Animal Spirits Podcast - Talk Your Book: Startups in a Crisis

Episode Date: March 27, 2023

On today's show, we are joined by Brandon Arvanaghi, Founder and CEO of Meow, and Devon Drew, the CEO and CIO of DFD Partners to discuss tools for business owners and treasury cash management, and distribution solutions for advisors and asset managers.   Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. ​​ (Wealthcast Media, an affiliate of Ritholtz Wealth Management, received compensation from the sponsor of this advertisement. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.) Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain position and the securities discussed in this podcast. On today's episode of Animal Spirits, we've got a two-fur,

a two-fer, meaning two separate interviews. One interview first, the second interview second. The first one is with Brandon Arvinaaghi. We've had Brandon up before. Hey, that was a great outline right there. One interview first and the second interview second. Great outline. As it was coming out of my mouth, it sounded, it sounded that we're coming out of my mouth.

So with Brandon, we spoke about what they're doing to facilitate. facilitate businesses, getting into treasury bills and bonds, as well as they've got a checking account. So we spoke about that and obviously what happened with SVB. On the second interview, we've got Devon Drew. Devon is attempting to disrupt the wholesale industry of ETFs and mutual funds and asset managers. So, Ben, let's just do the first one first and the second one, second. See what I did there? Nailed it. My biggest takeaway from both of these talks is that it's way easier to have talks with startup founders when things are going really well, or it's easier for them at least, but it's more interesting to talk to startup founders

when things aren't going as well for everyone else and hearing how they're dealing with it and how they're changing their business models potentially, how they're working with clients, how they're working through a different funding environment. So I thought it was, it was interesting to hear the different tone of things based on where we are on the business cycle for those startups. Yeah, that's a good point. I was about to rehash what I already laid out, which is a conversation that we had. Let's not do that. Let's just get right into it. The first conversation with Brandon from Meow. We are rejoined today by Brandon Overnagi. Brandon is the CEO of Meow. Thank you for coming back, Brandon. Thanks, Michael. Great to be here.

Great to see you guys. Okay. So you've been on the podcast a few times. You and the team took a little bit of a pivot. I don't know when it was, maybe a year ago, maybe less. When was it? Yeah, about six, seven months. So we were in alternative asset yields at first, and then we saw kind of the risk-free rate, quote-unquote, increasing. The notion of using alternative assets for your corporate balance sheet became less and less appealing. We saw where the ball was going. People wanted access to things like T-bills. So we made a really easy interface to purchase them from the Miao dashboard, and that's kind of taken off. So since September, we've seen our AUM kind of skyrocket, and that's been to our bread and butter right now. All right, so obviously this weekend, we're going to get

onto all of the banking failures and how you were a beneficiary, even though I think we would all agree that we did not ask for this. We would give it back if we can. But that's the reality. So, okay, when we spoke a couple months ago, because we are investors and we do speak, I said to you, when you told me about your price, and holy shit, how do you do that? This is like magic. So just the initial success, again, before the most recent wave, how did you guys do it? And what are you doing? We partnered with a bank called Third Coast Bank, and we offer a high interest checking account through them, which pays 4.31%. That's a checking account. You can do ACH. You can do wire from there. And people are always asking, how do you do this? Like, what's the magic? Are you investing

in something? And I say, no, this is a checking account. And your checking account, wherever you are banking currently could be paying you this much. Yeah, they're not. Spoiler. Exactly. They're not. And it's no fault of yours, by the way. It's your deposits. You're depositing into the bank. Either that bank or the fintech you're using to interact with a bank is clipping that much. They're just not passing it back to you. And that's no fault of your own. It's because their cost structures and how they built their companies. We built ours totally asymmetrically. We thought that financial services are a commodity. They're an efficiency game. So if we stay very lean, keep our cost structures low, we should be passing back the majority of the economics that

customers deserve because it's their deposits that are generating interest from the bank. That makes sense. When you told us that you were going to make the pivot to allow for T-bills and do it an really cool interface. That, to me, just seemed like a layup because we hear from people all the time that said, especially when rates rose, listen, I want to invest in T-bills. I want to manage my cash more efficiently. But the interface wherever I buy them, whether it's through my broker or it's through Treasury Direct, is just, it's impossible to do. It's really hard. I just want to make it easy. So without getting to the nuts and bolts about it, how did you go about that making it easier for people to just invest in these things that have a higher yield now? We partnered with the investing

infrastructure provider, an RIA and broker-dealer. And the custody is, at B&Y Mellon Pershing. So it's a $2 trillion custodian. So everyone who signs up for Miao, if they get onboarded successfully, they get their own account, their own fully disclosed account at B&Y Mellon Pershing in their own name. So Meow is not in the flow of funds at all. So the custodian is a $2 trillion custodian. That gives a lot of people peace of mind. And we just brought the fintech to kind of the financial infrastructure. So we brought like a dashboard, a clean way to interact with your account, a clean way to buy and sell from the dashboard. You can toggle your auto role preferences.

