he was my intern year one during his first and second year at Harvard Business School. So, like, then five years later, he's now ejecting from lending home to go start his own thing that becomes a multibillion dollar business. So you start seeing people and you start saying, if there's anybody I'm gonna bet on, it's him. So you start giving him money.

He raises a couple million from venture, and you give him $50 or a $100. So that's how it started. I did maybe a dozen companies like that, and then my dad was like, what are you doing? Because he didn't have access to that stuff. You know?

So so then we ended up putting a little vehicle together where when I put money up, he put money up, and we'd invest together. And then we started a a group called Access Insiders, which is, basically, an investment club. So it's our kind of fourth thing that I have. And this is a group of high net worth and ultra high net worth individuals who all wanna learn about alternative investing, whether it's private lending, real estate funds, or venture capital. So believe it or not, we ended up starting venture capital funds out of access.

They're called access venture funds. So that's where we we've invested Stellar. We invested out of Access Venture Fund two. It was the second venture fund that we started. It's been a lot of fun.

I mean, because now I get to apply the learnings I've had as an entrepreneur to, you know, being an adviser to people like Stellar and others. So

Steve: Yeah. I've in looking into this world, you know, at some point, share with you. I wanna be in that world as well. Yeah. You will be.

Yeah. And in that, what I've seen is, you know, I'm in Phoenix, which is great. You wanna be an educator. This is Oh my gosh. This is the place.

Right? But if you want that's right. If you want to see good deals, they don't make it here. It's kinda like No. You're on the email list of a wholesaler.

Right? Like, if you get an opportunity to invest in an early start up here, that means everyone else passed that.

Josh: Maybe he said no. Yeah. Exactly. Yep.

Steve: So, like, we get the equivalent of, like, the carport conversion. Right? Or this this will make a great assisted living.

Josh: Love the leftovers. Yeah. The leftover wholesale deals. Yeah. Yeah.

Steve: But over there, you get to see, like, the the best opportunities, before anyone else.

Josh: Yep. So this is why the the when we decided to do an investment club, this was after this book. People were like, hey. Teach us how to do this. We did that.

And then people started asking us, mostly alumni of this workshop, hey. What else do you do? We said, well, we we invest in venture capital. They're like, well, can we do that? So then we said, alright.

Fine. So we put together the group called Access because most people don't have access to deals like that. And so, one of the one of the better investments we made recently through the group, through Axis Venture Fund two was Anthropic. You know? Yeah.

We were early in Anthropic. That's a $450,000,000,000 company. Oh, really? Suck.

Steve: Doesn't suck at all.

Josh: Pretty early.

Steve: Pretty early?

Josh: Pretty early.

Steve: I mean, I'm a paying customer now. Right? So, I went through like, I was, I've spent a lot of money with Grok. Oh, yeah. And I paid a lot of money to to Chat GPT through, you know, their API, whatever.

But Sam Altman says something crazy. Right? I mean, he does all the time. But, like, recently, it was like, hey. We feel like we're entitled to, like, rev share or a company that, you know, that uses our tool.

What? What?

Josh: Who would say that? This is like you could you could you could word that in a lot better ways.

Steve: Yeah. And so with that, you know, we, I canceled my, you know, just the $20 a month. Nothing crazy.

Josh: Yeah. But, you know, times millions of people that probably felt the same way.

Steve: But I'm trying to get off their monthly API as fast as possible, because that's just crazy. But now I've moved a lot to over to Anthropic. Right? I've used a lot clod program is great. Cloud coding.

And and, I'm using the co work now because I get integrated with Asana and my Gmail. Beautiful.

Josh: I mean, to be the so here's access in a nutshell. We we I invested in a fund called Goanna Capital. Goanna's whole strategy is they wait for companies to be successful, and then they buy secondary. Meaning, you know, when your company is really successful, one of your early employees is gonna want liquidity at some point. Right?

Where do they get it? It's a private company. They can't just sell shares on the stock market. So there are secondary funds that will buy their shares, right, as a way to own some of your company and give people liquidity. So, anyway, that's what Goanna does.

Well, we invested in their fund, and it's done very well. And they will do what's called SPV, special purpose vehicles, when they find an opportunity that's so good that they can't just serve it from the fund. They need to do another vehicle. So that's what they did for Anthropic, and Rob and Hilmer called me up and said, do you wanna be in it? I was like, yeah.

So so it's all about access. It's who you know. I didn't know, you know, Dario per se personally like I do now, but I didn't I didn't know the CEO of Anthropic. I knew a guy who knew a guy who knew. You know what I mean?

And that's where it all happens. But, yeah, it's not happening in Phoenix. It's San Francisco, New York, Chicago, Boston. Yeah.

Steve: Yeah. Actually Miami.

Josh: No more.

Steve: Yeah. Yeah. Miami. So, Robert Wensley, he founded InvestorLift.

Josh: Yes.

Steve: And he was here for a long time because this is where all the Right. All the influences are for real estate. But he packed up here and moved to, Palo Alto.

Josh: Palo Alto. I know. I was just up seeing him.

Steve: Yeah. Because this is where all the brain brain trust is.

Josh: And when you're up there because I'm in San Diego now. So so I am I mean, it's biotech hub, but it is not prop tech, you know, AI. So when I go back up, I'm fortunate to be on the the Stanford Real Estate Council, which is the top Stanford alumni in real estate. And I go up every quarter to to the campus. When I'm up there, it is different.

