Archive for 2017
Will 2018 Be a Special Year?
December 29, 2017
2018 is going to be different, in a good way. That’s word on the street in the alternative finance industry, many of whom have told me that it’s just something they feel.
I feel it too. The S&P 500 is at an all-time high, Bitcoin is up more than 1,400% for the year, lenders are lending in full force, and on top of it all, Donald Trump is president. The world is changing and from a one thousand foot view, it’s an exciting time for finance.
2018 will welcome Broker Fair, the inaugural conference for MCA and business loan brokers.
2018 will transform alternative finance into just finance. For example, a mailer I received from PayPal advertising a small business loan up to $500,000 in as quick as 1 business day, included a letter signed by a top manager of Swift Capital. PayPal acquired Swift in 2017. Yesterday’s alternative loan is simply today’s loan. The one-day small business loan is becoming normalized and being offered by widely recognized financial companies.
Ripple surpassed Ethereum this morning to become the 2nd largest cryptocurrency by market cap. Cryptocurrency, once the domain of Bitcoin-obsessed internet anarchists, is quickly being adopted by the world’s largest banks.
It’s one thing to just talk about innovations in finance and another to realize that you now rely on those innovations. My company got a loan from Square, I got insurance through CoverWallet, I have funds in Lending Club, Prosper, Bitcoin, Ethereum, and Bitcoin Cash. Coinbase is the new etrade. MCA and online business loans are the new community banks. Payments can be made instantly and cost effectively.
2018 will be special because the world that we predicted would come, has come. That means it will be time to think about what will come even next. Online lending has come, instant payments has come, cryptocurrency is fast approaching. What will be the cool edgy hip thing in the ’20s that we may once again refer to as alternative? Mull that one over for a bit and consider that in the next decade the sexy fintech companies of the 20-teens will be stodgy financial institutions in the 2020s. This decade’s innovation will become part of the boring normal manner in which finance is transacted. That’s a fact.
Enjoy 2018. I know I will.
Happy new year,
– Sean
Creating a Credit Standard for Canadian Merchants
December 26, 2017
The Canadian alternative lending market is in earlier innings than the US market, which creates unique opportunities for funders and merchants alike. Indeed, the Canadian market is one comprised of nuances that distinguish it from the lower 48, which we have spotlighted before, and 2018 is shaping up to be a year that could redefine the parameters as we know them. One of the companies that is positioned at the forefront of this expansion is Montreal-based Thinking Capital
Jeff Mitelman, Thinking Capital’s chief executive, explained the company existed for about eight years before somebody called the industry fintech. “Rather than think of ourselves as a large funder in the context of the Canadian market, I like to think of us as having the greatest opportunity to get this new way of lending into the mainstream,” said Mitelman.
The challenge, he says, has moved away from ‘does this have a place in the market and do people want this’ (evidenced by the fact that Thinking Capital has funded thousands of businesses and deployed hundreds of millions of dollars) and shifted toward establishing a standard for business credit underwriting.
There are more than 1 million small businesses in Canada with no formal method to evaluate them. One of the most notable differences in the Canadian small business landscape is that there are no FICO scores for credit underwriting.
“The FICO score doesn’t exist in Canada. We have other similar measures of credit, but they are all very much consumer measures. They all fail to accurately reflect the credit worthiness of the small business,” said Mitelman.
Language & Education
The new face of credit for Canadian merchants, one in which Thinking Capital is positioned at the forefront, surrounds language and education and it is now taking shape.
“Interestingly the opportunity we have is around creating the language of credit and educating the market to say that there is a measure of small business credit that exists far beyond how credit used to be adjudicated,” he added.
This language would communicate to borrowers what their score looks like and how they should think of their own credit as it relates to their ability to borrow.
“There is no universal measure of credit that exists in Canada that says , ‘this business has great credit and this one has less than great credit.’ The opportunity that we have both as an organization and an industry is to establish a language on which credit can be offered to small businesses going forward,” said Mitelman.
One of the industries that is poised to benefit is restaurants, which historically has had a tough time accessing financing based on the belief that they’re a bad credit risk. “It’s an amazing industry that by default is just considered risky. Just saying ‘restaurants are risky’ full stop is an exclusive way to think about. The idea here is to be inclusive and say, ‘let’s find the right way to communicate credit worthiness back to the restaurants and help those that are doing great,” Mitelman explained.
Attention Small Businesses
Partners are a cornerstone to the Thinking Capital business model, including key relationships with the likes of Staples, CIBC, Moneris and Money Mart. The lender will rely on this model for its campaign to touch and educate small businesses about credit worthiness.