So if a T-bill's about to mature in five days, you can, from a drop-down, say, I want it to roll into a two-month T-bill. I want it to roll into a six-month. You can sell at any point. We have one-click accounting integrations with QuickBooks. This is just what software companies do. This is what Fintechs do. It's what we're good at.

But my thesis of what banks and custodians in the long run, I don't think they're going to be interfacing directly with customers in the next five to 10 years. I think Fintech is going to own the customer relationships. We provide the really good intuitive user interfaces, et cetera. They provide kind of the financial plumbing. that's kind of the bread and butter, the PB&J combination. Just to be clear, you're doing this for businesses right now, not individuals. Is that on the horizon or not?

We accept the occasional individual, but it's really as a perk for like a founder of a business who's already on us. Miao really focuses on businesses. That's our sweet spot. And checking account, that's new, huh? Yeah, exactly right. So we partnered with Third Coast Bank there. It offers 4.31% standard checking account. And again, they're fintechs that have existed since 2018.

They wrapped banks as well. So you can go to a fintech, open up a checking account if you're a business. A lot of them are doing that, as opposed to going directly to JPMorgan Chase, for example. But those fintechs, they don't even pay interest in their checking accounts. Why? Because they built the companies as though financial services are some high-margin SaaS product. They're not. You need a headcount of 1,000 people.

You need to raise money from Silicon Valley. You need to spend that money quickly. You need to have 2,000 people. And their cost structures are so high. They have to do predatory things. In reality, financial services are a commodity, and it's an efficiency game. So that's why we're able to pass back these economics because we have such few people in such low overhead, kind of built the company with... If somebody could use that bank that you just mentioned for their own checking accounts, why would they go through meow instead of going direct?

I'm not sure what rate you would be offered from any bank if you went directly to them as opposed to a fintech. It might vary case by case. I'm not positive about that. But on the other hand, fintechs are very good at layering in the features that you would want on top of what a bank would do. So the reason people may not choose going to chase, for example, they might choose a fintech is because of some of the other things that they offer. Dumb question, this is all of the features of a checking account? Yes, exactly right.

ACH, wire, bill pay, you can connect your Rippling. You can do everything. It's a checking account. It's a normal checking account. One of the things that raise a lot of eyebrows with the whole SVB debacle, and it's kind of down the line for a lot of people, but people like us in finance pay attention to it is that a lot of these companies that might have millions of dollars sitting in a bank just had no cash management strategy whatsoever.

I guess it was just far down the line and they were more worried about other things in their business. So what are these companies saying to you when they're trying to figure this out? Is that the thing that they were just, they were more concerned about the business and didn't think this was something they had to do? Yeah, it's exactly right. Because of how attractive the potential yields from T bills were, we did very well in sales even before this crisis, but we definitely would hear this is not top of mind.

This is not me managing my business. Investors give me money to build a company. They don't give me money to think about cash management. It's totally flipped on its head. Now it's not only top of mind for founders, but VCs and their, their eternal quest to add value. They're creating board policies. They're doing webinars. They're doing all sorts of things to mandate certain cash management strategies. So what we're hearing is have a lot of your idle cash and T bills. These are what some investors are recommending. They're saying keep

250K at a checking account, for example, to stay under the FDIC insurance eligibility. This is something we're hearing. It's not advice that I'm giving. And there are cool products out there now that have enhanced FDIC coverage as well through sweep networks. So let's rewind to what is it, two-thirsty years ago, when we first heard whispers that Silicon Valley Bank was in trouble, when did you start seeing some unusual flows? Like, if you didn't know the news, at one point you're like, what the hell is going on? We're kind of like the early detection in some ways, because we would start seeing like a wave of wires from one specific institution into some of our products. And we definitely noticed that. We saw the same like substack article that a few other people did. I think

that kicked off a lot of this or the concerns about their long-term bonds that they had in the balance sheet. We saw the stock going down. I think it was Thursday evening or was it Wednesday evening. And then we just saw a wave of wires coming in from that institution. And so it was all from there. And then we saw that and then it kind of made its way to the Twitter sphere. And then we started seeing wires from a different institution. I'm not going to say the name of it because I don't want to encourage any kind of behavior. Berkshire Hathaway. What's interesting is we kind of see this happening. It's like an earthquake. You see the initial shock wave and then like down the road people feel the residual effects.

