The Iced Coffee Hour - Meet The Man Who Owns A $250 Million Dollar Bank

Episode Date: October 4, 2021

Lock in your best rate today and get your family covered with Ladder at https://ladderlife.com/icedcoffee This week we are joined by Adam Moelis, the Founder and CEO of Yotta Bank. We discuss his life before Yotta, how he launched Yotta Bank, some of the terrible ideas we’ve all had, and much more. Feel free to sign up and try Yotta Bank - this link will give you a bonus 200 tickets! https://www.withyotta.com/?code=GRAHAM Add us on Instagram:  https://www.instagram.com/jlsselby https://www.instagram.com/gpstephan https://www.instagram.com/alex_nava_photography Official Clips Channel: https://www.youtube.com/channel/UCeBQ24VfikOriqSdKtomh0w DOWNLOAD MY NEW FINANCIAL APP: https://hungrybull.page.link/graham GET YOUR FREE STOCK WORTH UP TO $1000 ON PUBLIC & SEE MY STOCK TRADES - USE CODE GRAHAM: http://www.public.com/graham  MY NEW COFFEE IS NOW FOR SALE: http://www.bankrollcoffee.com/ Join the 2x weekly mentorship group: https://tinyurl.com/yaexko4o The Equipment used: https://tinyurl.com/y78py5g2 Audio Equipment Used In Podcast: Rode NT1, Rodecaster Pro The YouTube Creator Academy:   Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://bit.ly/2STxofv $100 OFF WITH CODE 100OFF  For Podcast Inquiries, please contact [e-mail] *Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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What's up, guys. It's Adam here. Welcome back to the ice coffee hour. So far, the podcast has made $104,000 of revenue. Wow. Well done. Now, this is really excited for both of us to have you on here. We have never met in person until like five minutes ago. You are the founder and CEO of Yada Bank. I like the way you said that. Very dramatic. I like it. The $10 million bank that I bought. That's right. A year ago, could you believe it? Crazy. Crazy. You haven't met you. You haven't met a lot of people over the past year. Yeah. So it's nice to finally do that for sure.

Well, thank you so much for coming all the way to Las Vegas. We have a lot to address today because you run a bank that I invested in that pays people up to $10 million. Now, I want to mention this video is not sponsored. You're not paying us to be on here. So we're all good. We just want to have an honest conversation and address all the rumors about this being a Ponzi scheme. Interesting. When I posted my video, so many people got a...

upset. They unsubscribe for me. They said it was promoting a Ponzi scheme. So, no matter what I say, they don't believe me. So we have to have you on so we could confront you and get to the bottom of this. Yes. I'm happy to, happy to leave you any concerns, answer any questions. So yeah, where should I start? I want to start from the very beginning. So you grew up in L.A. I think didn't we have a few mutual friends? This is how we started talking. So tell us about where you grew up, how you got involved. Because your whole family is in the finance industry, right? Pretty much. Yeah. So I grew up. up in L.A. went to college at Penn, Wharton, so went to business school. Pretty much everyone in my

family went to Wharton, which is pretty nuts. I studied finance and accounting. Parents in finance, pretty much everyone my family's in finance in some way, which is also strange. What does it mean by in finance? You know, whether it's investment banking, investing, hedge funds, real estate, you know, lots of different areas. Your specific role in that sector was to find businesses that were in distress that could potentially be a good investment? Basically, so I was an analyst, which is the very junior level there. I was only there for a year. And so you work with a vice president who's probably got seven to ten years of experience.

Oftentimes they're doing the work of trying to identify the opportunities, and then the analyst works with them to evaluate the opportunities. So a lot of Excel work and modeling at the company, meaning put in all their historical revenue, all their financial data, they report publicly, make projections. Based on those projections, have different assumptions based on, oh, if they grow at this rate or this rate, what does that mean for their future? So my job there was more of like the analysis helping my VP that I worked with evaluate the opportunity. At the junior level, you're not, you can like identify opportunities, but it's more typical because you're just starting out to work with someone who's doing that. And then

work with them on evaluating it. And what level of your work was like subjectivity versus objectivity when like appraising or valuing a distressed company? I would say a lot of it, maybe at my role, like in the analyst level. Yeah. My role was probably more on the objectivity side. Just strictly numbers, historical data, compiling historical data, manipulating it such a way that made it easier for us to understand.

And yeah, I would say, and then the ultimate decision was made by people higher up, should we make this investment or not. You're not making that many investments per year. So, you know, you spend most of your time passing on opportunities. So would this be like me telling Jack, like, hey, I want to invest in real estate in Summerland, go and look through all these 50 properties, bring me back to five that you think are the best investments? something like that and then I'll review those? Sort of.

I mean, at my level, it was more like here are what I think might be the best five. Help us, help me figure it out. And at the higher level, it was identifying those five within the 50. Got it. Okay. What were your hours? And how much, how much does that pay as an intern? Yeah.

So the hours in my group, which, by the way, are actually much better than investment banking in a lot of finance hours. It was probably 8.30 to a.m. to 10.30 p.m. or 11 p.m.? Whoa, whoa, whoa, whoa. Wait, this is right out of college? Yeah, yeah. So, and again, that's much better. People are jealous of that.

But how does that not break labor laws? Because you're not like an independent contractor. You're like actually a salaried employee. Well, I think, yeah, that's. Yeah, that's, yeah, that's. Yeah, that's, yeah. I think so. Yeah, I think it's when it's hourly,

then you start getting into the overtime, double time, you know. Right. I think salary is just, if you work more, right? Am I wrong? I think so. I mean, yeah, I think so. I mean, if you're an investment banking at Goldman, you're working, you get in later, like maybe 10, 11 a.m., but you're working until 2, 3 a.m., a lot of days.

Why so late? Why do they start late? So if you're a junior analyst, the lowest level in investment banking, a lot of your work will come in in chunks. So everything in this, in the finance world, for whatever reason, investment banking, you're working for a client, and so you're trying to do your best for a client, which often means everything needs to get done as soon as possible or yesterday,

because you're trying to just serve them the best way, even if they're not going to look at it for two weeks. If you do it as soon as possible, they're going to like working with you. And so when work comes in, it's the analyst's job to do this as soon as possible. And that's really what happens. And so if you get work at 2 p.m. and it takes you until 2 a.m. to finish because your job is to finish it as soon as possible. You wake up the next morning.

there might not be anything to do until 3 a.m. So there's like downtime where you don't have anything to do. And then there's just, you either don't have anything to do or you have stuff to do that you should have finished yesterday. So that 14-hour schedule, the 830 to 10-30 is a worst-case scenario. No, I would say it's maybe a best-case scenario. That's insane. Well, for my group, because, again, we're on the investing side.

So we were investing Goldman's money. We weren't working for an outside client, which means things in our group weren't always, needs to be done as soon as possible because we didn't have a client that was hiring us. You were moving around Goldman's money. What do you put Goldman's money? I mean, why, so why doesn't Goldman just say,

hey, we watched Graham's video. He says just buy the S&P 500. Why do we need you, Adam? Why don't we fire everybody? We're going to save a lot of money. And we're just going to index money. Why do they need to do all of this? Can you explain that?

Yeah, well, they're making fees off, well, not their own money, but oftentimes they raise out. outside capital. Basically, they believe they can get risk-adjusted returns that are higher than what an index fund might pay. Whether they can or not, you know, that's, again, that's an academic question. There's a lot of evidence that shows, you know,

active management net of fees doesn't outperform, but some do. And look, if you take more risk over the long run, you might outperform, but it's probably because you're taking more risk. Yeah. You know what? There's a, I'm going to estimate this study. I remember reading it quite a while ago. It was something like 33 or it was like 35% of actively managed funds in the short term outperformed the S&P 500. But I think it was over a 10 or 20 year stretch that whittled down to like 1%. In the short term, I think a few of them were able to consistently beat the SEP 500

up to like a five-year term. But I think the point that you mentioned was risk. adjusted. How much risk do you want to take versus how much money do you want to make? And I think with a lot of these people, they don't want to take a lot of risk and you're okay earning a little bit less just for a safer investment. So is that what you were trying to find these safe investments? Yeah. So it would depend. There's also an element here, which there's some investments that are open to, you know, it wasn't all public stocks. So retail investors, it's hard to invest in a company in bankruptcy. It's a complicated situation. It's a complicated situation. And so we would also go into those types of situations where their opportunities

aren't even accessible for the most part to like retail investors, which means non-institutions. And so, you know, there is some argument to if you can get into some of those opportunities that, you know, the average person can't, then there might be opportunity there because there's not as much focus on it. There's not as much information that's that's publicly available. And so you might have less competition for it. If you find, if you source that deal, that no one else is looking at. I forget your original question was, though. How much do you make?

How much of that pay? Returns? No, no, no, no. Like how much was your salary? Oh, right. So I think starting out, this was seven years ago now. Yeah. The base might have been like 75K,

and you could expect a bonus similar to that, I would say. Maybe 50. 50. 50. It's about 1.30 a year. Seven years ago. Now, I think the starting salary for a lot of like investment banking rolls might be like 110.

and 120. Yeah. Because they're competing with, well, I mean, they're competing with tech now. Tech's much more appealing to a lot of hungry, smart young people. And so, you know, you can go work at Google and make, you're an engineer, make 120, 1, 120, 130K at a school maybe and not work 8 a.m. to 3 a.m. You know, work 10 a.m. to 5 p.m. Right, right.

What was your schedule like for that one year? Did you just do nothing but work? I mean, was there any day off, or was this like seven days a week? Do you have time to watch TV? Do anything? A little bit. I mean, yeah, yeah, you get home at like 1030, 11, probably most nights. Okay.

Watch Sports Center maybe. Five days a week, though. Yeah, I mean, you'd have work on weekends, too. Mine wasn't as bad on weekends. Yeah. They actually have instituted, they might have had it back then. The Saturday rule they had to institute. Have you guys heard of this?

Yeah, where they have to give one, like, They have to get the Saturday offer. Oh, no, what is it, like a half day? Right? Different for different, different for different companies, but some of them were like, you're not allowed to work on Saturdays, which, you know, in effect, if the workload's the same,

just meant, like, your rest of your week's crazier. So it was like this protected Saturday rule, which my group didn't have, which I actually liked better because I'm a big NFL fan, so I wanted to get my work done for Sunday so I could watch football all day. Right. So I would have rather protected Sundays and then do the work Saturdays,

but. Yo, yo, yo, but first, I want to thank our sponsor, Ladder. Alex, what did I tell you, man? No hat. We want to talk about some things that have revolutionized the way that we live in modern society. These things are known as disruptors. These are things such as wireless headphones, smartphones, and even self-driving cars. Well, what about all-in-one body wash, shampoo, and conditioner?

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Yeah, probably. You do the math. But you don't do it for the money. You do it to get your foot in the door so that one day. Yeah, yeah, sure. How much are the top level guys making it? Well, that's the thing, right? You set yourself up for working in a big bank like Goldman or in the finance world.

is one of the, if you can get in and do a good job, I'd say it's one of the less risky ways to make a lot of money in life. As long as you do well and you climb the ranks, like you're a managing director at Goldman again back then. You might have, managing director, sorry. I don't know if you want, you can do the explanation, but it's one of the more senior roles probably. So they direct, they manage the people underneath them.

