So please tell me in.

One hundred years that Malcolm to Mr Cobb.

I'm.

Thinking.

So we got some my colleagues
in the audience and

my co-founder Catherine betrayal you love
speak in front of audiences she came here

to heckle me I think from the fifth row
there how many people here you know hope

to start a business one day on a business
be an entrepreneur or fair number of folks

here and for those of you who you know go
through once you graduate and get out of

the work world you probably realize that
would be nice to actually go out and

run your own business one day relative to
maybe what you're doing if so what I was

hoping to do today was take you through a
couple of different presentations really.

The first one is sort of our pitch
cabbages pitch and doing that for

two reasons One reason is because it's
a great pitch it's a great company and

I want to explain what we're trying to do
for small businesses throughout the U.S.

We're also launched in the U.K. The other
reason is I think it's important for

you to understand how to sort of tell
a story about a company tell a story about

a mission because it's a very important
thing to do when you're going out and

raising capital you know that the title of
this is zero to sixty million in venture

capital we've raised fifty six million
nearly sixty million dollars to date in

venture capital and it was not easy in
fact it was one of the hardest things

it was the hardest thing that I've ever
done I'm sure the first thing that my

co-founder Catherine and other co-founder
Marc has ever done in our lives but

also one of the most
rewarding experiences and

could not learn more through a single
experience than what we've gone through

over the last five years the second
half of this presentation is going to

be about tips a lot of people hear about

Silicon Valley about Menlo Park we've
lived and breathed and gone out there and

spent a lot of time with venture
capital over the last five years and

we've got the scars and brain damage to
prove it so we would share some of those

experiences with you as we go through you
know we've got about a half an hour and

then a little bit of Q.
and A so I'm going to ebb and flow in.

To move it with some alacrity
as we go through that and

hopefully have enough time for
some good questions at the end so

anyway the funny opportunity
especially finance.

Small businesses in
the US are big business

you can see on the statistics here
that small businesses account for

more than half of all employees in
the United States they also account for

nearly two thirds of all new
jobs in the U.S. and account for

more than half of the non-farm G.D.P.
they are the one of the most important

segments of our entire economy
the challenge is is that small

businesses never have access to working
capital if you were large business and

you've got a nice balance sheet I'm
going out and getting a loan for

your business is easy it might take a
matter of weeks or even a matter of months

but you know that based on certain factors
that you're looking at you'll be able to

go get that capital and you have a lot of
alternatives for looking at that if you're

a small business getting access to
capital is almost impossible and

that simply because it's hard for banks to
really understand the small businesses let

me give you a few stats two thousand and
eight two thousand and

eleven the total number of small business
loans has decreased by seventeen

percent in that time period and

by the way it really sucked before that as
well it wasn't as though small businesses

were getting a lot of capital
probably two thousand and eight.

Couple things micro loans so micro loan
is defined as less putting out less

than one hundred thousand one hundred
thousand dollars to a small business

that's fallen precipitously every year for
the last five years on the road just banks

those that have greater than fifty billion
dollars in assets continue to decrease

the amount of capital that they're
providing the small businesses the S.M.B..

Represent only one and one and

a quarter percent of the total balance
sheet of large banks even though they

employ more than half of all employees
that's a very very significant statistic.

Also just the number of loans going out to
these folks has decreased by two million

each year every year for the last for the
last three years if you look at some of

the major brands in this space American
Express with their open program for small

business only represents about a third of
a percent of their entire portfolio and

it only gets worse from there Bank
of America J.P. Morgan Wells Fargo

cap one these are all that large banks
that talk about providing capital to small

businesses but never do they simply
never do so this is what we set out

to do we've got this character and this is
also once again I said this is all about

also how you present this information so
we presented as a story and what we told

venture capitalists when we went out there
is we made it a children's story because

we thought it was the most relevant way to
convey information to a venture capitalist

Was there a children's story about all
that they could understand at the time and

usually they nearly laughed
at it more than you guys did.

But so we have a small business owner
builds an online seller Bill sells on e

Bay or sells on Amazon and
he needs cash to grow his business and

what does he use that cash for buying him
into oil marketing products upgrading

systems hiring seasonal employees
the challenge is we have this character

rich whose traditional banker one
banker see small business is like rich

they really can't understand them so the
way a traditional bank usually underwrites

a small business is they get the personal
credit score of the small business owner

they treat it like a consumer loan as
opposed to looking at that business and so

that really frustrates bill right because
Bill has built this awesome business but

banks were really won't pay attention
to that business that he's built.

The challenges the banks with all the
breaks in them and they granted in their

in their rabbies don't have
the systems to really effectively

underwrite a small business they expect
the small business owner to come in.

I meet with them they expect their
loan officer to go see the store and

these small businesses tend you know
a lot of them want to graduate is or

they run at shows and Piedmont Park or
something along those lines and so

they really don't have all of the you know
all the systems and all the set up that

small businesses need to have for a bank
like which is to really underwrite I'm and

so that creates a real problem and
but it created that an opportunity for

us because the other thing
these small businesses do

is they leverage technology like
nobody ever has in the past so

these small businesses market their
products via Groupon they accept

Pay Pal they use Quick Books Online
which were how they keep their books.

They fulfill their product via Amazon they
do things that allow them to connect to

other businesses be a data via A.P.I.
And so what we realized

is there was an opportunity here so
instead of asking Bill to come in and

meet with us to get a small business loan
we figured we could handle this through

technology and data so
just have literally come to our site and

associate every key account that Bill
has for his business with his cabbage

profile and by doing that we can
actually download the information

when Bill lands on our site and we can
analyze that data real time and make

an underwriting decision on bill without
bill even ever having to speak with us.