“What we are looking to do is really partner with brands that already have the attention of small businesses and in their messaging out to their customers let small businesses know that there is a better way to borrow; there is a bigger market for credit that is available through this new methodology than there was in the old way of thinking about credit,” Mitelman said.
Thinking Capital exclusively targets very large brands as partners. The lender has not taken the agent route and they’ve very much adopted a “lending as a service” approach with partners.
“2018 will be a big year of major partnership announcements for us,” said Mitelman. “Lending is being made easier and the addressable market for small business lending is being expanded.”
Mitelman went on to explain that small business demand for capital has always been there. “The ability to access working capital from brands that are trusted is something that’s changing and giving small businesses a whole lot of comfort around tapping the credit markets rather than bootstrapping themselves through vehicles that aren’t intended to finance small businesses, such as friends and family loans, personal loans and credit cards.”
Letter From The Editor
December 23, 2017
It was a year to remember, our sources declare
‘Twas the Jan/Feb issue I wrote about my loan from Square
Through March into April salespeople closed deals via text
As banks looked to fintech as their plan for what’s next
We went to Texas a nexus for finance and lending
It was May, maybe June when Bizfi’s final days were pending
Merchants talked, banks adjusted, it was a summer of learnings
For the pressure was on to produce solid quarterly earnings
September, October, liens and judgements were removed
But the world hardly noticed and deals still got approved
Winter coats and furry hats meant the year would end soon
But by golly 10k, no 19k! Bitcoin went straight to the moon!
And so boys and girls the story of ‘17 has been told
What a time for finance, for money, and a world to behold
See you in ‘18, in ‘19, and the roaring twenties my friend
We’ll be right there, whether you deal in receivables or lend
– Sean Murray
Technology Drives Changes in CRE Lending Space
December 21, 2017
Online technology, which paved new paths for consumer and small business lending, is making similar inroads with the commercial real estate industry.
Over the last few years, several online marketplaces have been established to try and match commercial real estate borrowers with lenders quickly and efficiently using technology. In the past, commercial real estate lending depended heavily on having local connections, but online platforms are blurring these lines—making geographical borders less relevant and opening doors for new types of lenders to establish themselves.
While banks remain the largest source of commercial real estate mortgage financing, non–bank players—including credit unions, private capital lenders, accredited and non–accredited investors, hedge funds, insurance companies and lending arms of brokerage firms—have become more formidable opponents in recent years. Online platforms offer even more opportunity for these alternative players to gain a competitive edge.
At present, most of these commercial real estate marketplaces are purely intermediaries—they’re matching borrowers and investors, not actually doing the lending. Certainly, it’s an easier business model to develop than a direct lending one, but things could change over time, as borrowers become more comfortable with the online model and develop confidence that these platforms can perform, industry participants say.
“You have to be viewed as credible with a certainty of funding for borrowers to come to you. You can’t just put up a flag and say ‘Hey we’re making loans’ because borrowers won’t trust you and they won’t have the confidence that the loan is going to close,” says Evan Gentry, founder and chief executive of Money360, one of the few online direct lenders in this space. “However, once you develop a reputation of strong performance, the tide turns very quickly and that confidence is established,” he says.
For now, however, many of the marketplaces say they are content to remain intermediaries and offer business opportunities to lenders instead of competing with them. The sheer size of the market— commercial/multifamily debt outstanding rose to $3.01 trillion at the end of the first quarter, according to data from the Mortgage Bankers Association—and the fact that is an enormously diverse industry with no plain vanilla product makes it more likely that several platforms can co–exist without completely cannibalizing each other’s business, observers say.
Each of the online marketplaces has a different business and pricing model. Some marketplaces focus on small loans, while some have larger minimums; some focus on just debt; some focus on a mixture of equity and debt. Some sites cater to institutional lenders and accredited investors to help fund loans. Other sites invite non–accredited investors who meet certain criteria to participate in loans, opening doors to a segment of the population which previously had minimal access to commercial real estate deals. While the sites differ in their approach, the upshot is clear: banks—while still formidable competitors in commercial real estate lending—are no longer the only game in town for funding these deals.
The struggle for lenders is how to work most effectively with these marketplaces. “If you can acquire customers through only your own channels, then of course you’re going to do that,” says David Snitkof, chief analytics officer at Orchard Platform, which provides data, technology and software to the online lending industry. Otherwise, these marketplaces present a viable opportunity to expand distribution, he says.