Like, they manage a whole bunch of use. Yes. Okay. It goes typically analysts, the bottom, associate, vice president, managing director. partner, senior partner. Got it. Okay.

So if you're a managing director, you might be 34, 35 years old. And your base, I don't want to get this wrong, but it might be today 500,000 plus a hefty bonus that might be, depending what department you are equal to that. Sure. So you can make like a million bucks a year. Yeah. 12 years out of school if you rise in the rank. Some people make a lot more than that.

Yeah. You have a really good year, whatever that means, for your role. And so, yeah, even though at the beginning it's tough and a lot of hours, there's two things. One, the trajectory is possibly very lucrative. Second is you're learning a lot. I mean, you're putting in a lot of time. And so if you're putting in twice as many hours as someone else in different fields or in your field, you know, compounding effect. Like compound interest, there's compound learning on your time, right?

Yeah, now I saw one of these vice videos. Then take this with a grain of salt, but one of these vice videos was an investment. bank and they're like the parties are crazy all the stories you hear about are true it's all of these illegal stuff and like how is that true you don't have to tell us to parties well yeah yeah so you know we just met i don't think i've been to a party i'm not a party person yeah so i don't know i've been to i went to maybe two two parties my four years of college maybe maybe three sure uh so it could be true i i was never there what what did you hear They said it was like the wolf of Wall Street sort of deal.

That's what they were saying. It's, you know, Vice, they do these videos where it's just like, black the screen, dramatize everything or whatever. Sure, but it's fun to believe that's true. I don't know. I mean, it's like in between meetings or just, like, doing stuff, and they hire people. Either I wasn't invited, I wasn't invited to them, maybe, but, or I chose not to go. I don't know, but I've heard stories that it used to be in the 80s and 90s.

like definitely the Wolf of Wall Street culture was somewhat real. I think that's probably less so now, but I don't know. I never observed any of that for what it's worth. What about the substance of like usage? Is that still like substance abuse? Again, I'm so the wrong person for this. I mean, how do you think they stay up that many hours? That's a good question.

Yeah, I've heard. I've never seen things, but yeah, I've heard that or all things. like that. Yeah, yeah. There's actually an HBO show that's, that's, that's in the life of, uh, investment banker type junior thing where I watched a couple episodes, but they have that element in it. Yeah. I wonder if it's like for me when I see those real estate agent shows, I look at that as a

former age. I'm like, that's so unrealistic. I'm wondering if investment bank is to say, you see, you see these things with these wild parties. You're like, that's impossible. They wouldn't be able to wake up the next day and like get their work done. Yeah. I mean, I've heard, again, I haven't seen anything, but I, I think, you.

it that or all type stuff is probably real. Yeah. What else? I don't know. Sure. You know what's interesting to me is that the S&P 500 is still, it's human decided. They still pick out those 500 stocks. So why is that just like the temple to every investor? Like why can't someone else do something that the S&P did but better? Because before the S&P, there were other things doing the same thing. And then the S&P came and then they did it better. So why can't someone else do you? Yeah. So I don't I don't know if I have a great answer or that great insight here. I mean, a lot of people used to use the Dow, right,

as like the holy metric, but it's just like 30 companies. Correct. Which isn't that representative of the economy as a whole, which is kind of what I guess the S&P is trying to do, right? It's 500 of the biggest companies. Yes. I don't even know how they were picked.

I don't even know they were hand-picked. Yeah, there's a criteria. There's like five different things that they have to comply with before they're even considered. And then a team votes on. I think it's seven people. Interesting. Yeah.

Did Tesla just make it in? Yeah, yeah. Because they're huge now. But, yeah, so I don't know. I think the S&P is also an interesting proxy for society because I think now it might, you probably know this better than me, but it might skew very tech heavy. And so pandemic happens, right? We have the market's crater for a month.

Since then, we've whatever doubled since March of 2020. But, like, that doesn't necessarily mean the economy's, I mean, the economy is probably doing well by a lot of measures, but there's a lot of winners and losers in society, right? So for a lot of the pandemic, the tech, the rich got richer, the tech companies got bigger. And so the S&P was going up. Investors who were invested in the markets were doing well. But the people invested in the markets are usually people who have money, right? Or have more money.

So, you know, we think of the S&P as a metric for the economy. But again, I'm just guessing. We definitely look at the numbers, but it's probably skews more towards like tech. Oh, absolutely. So, yeah, I think the top five companies make up 25%. Somewhere on there of the S&P 500. Right. Yeah.

So it doesn't tell you anything about the mom and pops and restaurants and all those types of. Right, right. So when you finished up your year at Golden Sacks, you decided that wasn't for you. You didn't see a career path of working your way up the ranks? Yeah, so I'd say about nine months in, I realized I had made a career choice. And again, I liked finance a lot. That's why I'm doing what I'm doing now in a lot of ways. I interned in my summers at college in different finance jobs.

I never really liked it. I just kept doing it. Everyone around me was doing it. Everyone at warden kind of gets caught up in the same path, at least 10 years ago, seven years ago, consulting, finance. And so I never really thought about what I wanted to do. Again, everyone in my family was in it was in this industry.

And so I kind of realized I got there kind of on autopilot in a lot of ways. And so I woke up one day and just decided, started thinking about what, what am I really interested in? and what I really enjoy doing. And this was about nine months in, and I ended up leaving a little out of year in. Yeah.

And started thinking back to, you know, high school, I really liked programming. I never pursued it. I like the idea of learning about all these companies in my job, but I wanted to, like, be the person on the other side, who was trying to do the strategic side of how do we grow, how do we make more revenue and all this kind of stuff. Yeah.

And so I realized I just got there by default. What did your parents think? Nine months in, we were like, mom, dad, I'm leaving Goldman Sachs. Can do my own thing. They were supportive at the time. I didn't leave to start a company at the time, right? And so it wasn't like I was going to do become a YouTuber, right?

Which I hear stories about that, which is, so like, yeah, it was, it wasn't, it was supportive. I mean, what about the finances? Because you're leaving a full-time job to do something that potentially makes no money, right? Right. Well, at the time, so I left Goldman and I did a coding boot camp because I knew I wanted to, I wanted to possibly start something someday. And the way the world was going, I decided that knowing how to code, I don't want to be an engineer, but I wanted to like know how to code

so that I could understand how are things built that would help me be a better manager, I guess, or just know how long is something going to take, is it possible? And so I only was without income probably for three or four months and had savings at the time. And then right out of that coding boot camp, which I'm very happy I did. a job at a tech company. How much were you making there? 100,000 at the beginning.

A bit more. Wow. What were your hours there? I would say on average, 9 to 630. Wow, there you go. So your wage effectively is also significantly higher. Yeah, well, the bonus may have made the finance wage higher. Sure.

But yeah, I guess the base was higher. But that's interesting. It took you four months to make 100K per year, but it took you four years to make, you know, 100. Yeah, whatever. Again, I think in finance, right, if you stick with it, in tech, you start out at a number and it doesn't necessarily go up by that much over time. I mean, it does.

In finance, like, you start out at that number and then 10 years later, you're making a million bucks. Would your parents have been improving had you decided, hey, I just want to do music, I want to play the cello and just do my own thing. It might not make any money, but. Amazon presents Jeff versus Taco Truck Sauce. whether it's Verde, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flamethrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk.

Habaniero? More like habanier, yes. Save the everyday with Amazon. I think they would have been supportive, but I think they would have said, Adam, you're terrible at... terrible at art. I mean, I can't. I taught myself the piano. Not great.

Yeah. I was never good at, it was held back in preschool because I couldn't, you know, finger paint. I was held back in preschool, but I couldn't fingerprint paint, but that's not why.

Yeah. So they would have been supportive. Yeah. Okay. If it was something that was bizarrely out of character, like music, sure.

I think it would have been like, well, you're going to, it doesn't make any sense. Yeah. Yeah, yeah. Okay. Got it. And what about like throughout college and everything, were they, were they helping you? Like financially through all of this or like, yeah, yeah, through college for sure. Yeah. And then, yeah, early days, New York for sure too, yeah. Got it. That really, I think, helps a lot because that, that takes almost the pressure off of like needing to make those rent payments and the food payments instead putting all of your emphasis in time on like honing the craft finance. Oh, definitely. It also makes it a lot easier. to if you're if you're fortunate enough to be in a position where you have a help or a backstop where you're not taking a total risk and if you fail you're going to be on the streets it's

definitely a position i was lucky to be in yeah um because again if i started a company or whatever i did early on and it just failed and you're not making much money then for a lot of people it's like a risk that you can't take yeah even if you really want to when do you decide to do yada bank who came up with the idea was it you or you have a co-founder ben So Ben joined a few months after I started working on it. So originally it was just me. So the story there was I was at that tech job that I joined for about three years. And I had the itch to do something on my own.

And so over the years, I'd written down ideas on a Google Doc. Ideas that I saw are opportunities or problems I ran into in the world. What are the idea? I want to hear some of these ideas, by the way. Okay, yeah. We can get to that now. Let's hear it now. Let's hear it now.

because we're going to tell a story here. I want to hear this. Okay, I mean, there's a lot of them. I'm trying to think of the best ones or the worst ones. Or maybe best or worse. Okay, so one idea I was super excited about, and I didn't think about this as like a business possibly, but people are late all the time.

You have group dinners, things like that. Everyone's always late. And so I wanted an app where you could create an event, like whatever, it could link to your Google calendar and you could charge people for being late. I would love that. Oh, my God. So, geez, I would love that.

I would too. So you could say, okay, we're going to have dinner, 7.30, Saturday night, Midtown Manhattan, right? Someone needs to do this. And you set a dollar per minute. You said whatever the penalty you want. And then like 30 minutes before the event, GPS is turned on for everybody. You can see them on the map. And it shows your ETA and your expected payments.

Like maybe someone's expected to be five minutes late. So it shows like $5 right now. Maybe they get there early. And so it reverses. But, yeah, so. I think that would cause a lot of accidents. Yeah, maybe. Someone's like on their last dollar a minute.

Yeah. I can't. This red light's going to cost me. Yeah. Let me just run it. $10 a minute? Yeah, you'd see some crazy stuff out there. I still wanted to exist.

They wanted to exist too. I would use that. But yeah, I don't think you would sign up. Employers would do that for their employees. Are you late? Graham is late. Graham is late. I don't act like you're.

I always. think that I'm always very prompt, but certain things, it's like if it's not urgent, if there's something urgent, I'm right on time. If it's like going to the gym and it doesn't matter 10 minutes either way, you know, he's late to do. Yeah, like, the stemmed, we would play, you know, beach volleyball in Manhattan with friends and like you'd have the court for an hour, right? And if people weren't there on time, like, you just can't play. You know what I mean? Like, you don't, you know, players. So we'd be waiting there for like 15, 20 minutes, a third of our time. and I just get so frustrated by it.