And we do that now we create accounts more
than ten thousand times a month right

now so we have more than one hundred sixty
thousand accounts that we've created since

we started throughout the United States
and throughout the United Kingdom as well.

And the way to do that is
they connect specific data so

you see those logos that are in color our
data sources to which we've connected So

for example Pay Pal an e Bay have an
A.P.I. said everybody familiar with A.P.I.

sets here at Georgia Tech I assume you do.

Right application programming interface
the law has them to authorize and

authenticate with us so we can pull
down the data and the most one of

the most important aspect of this is
we stay connected to that data so

when bill comes in it connects us to that
data source we can underwrite his business

at that moment and then we can continue
to see how is business operates after

the time that he connects that data source
to us which is another important facet of

underwriting small businesses small
businesses have real huge ebbs and

flows and so consequently a business
that's doing great today might frankly not

be doing well a month from now and if we
still have cash available to that customer

that puts a set risk now a bank if they've
just had somebody like Bill shipped

them their financials won't see the ebbs
and flows in that business like we can and

we actually pull down a tremendous
amount of data every day for

all those hundred fifty thousand accounts
that I mentioned and that's that that's

a big difference between the way we
operate and other businesses operate and

one of our major goals over time is so if
we can see your data we can underwrite you

so if we see that you're doing you know
twenty five thousand dollars worth of

revenue each month we understand whether
that drop down the twenty thousand

the following month whether we went
up to thirty thousand dollars and

as we add more data sources we allow our
customers to connect more data with us and

that gives them access potentially to more
cash that gives us more visibility into

their business so
it makes sense to everybody who if anybody

has any questions by the way it's like I'd
like you to feel free to throw out yet.

We don't seem business been
in business at least three or

six months ideally more time than that
the type of data we're looking for

is we're looking for the robustness of
the business you know how much cash

is going in and out of the cash
register We're also looking for.

For Calcutta of that business so we
actually pull down data from places like

Facebook and Twitter and we look at
seller reviews on e Bay We're going to be

connecting with Yelp in the future so
we can look at reviews those things let us

know whether things are changing in
that business we can also look at

bidding history for example on e Bay So
bidding history is really interesting so

if you know that a business is operated at
this revenue flow and you know right now

they have a certain number of listings on
the site but they have a lot more listings

when they first signed up you know their
revenue is going to go down converse Lee

if they have a lot more listings on
the site and a lot of activity history

you know their revenues likely going to go
up in the future so it's a good question.

So that was a core premise
of what we did and

what we're able to do now is a small
business can land on our site and

literally have cash in their account
within seven minutes that's our average

a small business loan effectively in seven
minutes which is faster than any financial

institution on the face of the earth could
ever do or could even come CLOSE to do.

That's for customers just so
I make it clear that customers that

have Pay Pal because pay Paul asked for
immediate cash delivery

if you have to deliver via bank it might
take a day for you to get the cash but

we actually complete the transaction
within that same time period.

One of the you know so I can sort of
explain sort of how we set up this product

cash in fewer than seven minutes really
fully automated fees range from anywhere

from two percent of how much we provide to
you to eight percent in the first month or

upwards of between two and twenty.

Two and twenty percent depending on how
long you keep it anywhere from a month

to six months is the way we set it up
the lines are between five hundred fifty

thousand so the actual product we provide
is a effectively a line of credit so

you can take cash at that moment and then
you can come back and take cash later and

that's why it's really important for
us to stay connected to that data

this is a really important point
in terms of the impact that.

This has well beyond what we're doing so

there's lots of folks who benefit when
small businesses grow and our average

small business has grown from the moment
they took cash compared to the period

prior to when they took money seventy
percent on average on an annualized basis

that's how the impact that cash has on
a small business but beyond helping us and

helping the small business it also helps
lots of other folks in the ecosystem so

if they're selling on e Bay They list more
product on e Bay So generates more fees or

Pay Pal generates more fees U.P.S.
benefits from that because the shipping

more packages for example the bubble wrap
manufactured benefits because they're

selling more banner rep to the folks that
are ship wrapping Braddock the impact that

working capital has on small
businesses is tremendous and

that's a big part of the of what's good
about what we do is making sure we deliver

capital to small businesses because the
impact they have in our overall economy.

So give you a little bit
of a background on cabbage

started it's interesting when you start
a business it's November two thousand and

eight the February two thousand and nine
the reason why that's not a specific date

is when you start a business it's kind of
hard to determine the exact date because

all you know is one day you're working on
it a little bit more than you worked on

it the day before and it goes from a hobby
to an actual company or a job and so

that's why it's sort of that span of time
we've got north of eighty employees and

we're actually just a couple
blocks from here between third and

fourth on Peachtree just north of facts
there hundred sixty thousand accounts

we've put out over one hundred forty
million dollars right now in capital

most of this happened in the last frankly
in the last year we've done this through

more than ninety thousand discrete
transactions and we've received over two

hundred fifty thousand payments over a
lifetime right now we've raised fifty six

million got a couple of at issued patents
and there's a whole bunch of press folks

that have said nice things about us and if
you invest in us and you're an individual.

Make a little Calicut sure of you so

that you have that in the future
that's blue one ventures which is.

Down the best are also Valley investors
U.P.S. you guys know is an investor

in us David Bonderman who is the founder
of T P G Texas Pacific Group

which is one of the largest leveraged
buyout firms in the world is

an investor in us in the guy named Warren
Stephens who runs a big investment bank

a private equity firm called Stephens Inc
out a Little Rock Arkansas as an investor.