GROWTH OPPORTUNITIES ABOUND
The surge of new companies acting as marketplaces between borrowers and lenders of all kinds comes as the commercial real estate industry is finally coming up to speed with respect to technology. The commercial real estate business has been static for decades in terms of how loans are processed and originated, according to industry participants.
“The use of technology is going to be an enormous disrupting force in that space,” says Mitch Ginsberg, co–founder and chief executive of CommLoan, one of the newer marketplaces for commercial real estate lending. Commercial real estate lending is “probably one of the last industries that hasn’t been touched by technology, and it’s ripe for massive disruption,” he says.
CommLoan of Scottsdale, Ariz., was founded in 2014, but the marketplace has only been fully operational since 2016. The platform targets borrowers seeking $1 million to $25 million of capital for all types of commercial real estate loans. It works with more than 440 lenders—including banks, credit unions, commercial mortgage companies, private money lenders and Wall Street firms. Altogether, CommLoan says it has processed more than $680 million in commercial transactions.
Online marketplaces can help make the commercial real estate industry more efficient and transparent, says Yulia Yaani, co-founder and chief executive of RealAtom of Arlington, Va., another new online commercial real estate marketplace. “People are tired of paying huge fees as a result of the market being so opaque,” she says.
RealAtom began operating in 2016 and targets borrowers who are seeking commercial real estate loans from $1 million to $70 million. The lenders on the platform include banks, alternative lenders, insurance companies, pension funds, hedge funds and hard money lenders. The company processed $468 million in commercial loans in its first 11 months of operating, according to Yaani.
Another benefit of online marketplaces is that they “create a liquid, national marketplace where lenders all across the U.S. can bid on a borrower’s business,” says Ely Razin, chief executive of commercial real estate data company CrediFi, which operates the upstart CredifX marketplace. Historically people who own commercial real estate have only been able to get financing through a local relationship with a bank or broker. “For borrowers, this means more certainty of obtaining a loan and optimized capital not limited by the relationship with the local lender,” he says.
CredifX started operating earlier this year to match commercial real estate borrowers, brokers and lenders including banks, finance companies, mortgage companies, hard money and bridge lenders. The platform is for loans of $1 million to $20 million across all major property types in the commercial space. It matches borrowers with appropriate lenders using the information that parent company CrediFi collects and analyzes. The company declined to disclose how much it has processed in commercial transactions.
To be sure, it’s hard to say how the marketplace model will evolve over time and which players will withstand the test of time. Certainly a similar model has faced challenges on the consumer and small business lending side.
“I think the pure marketplace will become more rare as time goes on,” says Peter Renton, founder of Lend Academy, an educational resource for the P2P lending industry. “There are examples of successful companies with a pure marketplace, but they are rare and difficult to scale. The only well-established company that seems completely wedded to the pure marketplace is Funding Circle; pretty much all other companies have switched to a hybrid model of some sort,” he says.
Commercial vs Residential
While much of the recent growth has been within commercial real estate, there are also some marketplaces that cater to residential borrowers or offer a mix of commercial and residential opportunities.
Magilla Loans, for instance, started out in 2016 as a solely commercial marketplace, but expanded outside this silo because customers were asking for residential and other types of loans, says Dean Sioukas, the company’s founder. The company now connects borrowers with lenders for a whole host of loan types—commercial, residential and others like franchise loans and equipment loans. Lenders on the platform include roughly 130 banks, mortgage loan originators, accredited investors, credit unions and online non-depository institutions. The average loan size is $1.4M for business loans and $500K for home loans. Nearly $4 billion in loans has been channeled through the platform since January 2016; of that 70 percent is tied to commercial real estate, according to the company.
While there are marketplaces that focus on residential mortgage lending, some industry participants say that side of the business isn’t as appealing to new online entrants in part because the cost to acquire customers is really high and there are more challenges to working on a national scale.
“It may not be that commercial is more attractive. It may just be easier. Going directly to borrowers in the residential space has proven harder than many companies expected,” says Brett Crosby, co-founder and chief operating officer of PeerStreet, a marketplace for accredited investors to invest in high-quality private real estate backed loans. Experience seems to suggest that for residential mortgage origination, “it’s much better to have a good ground game and know your local market,” he says.