And I think it stems, I don't know if this happened 20 years ago, because 20, 30 years ago, before cell phones, if you were late, like, you're just screwed. Yeah, right. You can't say, hey, I'm running late. Yeah. But cell phones, now you can just be like, oh, sorry, like, I'm 10 minutes late. And so a lot of people say, like, oh, yeah, I'm on my way.

No, they're not on their way. They're in the shower. They're not on their way. I would love that app. Seriously, I think for employers and employees, that too. Imagine that. Imagine just incentivizing your employee. Like, hey, just download this.

app if you're on time for every minute early. What employee would sign up for that? I don't know. Think about how much time is wasted waiting for people. Oh yeah. I mean, it would save we need to internalize these costs. You know what? It would be good for friends and stuff like that. Magic created app.

You just charge a three. You just siphon off 3%. Yeah, charge a little fee. So just transfers the money from the person who is late to the person I made a prototype for this. It was called it was called punctual. Can we not do this as just like a gag sort of thing? get it developed.

It's like, get it up and running. It's just so funny. Just word of mouth because I guarantee one person is going to tell another. It's going to be like, bro, I made 15 bucks the other day. It's like just so crazy it might work. It sounds like a NAPE for you concept. The issue was I had the assumption that like late people

they want to be on time and like they just have a tough time like doing it. And so maybe some like incentive that they could put on themselves. But they don't want to be on time. That's the problem. Like they don't. You don't know. You haven't launched it yet. I had a prototype.

I tested with some friends, the late people, they were still late, and we didn't have all the bells and whistles were at like forced payment, right? Forced payment? Well, yeah. You have to think about it. Wait, wait, wait. So if you're late, you don't want to have to like Venmo the person. It has to be odd. What if you didn't do?

It sucks for you, I guess. You can't control what people do on their own time. There's going to be like an escalation, you know, take a picture of the accident, selfie in the hospital. That would cause so many fights, I feel like between friend groups. And I feel like it would be inappropriate to use employer-employee relationship. between husband and wife what that would do boyfriend girlfriend girlfriend's late something like that

and money gets saved and she's like give the money back it's like no I can't reverse it I love the idea I think that's hilarious here's the one part where I do think it you would have to make sure it's it's correct isn't glitch is if you arrive and somehow it keeps tracking

you as being late yeah or they're like I showed up on time but the app didn't update I was in an area without reception or something. So you can have your verification system where the event host can like confirm you. Yeah, but what if the event host is unethical? It's just like, oh, I forgot. Yeah, you know.

We can figure this out. I think we can figure it all. I like the idea. I love it. I love it. If there's a true way to get that done where it's not glitchy, I love it. Tell us more. I like that idea a lot.

That to me is an eight out of eight and a half out of ten. I don't know if it would be like number one in the app store. Here's the thing. I think it's fun. For people like us three, I think it makes sense. But for people that are a little bit more like, like if I had a few of my friends, I know for a fact, none of them would sign up for that. For someone like me, I think it's funny.

And I'm like, oh, it's a couple bucks here. And I like being punctual, you know. But for my friends, they're like, why would I sign up for this? It does only benefit the person who's hosting you. Yeah. So we had a prototype for this. But I outsourced the development very cheaply because I was just funding it. It doesn't, just fun.

And it was super glitchy. But I found myself, again, I'm pretty introverted. I don't go out much. I was creating events with friends just to get them on and try it out. I like that. That's the thing I would do. You could make a video. I just bought a late app.

Yeah. It could be the title. Maybe we talked about actually doing this. Seriously. Maybe we talk about actually doing this. Yeah. I think if it, listen, I think if it costs under 10K to, like, get a prototype out there, I could just do a swipe up.

Like, guys, just try this out. I'm down. I'm down. We could build it better than I did three years ago. Another idea that came to mind, again, there's a lot. And my memory is a little bit cloggy. Was helping people save money on their property taxes. And we're going to start with, I think, Illinois and Texas, where property taxes, I believe, are higher. Again, it's been a while. But a lot of people, if you just fight your appraised value, and you might know about this from the real estate world,

but you can, like, submit documents to the county, whatever, and say, hey, there's evidence that my property is worth less than what you guys are assessing the taxes at and automating that. So this was a big issue in California. It's something I'm very familiar with. The county assessor actually sent out a PSA to all property owners. They mailed it and they sent an email. Usually in a given year, they would receive a few thousand. This is just the county valet, a few thousand requests a year, and they could handle it.

Those services have gotten so popular. And we're just talking like the template format. where you could go and pay some guy three hundred bucks who's going to try to negotiate your property taxes down and they just send a template. Now they got almost a hundred thousand. There you go. How recently was this?

Last year. Yeah. So it went from nothing to 100,000. The service popularized. The assessor basically said at this point, we're understaffed. It's going to take us years to go through what we get in like a month.

So we simply can't do it anymore. So they basically just said, we can't handle it anymore. It's actually backing up the legitimate claims. And because of that, because we're understaffed, we're just not going to do this for anybody. So they were basically just pleading to people, hey, if you have a real reason to believe your property tax is going out,

please submit something. But if it's just a template thing from a lawyer, it's just a backstop. Please don't do it. It was just a please. They can't stop. So that's something, I'd give that a two out of time.

Okay, fair. Two out of ten on that one. And you're all, yeah, it's tough because you're exposed, if they change, whenever you do these hacky, like save money, legal things, you're always, they could change the rules. Yeah. So I don't like that one. But what's fair.

I like the honest thing. Perfect. I do just want to say that reminds me a lot of this idea I had. And I almost put this into action. I had a business partner for it. But to go to the unclaimed funds thing. Oh, I had that same idea. And then because it shows.

Which is the unclaimed funds thing. So the state of California, basically. like if you paid too much in taxes or something, you change addresses, all these things, like they can, they basically owe you money. And there's a log of it all online, and you can see their name, you can see their address, and you can see how much money that they owe you. Or, for example, like transfer of estate, something like someone dies and they have all of this money and they don't know who to give it to you, or they don't know where you went

and you were in the will, and you were in the will, they basically have a log of all of that. And I had the idea of going to those people's addresses and saying, hey, the stateos, you, you know, $5,000. You were completely unaware of this. It shows that it's been owed to you for five years. You know, it would be nice if you could charge me a finder's fee just for this. However, I wouldn't make it mandatory because it's their money in the first place. So two things.

First of all, that does exist. It's called unclaimed property. And anyone could do it in all 50 states. Just type in unclaimed property, your state. You'll type in your first and last name. And you'll go through and you'll be able to see what they owe you. It's legit. So I've gone on before and I think it was like a phone bill something or other.

And I was at like 50 bucks. So I'll tell you the two downsides of that. One that exists. And there are companies out there that do this is a full-time thing. They just find people with high amounts above like 500 bucks. And they reach out to those people saying you have money owed. The problem with that is that, first of all, the paperwork is terrible. I went through it.

You have to sign this thing. You have to get it notarized. You have to mail it in. It takes like six to 12 weeks to get back, and then they send you an... It's like for small amounts, like $10, $15, it's probably not worth it. Could you do it better? Were you automate a lot of that stuff? The problem is you need a power of attorney.

So the issue that I've seen with a lot of these companies is that nobody trusts them. And I actually had this one guy reach out to me, and I was so skeptical. And he was an older guy and just called me on myself. I didn't really give it out, but he called me and myself and he says, hey, you have unclaimed property that's like, $700 and wouldn't tell me where it was or like how to find it. He's like it's not it doesn't show up in the database yet. Uh, but we want to give you the we're going to handle it, but we're going to take 20% of that. So if you want to claim this, we'll do all the work for you. We just need you to send over a power of attorney to us and like have this notarized. I was so sketched out,

but I didn't do it. It's just not worth it. So I actually talked to the guy and said, listen, just off the record. Trust me. I'm not going to screw you on this. Just tell me where it is. I'll claim it myself and I'll send you the money. You do? I did. And I claimed the money and I did send him the money. And he said you were the first person who actually to sit.

What? 20% fee? I did. He paid him exactly what he was out. Yeah. But sure enough, it showed up a few weeks later. And yeah, I got money. He got money.

I wouldn't have known about it otherwise. I forget what it was for. The issue is that it sounds very sketchy. When you're pitching it to someone, you go and you knock on their door, hey, you're owed this amount of money. And then you also like, you kind of have to show. them but you don't want to show them because then they could just fill out the form themselves. Obviously, if you had that like automized or automated and you knew how to like fill out the form and everything and get it all situated, it makes it better.

There are plenty of people that have like $15,000 in claim, 20,000 millions. There used to be a news, a section in the newspaper and it said top unclaimed money for our county back in California. And it would say like one million dollars unclaimed by this person. It was fun to look at it. There's a lot of those like, you know, people not taking advantage of, for example, another I that I had briefly was a lot of people don't take advantage of their 401 match at their employer because they don't have the money to contribute to their 401k and oftentimes the employer will just match. It's like free money if you contribute to it. So some companies actually

emerge that are lending to employees to say, hey, we're going to lend to you, put in the 401K, get the match and they figure out a way to. You didn't do that idea, did you? No, but it is a thing now. Yeah. So I think three or four years ago, somebody, I think it might have been asked Sebi, I think it was as Sebi, like two, three years ago, reached out to me to invest in a startup that was doing just that. And I couldn't, in good conscience, invest in a company that was tried. They wanted to charge like a 15% fee. The fee was so high that it was like, yeah, they could get money invested, but like, if they

don't pay that back, you know, or they wanted money in the back end, I forget what it was. Good concept, but, yeah. Yeah, there's just a lot of opportunities that people aren't taking advantage of free money for lots of reasons. Sometimes they don't have the money they need to take advantage of the free money, sometimes don't with the time.

There's companies that will negotiate your direct TV bill or whatever and take a percentage of the savings like on your behalf. Another idea I had related to that was a lot of startups actually, this was two or three years ago

when interest rates were much higher. They were keeping their cash in checking accounts. So you raised $10 million to startup and they're just leaving a checking account where you could move it smartly into the high-ield savings. And if you make 2%,

like that's $200 grand. my math's right right and so like just free money effectively um so that was that was another one and there there's a lot now that i'm probably not thinking of what's a bad idea that you're just like you looked into it you're like eh honestly the the whole i hate to burst you guys bubble but the late app idea i don't know i don't know if it was a bad idea or poorly executed it's funny you say that was my favorite idea so far yeah i think it's the funniest idea i don't know if it would actually be something people would use just between friends it's like who really cares if someone's five minutes like I don't like it but like I'm not gonna charge my friend I would

feel bad charging my friend he's late to go get ice cream with me and I'm like I guess my ice cream's paid yeah I don't know it's just like three minutes late I got three bucks it would be funny if you could attach a debit card and like Venmo you hold a balance and you could spend their money you could attach the Yada debit card yeah perfect and you get tickets it would work perfectly I'll tell you yeah if you guys prototype that app I will use it at my wedding because in the wedding industry people pay for your plates right they you know people don't know this but they charge you you know it could be $150 a plate if it's really good food and one of my biggest pet peeves is when people didn't show up and so if you guys did build this app I would

implement it in my wedding and I would charge them their plate price if they're not there I don't even want to pay for it to begin with but this way if you tell me you're going to be there you're going to be there. Yeah, you know what? I bet you could incentivize this because I'm thinking like, imagine like personal trainers. Imagine their clients show up late or something like that. And they, you know, run it. Something like that.