The wires that were coming in, were these going into treasuries or new checking accounts or what exactly? It was a combination of both. Honestly, it was a position where people thought it was kind of a lifeboat. It was like any other institution they'd feel more comfortable with. In fact, we saw examples of people trying to wire $50 million and the first 30 made it before the cut off happened and the remaining 20 didn't make it. And it was just like a few minutes in between the wires that went off. So that was definitely a panic mode that we saw. Now, it's gone from panic to urgency to now top of mind, I'd say. So the temperature is definitely cooled across the board. It's just in top of mind territory for a lot of people. How did it

feel to you as still a startup? You've been at this for a while, but you're still in startup mode in a smaller company. How did it feel for you in this crisis mode? And how did you feel that your company and your coworkers and your infrastructure held up for something that you didn't really plan for? The nice thing is the counterparties that you deal with when you go to meow, it's It's not like we're in the flow of funds. It's not like where you're a counterparty. Everyone gets their own account at BMIMell and Pershing. And that's a $2 trillion custodian when they onboard through our investing infrastructure partners. So their infrastructure is tried and true. They've been through a lot of these waves for quite some time. So that was the nice thing as we were

prepared for this. All that really happened was we got on the radar of more VCs who understood what we were doing finally. They understood we weren't a counterparty risk that they might have thought that we were. It's straight up opening your own account through our investing infrastructure partners at B&YMel and Pershing. Yeah, that day, we could have had more people on sales. If we had more salespeople, it would have been more people getting accounts open. That's the only drawback of being a leaner team. But we definitely did our part. We saw a lot of growth, thankfully. And thankfully, the temperature's cooled all across the board, though. That's the good news. What is the feedback you're hearing from people now that you said it's more top of mind? Are they

looking for more advice? Or do you think that there's enough on the platform to get people started when they come to me out to check it out? I think people are still figuring out what the long-term approaches for treasury management. The thought leadership is coming from different places right now. hasn't been a coalescing on one idea. So some VCs are saying you should put 250K at six different banks. Some VCs are endorsing just one platform. Some are endorsing another. So right now, there's kind of billions from SVB, frankly, that are, I wouldn't say up for grabs, but that are actively looking for a long-term platform to put their funds in and understanding how T-bills play a role in that, for example. So it still hasn't ossified yet. So there's still questions about

how do T-bills fit into this? How do checking accounts fit into this? How does Chase fit into this? two-part question. Are you disclosing how much money came in? Is there any reason to suspect that the money that came in is going to go out if and when the dust settles? We believe in full transparency. We had crossed half a billion in assets before. Our growth is really good. We were growing something like 20% month over month before the SUV stuff. We saw another half a billion come in. So we crossed a billion. Sorry to cut you up, but over here, we say not to brag. We say not to brag. Not to brag. We crossed a billion now in assets. We're still growing. And I'm totally fine.

So the customers, they're all either in the checking account product or have their own accounts at B&Y Mell and Pershing. The customers seem to understand who their counterparty is. BNY Mell in Pershing is a $2 trillion custodian. They're invested in treasury bills. They seem to really like that. I'm very grateful for the reception we've had on, like, Twitter and LinkedIn. But again, I always say, I don't mind if customers withdraw. This is a very long-term game.