To be sure, as the online market for real estate matures, it’s not so surprising that companies would shift business models to find their own sweet spot. RealtyMogul.com is one example of a company that has morphed over time. The online platform began operating in 2013 in both the residential and commercial space, but has since moved away from the residential business. Accredited investors, non-accredited investors and institutions can use the platform to find equity or debt-based commercial real estate investment opportunities, and borrowers can apply for private hard money loans, bridge loans and permanent loans.
Money360 is another example of a company that has shifted gears. It started out as a pure marketplace, but changed its business model to become a lending platform in 2014. Now the online direct lender in Ladera Ranch, Calif., provides small-to mid-balance commercial real estate loans ranging from $1 million to $20 million. It’s one of the only companies targeting the commercial real estate space in this way and has closed nearly $500 million in total loans since 2014.
Gentry, the company’s founder, says he would expect to see more industrywide changes as the online commercial real estate business continues to evolve. The key to success, he says, is executing well and “knowing when to pivot when you realize something’s not working just right.”
Ultimately, Gentry predicts more online lenders will target the commercial real estate space. He says technology-based alternative lenders have an advantage because they can operate more quickly and efficiently while still being very competitive from a pricing perspective.
“You put all those things together (speed, efficiency and competitive pricing) and that’s what borrowers are looking for,” Gentry says.
Startups, Big Financial Institutions Play Nice in the Sandbox
December 20, 2017Data is the lifeblood of financial technology and more established companies frequently supply data to fintech startups for free as part of their growth model.
A Boston business incubator is basing its operations on that dynamic.
FinTech Sandbox, a non-profit group, launched two years ago and now claims more than 30 data sources that it calls partners for the startups going through its six-month program that benefits both data providers and users.
Testing new technology under a load of data is an important factor facing fintech startups so there’s a tradeoff: established financial services companies are providing data in exchange for a glimpse of the latest tech tools being developed.
FinTech Sandbox participants get to test drive their technology with large amounts of free financial data, which can be crucial step before taking on customers real time, Executive Director Jean Donnelly told deBanked.
“In order to be taken seriously, you have to test. That’s why we came about,” she said. “It’s for beta testing, to get feedback.”
Without partnerships, startups would need to buy data or scrape it from the Internet. However, providers generally don’t want to deal with the small amounts startups need versus larger paying customers. As a result, programs such as FinTech Sandbox’s can play an important role in the fintech ecosystem.
To date, four FinTech Sandbox portfolio companies have been acquired by larger companies. Most recently, machine learning company DataRobot Inc. bought software maker Nutonian in May.
Data sources for FinTech Sandbox’s startups include Fidelity Investments, F-Prime Capital, Thomson Reuters and Silicon Valley Bank.
Several banking and financial services companies operate accelerator programs and gain access to the latest technology by doing so. They include Deutsche Bank Innovation Labs, Barclays Accelerator and the Wells Fargo Startup Accelerator.
Earlier this year, Pricewaterhouse Coopers reported that the demand for data analytics is fueling the trend of traditional financial institutions folding fintech startups—and the tools they develop—into their companies.
“FinTech companies create an ecosystem that fosters the collection of vast amounts of data and builds trusted relationships with clientele. Financial institutions have realized the importance of these ecosystems and are attempting to engage with and bring innovation inside their companies. Partnering with FinTech companies is up from 32 percent in 2016 to 45 percent this year on average, but large discrepancies by country do exist.”
Ninety-eight startups have participated in FinTech Sandbox’s six-month program. They’ve raised a combined $380 million in funding, Donnelly said.
Artificial intelligence may be the hottest trend in the technology industry. But tech tools related to environmental, social and governance, also called ESG or socially conscious business models, are fueling the strongest growth trend with fintech entrepreneurs, she said.
One such startup, California-based Data Simply Inc., went through the FinTech Sandbox program in fall 2015 and now provides data to sustainability-focused companies.
The financial technology sector has changed over time to become one in which legacy and startups regularly team up, Data Simply CEO Michelle Bonat told deBanked.
“It used to be more of a competitive environment, but it’s now more collaborative,” she said. “Each realizes they can gain more from the other.”
FinTech Sandbox also collaborates with 11 accelerator programs such as Techstars, Startup Bootcamp and FinTex Chicago. Partnering with larger fintech companies turbo charges the growth of a business, Bonat said.
“It started so many useful discussions and it happened so much faster than it would have happened otherwise,” she said. “It’s all about an ecosystem and accelerating that in different ways.”
In July, Boston-based investment analytics startup FinMason Inc. disclosed that it was making its enterprise software available to FinTechSandbox participants.
The software is a suite of investment analytics with access to more than 700 analytical data types, including risk and performance metrics, aggregate factor exposures, scenario analyses and stress testing.