A lot of professionals. A lot of professional services could do that and use it. And then they get a reward. Imagine they show up on time. They get like a 3% discount on whatever. Restaurants. If someone shows up 20 minutes late, it just screws up the next table, the next table. You know, you can't turn as many tables.

Yeah. I've said this before. But I'll tell you my worst idea. You let me know what you honestly think about this. When I was like 20, I came up with this idea called Truth&Tel. And I bought the domain, truthintel.com. And it was basically meant to be a Yelp for people. Where you could go and you could make a profile about somebody, write your honest review about them.

And we had like a rating system from like honesty, how trustworthy they were, personality. You could basically there was like five criteria and then you could write a review on them. You could upload their picture. Did you pursue this at all? an idea. No, no, I pursued it. Oh, wow. I pursued it. No, we, so it was three of us. Me and my buddy Jaron and my friend Artie. Now, Artie was the one who was the programmer. So he was like, yeah, and I'll just work on this in my spare time. We're all kind of, we would just get together once a week. It was a fun way to hang out and we just sit there all night and just make this,

make this website. He would be, you know, coding it on the back and we'd all come up with ideas, just brainstorming. But we created truthintel.com. And so what we did is we started making profiles on all of our friends. Now I have the question. What would you rate Jack? Oh, I'd give Jack a good rating. Jack gets a good rating. He gets a good review.

What does that mean? Honesty Bucket. Yeah. Oh, yeah. Oh, Jack on honesty, at five out of five stars. Oh, five out of five stars. Oh, five out of five stars.

Yeah. But yeah, so now, here's the thing. We made like 20, 30 profiles. And my buddy wrote something on one of our friends who has a very unique last name. Like the type of last name where you type it in. It's like there's no one else that has his last name. But the problem was that his dad ran some sort of construction company with the last name. So it was like the last name construction ink or like something like that.

So we wrote something. Well, I'm not going to say we. My friend wrote something about this person that was just a joke, but it was a rather serious joke. What was a joke? You know, I can't see what the joke is. Oh, come on. You can't leave us. I'm not saying which friend wrote it.

I'm not going to say. I can't say what. the joke was. I'm not going to say it. I'm curious what happened. I'm not going to say it. So anyway, he wrote a very unfunny joke about this person, claiming something that was not true about this person. But between friends, it's like, you know, you're kind of ribbon on each other. Anyway. But anyone can see it. Anyone can see it. Got it. The problem was that when you typed in this construction company, our SEO was so good because we had compiled all this relevant data about like all these last names that when you typed in that within like a few weeks, that became the

top result on Google. You just type in blank construction ink. The sun comes up with this, you know, joke in his profile. So it hurt the business. He had, first of all, a friend had no idea that we had a profile on him, and his dad

had no idea because customers are calling about it. So we took that down, but we, yeah, we didn't want to get into any legal trouble. And then you get into the moral issue of, like, how do you know if something is correct. And there's like, what is it, section 230. I forget with the internet act, something section

230, which basically says that if you run a website and somebody write something, you're not a publisher of that information and you're not responsible for what that person says if you don't edit anything. As long as you just leave it up on the website, you're not responsible for it because then you're a public forum and not a publisher. So if someone says something that's untrue that, like, let's say someone loses their job or something happens, we couldn't take that down. It's just, it's up there. So we never pursued it.

You're not allowed to take it down because that would be editing. Right. Interesting. Exactly. And so you would need a way to screen before it even got there in the first place. Would that help or you can't even do that? But even then, even if you screened, the whole point of this was that it was supposed to be anonymous, but then again, it's like, what was the inspiration, like,

what was the something in your head that was like, I want this to exist, that you have a really bad experience with someone one day and you're like, man, I want to tell the world. I didn't. I just, I thought it would be fun to like see a review system of like typing a name and see what other people say about them. Have you, you watched Black Mirror?

I feel like there was an episode similar to. Oh, it was a social score or whatever. Social score. So yeah. But I'm, listen, I'm really glad we never pursued it because two other ladies ended up doing the same thing. What was it called? People.

Yeah. Yeah. Yeah. And oh my gosh. They were, they were on the headline of everything is like the most. hated new startup, like everybody disliked them. They were outed. I mean, like, all this crazy stuff.

And we're looking like, thank, thankful, you know, just so thankful. We never pursued that. I think someone also, I don't know if this was the same when you're talking about, did it with like dating, dating? I think so. Where girls started guys. Yeah, I think they started with that. Maybe it opened it up. Yeah, the help of people.

But, yeah, so many issues, the morality of whether or not you leave up information that could be hurtful to another person. And, yeah, it's just, it's shady, so we never pursued it. So what, I give my rating now on it? Yeah, you can give you, give you a four, four to ten. Okay. Yeah, I like the idea, which would be really tough in practice, right? If we could somehow judge people and have no ahead of time if they're actually not, it would be helpful.

The other one, the last one I'll mention is that I liked a lot. You know, in Los Angeles, basically all throughout California, parking is really difficult around the coast. You can't find any parking. I wanted to create an app where people could rent out their driveways. I did the same thing, actually. In my coding boot camp, it was called Park Shark. Mine was just called Parked.

I like Park Shark. Yeah, Park Shark a little better, right? The rhyme. Literally, we did that as our project. Yeah. And it's a thing in the UK. Yeah. I figure it's called Park Hero or something.

Something like that, yeah. We looked it up. There's a San Francisco company that already beat us to it, and they had like a fully functional beta. But it just never took up. off and I'm thinking, well, if this company tried it and they couldn't do it, and it was going to be like $100,000 to build this thing out.

I was like, I didn't have money. And the tough part is even building the platform, right? It's getting the inventory. Yes. You got to get the, because you can build the platform and there's no content. And the other problem is that like the prime parking spots, like if you're in Venice and you have a $5 million house, you're not

going to care about renting out your driveway for like $10 an hour. And there's a certain point where it's like, beyond that then it's like you may as well to pay for valet. In L.A. So, yeah. Because I had a similar, what started that idea was LA like around the sports stadiums right there's a lot of parking lots and people play a lot for parking i was in wisconsin in august actually you went to the packers

preseason game while it was there and i don't if you ever been to green bay but around the stadium there's a lot of small houses and we ended up parking in the driveway on this woman's lawn i think she charged 40 or 50 bucks for the spot and every game she'd have 20 cars or whatever profitable yeah and the house was worth she's looked it up like a million and a half two million bucks this tiny house just because of Airbnb's on on game days and for the parking that was the whole value of the property so she was just doing it holding up a sign but yeah I do just want to say Graham did mention this was in like our second podcast ever we talked about his bad business ideas I my favorite actually was the one where if you call someone you know how you hear that oh yeah I forgot

you um you actually hear an ad and then the ad will lower your phone bill you you're like yes I I accept to hear ads when I'm calling someone what was that about That's about that idea. Exactly. I thought that was a great idea. I forgot about that. I was 18 years old when I came up with that, and I thought you just give people free phones, like just free cell phones.

But every time you make an outgoing call, you have to listen to like a 15, 30 second ad. And that would either give you a free phone or it would lower your service. Or you get something like that, you know. I was like 18 and like, where do I start? Like how do I even go about doing this? So like when you're 18, no money, no connections. Like I had this idea. I wrote it all out.

just had no idea how to implement that. Were you always thinking about ideas too? Oh, yeah. Oh, yeah. Yeah, I would keep a, uh, uh, uh, just a note on my phone of just like, every time I would think of an idea, I'd write it down. Yeah, I write down every time I think of an idea, this stupidest stuff, uh, in this morning, actually, was in the hotel and I, I can't, I'm the only young person who can't read. And so when I get into these hotel, like showers, I can't read which ones in the shampoo

and which I need my reading glasses to read. So I was like, oh, What if there was, and again, the stupidest idea of all time? I was like, I need to solve this problem somehow. Yeah. I write it down. I literally write down as stupid as that idea. I write down on this list.

Because you never know which one, you know, I mean, that one's not going to be the thing. But just any, like, problem I encounter in society. Because if you have a problem, so do other people. Like, that's what I've learned is like, I used to think, oh, I'm probably only known with this problem. Like, if you have a problem, if you're thinking something, there are millions of people thinking or having the same problem. Yeah. And if you can solve the problem, you have something. So how did Yonda Bank idea come up?

So after I tested somebody's other ideas, again, I built the prototype for the punctual thing. And basically, again, I was always very interested in finance. I was in it. And I've always been super into behavioral psychology. So I don't know if you're familiar with books like Nudge, thinking fast and slow. And so when I came across the statistics about how Americans spent $80 billion a year on the lottery, which, by the way, is the worst gamble you can make. you can go down to the strip in Vegas, play blackjack,

craps, people give you crap about it. You're only losing 2 to 5% like expected value. The lottery, you're losing like 60%. People spend $80 billion on that. That's $700 per household. The same time half the country doesn't have emergency savings. And so a lot of people are playing the lottery who struggle to save. And so the idea basically was,

and I saw there's a program in the UK that's basically what YADA is run by the government. putting it a little bit too simplified. Yeah, sure. It's huge there. And so I saw this opportunity to do it in the U.S. So ultimately, I was like, okay, why is this thing so successful in the U.K., but not here when we have this problem of savings and lottery playing?

And it's been successful in lots of countries. So I just started doing research on it, as I always start out doing. Turns out it was kind of illegal here until 2015. It's a relatively new opportunity. Just the way the gambling laws were written wasn't like they said, savings with a sweepstakes lottery element attached to it is illegal. It just would have been a gray area with gambling because of the way, for gambling to be gambling, there has to be a prize, so there's a prize, and you have to give up consideration

to, like, participate. Money. Yeah, so consideration, the definition, is it paying for something? Is it doing something? Is it depositing money? Like, is that consideration? Like, I don't know. Right.

And so in 2015, they carved out a law that basically said, this thing, prize-linked savings, is okay. Again, more nuanced than that. Why do they carve out a lot? Because to do that, there must have been an issue in someone fighting it. Who fought that? Academics. So there's a lot of evidence from programs in South Africa, New Zealand, UK,

that this actually really helps people. This idea of combining a savings account with lottery-type upside, instead of just boring tiny interest payments, helps people save more money, which is good for society. generally speaking. It's, you know, you still need people to spend, but for the economy.