We've, you know, 10 years of runway. I think every customer needs to see money go into Miao. They also need to see money leave Miao. They need to be able to withdraw from Miao because it's a long-term part. It's a long-term platform for people. So this is not like a short-term thing. Yeah, there was this crazy, crazy event that happened to the markets, but we're here for the long term, and I hope you'll be hearing about us more. You said that Bank of New York Mellon's counterparty. Isn't the United States government the counterparty if these are just T-bills? Let's say B&Y one other, which

obviously I'm not saying that in a hypothetical scenario, what would happen to the T-bills? Through our investing infrastructure partners, everyone gets their own B&Y Mellon-Pershing accounts. It's Pershing, not the Parenthood, the bank. instrument itself is a U.S. government, it's a U.S. Treasury bill. So the risk there is if the U.S. government defaults. In my opinion, without giving advice of any kind, there are bigger problems in the world if the U.S. government's defaulted. I think we're in a different kind of world than even an SVB crisis. So it's difficult to quantify risk. It's not risk-free. Of course not. It's not even close to risk-free. We're in a different world if that happens,

for sure. My way of looking at this is anything over and above that $2.50. If people really are worried about not being insured, treasury bills effectively are insured without having FDSC insurance. can't, I guess, say that, but that's kind of the way to look at it, to your point that if that ever went down, there's something bigger afoot that's a problem. There's risk reward to everything. T-bills have their own benefits and disadvantages, obviously. But yeah, they're backed by the faith and credit of the U.S. government, which that's how we personally allocate our treasury, the vast majority of it is in our own product there. All right, last question from me, in terms of ease of use, what does this process look like? So I'm a business owner, and I want to

manage my cash in something that's paying me more than 15 basis points. I see the agency now. I get it, but I don't really have time for a headache. What does this look like? You can self-service at meow.com. We call ourselves the Costco of financial services without any affiliation to Costco. We're very proud of the Costco model of being leaner and passing back the economics. So if you go to meow.com, you can sign up, you can onboard as a business. We tend to work with venture-back companies just so the economics are really clean on our end. But please sign up. Please reach out to us. We'll see what we can do to try to onboard. Sorry, last last question. May I'll spend us anything else. How do you guys have paid?

So on the T-bills, it's we earned one BIP a month. So it's very, very small there. And on the checking account, even though we're passing back 4.31%, we're clipping a little bit on top of it. So it's not like a fee, but we're getting back a little bit more. Now, if you go to another fintech, they're capturing the full, say, 4.5, 4.6%. And they're giving you none of it. Our entire thing is, how do we humble ourselves? How do we stay so lean like Costco, or at least decimate the cost of the product, rather, like Costco, and pass back the economics. That's what me how I was trying to do here. Brandon, thank you. That was awesome. Had a blast. Thank you, folks. All right. Thank you very much, Brandon, for coming on. Now, here is our talk with Devon. Drew. Devon is the CEO and CIO of DFD partners. Devon, welcome. Hey, Mike. Thank you for having me. For people that are on the financial circuit, you go to events. You've definitely seen Devon there. But for the rest of the audience, who is not familiar with your background and where you're coming from, who are you and who is. is DFD Partners. Thanks for asking me. So Devon Drew, founder, CEO, CIO of DFD partners. DFD stands for

diligence fund distributors. What we are is modernized distribution. And we all see all the vendors at all these conferences, but people who look behind the scenes don't see how difficult it is to penetrate and gain market share within the financial advisor community. You're trying to help newer fund providers or smaller fund providers get in front of RAs and advisors? So they don't need to be smaller. I mean, our largest client is a $600 billion asset manager. And the premises, we were able to generate cost-effective tech-enabled scale. Because everybody wants to add $600 billion, okay, that's big, but they want to get to a trillion. And if you're $20 billion, you want to get to $50 billion. So everybody wants to grow, but being able to do it in a tech-enabled cost-effective way

is our wheelhouse. So you came from Vanguard, and they do distribution quite well. They also have some products that apparently, yeah, proud of market fit, good for them. Not everybody has 7 trillion or 10 trillion or whatever the number is behind them. They're fun sell themselves, not taking anything away from their wholesalers, but you don't have to twist somebody's arm for a three basis point market index. So talk to us about the rest of the industry that does have to do some selling. And I don't mean that pejoratively, but you have to sell. That's the job. You got to sell. What does the distribution model look like? Maybe let's start before we get to the ETF model and some of the inherent problems with distribution in that marketplace.