So now I'm going to talk to you
a little bit about some of that is that

people have any questions about that part
of the presentation about the company.

OK.

So now what I want to do is just give
you some tips about raising money in

Silicon Valley and the name of this is
eat the food a kind of Perkins which

will tell you in a second why why we call
it that when you go into a venture capital

firm you can often judge how good or
not is good the venture capital firm

is that the quality of the candy at
the reception desk when you walk in and

the really you know ones that a lot of
money have you know really good chocolate

you know from some other country and
the ones are NOT have like on balls and

things like that a little bit about kind
of proteins in a second before you raise

the money so the most important thing that
we could have ever done as a company and

we attribute most of our success frankly

is to actually hiring somebody
on the outside to come in and

help us prepare the story that we were
going to take out on the road and we had

no money at the time literally scraping
together pennies and nickels to try to try

to try to run the company at that point
but what we really realized was we needed

to have some DAC and
awesome story to do this so

I would negotiate you know every price
off of everything in the office but

the only thing I didn't really
negotiate on was hiring an absolute

fantastic storyteller who could
tell the story and do it visually.

So to just give you an example and to
show you what our deck looked like before

we hired Mary Frances This was our deck
that we're trying to raise money on

it's pretty it's actually
pretty laughable.

And that's what we tried to go out
initially raise capital with and

then we realized that was going to work so
we moved to something that was much more

visually engaging and the one thing it's a
matter of people said no to us but the one

thing they always stopped and said to us
after the fact was that's a really good

deck and I got the name of the person who
helped you with that So Mary Frances has

become almost famous Thanks West taking
her back around around Sand Hill Road.

In Menlo Park but you want to be
able to convey a story to people and

people like stories they like real
characters like folks like Bill in

the rich in understanding the issue you
know throwing a bunch of numbers a half or

a bunch of bullet points is not that
interesting you know that's not very

visually appealing but doing this and
telling a story behind it is is really

what was able to capture people's
imagination and get them into the flow

of what we're doing so that's why
I think lesson number one for us.

Lesson number two is the dream of
the hereafter so you know we would.

Release a small amount of capital and
one of the co-founders in our

partner Mark Owen after we did that for
us and somebody made fun of me for

bringing empty bottle of champagne
to a university and I had.

These bottles of champagne after we closed
that around that's really nice and he said

well you have to look at it it's personal
ised and so what are you done was he

basically said after that were around that
we were valued pretty low at that point.

To be opened by the right for
a line when cabbages valued at.

Or more than fifty million dollars.

So he gave us a battle which was just an
awesome thing which was really just a goal

and we believe in less than you in this
company so that we could one day open the.

All the champagne not only did he do that.

But he also gave a bottle he had a bottle
produced for everybody in the company so

everybody had that it could share
that experience together and

drive towards that goal the other really
funny thing is when we were negotiating

a subsequent round of capital and
offer came in for

the company be that a thirty five million
we turned it down the next step for

it was the for the company be valued at
like forty two million and we said Brian.

I don't think you understand this but
we can't close a deal for

a value less than fifty million dollars He
said why and he said he said because we

have a bottle of champagne that can't be
opened unless it's fifty million dollars

So we close that deal at fifty five
million bucks for the money and

we open the champagne and they have a cool
thing is we had more battles produced.

With a different goal on it which
I won't share with you right now

which we hope to open soon.

And then they also give a smaller
group of us another bottle

with a much higher number.

So that would have better work
to do on that one as well but

you need to get everybody sort of
on board with the goal innovation

in the company and that's one thing that
I think we've been really successful with

at cabbage is rattling around that's
a financial goal so that's good but

rallying around a lot of goals and
side of the company but

also getting the investors rallied
around those goals as well and

so that was something we were able to
do that's just one example of it and

there are many other examples of it
internally of the grind and by the way

this is a condensed version believe it or
not even as much as I'm talking to

condense version of of of what it's like
as we have on this but talking a little

bit more about getting on the road and
what you do once you're on the road so

this sounds like a very sort of trite
concept I never stop trying but

it really is true if you see the numbers
at the four two three two three seven

those are the number of times
that actual investors in

our Series A round said no
to us before they said.

Yes.

In fact seven is the number of
meetings we have had with U.B.S.

before they finally said yes to making
frankly a very small investment in

the company but
they've been a fantastic partner since.

Every single one of our major investors
in the company in our Series A round said

no to us a bunch of times but
instead of saying OK thank you and

leaving we did two things One thing
is we always ask them Well why not.

And sometimes they just give us a line but
sometimes they give us a real

piece of information like we're concerned
about you know the uptake of the product

by customers or we're concerned that you
not be able to service the customers or

your pricing is off or something along
those lines we took down those notes

we went back we worked on that and then we
went back to them we literally went back

to them and said Remember you told
me if we solve this issue we could

come back to you which they never
actually said to us but we but

what of course we're going to say yeah I
remember telling you that right because

people don't remember but you just make
they just assume that I can remember that.

I mean you said and you told us the reason
you're one investing was because of X.

Well guess what this is what we
found out and that actually worked

that's what it was amazing that
actually worked with these investors so

that's a major reason you do that the
other reason the other thing you do when

they say no as you say if you are not
interested can you tell me somebody else

that you think might be interested
in this story again this sounds all

very logical but almost nobody that
goes out looking for money does this so

they lead investor blue or
ventures we got to because three

other people chain referred us so we had
one person refer us to another person

referred us to another person who
referred us to blue adventures so

if we had never asked that question along
any of those lines I can it would be

I would be standing here right now because
they've been incredibly supportive

investor we love them and we don't think
we would have been able to get to where we

are today without their support so it's
a really really important concept and.