CEO Kendrick Wakeman told deBanked FinMason is partnering with the accelerator’s portfolio companies with a plan that such startups are prospective customers in the future.
Startup partnerships are more common in the financial services industry because an aversion to risk has slowed the adoption of innovation. Now, the industry is playing catch up and working with startups and young entrepreneurs is one way to close the innovation gap faster than developing products in house, Wakeman said.
“Institutions know they have to innovate. Consumers demand it and regulators demand it,” he said. “They have a long ways to go.”
MCA’s Top Social Media Voice
December 18, 2017
LinkedIn has unveiled its top 10 voices for marketing and social media. Fintech did not make the list, but perhaps the social networking site didn’t look hard enough. If they had been following Jennie Villano, who on Dec. 1 joined Kalamata Advisors as vice president of business relationships, that list might have included a nod to the MCA industry.
By most standards she’s a newbie to fintech, having joined her previous employer Pearl Capital only two years ago. But that hasn’t prevented her from making her social media presence known. And while she reserves Facebook for her personal life, if you know Villano then you wouldn’t be surprised at her success on LinkedIn, as she seems to have a knack for social media.
“I felt like I needed a very strong presence in this industry to get anywhere,” Villano told deBanked. “It’s funny, I think a lot of people associate sales with a type A personality and being pushy. I’m not an aggressive, pit-bull woman. You don’t have to be that type of woman to get ahead. I thought about how am I going to show this to the industry? Social media was my answer. My Facebook and LinkedIn attract a lot of views.”
Indeed, it was because of her Facebook profile that Villano was featured by a famous painting by David Uhl. The painting, dubbed Steampunk Seduction, is the first in Uhl’s Steampunk series. “I got that through Facebook,” Villano explained. “Someone saw my profile on Facebook, reached out and said, ‘you should contact the artist.’ I told them they were crazy. They insisted, and he chose me. It’s been a blessing.”
Meanwhile, her LinkedIn posts designed for MCA ISOs have similarly caught on like wildfire, and she only “amped up” her activity on the site in July. Villano has been posting on LinkedIn once per week, and the proof is in the pudding. “Since then, in September, October, and November, we broke funding records every month. It works,” said Villano of her previous employer Pearl Capital.
Underpinning that deal flow has been a flow of new relationships she’s forming, evidenced by more than 500 ISOs having contacted Villano on LinkedIn via her previous employer’s Salesforce network.
“That was from posting one time per month and just educating; not posting pictures of me on a beach sipping a Pina Colada,” said Villano. Instead, she was educating them about Pearl’s funding options, the types of deals they wanted, their bonus structure, etc. “So, it’s very basic information. I was just letting them know what they can expect from Pearl, what kind of fundings we were doing, just being a constant reminder,” she added.
While Villano is no longer employed by Pearl Capital, her posts from her tenure there have had a lasting impact. “[Last month] I put up a post announcing that I was leaving Pearl Capital,” Villano said. “The post generated more than 35,000 views.” Meanwhile, since she’s been posting, she’s seen the number of LinkedIn connections skyrocket.
Villano is continuing her social media push at her new employer, Kalamata Advisors.
“Kalamata has a partnership-culture mentality. It’s an amazing opportunity to be elected a partner, like a partner at Goldman Sachs or McKinsey, here after a couple of years. Then you have a real stake in the company and work at a firm where everyone wants to pitch in,” she explained. “Second is their great reputation. The partners put their mission and values first. They’ve grown so fast; but they’ve grown with the purpose to genuinely help people. And lastly, they’re very respected in the industry. Everyone here is very responsive, honest and professional.”
And while she’s no longer employed by Pearl Capital, she has nothing but respect for her former employer as well. The feeling is mutual, evidenced by a going away party that they threw for her on her way to Kalamata.
Gender Gap
So why isn’t social media more pervasive among MCA market participants? According to Villano, the reasons are two pronged, the first of which is compliance. “It’s very important to make sure we convey ourselves properly,” she said.
The other has to do with the fact that MCA is a male-dominated industry. “Women are more conversationalists through texting or social media. I find women are more intimate with it on a professional level. I have to say that I have the most active social media in our industry,” said Villano, who again only joined fintech two years ago. She’s inspired by the many women who are behind the scenes at ISO shops, many of whom she explained work as processors.