So they changed that, expecting that a business was now going to arise that would do that? Possibly, yeah. So basically what happened was there was in Michigan, I don't know the exact legal details here,

but they ran a pilot program in like 2010 called Save to Win. And by they, I think it was an academically run thing. And they proved over a couple of years of that program that it was also helping people save. And so I believe they went to whoever, I don't know,

they lobbied whoever, this is actually very good for people. We have a savings problem in America. The only downside, literally, like, the only downside to this is the lot. Like, if this works and takes off, like, does it take away from the lottery? And, like, most people agree that the lottery is generally a tax. It's a regressive tax, a tax on the poor. And so the problem with the lottery, not only is it horrible, it's monopolized by the government,

meaning if if lotteries were privatized meaning anyone could do it no company can get away with taking 60% cut on the lottery right you'd have competition and it would probably be like blackjack or craps where it'd be like oh 2% you lose on average right not 60 wait so explain the lottery I'm actually not familiar with this who who runs it where does that money go you say it's run by the government states the states the state runs the how how is the state able to get away with that do it and does that money go back into the community? Is that how they justify it?

Like, hey, we're raising this money, putting it back into the... And how much, do you know how much money goes into the community and how much money people are making? Roughly. I... Off top of my head, I'm going to get it a little bit wrong. But, so for every dollar that goes... So first of all, 44 states legalized it. I think Utah, it doesn't have it.

Some other states, if it's Alaska, Hawaii, something like that. Some of them don't have it, because, for whatever reason, they've said, we don't... This is bad for people. Or whatever. I don't know the origins of the lottery, but at some point, look, people are spending $80 billion dollars a year, the government's taking, I don't know the exact percentage, but it's like meaningful revenue. So anytime the government's threatened by a revenue stream, like, they're

going to want to defend it. And the status quo is easier. If the lotters didn't exist, it would be harder to say, hey, let's monopolize a system where people buy tickets for $2 and we're going to take whatever. People might push back. But because it's been a thing for so long, it's harder to be inertia. It's tough to take it away. So for every dollar that goes in the lottery, 6% goes to the convenience stores that sell it, roughly. I'm not sure the exact percent that goes back to community programs. I mean, that's a big chunk of it. Sure.

Like, that's where it's going. Convenience stores, prizes, and then prizes to the people who buy the tickets, and then back to schools or like whatever. But the reality is a lot of people playing the lottery are the same people that are going to these public schools. So you're basically taking a dollar out of their pocket, paying some convenience stores, and like redistributing it back to,

supposedly those people, probably inefficiently. Like, my view as the government generally, spends money less efficiently than individuals who know what they might want to spend it on or private companies. I did research on the lottery. Oh, wow, this is probably two years ago. So I wish I had refreshed my knowledge of this. But I remember something like, like, it was an abnormally high amount of people who play the lottery are unemployed or have a, income significantly below the poverty line.

And those make up like 60% of people who play the lottery. Very few people who earn above like $70,000 a year play the lottery. I found that was very interesting. Sounds right to me. I mean, the thing is, okay, I'm going to spend $10 a week on the lottery. Okay, you're thinking to yourself, okay, it's not that much. I'm just having some fun. And it's not, as long as it's not harmful to you.

But if you do over a year, that's $500, $300, $30,000, it's $15,000. maybe you could have been either saving it in a high-ed savings account at first and later on investing and earning 7% compounded. That's not 15,000 anymore. It's something much greater at that investment rate. But the psychology is like what's $10 once a week? It feels like nothing. And saving money is something it only pays off until it's too late, right? You had an injury and you need to pay a hospital bill.

You should have been saving the last year, but you weren't because there was no instant payoff to it. The lottery gives you instant payoff, right? You have hope, you have excitement for that period of time. People are bad at doing things that are good for them in the long run, but tough in the short run. Yeah. That's why, you know, why isn't everybody eating broccoli all day, right? Like, why isn't everyone going to the gym every day?

All right. Once you get sick or once you, you know, you should have been going to the gym, then you start. It's like the same type of thing. We're not good to, like, preventative, right? Yeah. I do have to say, though, part of the fun for me, because I play the lottery every now and then. And it's usually when it gets up to like a crazy amount,

then I'll be like, you know, I'm going to throw like 20 bucks and just see what happened. It is fun to get that little escape for, you know, an hour or so where you think to yourself, what if I win? What would I spend the money? Everyone does that. You sit there and it's like, okay, I'm going to think about winning here. Where is it going to go?

And you map it all out in your head. Totally. And it's totally healthy. When you go to a sporting event, you're paying $100 for the ticket. There's no change. Like you're losing $100. You're having entertainment. You're paying $20.

for entertainment. And as long as it's entertainment, that's fine. But when you think it's going to get you out of a poverty trap and that's like your investment strategy, that's when it's a problem. Yeah. Like if you can afford to lose the money, it's just entertainment. Right. So you came up with this idea, Yada Bank, to solve this. It was legalized 2015. How do you go about actually starting up a company like that? Yeah. So the first step research, like, is this an opportunity, right? Once you figure out, you think it's an opportunity. Now you have to verify, at least that was my approach. So it vary one step at a time. So the first thing I did after again researching, looking at other things in the market, seeing like why haven't they taken off? We were not the first.

So you got to figure out why didn't they take off. So we talked to some users of other apps that existed, tried to figure out what they like, what didn't they like. Next step was tried to come up with the actual concept, put up a landing page. So I recommend anyone do this that's thinking about an idea. Very cheap, very efficient. Put up a landing page that looks legit and have a wait list and make sure it communicates like your value proposition of like what you're going to build maybe even have a screen with the app that's just designed right run ads to it see if are people clicking through to it is the value proposition resonating with them are they willing to sign up or a wait list and then we had a survey after they signed up for the wait list we actually spoke to these people

about this product that didn't exist but we kind of pretended it existed or that we're working on it like why did you sign up what what interested you about this so really trying to figure out like is this is there something here it's easy to sign up for a wait list So, I mean, you know, still, there's degrees. Do 1% of people sign up, do 15% who visit the page, right? Even better if you have a product that people are going to pay for, can you get people to pay in advance for it? Or pre-commit, like, okay, once this is built,

I will pay $20 per a T-shirt, like whatever it is. Yeah, sure. Because that's more buy-in. So we saw some pretty good results with running the ads to that page. Why did the other apps fail? Yeah, so the biggest one that, 4S was called Long Game. And it was too much of a gamey interface, in my opinion. Like, with our product, we wanted to make it very simple and to run in the background so that could be appealing

to a lot of a wide group of people. If you have to log in every day and spin virtual wheels and do all these things to win five cents, two cents, whatever, at some point, it's not a good return on like your time. Like, even though it's kind of fun to go in every day and to make five cents, like it's too much effort. So we wanted to make it very simple. We wanted to have a a big grand prize. They didn't have, their grand prize was like $1,000. We thought having a grand prize was very,

very important because half the value of the lottery, or pretty much all of it, is this idea you can dream big, and it's fun because you have the hope. So if you're only winning 100 bucks, 500 bucks is the maximum prize, you know, it's different. Right.

And the other element was they were very non-social experiences. So these other apps would, again, you'd spin a virtual wheel. You'd do a lot of these things, and it was just you in your own, environment. With us, we wanted to be similar to the lottery where everyone has the same winning numbers, right? So midweek, you might be talking about it to each other. You're part of the same game.

And so I think that makes people talk about it more, which helps with growth. And also, it makes it feel less rigged. It's like playing a slot machine, right? Sometimes you're like, oh, I wonder if it's just rigged against me. When you're spinning a virtual wheel, you're like, okay, are they just programming it to make me lose? For us, when you have your phone says the same numbers your phone to the same numbers my phone, it's, you know, it's not rigged. So those were some of the reasons. Okay. So you created this app.

What was the feedback like from the people who signed up on the wait list? A lot of excited, yeah. I mean, they were like, a lot of them didn't even know high health savings accounts were a thing. And so this idea they could get more than 0.01% from Chase or Wells Fargo was exciting. And a lot of them were like lottery players. How much did it cost to develop the app? Was it just you doing all of this on the best? Did you develop the whole thing or did you like pay out?

At that time it was it was just me. This was literally probably a little over two years ago. The first step was not developing it. It was designing it. And part of that was also for the website. It was like design the website. And a friend of mine who actually now works with us, awesome UI, UX designer, awesome developer.

I just paid him to work with me on the initial concept. Hourly, hourly paid him hourly. So the first step was design. the concept, not getting to development. And then I ended up outsourcing the development to an agency. And this was still, I was paying for this. It probably cost 10 to 25 grand early on of my own money. And you don't want to go straight to development.

Because if you're going to outsource development, you're going to get something, unless you're very, you have it very well defined. You're going to get something you don't expect. So you want to make sure you have everything very specked out. When you click this button, this is what happens. This is what the screen looks like. Don't leave anything to the imagination because, again, they're not incentivized to build a great product. They're incentivized to get paid by the hour.

And so they're going to follow whatever instructions you give them. And they're probably going to code it, not in the best way, but something that works. So we spend a lot of times writing a 10-page document saying, this is how everything is going to work for the initial prototype. Here's what it's going to look like. Now I can hand it over to you to develop. Simultaneously, we knew this type of idea was going to require money because we had to partner with a bank. and banks, they spend a lot of time and investment to working with you.

And so they don't want to work with someone who has no money because are they going to be around in six months and is it worth our effort. So while we were developing the app, I also, and the designs helped for this, went out, put together an investor deck and raised from Angels, friends, and family an initial fundraising round.

For this idea, we needed to do that. Like for some ideas, you can do a lot more and build something. How much did you have to raise in the beginning? And how do you find a bank to partner with? that process like in how much money do you need like can i go and be like hey i got like two million box let me let me bank with you if you if you were serious about it and yeah you could so wait so you're saying so i could start my own bank fund it myself partner my own money partner with a bank yeah

partner partner partner you got to be careful legal distinction there partner yeah yeah yeah okay but you you you you could. So at the time, this was two years ago. There's, there was, you go directly to a bank, and in which case, they're not really well-versed and working with startups. And that was, they wanted to, you have millions of dollars to work with them.

There were a few companies that had emerged that were in the business of connecting startups with banks to work with. And these companies, because they were doing it, they had the compliance teams, they have everything, and their whole business was connecting banks with startups. They required, We raised $500,000, so we had to have enough money to where they wanted to work with us.

But because they were kind of this middleman and they make it a lot easier, that's who we ended up going with. Today, there are a lot of these types of companies now. There's probably 8 to 10, maybe, companies that their whole business is to connect banks with startups. There's a lot of regional banks in the country. It's not the Chase is the Wells Fargo or the world that are doing this because they just doesn't move the needle for them. A lot of regional banks in Tennessee or the Midwest that have, consumer branches that there's not that big. And so they realized, hey, if we partner with companies that are raising millions of dollars,

spending a lot on advertising, and we can work with them, they're bringing us the customers. Yeah. This is a better strategy. And you had to raise $500,000 in order to be partnered with them? Something in that range. We ended up doing $500. The monthly fee itself at the time was going to be $10,000 a month. And then we probably could have done a little bit less, but we also wanted money for development

and other things. Now, were these banks skeptical, like, you go to them and say, hey, we're running this prize-link savings account kind of, that's running almost as a sweepstakes. We don't want to do that. Like, how many banks are sketched out and said, no? Yeah, there were, when we went directly to the banks, definitely. They were like, we're not so sure about this. Like, this sounds a little bit weird. Two or three of them probably were like, let's pass for now, two years ago.