And my partner Mark Owen is the first
guy I really have ever met that embedded

the spirit that now was the first step to
us and he really was great at teaching

us that find that connection I actually
just spoke about this a little bit.

And I think I'm entirely spoke about
this a second ago this is really again

just reinforcing the point that you really
have to look for the connections between

people and see who they know your network
is not going to be big enough but

your networks network is probably going to
be a lot better and certainly they have

a network it's going to be much better you
can actually read your way out if you're

patient and diligent enough to get to
any investor literally in the country

and if you bother them enough they
will actually take a meeting with you.

In fact we had one investor here in town.

Who probably said no to us about eleven or
twelve times I mean to the point where he.

Learned later that he actually put marks
phone number in his phone as an avoid

phone number and then he and
then my tracking down through somebody

else's phone and eventually said yes
you know a big check but he said yes so

that was important Take Me To Your Leader
is this really really critical So

a lot of people get super excited about
going to a venture capital firm and

meeting with somebody in
that venture capital firm.

A lot of the people that you meet with
initially associates and those associates

have absolutely no authority at all and
they will never help you and

they're almost worthless in fact the
associates tend to be the people who spend

the most time trying to convince partners
not to do the deal we have this one guy

if you look them up on Linked In I'm sure
let me Grover very nice guy work for

a firm up in Boston and he spent was a ton
of time trying to figure out how we were

never going to be able to do anything that
we said we were going to be able to do so

they were ready to give
us a term sheet and

then let me consistently went through this
process to push this away so the net.

That on this is what you always want to
do when you're talking to an investor

speak to the person this
makes a lot of sense right

speak to the person who is actually
decision making authority or you know and

in those firms it's usually a group of
people who do but he's got to be or

she's got to be one of the people sitting
around that table very very critical so

I always make sure you have
somebody with forty in that room.

So.

This is sort of contrary to my
point a couple slides ago which is

sometimes they're not just
Just Not That Into You.

When you're going out we probably met with

Catherine how many firms that
we meet with in our series.

Really I thought more than that so if
they like one hundred one hundred ninety

five farms I think that's about right but
I have a phone calls to but

one of the things you got to realize is
a lot of times people will give you just

a little morsel of hope right so they'll
say something like one of us might be

interesting you know want to go give
me a little bit information on this or

that and a lot of times that's
a waste of time you really need to get

very good at understanding those
firms who are really serious and

those who are just leading you on
a wasting your time because a lot Will.

We used to have this
situation that happened a lot

where we were OK I had a before.

And we would say it would be a bad
meeting be a horrible meeting and.

You know we'd say well when they're
never going to invest in us and

Monica had mentioned a couple times
already would say you never know.

And his point was you never
know they may come back and

do something we worked out a one for out
and Silicon Valley meeting ended way early

they were noxious to us they didn't pay
attention or anything we walked out and

I said most you know you never know
when you go sometimes you do that.

I mean they were just so
rotten to us some people

just really you know how did it happen for
whatever reason I think we were late for

that meeting might have
been one of the reasons.

Because we are running around.

But a pebble in your shoe
take you out of the race so

you'll be in a meeting
you'll be pitching them and

somebody will weigh is what seems like
a pretty small issue and I might say well

you know I mean how can you be sure that
you know these small businesses are really

going to give you access to their data and
it seems like a privacy concern and

we'd say well you know you know people are
getting used to our Facebook Twitter we

tell them you know maybe it often turned
out that a small throwaway comment

during that meeting was going to be the
reason that they didn't invest in us and

so you had to become highly attuned to
listening to everything they said and

making sure that you listen for
what we call the pebble in the shoe

because oftentimes that was
the reason they wouldn't vest and

so spend an inordinate amount of time
addressing what otherwise seemed

like a relatively small issue to make
sure you got rid of that pebble and

then you go on to more fruitful
conversations with them.

Don't let the assholes get you down.

This is a good one.

So a lot of people were
horrible to us you know

during this process of the times everybody
thinks they're an expert in everything so

these are some of the comments that
were directly you know directed to us

specifically your
management team is weak and

you're not smart enough to make
this work was A or B. in common.

I would buy back around Robb's
a lawyer was the C.E.O.

and that was that was that was enjoyable.

Capturing came from Compu Credit
people from copy credit there too

many moving parts in this business you'll
never be able to put it together I mean

people who made you think that the very
premise upon which you started the company

was a mistake and they were sure
that it was a mistake and so

you just have to have the perseverance
to get through that and

to realize that you know they are not
always the smartest people in the room.

They might have great pedigrees they might
have raised lots of money in the past

they may have even run
companies in the past.

But they don't know your
business as well as you do and

you need to have faith that
you you know this business and

you can drive through it and
that's and it's very very important.

But the final one so there been any
man this is a really funny one.

The same one that was up and
down so I made reference to before

really disliked one of the members
of our management team and.

It was sure the business
would never succeed and

then after a couple
financial raises later and

we had gotten a lot of great press and
we're obviously doing pretty well.

We made announcement that we
were a seventeen million or

whatever the number was I got a phone call
from this guy this partner in the firm we

turned us down principally based on this
guy one of my partners but he didn't like.

Him so I saved on that I guess you still
have the same management team you had when

you were in here you know simming that how
could we ever be successful with you know

with the management team we had before and
I was really excited to say yep exact same

team so so sometimes I feel those phone
calls are a lot of fun and feel good.

This is one that can piss off
the venture community in Atlanta but

every venture firm.