We asked Villano about whether sharing her trade secrets with competitors in the industry made her uncomfortable. “Not at all. I’m not made like that,” she said. “And Kalamata believes trust is the importance of every brand. With transparency, there is trust. Everyone is authentic and unique. Everyone should have the opportunity to share his/her own self in any industry.”
How I Failed to Become a Bitcoin Millionaire
December 18, 2017
This past Fall, an industry colleague congratulated me on my newfound wealth. “What newfound wealth?” I reply. “What are you talking about?”
“Aren’t you a bitcoin millionaire now?” he says, smiling brightly, with a look in my direction that suggests he can see through my deceptively coy demeanor. “You were talking about it for years. You were right about it!”
“Oh, yeah… Bitcoin,” I say back while looking at the ground, embarrassed by what I am about to tell him. “I spent nearly all my Bitcoins well before the price jump,” I reveal.
He didn’t believe me, but it didn’t matter. I had no regrets up until that moment when I decided to look back and see how much my Bitcoins would’ve been worth had I just held on to them. Doing the math ultimately turned out to be a bad idea.
$500,000.
That’s the rise in value I missed out on by spending the Bitcoins I had been acquiring in 2014-2016. It’s not a million dollars, but it’s enough to sit back and think, what if. [Editor’s note. The market value of those Bitcoins since the time this issue went to print reached about a million dollars after all. DAMN.]
Bummer
But why spend or sell them if I was a supposed true believer? I never cared much for speculating. I liked and still like Bitcoin because it’s a payment methodology that exists outside the purview and control of banks and government. It is the ultimate way to de-bank. And hey, that’s what all the fuss of this publication is about.
I started reporting on Bitcoin here in deBanked as early as 2014, mainly to an audience that didn’t know what they were and didn’t care to know. I couldn’t blame you all. Talk of digital currency, mining, and block sizes doesn’t exactly go hand-in-hand with things like online lending, merchant cash advance, and brokering deals.
A handful of diehard Bitcoin fans at the time told me they were happy to see Bitcoin legitimized through our coverage. Others told me it was complete garbage, a ponzi scheme even, that didn’t deserve any attention whatsoever.
In those days, I took a tour through the whole ecosystem by mining Bitcoin, buying it, selling it, paying people with it, and accepting payment with it. I read books about it, attended seminars on it, and watched documentaries about it. I even experimented with turning my computer into a node in the Bitcoin network to keep the ecosystem itself running smooth. I repeatedly heard critics argue that it was all a scam and I walked away every time remaining unconvinced.
Bitcoin allows users to carry their money across borders without hassle and to retain possession of their funds even if a bank or government agency wants to seize it. Perhaps these benefits appeal to criminals, but surely they also do to law-abiding citizens.
I didn’t like the volatility of it so much back when I was acquiring them. It wasn’t a very good store of value and it still isn’t. The fact that a Bitcoin I acquired for $300 is now worth $10,000 [market value at the time it went to print] is amusing but also terribly unnerving. What good is Bitcoin to legitimately use as money if the value can swing massively in an hour? And what to do if I bought 1 Bitcoin now at $10,000 and it retreated back to $300?
In a way, I may have been more excited to have held all those Bitcoins for another year without them experiencing any increase in value, rather than to have accidentally profited handsomely thanks to speculators who do not care about the underlying utility of Bitcoin.
Maybe I’m an idealist. Or maybe I’m just rationalizing why I shouldn’t cry myself to sleep over having missed out on 500k in profit. I personally believe Bitcoin will be at its most valuable when its price is stable. If we can get to that point and the world economy becomes more accepting of it as a form of payment, well then I’d be very interested in holding on to Bitcoin indeed.
I wondered, of course, if the me of three years ago would’ve agreed with my philosophy now. A blog post I wrote in November 2014 answers that question.
Below are some of the points I made then:
“Bitcoin is more than a currency. It’s not the Euro, the Yen, or the Peso. It’s a detachment from governments and banking. It’s self-control. Without the private key, your bitcoins can’t be seized.”
“I’m not necessarily speculating though. I spent almost half my bitcoins shopping on Overstock on Black Friday.”
“A 5% swing might be acceptable for an investment but it’s quite ugly for a currency.”
“Your money is not really yours. You have rights to it, but only to an extent. It can be garnished, frozen or confiscated. That’s the price of liquidity and relative stability. If you can afford to color outside the lines, where you can remove [bankers] and their control, why not experiment? There’s something pure about [Bitcoin], liberating. And when you add in the fact that it’s governed by math, it’s more than that, it’s beautiful.”