But all you need is one. Right. And so, but yeah, that was an issue. Because it sounds weird, right? It sounds weird that this thing that totally knew, no one's done a thing, a bank system like this. So, yeah, there were a lot of questions and a lot of diligence and things like that to see. Yeah, they did diligence for sure. Yeah.

Even the ones we partnered with. They did a lot of diligence to make sure that what we're doing is kosher. Yeah. So when you launched then, what was that process like? How do you even launch something like that? Is it just word of mouth at them? point or? So initially, again, this is incrementality, right?

Take one step at a time. When we launched, we initially got friends and family to join, mainly because we wanted to make sure there weren't any major issues that were going to be facing the public when they joined the app, right? So probably had a few weeks of just friends and family testing. Once you felt good about that, the next

step we were running ads on social, trying to get people to use the app that weren't connected to us. Main reason is you don't want to spend a ton of time growing something. that people don't like. And so the first question was, can we get 100 or 200 people

to sign up, make deposits, and like stick around? And until we knew that people were sticking around, it's not worth investing in growth because if you have a leaky bucket where people are signing up, sure, but they're going to leave you in two weeks, then like what's the point? So the first step was, again,

can we get 100, 200 people to have a good experience? What good experience means can be different for lots of different companies? For us, it was looking at retention, right? Like, are they depositing two months later? Are they growing at the deposits? Are they churning?

Are they withdrawing? And then once you get, once you feel like you have something that's retaining people, then I think is the time to just look at growth. And for us, it was still, we did a little bit of paid, but not too much. The paid was more. The paid ads was more to just test it out. Yeah. reviewing that bank account. Had you talked to him before or did he do this on his owner? How did that?

Because that's what caught me. We spoke to, I believe, right after the video. So, Seby, we were in White Combinator, which is a... Oh yeah, tell us about this. So, sorry, I skipped that part. Yeah, so we... What happened there? We raised that $500,000 of funding a year and a half ago now. Last summer, we... And then you... So White Combinator is a program in Silicon Valley where you apply to get accepted and they invest 150,000 at the time for a percentage of the company. And you apply to get in. They take one to two percent of applicants. It's pretty competitive.

And it's almost like the Stanford, Harvard of like startups. You go there. There's a great group of partners, they call them, that have seen everything in the startup world that give you advice for a two-month period. You're with a lot of companies in a similar stage, all motivating each other, setting goals, learning from each other. So it's almost like a startup school in a way. So we were in that for two months last summer.

And at the end of it, it sets you up very well because investors really like to see, oh, that company was in Y Combinator. It's a good stamp of approval of that this is something possibly worth investing in. Obviously, you need to show that you are worth investing in. But Seby, I believe he had kind of followed the Y Combinator companies.

So he saw us and then reached out, I believe right after the video. And it was like, hey, saw you in Y Combinator. Seems super interesting. would love to invest. Seby is so good. I don't know people underestimate, but I got to say he is one of the sharpest investors

when it comes to startup companies. I had no idea. I'm asking him advice on other companies that he's helping me out with, just with these terms, I don't even understand. But he's a genius when it comes to stuff like this. Right. And so then did he reach out to you after that, I guess?

I don't even know. Yeah. So the story was that I kept getting, and I don't know if it was from Sebi's video, I kept getting this comment, review Yada Bank, review Yada Bank. Prior to this, I was big on high interest savings accounts. So like every year I'd be like the best high interest savings account of 2020 or whatever. So people kept saying Yada Bank, Yada Bank, Yada Bank, Yada Bank. And I'll be honest, I didn't like the name Yada.

I really didn't get it. And I thought Yada is, it reminds me of that old early 2000 song where it's like Yata, It just reminded me of that. I'm like, yada, and like, what's yaw? The name didn't click with me. And it sounded like one of these gimmicky things. So I didn't, I didn't pursue that.

But I happened to see Ask Sebi's video that said the best high-interest savings account, Yada Bank. I was like, okay, well, let me at least see this. So I watched this video. I'm like, that's kind of interesting. So I downloaded the app and I think, I don't know if I immediately put like 10 grand in the app.

I put some amount like that, immediately into the app, I think it was 10K. And you trusted it because of Ask Sebi, basically. Yes, only because of Ask Sebi. Yeah, if it were anyone else, I wouldn't have done it, but because I saw his video. And then I read a video from the, or I read a blog from the Doctor of Credit.

And I think it was between those two. It's like, I trust As Sebi. I trust the doctor of credit. Both of these people are saying, well, the average interest rate, I think at the time was like 2.5%, something like that. I'm like, let me try it out.

And so I put $10,000 in the app. and I think it was like that first week, and this is a fluke of luck, by the way. I had won like $200-something dollars, like $300, that first week. And again, that was a fluke. So I text Ask Sebi my winning numbers, and I said, like, hey, by the way, I just want to say, thank you for your video.

Because of your video, I won like 300 bucks. This is so cool. And I remember telling Jack about this too, and Macy, because if I referred, I think it was for every reference. For all, I got like 100 tickets or something like that. So I was like, well, if I could get an extra 200 tickets today just by telling Jack and Macy, I'm going to do it.

So then they both signed up. I got my extra tickets. And I was like, I'm all stoked about this. I was planning to make a video about it. And so then he introduced me to you after I told him that I was really impressed. I was planning to make a video anyway reviewing it. But then being in touch with you was like, I wanted to be a part of it. Yeah, and we had a mutual friend too from L.A.

Yeah, so what was the high school you went? Harvard Westlake. Which high school were you? New Roads. Yeah, okay. And what you were, I was class of 2008. 2010. Okay.

Yeah, yeah. But still, all those groups kind of overlap a little bit. But yeah, we had a mutual friend. I don't remember who. I think Spencer Friedman? Yeah, yeah, yeah, Spencer. And I think Spencer was also an investment banking. Yeah.

Can you go into that? Yeah. Okay, so there we go. Exactly. Yeah, so he dated my girlfriend at the time, one of her best friends. Oh. Interesting. Everything comes together.

Yeah. So anyway, so just with all these connections, I felt comfortable, and I was like, I want to invest. I want to find some way where I could get involved in this. Because I had never done an investment like that before. Like my investments were always, really up until that point, it was just like real estate, Roth IRA. That was it. So for me, this was like a brand new world. And Ask Seppi was really helpful in navigating a lot of that and answering those questions.

So then I made my video and tell us what happened because I don't know if you were prepared for as many people to sign out. Yeah, that was quite a weekend. I think it went out on a Friday night. And we just had signups coming in left and right and up and down. And all weekend, we didn't have a customer support team yet. So, like, we had, I was helping on the customer support.

And all weekend, we were just trying to keep things up. So, yeah, it was, that was a crazy weekend. I think we tripled, like, that weekend in terms of signups. Yeah. But along with that, though we got to talk about the Ponzi scheme oh yes what is this what is this i got to say a lot of people were very upset because they said i can't believe graham is going to promote a Ponzi scheme this sounds like a Ponzi scheme this is like this is gambling uh i want you to address everyone who says it's a

ponsie scheme why it's not a Ponzi scheme how we actually know the numbers being picked are truly double blind how do we know that nobody knows the numbers before how do we know that you're not involved or like, explain the background about this. So I'll start with maybe the gambling side. So what makes gambling, what makes gambling, is the possible loss of money. With us, you deposit money, it's an FDIC insured bank. You cannot, you can never lose that,

up to $250,000. That's just the law, the same way Chase, Bank of America operate. So gambling means you can lose money. In terms of the prize drawings, we have a $10 million jackpot, which if someone won that prize, us paying it out would be pretty harmful to the business, obviously.

We partner with an insurance company that we pay them for every entry, no matter what, every week, a certain amount of money. And if someone hits the jackpot, they pay it out. And because of that, every week they pick the winning numbers.

And there's no way, I guess, for me to prove this to you, but they pick the winning numbers. They don't see anyone's picks. We, in theory, could see the picks. Like, we don't, but obviously it's our app.

Like, we could see what the numbers are. You're saying you could see the numbers before they come out? No, we could see, like, you pick one, two, three, four, five, six, seven. Oh, you could see my numbers that I picked, but you couldn't see their numbers that they picked.

So if we were the ones picking the winning numbers every night, like you could say, oh, Adam, are you guys looking at Graham's picks and saying, okay, I'm going to pick numbers nobody has, right? But because the insurance company is picking it, it's blind. They don't see, they have no way to see the numbers people are picking. We have no way to know what numbers they're choosing.

How do I prove this to you 100%? I mean, I don't know. You contact the company and do, do some diligence on it. That is how it works. And the reality is we want someone to win. If anything, we want someone to win the grand prize. We're paying for, we're paying the insurance anyway.

So if someone wins that prize, that would be amazing publicity. Is it like car insurance where you get in an accident, like your insurance goes up? Yeah. It's 10 mil. So all of a sudden your insurance go up after that? No, because the reality is why does insurance, again, why does insurance go up after an accident?

Something has changed about you as a driver. You're now riskier because, You're underwriting something that is not certain. There's between risk and uncertainty. With a sweepstakes system, with numbers being drawn, you can calculate the exact math behind the game. So just because someone wins doesn't change the underlying principle of this is the math. Whereas if you're doing home insurance, right,

and it's Louisiana and there's a hurricane or whatever, maybe something changes in your model where you're like, okay, we underestimated the actual risk. Because there is no math behind it, it's just history. Right. Right. And so with car insurance, it goes, up probably because they're like, well, they gave him insurance last time because he had a clean

driving history. He's gotten an accident. Maybe he's not as safe as we thought. With this, someone in the wins, they're not like, okay, math changes. Sure. Right. Yeah. Now, you do say that you don't lose anything. One of the comments that I got repeatedly is that technically you are gambling with the extra money that you could have made at ally bank. So you're paying a 0.2% interest rate. ally bank is paying 0.5. So you're paying 0.3% interest on your money for the chance at earning way more than that. There is an opportunity cost, right?

So let's say you get really lucky with us. You might get a 10% API. You get super unlucky win no prizes. You might get the base 0.2%. So yes, when you win less than what ally is paying guaranteed, you might have lost some foregone opportunity cost. That's real. I mean, but you're still not losing anything

in the sense of what you put in. Like, yes, there might be an opportunity cost there. The reality is, with our prizes, the average people win a lot more than 0.5% on average. But if you win less than that, sure, you could have made more. The same way, when you're sitting on the couch on a Friday night watching TV, you could be driving an Uber and you could have made $10. Like, yeah, there's that element. But whatever you put in is totally protected, whatever you win is protected.

But if you view it from an opportunity cost perspective, sure. But so is everything in life, right? You know, maybe I could have done something, you know, yeah. So that's what I would say. Does the insurance company pay out every single payout? Or do they just pay out the grand prize? Just the grand prize. The rest of the prizes are funded from Yada.