Passed on every venture from
an Atlanta pastor deal chances

are they'll pass on yours too so we say
make your silent partner make sure you get

out of Atlanta to at least look for
money by the way that doesn't mean and

land a venture firms aren't good they
are the challenges are so few of them so

you've got to you've got to always give
yourself the best opportunity to raise

money and that means getting on
a plane going out to California

going to Boston going to New York
a meeting with lots of different investors

you've got to create an environment
where you can raise money and

you've got to talk to
folks you know that have.

A lot of cash available because
a lot of people will say no you know

everybody that you know out of the ninety
five firms that said no to us we only need

one that said yes before we were able
to get our first series a deal done but

anyway a lot of people think that you know
going out Silicon Valley raising money is

really glamorous Well this it's a lot
of middle seats way back in coach

you know how people situations this
is a picture of myself Catherine and

Mark on a flight coming
back from the best and

while a baby was being changed
literally in the row behind us.

So that's the game worst experience I
think that was in the midst of our series

A razor Series B. arrays so it's not
it's definitely not a glamorous pursuit.

So a few tips and
how my doing on time good.

Roughing up the last five good if you more
points here in the objections hundred

challenge we basically we now go
into venture firms where we talk to

investors now and we literally offer
them one hundred dollars if any of

them ask us a question that we've never
been asked before I'm not going to

put that out this crowd because that
would probably be bankrupt the company.

So don't burn important investors for your
first pitches so quick a sad when I was in

college one of my summer jobs with
a strong blood that hospital.

And the way they taught me how to draw
blood in hospital was they had me

stick comatose patients because
they wouldn't know what I missed.

So instead of what was true.

So I think it was a bad example guys.

So folks from the Going to the same
idea in your pitches don't buy.

Your first pitches on the best
potential investors go out there and

try it as often as you possibly can pitch
ten times a day you know if you can

just get better at doing it because
it's really is more of an art and

you've really got to get that down or
a little bit.

More of a science you really
got to get that down.

Quick thing don't ever use the word
conservative everybody puts

these financial models together and
they look like they're going to make

five hundred million dollars
in the next two years and

the one that's conservative you know
we're going to do much better than that.

Use different words people hate the word
conservative just attainable or

something a little bit more reasonable
I talk a little bit about don't

be afraid of the seize the Pedigrees don't
make them smarter than you it's very true

I mean if you show confidence in your
business confidence in yourself confidence

in your model they're going to be
confident and that's a really important

thing to understand Don't let them know
of you as you go through that process.

When you go to conferences talk to
speakers before they speak at a couple of

people before and before shut up a little
bit early one of the biggest success for

partnerships or for
investors everybody crowds the speaker

with the exception of today and we could
have a speaker after the talk is over

nobody talks to the speaker before
the speaker is up and talking so

that's the ideal time to go up and
engage in a conversation so do that that's

the way we actually first met somebody
here know a guy named Ron Conway or

out of investor called Ron Conway a few
people and the most famous investor and so

I come out of the reason he invested in
cabbage we went to him before he spoke and

he goes hey I'm going to get together
with you after we would never

have that opportunity with him had
we waited till after he had spoken.

Get a room of that around this is really
simple there's lots of services out there

so if you're raising money and you have
all these documents we always encourage

you know we've always tried to
maintain a central as online place for

folks to come and look at our documents
and review our documents for a deal and

we continue to maintain that today because
we're always dealing in sort of advance

equity and debt discussions and so
that really helps ask your vendors for

money really important on one of
the key components of our system.

A couple of the key components of our
system two pieces call the system a record

and decision engine we didn't have any
money those are really expensive literally

hundreds of thousands of dollars we talked
them into actually licensing that to us

for equity in the company so
that was those were dollars that

we didn't have to raise right off the bat
and that really helped the company

propel at at a very early stage and
get a lot done very early in our life and.

Get a good lawyer and a lot of people like
to do everything on the cheap just like

have a good presentation make sure that
you get good help along the way to make

sure you're not making mistakes and that's
something that we always made sure we did

ask for the money this is really important
but people go out there and they go really

looking for a mentor and if you can help
me you know learn how to do this business

I really don't want you to invest in us if
you want them to invest ask them to invest

say please put money in my company I
want you to be an investor in this and

that's really important well that
people are afraid to do that and

then the final tip here is get your first
check in the door which means that hey

once you get the first time in the door
the money will start flowing so

going to move how many minutes do we have.

I got to get done OK I GET SO
couple quick things I'm going through.

Again it's good to get
competition in any deal so

get more than once were you a deal
raise money when you don't need it and

not suggesting a threesome here so
I got that was to say that here.

The idea is you want to get more than one

potential suitor in your transaction
right so you want it so we were.

Fortunate to have three two term sheets
and then a final time she came in for

Series A and that really helped us
negotiate the overall deal because

people wanted that deal
the other thing is move quickly

once somebody signs a deal once you agree
to get an investment in that company

Get It Done It took us only sixteen days
from our first term sheet to actually.

Really getting it closed and
anything can happen I mean

you know God forbid plane planes can hit
buildings you know the economy you know

the financial system could crash any sort
of thing it happened to up in a rapid

dealers have been lost just because it
took a few extra days to get a deal down.

There's a line from the movie Wall Street
from the eighty's that says money doesn't

sleep and that's very true you need
to get these deals done quickly

finally you put a kind of program to tell
the story real quick so after Mark and

I were on a session.