“There are indeed those holding [Bitcoin] and not spending. Rampant speculation is both a cause of volatility and an argument for its long term unsustainability. Speculators are hoping the digital currency will appreciate and make them filthy rich. If that day never comes, a big sell off will cause its value to drop.”
And so it was in 2014, I was interested in the utility of Bitcoin while concerned about the volatility of it. The value has since shot up to the moon, largely due to speculation. Along the way my views caused me to miss out on becoming a Bitcoin millionaire.
And I couldn’t care less. Wake me up when the price stabilizes.
Editor’s Note: Between the time this story was sent off to print and now (when it’s being published online), the market value of those Bitcoins had increased from $500,000 to nearly $1 million. Incredibly, I legitimately would’ve been a Bitcoin millionaire.
Editor’s Note 2: It’s been a long time since I have played around with being a Bitcoin node. More recently, I have become a node on Ethereum, a blockchain for decentralized applications that also serves as the backbone platform for things like Initial Coin Offerings.
Hard Work, Big Success – The True Story of an MCA Broker
December 15, 2017Sales is a tough field for anyone to break into even if they come from the most ideal of circumstances. At some point, the rubber meets the road for every MCA broker, at which time they must decide whether they’ve got what it takes to make it in this business.
This is what makes Lerry Dore’s story so remarkable, as it seems that the more he got knocked down in life, the higher he was destined to rise. Today he’s employed as an MCA broker at Cresthill Capital. And while education has been paramount to getting him here, evidenced by the fact that during his entire employment he has been in college and he is still one of the funding company’s most successful brokers, Dore more than anything else was trained at the school of hard knocks.
Coming to America
Dore was born in South Florida, but he wouldn’t stay in the United States for long. After his parents split up, his mom was having a tough time making ends meet and made the impossible decision to send him to Haiti to live with extended family.
“My mom had a very hard time supporting us right out of the gate. Soon after I was born, I was sent to Haiti to live with my aunt and cousins,” he said, adding that this gave his mom a chance to get on her feet. “She needed to get a job so that she could provide for us at a basic level.”
Dore would remain in Haiti for the first three years of his life, where his first language would become Haitian Creole. But you wouldn’t detect a hint of an accent talking to him today at the age of 23.
Dore’s mom eventually found a job. She was only earning minimum wage at a hospital, but it was enough to get the wheels in motion to bring her son home.
“She was in a position to provide food, electricity and shelter for us. That’s why I came back,” said Dore, adding that he doesn’t remember much of Haiti with the exception of the plane ride home. “That’s where my memories start,” he said. Perhaps it was somewhere over the Caribbean that young Dore’s dreams began to form.
When he got back to Florida, Dore was able to meet his mom for what felt like the first time for him. He also met his brothers and sisters for the first time ever. He explained how at this point, his mom was still getting adjusted to life in America as an adult immigrant.
“There were a lot of things that I went through as a kid to this point that she couldn’t give me guidance on. She simply didn’t have that experience. That brought a challenge,” he said. Little did he know that these obstacles would help shape him into the resilient person and successful MCA broker he is today.
While getting used to the American culture was a challenge, something that his mother never lost sight of was the importance of education. “She was very big into education,” he said. Dore’s mom discovered Head Start, a government subsidized program that provided a pre-school education for families who couldn’t otherwise afford it. That was where it would all begin for Dore, and come hell or high water his mother was going to enroll him. Without the luxury of an air-conditioned vehicle to drive in the hot Florida heat, the pair set off on foot to sign up. Some 12-15 blocks later they arrived.
“Both of us were sweating bullets. She didn’t know it, but there was a small registration fee. At the time, she didn’t have it,” Dore explained. It was then that fate seems to have stepped in in the form of the woman who was handling registration. She pulled the pair aside and told them that after witnessing the dedication that this mother had toward her son, she was going to waive the fee. In return she only asked that they keep it on the down low.
“That small gesture made a dramatic difference in my life,” Dore said. “If I was not able to attend, I wouldn’t start school until I was seven or 10 years’ old. That was a very important moment in my life.”
Indeed, it was, as it would set in motion a series of events that would lead Dore to where he is today, a successful MCA broker at Cresthill Capital. But before he would join the firm, there were still more hardships waiting for him, not the least of which was the death of a friend in his teenage years. “That could have been me,” Dore exclaimed.
For the average person, life’s setbacks could have held them down forever. For Dore, they seem only to have propelled him further. “The reason why I stayed out of trouble was I was in school and my mother kept us grounded,” he said.