Yeah. Got it. So it's only the 10 million. Yep. Got it. Okay. And, again, the reason we did this is because, again, we thought having a big jackpot was very important. There's a chicken and egg problem, which is you can't offer a big jackpot.

Unless you have a ton of people. You can't have a ton of people unless you've grown. And so if you want to offer a big prize from day one, you need to do it with insurance. If you go to a sporting event and there's the half-quart shot, a lot of these prizes are really insured. So a lot of these jackpots you see in the world. Not the lottery, because again,

the lottery is millions of participants every week. They don't need it, but... That's interesting. Really curious. Can you say how much that insurance costs? Asking the important questions. Is it paid like per month? It's paid per entry, so every ticket has a cost associated with it.

No way. Yeah. I did not. It makes sense for the more entries, the more chances to win. So, yeah, every month it costs us around the tens of thousands for the insurance on that jackpot. Wow. Yeah, and so how they price it and how they think about it is, what are the odds of someone winning? What is our payout?

And like any insurance, how much we need to charge to make a margin on that. Is there a certain time or amount that you guys? will have to be worth until you guys remove the insurance thing? Yes. We have to get, there's a much bigger to be able to do 10 million on like a weekly basis. We'd probably start out by doing it on a monthly basis or something like that first. But again, when you're funding a jackpot like that with the lottery, every dollar that goes in is a dollar that contributes to the pool. With us, it's a percentage of that, right?

And so it requires way more scale. So in the UK, for example, they offer two prizes of a million a month, not a week. And they have a third of the population on it. And so you need massive scale before you can self-fund the huge prizes. So this is expensive to run. How expensive is it every month? What are the overhead costs? How many employees are involved?

Do you pay yourself a salary? Yeah. So it's in the hundreds of thousands. I don't give the exact numbers. It's in hundreds of thousands per month to operate. 12 full-time employees, and then we work with a bunch of freelancers and agencies that probably makes us in the 20s.

And yeah, everyone makes salary. So me and my co-founder make a salary. Can you save what your salary? No, I can. I can't. Maybe one day if I have a big YouTube channel and then I'll publish all the financial details, but not today.

I want to know that's funny. We want to know. Not today. Okay. It's in line with what you'd see at any Series A funded, like, startup. We have a lot of metrics and intelligence on, there's a lot of data out there on what people in any role at a startup make, and we use that when, same thing without me and my co-founder.

So it's, you know, median for our type of company. Got it. What sort of expenses have come up that you have not anticipated? Fraud. So, yeah. You can plan for all your expenses, but you don't know how much, first of all, you don't know how much fraud was that big of a deal. And you don't know how much is going to be in a given month because sometimes you have like fraud rings that try to do crazy stuff. I don't want to get into the details of how they get away with it.

But the banking system is the rules around the bank system are written such that it's very easy to commit financial wire ACH fraud removing money. So every month like, you know, we're doing a better job of this. And a lot of people will complain, oh, why are my limits this? Why is it this? And I'm not trying to commit fraud. And like, yeah, but there's the, there's the sub 1% of people that are. And it kind of ruins. It's why settlement times have to be a little bit longer.

It's why limits have to be a thing. And it sucks because it ruins it for all the people that are good actors. But that's been the one that, and that can be in the tens of thousands a month. Like, easy. And it's a big problem across the whole industry right now with COVID. Now, about the sweepstakes aspect of this, technically to be a sweepstakes, you have to have a no-consideration entry, which means you can mail in an entry.

How many mail-ins do you get? We don't get very many. But you do get some? We get some. Single double-digits-type range. So nothing that really moves the needle. The reality is the postage cost, like for, you know, it's just not worth it for people. I mean, some people don't do the math, but it costs 50 cents to mail something.

I mean, most people on the app have a lot of tickets, right? So they're winning stuff. but you have one ticket. Yeah. You're probably not going to win the 50 cents back in a given week. Yeah. And so, yeah. You know what's wild?

So I don't want to say I learned this the hard way, but I wanted to do a giveaway with public.com. Link down below in the description. You can get a free stock worth all the way of $2,000. So I wanted to do that, but I wanted to, I thought it's such an easy thing. I was like, how about this? I'm going to pay out of pocket to give somebody a free stock

who just goes on public, deposits a hundred bucks, and in the next week, I just want to get, I'm paying out of pocket on it. Like, I'm doing this myself. Just want to give them a free share of Tesla, a $700 share, and just randomly pick somebody.

For one winner. For one winner. I did not realize the legal complexity of doing that, and all of a sudden now that's considered gambling, even though technically you don't have to invest the $100, you could deposit $100 and then take it out immediately after, technically that's gambling,

because now you're paying, paying for the chance to win a prize. Oh my gosh, the legal work that we had to do, unfortunately, it kind of ruined it. Yeah, that goes back to the initial point about consideration, right? Depositing money could be consideration. It was horrible. So it was like a few weeks of, and public has an amazing legal team that worked with me to try to get this done. But yeah, part of that was that there's a mail-in entry. and I'm thinking, okay, it's in a disclaimer, it's in the fine print,

and you have to scroll down to like see no purchase necessary, click the link, you know, you figure out where to mail your entry. So I was thinking, what, maybe like a few people are going to do this? Hundreds. Wow. I kid you not. You got a PO box for the mail? Hundreds.

Yeah, well, no, I don't handle it. So they handle it all. So like, I'm removed. I'm simply just like funding this, but they're legal. It probably costs them way more. to give away this stock to comply with regulation. But the founder of public sent me a picture with these bins of envelopes that were all entries. And I'm like, how?

And it turns out, what's interesting is that there are these sweepstake groups that what they do is they automatically comply. And it's a group of like, they're almost always like, you know, I don't want to say the elderly, but they're almost always people in their 60s and 70s who they get in these groups, sweepstakes groups, and they all do it together. And they have a big list. And they don't even know what they're signing up for. They're just like the mail, mail, mail, mail, mail. And it's just a numbers game and they eventually get it back.

Do they automate the printing of the entries, you know, or they handwrite it? Because you can usually say it has to be handwritten. Yeah, on the picture. And Alex, you know what? I could maybe send you this. Maybe I could send you this picture. Yeah. Okay, so here's one of the bins.

How wild is that? Look at that. I'm not surprised. That's one. That's one of the bins. Look. Those are all entries. There were a lot of those?

Those are all answers. Yes. Multiple, multiple bins. And this was a disclaimer on the bottom of your page on the website. They had to comply

with whatever the regulation was. So whatever was required to make it illegal sweepstakes, that's what they did. Totally know, yeah. But I know for myself, like you don't look at the no purchase necessary option

in the fine print and see like... There's probably some forum or something that can go and they can find all of the people running sweepstakes and they all load it onto there. Yeah, and is it worth it, right? So when you're giving away a thousand dollar prize,

I could see that for sure, like, or 700, Tesla stock. Someone's just like, oh, let me take a shot at 700. With us, it's a little bit like, oh, what's a ticket? What's it worth? It's a little bit less, you know, clear. And so, yeah, one issue, if you offer a sweepstakes that is too valuable, you have. That is interesting. You could have said, okay, if you sign up, you get 100 tickets.

And then if you do the mail-in, or entries, and if you do the mail-in, you get one ticket. You know what I mean? You might be able to do something like that. There are some nuances. where you have to give mail-ins the same, like, so they could be able to mail it 100 times. Yeah, you could do that. If they'd have to be able to mail in 100 times

and get 100 entries to be able to do the same. You sign up you get a million tickets. Yeah. Yeah, so, yeah, it's unfortunate because a lot of these giveaways, the mail-in entries make the sweepstakes almost, like, not possible sometimes, but a lot of these sweepstakes are, they're not, again, I don't think they're gambling, right? Like, it's just the way the laws are written, unfortunately, right? Like, you're not trying to, there's nothing negative that could happen to anyone

and if you didn't have the mail-in option, right? Right. When are you planning on, like, dissolving your relationship with Evolve bank? Like, what evaluation do you guys have to have your own bank? And then also, at what point are you guys just going to sell it off or are you going to continue to grow up forever? Yeah, so on the Evolve side, no plans to switch anytime soon or to focus on that. There's a lot of big, like, even the biggest neobanks out there generally are still partnering with banks. You need to get to a scale that, like, it really makes sense.

to go through the effort of sometimes you buy a bank or you actually buy a bank to get their charter or you become a bank and go through the chartering process. It's very expensive, very time consuming. And so when you're a young company, you're really trying to prove out, like, is there a demand for this product? Your risk isn't, like, we know we can cut costs. Like, we know we can be more efficient? We know that. The question is, can we attract enough attention, enough users, enough deposits, enough product use,

at which it makes sense to start cutting those costs. because again, we have fixed resources. We need to focus on that right now because we know the other stuff is possible, just takes time and money. And so, you know, switching banks is always a possibility because, again, you have terms with the banks in terms of what is an ACH cost.

There's fees all over the board there that we pay the bank to work with them. So if we can switch to a bank that's giving us a better deal, that's always a possibility for us. There is a lot of headache to doing that. If you look at your debit card, it'll say the bank's name on it.

So we'd have to manage multiple programs. where we have to have some evolve and some new bank. So it's a bit of a headache for sure. In terms of like selling or growing, we're very focused on just growing as a standalone entity right now. What would that look like in a few years from now? Like where do you see YADA integrating? Because it's got to be more than just a savings account right now.

Yeah. And so far, we've rolled out a lot of new features that make it more than a savings account. debit card, there's now more flexibility in terms of bill pay, sending checks, depositing checks, you can really use it as a full bank right now. And we're working on credit cards, credit building loan products to help people build their credit.

Someday we want to get into like the ETF investing, right? Helping people, once you save, the next step is to start investing. We don't want to be like a Robin Hood offering individual stocks and make it like that. We want to probably do more index fund type stuff. So the next two years, we want to become a place people can really make it their primary bank.

and so we're doing a lot of stuff related to that. Also, we're really focused on adding a lot of social features that help people enjoy it together, which improves our defensibility. So if someone copies us, it's harder to leave if you and your friends are all participating. What is the typical, let's say for myself as an investor, what's the typical return look like down the line?

Is it usually an acquisition we sell, or is it just gets so big that it's profitable and profits are shared, is it like it becomes a publicly traded company or how does that work? So it's probably more common. So most startups fail, right? And so it's more common that failing sometimes means you get acquired, you get aqua hired, you get bought out for a very small amount and investors get their money back or a percentage

of it. Sometimes if they lose, they get some of it back. So that's probably by far the most common on a number of times it happens basis on like a dollar's return basis to investors. I would imagine the companies that are standalone companies and IPO. make up a lot of the dollar, right, percentage of returns to investors. So the big IPOs, and then, you know, the biggest IPOs are usually bigger than the biggest acquisitions, which is why. So, yeah, at some point, it's not that you share, I mean, you could share in the profits if the company pays out dividends at some point.