And on Santa road and Menlo Park and

we had seven meetings and
like an eight and a half hour span so

literally you go when you pitch for forty
five minutes or an hour or an hour and

these venture firms are all set up in
the same can then still use only takes you

three minutes to get to the next one so
we would leave fifteen minutes in between

meetings we're starving we haven't read
any breakfast it's probably two o'clock in

the afternoon we walk in the Kleiner
Perkins literally ready to pass out and

we see this huge Buffy of food out so

they see this unbelievable lunch to
all their folks every single day and

we're like should we grab something
she would just just you know make

you a little wreck and bad when they grab
a cookie or a piece prude or a sandwich

off tray when like now we're going to
be good we want them to invest in us

we go into the meeting we have the meeting
with this with this venture capitalist.

It's pretty evident to us that
they're not going to invest and

we're rocking out we're walking
by this table filled with food.

And we look at each other and we decided
not to grab anything because we thought it

would look bad we laughed and sure enough
like a day or two later they said they

were going to invest so the lesson in
that was eat the food a clown a Perkins

because they want to best you and
that was the that was the final story.

And I think that's it so that's it for
this to happen answered.

Any questions if you have any questions.

Related to anything about the company or
raising money or starting a business

thank you.

Do we want to see them already if that
was so the answer question is we have for

Pan protection we did it from the earliest
of times I have a long back from the three

books I wrote were on intellectual
property so so it was definitely something

that was important to me and important to
my colleagues when we started the business

I'd say it's actually been a very
critical thing that we did

in fact and there's been a couple of
companies that have come in and tried to

proactively attack our patents simply
because they want to move in the market so

having those in place right now is that
if it's costing us a lot of money but

now we have money that to
actually defend ourselves and

to pursue more patent protection I think
it's a good idea now there's a lot of B.S.

patents out there right so you can find a
patent on anything you want and not get it

I wouldn't necessarily recommend just
filing for the sake of filing but

if you have something that
you think is worth protecting

absolutely protected Absolutely and
by the way have a great recommendation for

a guy that helped us out when
we were pretty early on for

you know who did a great job at a really
inexpensive rate relative to other folks

out there so happy to share
that contact with you as well.

Well.

We haven't looked into that and
we haven't but but

good idea we should buy
we probably should.

Yeah yeah.

Yes.

Descends a mechanical engineering
I don't really belong here but.

So I was interested in when you get those
small little questions that you and

your presentation what was some of
the specifically tactics you use to show.

That there was one I'll tell you one story
we're at this farm in New York it wasn't

actually all that long ago maybe a year
and a half ago and and it's interesting

the perspective that you know you were
in the venture capital farm frankly

most of the people in that farm have a lot
of money even the associates have a lot of

money and we had one of these annoying
associates in the meeting with us and

you know we've already done you know
you know fifty million dollars and

a van and loans and dances and.

And he said to us he goes what's
the average amount you put I won't

put out like two or three thousand dollars
at a time it's about the amount of cash we

put out each time he goes I don't really
understand that he doesn't have like three

thousand dollars in their bank account why
do they need to why do they need a loan

and what was amazing was you know so
my response to him was you know

that points already been proven where we
have people actively taking the money we

have more business than we
know what we can do with so

I think you know making sure that you
respond in the in a sort of concrete way

not that makes them look stupid although
that tended to have that effect at that

time but you know make sure you understand
your mark and you have more confidence

more information more information when
this and so you know in that situation

if you have a couple things One is you
know in that situation we needed to be

able to say look we already have done this
business you're not you know what I'm

going to start back in this is not tooth.

Thousand and they were going out and
pitching it we've already proved

the business the other thing is
is practice I mean you need to

anticipate every single question
there's literally not a question about

our business that could be asked that we
haven't heard fifty times and that's how

you really address those things it's just
be ready with an answer that makes sense.

For sure and I was just curious
what was the genesis of the idea so

how did you come up with it and

then how did you go about selecting your
early team members it's a good question.

So I came out of the idea no seven and
two different things one was so

I was been a big idea guy and so I have.

You know I've always tried to solve
problems start businesses and

do those types of things and I actually
don't believe that great ideas come

at least not to me in
the middle of the night or

while I'm in the shower great ideas come
when I actively think of a problem and

so I was and I also have techniques for
thinking about or

coming up with ideas as crazy as that may
sound one of the techniques is you say

what if one company bought another
company what would they do with it and so

I literally thought to myself What if
I bought a credit company what would

they do with it and the natural output of
that was will they fund the businesses

that generate them all their revenue which
are the small businesses on their site now

incident to that attended to that was the
fact that I was already an investor and

involved with a company that was pulling
down data from online marketplaces

to identify counterfeiting project
on products being sold online so

is that Tiffany lamp really a Tiffany lamp
and so I knew that there was product and

seller level data that you could
pull down from different sites for

use in trying to identify that kind of
activity and I thought that kind of data

would be good for trying to figure out
whether small businesses credit worthy or

not credit worthy so
I sort of combine those two concepts.

So the other how do I go about
selecting the other folks and

selecting is kind of a funny word
Katherine left for that part.

Because.

I now think I understand that
back then it was just luck so

I had worked with Catherine in
a different context before she was

working at a company called Compu Credit
a credit company here in town and

she struck me as the kind of person that
understood credits and payments but it

could also talk about it right she could
get out there and get a lot of energy and

really understood the market and really
conveyed a lot of passion and confidence

in others about the topic she just seemed
like she'd be a fun person to work with.

And you want to work with
people that you like.

It was a guy who I had known for

a number of years he was involved in other
startups here in the community and I got

to know him on a personal level I knew he
was a good person he was also somebody who

was funny and was and I enjoyed
working and enjoyed working around.

He also had a network that was absurd
in terms of at least those initial

connections to folks that could help
us raise money so you know I think now

looking back on it you want to have folks
that have the subject matter expertise

to have you know have some capital raising
capabilities and so I really know what I

brought to the table personally
because those guys covered most of it.