place, what did the mutual fund distribution model look like? So when you look at the model, which by the way, it's antiquated and hasn't been changed in 50 years, it's really a feat on the street model. So you had wholesalers that were the sales professionals split across specific geographies. So you had, let's say, a wholesaler in Manhattan, and you had one in Long Island and one in Greenwich, and then supporting that wholesaler, you had an internal wholesaler and then some client support. So if you're a larger asset manager, like your Black Rocks, your vanguard, your deep mortgage, your American funds, your Fidelity, you have, let's call it 100 people, 150 people out in

a field. You have another 100 people supporting them from an internal side. And then, of course, you have all the tools, the resources, data. That's very expensive. These firms are spending tens of millions of dollars a year just on headcount and resources. Now, if you look at the total dressable universe of 16,000 asset managers, every one of them is looking for different ways. to grow their AUM. So the problem is, not everybody's $9 trillion like Vanguard or $10 trillion like BlackRock. So what you have is the top 20 largest asset managers getting 50% of all the flows in the industry. Now, on the ETF side is even worse. You're seeing three BlackRock Vanguard State Street getting 84% market share in the industry. Now, on the flip side, the good news is

those pennies, those pennies on dollars are very big chunks of money because the total industry now is roughly like $82 trillion. If you penetrate, it could be very fruitful. But it's very expensive to penetrate the mines and portfolios of the advisors because you have thousands of new issues. You have thousands of mutual funds, ETF, separate accounts, LP structures, different private, different alternatives, all trying to get and compete for that $1. So back in the day, you had these 12B1 fees, which would be essentially compensate an advisor for putting someone in their mutual fund. And Michael and I talked to a lot of ETF providers over the years, and we often ask them, like, where's your money coming from? Is it institutional? Is it retail? And a lot of them will

say, we don't really know. Unless we talk to a bunch of our clients, it's hard for us to say. So obviously, the challenge with ETFs is much harder since you said that industry hasn't evolved much. So why are those ETF providers coming to you? And what are they looking forward to make it easier for them? You mentioned something with transparency. I remember, so I was a part of an organization that actually had the first ever ant. So active, non-transparent ETF. And I just remember tracking was an absolute nightmare. We actually had to pin the advisor down and say, hey, Mike, when you drop a ticket, send me an email on the exact shares that you bought. And we had to send that to our data guys and they had to bring that to Broadridge. And then a month later, maybe it appeared out in there.

Where was that, FTX? It was actually American Century Investments. In good times, now you see that you have business grown. It's like 20 billion. and very happy for the folks over there. But if you look at ETF also is known for a trading vehicle as well. So even if assets stayed in and you're happy you got to trade, there's a good chance to get go out that next month. So the problem in distribution is how do you compensate people for that? How do you track it? How do you compensate for it? And how do you protect the assets that are there? And I think that is a very expensive endeavor. So you have ETF issuers that come to us at DFD partners and say, hey, listen, we don't want to spend a half million dollars on an ETF wholesaler.

We don't want to spend $250,000 on Broadridge data to know with granularity where this data is coming from. We want to be able to get our story out there, amplify, get exposure, track some analytics behind who's looking at our stuff and being able to penetrate in different ways. They'll come to us at a fraction of the price. If you look at our price, it's right in line with an industry conference. And we all know we've been to these industry conferences. you're running around, you have a stack full of cards and there's no ROI there. Or you could hire

DFD partners and get a year's worth of cost effective scale for the price of an industry conference. So as far as getting them out there, doing data-driven webinars, being able to get 200, 300, 400 advisors on a call for an hour, that's what they're paying for. They're paying to get the eyeballs because it's a very difficult environment to get advisors to pay attention to anything, let loan a new ETF offering. So before we get to the how you actually service these asset managers and get advisors in front of them, I'm curious about the inspiration for DFD partners. Was it a light bulb moment? Was this something you thought about gradually over the years? What was the like that I'm doing this moment? I mean, there's a couple things. So first, you know, I'm 16 years in

the industry and was deemed somewhat of a success. I had decent market share growth at every firm I was at. And then you start thinking of large firms like Vanguard and I'm sitting there and I feel like I wasn't really doing much. But yet, I was bringing in $10 billion a year and bought in, I think, $22 billion in a year and a half there. And you think about the smaller firms and it's like, man, there's got to be a better way. If you're a firm that is a good performer, a good firm that just has no way to penetrate the Michael Batniks and Ritt Holtz of the world, there has to be a way to be able to leverage data and technology to be able to cut down that sales cycle, reduce the client acquisition costs and not have to add to that half a million dollar wholesaler.