You are just immersed in everything cutting edge. So to your point. Yeah. Yeah. It's not happening out here.

Steve: Yeah. Gotta make our way up there. Yeah. Right. So I asked you a whole bunch of questions.

Went through a whole journey, but, you know, a a a couple different things before we wrap up. So first question is, what do you wanna be remembered for?

Josh: Probably being a great dad. That'd be the number one thing. You know, if I can somehow launch these little these little I will sweet little term for them, these little kids. I have a nine, six, and three year old. I think I think if I'm on my deathbed and what I realize is I've, like, raised pretty good humans, I think that's the number one thing.

I'd certainly like to change the wholesaling industry for the better. Like, I'd really like to do that. I think we have a shot at doing it at Sunday. I think we can I think we can change the way people the traditional process of selling is not right for everybody? It sucks for most people.

There needs to be an alternative, but it also can't be an open door, I buy your house. It has to be a competitive fast offline auction with millions of bidders, but that's my opinion. I'd love to be known for that professionally, but more more than anything, I'd love to be known for having some some good human beings.

Steve: Gotcha. Yep. And then final question is, what is your superpower?

Josh: Man. I'd say it's storytelling. Yeah. Yeah. I oh, boy.

I had to tell this is a great story. I it'll be it'll be oh, story tell. Okay. It'll be quick. So I'll I'll I'll I'll leave his name out.

But through through happenstance, I met, one of the general partners at Sequoia, and this was twenty years ago. I was an intern in San Francisco at a consulting company. I happened to meet this guy, and I only met him because I was very outgoing, and I was, you know, I was talking to him. And he said, I like you. You should come down to the office on Sand Hill Road.

I didn't even know who he was, then he gave me his card. Didn't even know who he was.

Steve: So after getting the car, you didn't know who he was?

Josh: No. I did at that point. I was like, Sequoia guy. So so I email him. I set it up.

And so, anyway, I end up in a conference room in Sequoia's offices, huge, you know, long conference table glass conference room, just me sitting there, you know, waiting for this guy. So he comes in, and he sits a binder, a three ring binder down right in front of me. And he sits down, and he says, hey. Look. I'm not kidding you.

This is exactly what happened. Like, okay. So I flip it open. It's a stack of, papers, one divider, and another stack of papers. And he says, these are the, resumes for our summer intern program, and I've flagged six of the 400.

By the way, it was Stanford Business School, Harvard Business School. That was all he was looking at. He said, I flagged six. Go through the six, and he had those little flags. You know, like, where you'd sign, he flagged these resumes.

Go through them and tell me why I flagged those six. This is this is like I just met the guy, and he didn't say hi. So I flipped through him. I flipped through him. I go, well, it can't be the education.

I mean, they're all he just told me they're all Stanford or Harvard MBAs. So I was like, honestly, I don't know. And he said, look at their first job out of college. I looked. I said, oh, it's in sales.

He said, I don't want anybody that can't sell. I don't care how smart you are. I don't care how it it doesn't matter. If you can't sell, you don't realize that that's the most important skill in life. You're either selling when you're looking for a spouse.

You're selling when you're looking for friends. You're selling when you're looking for money to raise, when you're looking for employees. You gotta be able to sell. This was 18 year old me being told this by a billionaire. And so I just always realized that.

I was like, storytelling could be a superpower, and I think I've worked on it enough, but it is powerful.

Steve: Yeah. Well, especially if you're raising.

Josh: You don't have a big story. People are just like snooze, and you have two minutes to tell it, by the way. You You you don't have you can't tell a big story in thirty minutes. People are gonna fall asleep. So it's tough.

It's tough.

Steve: Gotcha. Alright. So I want to just

Josh: How about you? What's your superpower, Steve?

Steve: My superpower, what I found is I can learn just about anything and break it down at a level that anybody could understand. So, like, whatever the topic is, I'll get in there. I'll get dirty. I'll do all my research, figure it all out. We will convey it in a way that anybody well, I love teaching.

Right? Like, I actually wanted to be a school teacher at one point. That was like, hey. This is cool that you can make an impact Yeah. On kids and learning this and that.

Then you learn how much teachers makes. Like, well, Yeah. Let's

Josh: go find let's go find a better way to do this. Yeah. Yeah. Yeah. Well, we could be a force to be reckoned with between storytelling and processing power like that.

So Yeah.

Steve: Well, we still get to teach. It's just teach it taught in a different way. So I wanna think about some last thoughts I wanna leave all the listeners with. Yeah. Guys, if you got value from this episode, please make sure you subscribe.

That way we can get more disruptors coming on the show, and we can reach more people so we can create more millionaires. Last thoughts you wanna leave everybody with.

Josh: You know, just don't take no for an answer. You know? That's that take a lot of risk. Don't take no for an answer. Believe in yourself, and, you'll make it.

You know? Just trust trust the process.

Steve: Simple. Not oh, don't overcomplicate it. Right? And, again, like, to see all the things that you've accomplished, it's wow. And you're still young.

Appreciate it.

Josh: Like, all

Steve: the things you've accomplished, absolutely incredible. Cool. Thank you so much.

Josh: Steve, thank you. Appreciate you. Thank you

Steve: guys for watching.

Josh: See you guys

Steve: next time. Steve train. Jump on the Steve train. Disrupt us.

How To Create A Billion Dollar Business In 3 Year

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Josh Stech

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$6M in Profit in 2025 with Only 12 Employees

How To Create A Billion Dollar Business In 3 Year

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