And you know I think I knew both of them
and I think that was a big part of it.

Was it with lots of money or anything
because we didn't have any back then and.

You know it's interesting Catherine was at
that juncture they were both junctures in

their careers where they were sort of not
really connected with something at that

point or just rolling off something it was
very much a right point you know the right

you know right time to to
address that with them so

I got I did frankly get a little lucky and
that.

Respect but the other thing is I think we
saw that there was a real opportunity and

we all you know sort of been in
various related spaces in the past and

saw that this could be big I mean we're
talking really large opportunity and.

I think we wanted to do it and it was
a crazy time to do it right in the midst

of the global financial crisis this
is to this is late two thousand and

eight everything was falling down and

we're going to start a financial
services company in Atlanta.

You know absolutely the craziest but
the best thing I can tell you is that.

It's great to have
an anti herd mentality so

when everybody is running away from
something it's a perfect time around at it

right now you know it's one of
the hottest spaces out there.

And that's only because we took
advantage of the time frame

where nobody would touch it.

So you know everything abs and flows.

To questions first.

First question how did you guys come up
with the name cabbage and second question

Have you had any issues with the small
businesses defaulting on their loans and

have you dealt with that.

Yes I'll do that do the first cabbage is
a cabbage is a quote kill isn't for cash

how many people knew that that people call
cabbage cash that actually is slang from

the early one nine hundred for cash and
it's really prevalent in Eastern Europe.

We came up with that because we spent
like literally weeks at a bar checking

out every possible domain name that any
real labor bread tap vine cache and

we had some horrible names we just
actually sort of Ford around the whole

company the list of names that we had we
kept in on the cabbage we chose K. because

cabbage was for the sea was available for
seventy five thousand dollars and

cabbage with a K was available for twelve
hundred dollars so we chose now when we

see cabbage with the see we think it's
misspelled and that the four rates so.

It's all.

When you start a business leveraging
data that nobody's ever looked at for

this the first thing that you really
need to do is you need to go out and

you sort of have to run naked for
a while which means that you've got to

take all comers and you've got to let you
know and guess what you're lose money

you're going to spend maybe millions
of dollars losing money but

one thing that we always made sure we
did is we brought all these folks and

we have them connect an unbelievable
number of data sources and

many many many attributes related
to each of those data sources and

now we have an unbelievably
robust set of data and we can

basically figure out precisely who we want
to target based on wants attributes so

the answer to the question what are the
front rate is is historically it's been

a ball of some of the larger
banks are now able to move it but

below what they are simply
because we have this

unbelievable amount of data we're
able to underwrite customers and

understand if somebody comes in
from this origination source and

they add these data sources and
they've been around for this long and

they have this much revenue and they have
this kind of you know feedback rating and

it's changed this much over this period of
time you know they're going to default on

average at three point
two percent you know or

something along those lines rates and
now we have all that data and

we can accurately project exactly how much
for rate is going to be for any segment

of audience that we bring in so that's
the power of what we brought in and we

have a lot of big banks talking with us
right now because they want to leverage

the same kind of power that
we've that we've built and

that's part of the strategy going forward.

You know we have our own scores for

different tiers we have different
inputs for different tiers I mean it's

it's sliced up as many different ways
you can as you can possibly imagine.

What's.

Yes yes absolutely.

I can hear you.

So the question was are we seeing
any growth or declines or any.

Within the various markets we've.

Yet we've seen a million of
them you know I mean it's.

It's on it's interesting in certain
markets seeing as how sort of

gift the gift card market works and
how you know we see that sort of ebb and

flow that's actually one of our
frankly higher bad debt markets.

You know there's again we don't add up
sort of if you're merchant we divide that

up into probably forty different
product categories and we see how those

businesses sort of ebb and flow within
those markets so one of the interesting

things we've looked at is you know how can
we build indexes for small businesses and

publish them out to the Wall Street
Journal or other business publications you

know based on we're getting a huge amount
of data we've published a bunch of surveys

as well in terms of holiday shopping and
other things that we've seen so you know

the impact of this data goes well beyond
just underwriting for credit extension.

You mentioned the continue to
assist clients don't have plans for

providing them with substantially large
amounts of capital as they to grow Yes So

again what you know right
now are you know where

we go up on an automated basis the fifty
thousand dollars We've actually gone north

of that we've gone north of one hundred
thousand with some of our customers.

So we have we have absolutely seen the
opportunity to grow with the business is I

mean we're still fairly young right so we
really just started putting capital out at

volume a couple of years ago so you
know what's been fascinating is the fact

that the customers that we originated back
you know a couple of years ago actually

taking more cash today than they were
taking two years ago so the nice thing

about the model we've created is you know
we can stay connected to these businesses.

And continue to help them grow other
competitors sort of in our space.

They usually push out one lump sum of
money to the customer one time and

it's life you know they may give him
fifty thousand dollars right off the bat

the fact that we give them a line for
fifty thousand dollars

means that over two or three year period
they probably take in two or three hundred

thousand dollars from us and so that's you
know one of the things that you know that

sometimes it's hard to convey is actually
we're giving a lot more money and sort

of like your credit card where you can
you know pay off the line every month and

then you get access to more capital so
the same kind of idea.

So no is the first F.P.S.
right and how do you differentiate.

When you have an experience where you
get too many and somebody knows yet

you still have this idea in your
mind that you shouldn't give up.

Versus.

You give up and look elsewhere you're
investing your energy the wrong spot you

barking up the wrong tree you have to get
better different in those two situations

Yeah I mean it's.