You mentioned that you work with some small providers, some large providers, maybe some niche providers. Is there a specific subset of clients that you want to work with, or is it your model that works for all different types of providers? Our model is super scalable. We're not guarantee you any dollars. We're guaranteeing you distribution that you will have a basket of services that we create for you. The bellwether of that is our patent pending tech platform that leverages AI and data to be able to match a product fit with the product need. People call it the match.com for investment management or some people might call it to tender. I guess it just depends on how old you are and which your marital status is. Being able to cut through the noise

because there's 250,000 financial advisors out there, another 20,000 multifamily officer. The wealth management space is pretty large. But any given manager, you're probably only looking at anywhere from 75 to 200 advisors that you should be focusing on. Now, how you focus on that and where you get those names from, that's what we help provide at DFD partners because it's very difficult to figure out which advisors is going to be a good fit if you don't have the VOL or IVV or SPY. Devon, you mentioned technology, you mentioned data. You're not the only player in the space that's trying to solve for distribution. It is very difficult and if done properly can be very lucrative. What is different? What does an asset manager get from

DFD partners that they're not getting from the incumbents? So if you look at this space for modernized distribution, when I started in 2021, there was probably one or two competitors. And now you're looking at about six competitors that have all raised a ton of capital that is going to be able to continue to amplify their service model. We're just laser focused on doing what we do, which is offering cost-effective tech and able-scale. We are patent-pending for how we're able to leverage AI. The patent office has given a 73% chance of getting our patent granted. And being able to find an affinity between advisors between their 13Fs,

variances between their ADVs, also their LinkedIn, their Twitter engagement, their public searches, and their opt-in information. And when we're getting opt-in information, advisors are telling us, hey, these are their type of webinars I'm interested in. These are the type of allocations I'm looking at. This is how often I rebalance. So being able to have a trifecta of data, both public data, paid data, and also opt-in data, separates us from our competition because we can get that much more granular for our asset manager clients. So instead of a shotgun approach and firing everywhere, our managers, our clients are able to get laser focus on a subset of a subset of a subset of advisors

that, hey, we need to spend all of our attention on these, let's call it, 200 advisors. How do you approach this from the advisor angle? Because maybe in the past, it would have been distribution was kind of like, just go sell to your territory. And I don't care if it fits with the advisor. Like, you have to shoehorn this into their portfolio. So how do you approach that from not only helping distribution of these funds, but also solving a problem for an advisor that maybe they didn't know they had? There's two ways to answer that. So first, there's $10.2 trillion dollars of advisor AUM that they will be retiring in the next 10 years. That's a fact that we know. We know that 68% of the graduating class of college students are women in BIPOC. We know that 70% of

the workforce is currently women in Bipak. And now more than ever, just coming with a cookie cutter portfolio of Black Rock and Vanguard, quite frankly, is not getting the job done anymore because people know that they want more representation of what looks like and sounds like them and what mirrors their cultural beliefs. So the profile background of wealth are changing before our very eyes. So for an advisor standpoint, it is business risk to not at least look at some of these differentiated investment offerings because we also know the Bank of America report stated that millennials invest three times the amount in alternatives in their Gen X and baby boomer counterparts. So once again, so for the advisors that is just showing the now and the next

generation of investors, this CIO model, so to speak, there is a business risk in potentially losing out on those prospective clients. And you're seeing a lot of RIAs adapt to that with their offerings. So that's first and foremost. Second, knowing that is difficult to get eyes to these asset managers, we heavily incentivize advisors being on our platform. And that's because we have accredited investors on the platform as well. And it started with accredited investors that were all, let's say, under 45 coming to our platform looking for certain managers, let's say alt managers, and they were going to invest a majority of their net worth into these alternative managers like hedge funds and private equity. And then it crossed sold and said, hey, what does this

do to your asset allocation model? And I promise you, each and every accredited investor under 45 asked me the same question. What the hell is an asset allocation model? So, okay, Before you do this, let's have a conversation with the financial advisor. So we would take the advisor population that we have in our platform, we would take their gender, we would take their background, we would take their sexual orientation, we would take their veteran status, we would take course their geography, put it together and assign an affinity score to that accredited investor. And last year we matched about $400 million worth of net new AUM to advisors just by their

data empowering them. So what that leads to is a value ad for each part of our community. And the net result is the asset managers pay us. So they're happy because they get eyeballs for the advisors. The advisors are happy because they're able to pick out some differentiated investment solutions. And they're also as a business development type of funnel legion tool able to get matched with an accredited investor.