During his teenage years, Dore and his family lived in an apartment complex in a neighborhood of immigrant Haitians where he said the median income was $25,000 to $30,000 per year. He shared a room with his brothers and sisters.
“I focused on athletics,” he said, adding: “That’s where I got my competitive nature. Also, my thick skin,” both of which, incidentally, are characteristics that would serve him well as a broker later in life.
While he excelled at basketball at his Boca Raton high school, Dore wouldn’t be able to pursue those dreams for long. He and his family would be uprooted from their home time and time again amid landlord trouble. This series of setbacks, which involved him sleeping on his brother’s couch for a time, instilled a sense of maturity in Dore at a very young age.
He had a few Division II and Division III offers to play basketball in other states, but he turned them down. Instead of chasing his own dreams, Dore decided to focus on business and find a way to sustain and support his family “Once I graduated, I was not interested in basketball. I wanted to finish college,” said Dore, and lucky for the MCA industry he had his sights set on the field of finance.
Funding Merchants
After High School, the first thing that Dore did was to go online and look for a job. As it so happens, the first ad he saw was at a stock brokerage in Boca Raton. “That’s where I started, in phone sales. I didn’t have a Series 7 license at the time. I was just calling from the Yellow Pages. Once I got someone on the phone, I would transfer the call to someone who had a license,” he explained.
This went on for a couple of months until he heard about a startup company in nearby Delray Beach. “At the time, they were prospecting merchants. That’s how I got into the industry,” he said.
His first job in the MCA niche was with a very small ISO shop. But it was there that he would make a connection to change the course of his career. He was working on a deal that was hard to place and was only getting rejections. That is until he came across Mike Daniels, Cresthill’s No. 1 producer.
“I couldn’t get the deal done anywhere else. The merchant was getting frustrated with the process. I heard of a company that takes chances on merchants with imperfect credit,” he said. That funder was Cresthill Capital. Little did he know at the time, but they would eventually become his employer.
He sent the merchant file over to Daniels, who then reached out to the merchant and got the deal funded. It was at that point, Dore said, that he started to fall in love with Cresthill “because of how [Daniels] was able to treat the merchant with respect and get the deal done.”
For the next six months, Dore would proceed to trust all of his business with Cresthill. He was still employed by the small ISO shop, but he began to outgrow his environment and long for a platform that allowed him to explore his talent and excel. But his pursuit only left him frustrated and thinking about leaving the MCA industry, something he confided in Cresthill Capital’s Daniels, who was turning into a mentor, about.
It was at this point in his life and career that instead of being the rock, Dore needed to lean on someone else. Daniels and Cresthill Capital were there for him. He was invited in for an interview, and as they say the rest is history.
“I was shocked at how diverse the workforce is. There were different types of people with different backgrounds. I liked it right off the bat. And then everyone was very friendly to me from the moment I walked in,” he said. He was greeted at the front door by Cresthill Capital’s Mike Marano, who then proceeded to interview him.
“I’ve actually interviewed and sat with every single person at my company and hired them personally. What I can say about Lerry is that from the moment I looked at his face and saw his eyes, I knew intuitively that he was a good person. And responsible. I had no idea how deep of a person he was, how much humanity he would show. He was a willing student, and we were happy to teach him. And he continues to soak it up like a sponge,” Marano told deBanked.
Dore was convinced Cresthill Capital was the right place for him when Marano insisted that Dore stay in school and continue his education. “They said, ‘we will work around your schedule,’ and that really drew me in,” he said, adding that the dog-friendly environment was a bonus.
Dore has been employed by Cresthill Capital for the past 18 months and is graduating from college this week. He is not only supporting himself, but he’s the highest earner in his family, which has allowed him to help support them.
Paying it Forward
As if on cue from the mystery lady that paid his school tuition when he was just a child, Dore is now interested in paying it forward in life. He said that similar to how Cresthill Capital is involved with philanthropy, he’d like to give back to the community. But his vision goes beyond his neighborhood.
“I want to help kids that are similar to me, who are in programs that try to help them excel in this country. I want at some point to work with immigrants that come in from Haiti and work with them to give them a platform, like the lady who gave us a chance,” said Dore.
Since the Haiti earthquake, his extended family has relocated north to Canada. “But I still feel to some degree a responsibility to try and help out the people in that country and the ones who come here through immigration,” he said.
As for Marano, he said all Dore needs to do is exactly what he’s been doing. “When he leaves me, he won’t have to work again. But knowing this kid, he probably will anyway,” Marano said.