It's a really really good question I mean
you know there's certainly situations you

know there's the risk in any business that
you start that you get just this sort of

small amount of positive feedback and that
keeps you going a little bit longer and

a little bit longer and
a little bit longer and before you know it

you're three years into it he may know in
reality you may know progress I mean so

I think one thing you need to do
is you need to set up definite

you know go nogo parameters like if
I don't vomit able to accomplish X.

by what you know such a date I'm going to
have to do something else it can be sort

of you can sort of be a catalyst to
actually achieving So that's and

that's an important part the other thing
is you just have to probe with these

folks you got to understand you know
the reason they're saying no and

you also have to judge whether they're
being honest with you right because

some people say no and they'll give
you a reason the reality is they just.

Have absolutely no interest so you have
to develop enough of a reporter with that

individual in a relatively
short period of time so

that you can get down to the truth and
you need to let them know that

that's what you're looking for that
people actually want to give you advice

they don't want to lie to you they don't
want to give you you know a song and

dance about something and
they don't want you wasting their time so

the key thing is you actually have to
say that and say look I know you're busy

I know you don't I don't want to waste
your time you know want to waste mine but

can you give me some honest advice as to
you know where you see the challenges here

and be as blunt as you possibly can
you have very little to lose and

actually a lot of respect again from the
imperfect from that person if you're just

honest with them and direct with them so
that's my best recommendation.

I'm wondering if you have any plans to
supply Chinese small businesses with loans

so that one more time.

To supply Chinese small businesses with.

The Chinese banks.

And the ninja valuating Chinese and.

Good question so foreign markets
when the U.K. We have a pilot and

that will probably launch sometime
next year with a bank out of Asia

that's going to be in the Khan and
Korea market China is a.

Different story I leave anybody here
familiar with only bad on the Alibaba good

OK So they operate only
about it which is a large.

Site for supplying products to

to merchants both domestically in
China as well as internationally

they operate something called How
about sort of like the bay in China.

They actually run a cabbage clone in China
right now and so they fund very similarly

to cabbages they fund merchants in China
so it makes it unlikely that we're going

to move into that market I mean really
we do have conversations with those.

That's all the time because there's
opportunities outside of China related to

you know how could potentially because
a lot of us merchants buy from Chinese

merchants you know selling on Ali Baba's
So there's an opportunity to actually help

you know Chinese suppliers
supply product outside the U.S.

and that's something
that we're looking at so.

Many of the sellers on these sites so
hybrids they have because well it's

what they sell on line do you take into
account what's going on in those other.

In.

The business decisions so

fantastic question I guess that's why
you are who you are and everyone's.

So that was one of my big challenges right
was we were only looking at a lot of

online activity and so one of the big
pushes for us has been to be able to

look at activity that's happening offline
you know in bricks and mortar as well and

we're doing that through relationships
right now with U.B.S. through Quick Books

and were soon going to be releasing
a product that's going to primarily be

looking at the checking accounts
of small businesses that allows us

to understand sort of the financial makeup
of those businesses regardless of where

they operate so the through a long answer
to your question is yes we're taking

it into account in certain instances
right now and we'll continue to take into

account more over the next year and it's
a big market expansion opportunity for us.

So.

Yeah.

John.

That sounds a perfect one.

Absolutely so
yes we're already working with so

many factors working with distributors.

That we're also working with
service companies now so

getting outside the merchant merchant
trade so looking at you know folks that

are providing all sorts of services out
there we believe there's opportunities in

each of those verticals and without a
doubt we're we're turning aggressively in

your right trade credit has been eaten
up so one of the best places for

small businesses to get credit is
frankly from the people who supply them

with their product right and so that means
getting better terms on your inventory so

instead of paying thirty days you
know out a payment sixty days or

ninety days most suppliers of product
have really come up that way down and

cut it down to fifteen days and that puts
a huge crunch on the small businesses so

helping to open up that
channel is absolutely huge and

it's something that we
definitely have looked at.

So.

Yeah but it's a matter amounts of student.

Cabbage get the confidence when they
went in had the discussions and

talked to people about
CAMBAGE realize you have to.

Seize has it come in you know faith
not needing a non-disclosure But

in talking to trying to get data
from them without them going off and

doing it on their own would give you
guys the confidence to get the word out.

Really good question and

a good one the wrap up on you know my
background is intellectual property and

I will you got to be very careful not to
be paranoid when you're an entrepreneur

and you've got to take I mean it's not
about risk it's about calculated risk and

we knew that e-bay was fundamental to
us being able launch this business so

what else were we able to do you've
got to you've got to realize not

everybody is trying to steal your idea and
the other things I talked about right now

about talking about well you know
Ali Babba we're talking about you know

what we're doing with
checking accounts any of you.

Her that to replicate
our system is not easy.

But we have the confidence
to go out there and

be able to execute on these markets I
have always said that people can see

where we've been and they can see
where we are but it's really hard for

them to truly see where we're going and
we can say that we're doing something but

it's like handing somebody you know
Pollock out it's really hard to figure out

what that code does in reality you need
people who are involved in executing on

that and so I firmly believe when you go
into these partnership discussions you've

got to be willing to you know talk to him
and guess what a lot of them are not going

to execute an N.D.A. with you and if you
say well I'm not talking with you and

they're going to say well I don't
care if you don't talk to me

Get out of my office you know they were
literally going to say that so you just

have to of the confidence to go in there
you know and believe that you're going to

be able to get the money to be able to put
together the team build the systems and

operations and execute better than
anybody else a big company is the least I

think the least equipped to go out and
build a new business I think everybody in

this room is much better equipped to build
a new business than those guys are so

you just have to have confidence
in yourselves to go do that.

Thank you thank you.