That does sound like a dating app, essentially, where you're matching people based on characteristics and profiles and things that make sense to them. I just have to say, I've been married for a while and I'm glad I never went through the dating app phase. I don't think I can handle it. Oh, it's terrible. How do you vet asset managers? In other words, you want to make sure that you're not allowing anyone on the platform if it's a lousy product and potentially pissing off the other people. Because Ben's right. You don't want to bring people that are not matches for the person on the other side. What does the engagement process look like? Okay, I'm an asset manager. I come to you. Walk me through the process.

So first and foremost, you have to apply to the community. So when you apply to the community, It's essentially an RFI, so request for information, and then an RFP, request for proposal. So we get pretty granular with who they are, what they are. We do cross-party due diligence. And then for some cases, we actually do an on-site visit. So our name, DFD partners, is diligence fund distributors. Each one of our funds is vetted. If it's on a private side, we outsource it to, we actually use, I don't know if you're familiar with Shane over at Banneryn.

So we use her as a strategic partner. If it's a VC, we use the folks out of San Fran called Revere that wants to be known like the Morning Star of VCs. And then we have advisors on an advisory board that help us with some vetting of being commercially viable because it's not enough to be vetted and all of a sudden it makes sense. But it has to be commercially viable because if no one's going to buy it, then the asset managers are going to get upset and they're going to be taken up shelf space.

So we have to, we go through a commercial viability screen as well. How long does that process typically take for an asset manager to get on your platform? So it depends if it's public or private. If it's on the private side, private alternative, illiquid, it usually takes about three months for a publicly traded, 40-act vehicle. You're probably looking like a month to six weeks. And so what I'm really trying to ascertain from the estimator's point of view is, all right, they say, you know what, we can't attract the right talent to distribute our ETF or our fund

or whatever it is. We've tried. It's not working. We're going to hire DFD and they're going to deliver what. What is the deliverable? That goes into our basket of services, because here's what we know. In and of itself, data is not going to get the job done. In it of itself, branding and marketing isn't going to get the job done.

In it of itself, being able to tell your story on a webinar, isn't going to get the job done. In of itself, digital market is not going to get the job done. What we do is we compile a customized basket of services and provide it to the asset manager depending on what tier they fall into. Now, that customized basket of services could look like a few different things. It could be, hey, Mr. and Mr. Asset Manager, we're going to be providing you with two data-driven webinars for education. We're going to be providing you with a 30-minute webcast to get your product out there. We want to be providing you with lead generation, lead distribution.

We're going to come in, do a manager showcase to help you with branding and awareness. Then we're going to get you access to our panpending tech platform, DFD.A.I. All of those are enough to try to replicate the efforts of a large asset manager because you're getting the data, you're getting the technology, you're getting the outreach, and you're getting the eyeballs, and you're getting the brand awareness. So we're tackling all that, and that's what they get from us at DFT partners. I'm just curious, stepping back from it, getting away from what you do, but how has this environment been for you as a startup and a business owner? Because a lot of people have just been worried about the startup space. I'm just curious how that has

gone for you with some market turmoil and funding problems for startups. How do you feel as a business owner right now? It's one day at a time. I mean, it's a grind. I'd like to think that any time you go out and start something in a very large industry, there's barriers of entry. So it's a grind. It's very expensive industry to break into. Industry coffers are expensive. Headcount is expensive. Technology is very expensive. I feel like even though it's been difficult, we have just under 30 clients now. So we've been able to manage our burn with our revenue that we've been able to bring in. Raising capital, people are more cognizant of valuations now than let's say two years. years ago. So something I referenced, our CTO we had, or our head of product, I should say, came from a firm called Hidden Leveres and they got bought out by 30X. And I'd believe that was like 2019. So we're not in 2019 anymore. So people are very cognizant of valuation and they want to know, hey, well, what is that revenue and we're going to do your evaluation based off of revenue and not ARR, more like MRR or your projections or your projections, but we want to

focus on what is actually in the door to evaluate your company. Devon, if people want to find you, learn more, talk to you, both on the asset management side, or if they're an RIA looking for help with, what's the opposite of distribution? Discovery? Yeah, that's good. Where do we send them? So dfd.aI is our website and platform. And then I'm on all social platforms at DFD partners and my personal handle is Devon underscore

DFD. All right. Thanks much for coming on. We appreciate it. All right. Appreciate the time. All right. Thank you very much for listening. Animal SpiritsPod at gmail.com. Have a great weekend. Nope. This is Monday. We'll see you Wednesday. Thank you.