That's usually way down the line, especially for a tech startup. Yeah, so it seems like either the options are IPO at the top, acquisition, and then the company just doesn't. fails and then now let's say for both for myself and for a user of Yadabank, let's just say doesn't work out. I'm guessing there's never a point where there's not a value to the company. So there's always something that could be like, hey, well, we fail, but this company's willing to buy us out at X amount, take over all of our users. And then, yeah. Yeah, we saw that happen recently with, I think, Simple Bank or something, where they were

kind of like, I don't know the exact details, but like PNC. bought them or Aqua hired them and they just rolled simple into their into their existing product and they just renamed it. So I mean if that happens, yeah, sometimes a company could take you over and keep you operating as a standalone app.

Sometimes they'll integrate you into their existing product and so you'll just roll your accounts into their existing application whether for PNC is PNC like whatever. So yeah, that's how it probably play out in that case. What would be your goal, let's say five years from now?

Five years from now, I mean, I guess IPO is the ultimate goal, like standalone company. Why would there be an IPO? Is that as a way to cash out, or is that as a way to, like, the next way to grow? Or because it seems like if you get to a point of an IPO, why do that for the company? Yeah, unless it's to raise more capital. So in the current world, like, you can be a private company right now and raise a lot of money. There's, like, a lot of money. 20 years ago, people weren't raising billions of dollars in the private markets, I don't think.

And so people would use the IPO to be able to raise a lot more. In today's world, it's probably more common to IPO, not for the money, because you can usually get the money in private markets, but for a lot of investors, employees, founders, us, you know, they've been, they've been had their cash locked up for a long time, and it's a way to cash out for sure. Usually it's not about, and that's why you're seeing a lot of direct listings do now from tech companies. Direct listings mean you IPO, but you're not selling new shares. You're not raising money for the company. You're just listing and existing shares are bought and sold. So yeah, a lot of people will say it's to raise money. I think it's usually to get liquidity for, and it's not

for the investors and for the founders and employees that have been locked up with the shares for a long time. Now, what would it take in anybody IPO or does it have to be built out to a certain amount before you decide to do an IPO? How does that work? So I'm not sure what there's like a threshold. There probably is a threshold in terms of what your implied valuation would be. There's public companies that are in the low hundreds of millions valuation. Pretty rare to be under like 100 million in a public company, unless you started out way

bigger and you've just share prices gone down. The typical IPO is probably in the, I don't know, 500 million to 10 billion valuation range. Okay. There probably is some thresholds around, I don't think. it's a revenue threshold. I think it's a number of shares and evaluation, but I don't know. There's something.

And what would Yada have to do to get to that point? I don't know offhand. I mean, I don't know. Okay. We'd have to be, yeah, we'd have to millions, millions of users. Yeah, I'd say millions of users is probably the bar. Okay. Yeah.

Got it. You could make us one step closer using link down below in the description. Nice, yeah. Yeah, 100 tickets. Refer. Wait, wait. Who's link, Graham? I won't wait.

I want the 100 tickets. You want that, but I want the 100 tickets too, Graham. We'll work it out. There's one thing that I feel like with the debit card, I told you about the Venmo cash app

situation with it. Very interesting. So people are Venmoing people there, you know, the friends all the time. You're not getting any rewards for it. You get charged a fee for using a credit card

on Venmo, cash app, all these services, because merchants pay a fee. If you use a debit card on all these platforms, they don't charge a fee. But no one does this because most debit cards don't have rewards. So what's really interesting is with our debit card, you get tickets, plus you get the chance to get what you just bought for free.

You use it on Venmo cash app, a lot of these peer-to-peer payments platforms. You get those rewards. So right now, let's say you send Jack 20 bucks for dinner. Right now you're doing on Venmo and you're not getting rewards. Use a debit card. You get whatever rewards debit card has because they process it as a purchase. which is a very interesting use case we've seen in general. What's the limit on that?

It's whatever the, so it's a purchase, right? So Venmo is processing it as a purchase. So it's whatever limits they have for you. And that could be different. Now, what's to stop me from Venmoing Jack, to Venmoing me, Jack, and he just bounces between us. That was a good catch. Do we get, we got that?

Do we get in slow-mo? Play it back in slow-mo, please. Obviously we hit a sensitive topic. That was, what a catcher. Wow, okay. Wow. What's to stop? So nothing.

Nothing's to stop it, except Venmo's policies or cash-ups policies. Got it. It's just processes a purchase. Does that hurt Yada at all? No. Where does the money come from, though? Because the thing is that if we keep bouncing money back and forth, we're racking up tickets between us. Yes.

Who pays? There's a little energy. There is. Who pays that? So interchange for those who don't know, credit cards and debit cards, when you buy a sandwich, the merchant is paying the card networks, the issuing bank of the card, a fee for their servicing of that payment. They do it because people are used to paying with cards now. Sometimes people pay more than in the history.

They paid more with cards and cash. And so it's just people spend more because they feel like it's plastic and not real money. But these merchants pay a fee. With credit cards, that fee is often like 2 to 3%. With debit cards, it's typically. like 5 to 10, 0.05 to 0.2%, so it's very cheap. So when you're making a bigger purchase often or you're using Venmo or whatever, they're not going to let you pay with, send money to Jack with a credit card because they're

paying 3%. With most debit cards, they're paying a tiny fee. And they do it because it's convenience. They want to have money move easily, and so they don't charge fees for debit cards. There was an amendment passed in 2010, 2011, small banks, small issuing banks that have debit cards get paid a lot more interchange. So whereas the traditional Big Bank of America debit card makes 0.1% on every transaction, smaller banks to make 1 to 1.6%. And so you're able to give better rewards as a smaller,

or if you partner with a smaller bank or if you are a smaller bank. But a lot of companies don't charge fees for debit cards because 99% of the debit card transactions are from big banks and it's like zero. And so it's just an interesting... That's really interesting. And they just passed that because they wanted more small banks? I don't know the reason why they passed it. I don't know.

there's got to be a reason. I've not looked in like the reason why that was passed. That's fascinating. So you just pass on the rewards to us. So yeah, and you're Venmo someone,

Venmo's paying an interchange fee when anyone use a debit card they're paying a fee. And so, yeah, we've seen people use it for Venmo for rent. You know, sometimes you pay your rent and you're paying a, you can't use a credit card,

but they often accept debit card. That's, maybe you guys could start to bounce money back and forth. Venmo might have problems with it. But how much? Because I Venmoed quite a lot of money back and forth just throughout, you know, whatever. I wonder how high the amount would have to be for them to catch on. I have a limit.

It's like $1,000? Or what is it? Again, it's probably, they probably have a different limit for different people. That's the thing. They probably have different limits for people. Alex, pull that up. While we're waiting on that, I wanted to ask you this too. Do you have any concerns over the regulation of,

gamification. For those that don't know, Robin Hood is under fire because they've gamified investors. They made it really fun. You scratch off a ticket and confetti comes down and you make a trade.

It's like, oh, you made your first trade. They make it like a video game. Are you concerned that Yada is similar to that aspect where it's like a number rolls out of a rolling thing and, you know, is that a concern?

The concern is more that like perception can be reality. But if you really look at it, like gamification itself is not the bad thing, right? The reason Robin Hood gets scrutiny is because they gamify something that makes people do a risky thing that sometimes they don't know what they're doing. It's not gamification that's bad, right?

It's the fact that it's driving a behavior that people don't understand. They think their stock's always going to go up, so they put too much money in it, and it can go down. So I don't think gamification is bad, but I think public perception is often, oh, this thing looks like this thing, so this is bad because this is bad, or possibly bad. So from perception perspective, yes, we have to educate people. Yes, it's gamification like Robin Hood, but the key difference is, again, all the money's FDIC insured. You could say you're losing an opportunity cost of foregoing a return in the market or an ally or whatever it is.

But like gamification itself, in my opinion, like in the way we're using it is not a negative thing. Got it. Alex, we find those limits? Yes. It is $4,999.99. and 99 cents per week as long as you have a you know ID link

to your account which we all do and that makes sense I don't think I have an ID link yeah then your limit is $299 and 99 cents per week the what is $300 if you have no

like ID linked I probably have an ID linked yeah must I was looking online on YouTube and I saw that somebody actually won the Tesla and maybe you got according to your calculations, you didn't expect them to win so fast?

Is that true? So I actually think we've had fewer Tesla winners than expected so far, which is just a matter of luck, right? It's a sample size. So no, we actually expected someone to win. It's not that, it's not that crazy

that someone won it. So, yeah, no, I think it wasn't that crazy given the math behind it. Did they take the Tesla or the cash equivalent? The Tesla. Every single time? Only one winner so far. Oh.

Oh. Yeah. I've seen his, you reached out to him and you made a video with him, right? Yeah. It's good advertising.

Yeah. Exactly. Yeah. That's great. I want to ask a question that I want to know but the audience might want to know and I don't know

if you can answer it, Graham. All right. How much did you invest in Yada? Can't say. Oh. Can't say. Wait, you can't say because you don't want to or you actually can't say.

It's six figures. It's in the six figures. Wait, what? Yeah. It is? Yeah. I don't remember that. Really?

Oh. But if you wanted to say, could you say it? I don't know. I don't know. I don't know. I'd rather. I'll say no. It's better.

It's better leave it to the imagination. Oh, thank you. I'll say you can't. Yeah. Okay. Yeah. Good question, though. Good question.

That's the tough one. They were probably wondering. You know the audience. Yeah, definitely. Leave it to the imagination. Thank you so much. It was really nice meeting you too. Thank you.

Nice meeting you guys. Finally. I know. I know. Thank you so much for making it all the way. for doing this means a lot. Thanks for having me for sure. I don't want to make this come off as like sounding sponsored or anything like that because

it's not. But we were able to work out just now if you do actually want to sign up. We'll give you an extra 100 tickets on top of your extra 100 tickets. We'll find a link down below in the description. So if you want to sign up, try it out. And if you have any issues or anything, no, you could reach out to the Yada customer service. Do you ever answer this? Yeah, yeah.

People reach out to me all the time too. Adam at with theata.com. Oh, you just, you don't know what you just did. Yeah, well, we'll see, we'll see. I'll hopefully respond to most of you guys. Oh, geez. Thank you so much. You could guess my email anyway, right?

Like, you know what? I invited it. Yeah, you know, it's surprising a lot of the emails that, like, the top companies are the most simple things. It's like either first or last name at the company.com. And it's so easy. And these people check their emails. It's mind-blowing how easy it could be to correctly guess it.

I've heard stories of Elon Musk types. I don't know if Elon Musk, but people in his name responding. Or in that Berkshire Hathaway.com. Yeah, yeah. Mr. B. B-H. Yeah, anyway. Thank you guys so much for watching. Make sure to subscribe.

Check out the clips channel down below in the description. Hit the like button. That helps us. Oh, you know what? You actually have to tell. Look at the camera and say, destroy the like button for the YouTube algorithm. Destroy the like button for the YouTube algorithm. I've always wanted to say that.

Thank you. Thank you so much. I appreciate it. Thank you. Thank you. Until next time. Awesome. Oh, thank you, man.

Can we take a selfie in here? Yeah. Did I get the crew?