Your Next Move - Managing Cash Flow to Drive Startup Success

Episode Date: August 20, 2024

On today’s episode host Aisha Bowe talks with the two founders of Farther: Brad Genser and Taylor Matthews. Farther is a technology-centric wealth management firm -- combining expert knowledge with cutting edge tech to create a more holistic approach to money management for their clients. In all stages of its growth, your company’s success or failure will be determined by how you manage its cash flow. This episode offers hard-earned advice from founders about how to make sure well-managed cash flow lets your company scale to its next level.

With the VentureX Business Card from Capital One, you earn unlimited double miles on every purchase. And with no preset spending limit, your purchasing power adapts to meet your business needs. Capital One, what's in your wallet? Find out more at capitalone.com slash VentureXBusiness. Terms and conditions apply. I'm Sarah Lynch, and you are listening to Your Next Move,

audio edition, produced by Inc. and Capital One Business. On today's episode, host Ayesha Bowe talks with the two founders of Farther, Brad Gensler and Taylor Matthews. Farther is a technology-centric wealth management firm combining expert knowledge with cutting-edge tech to create a more holistic approach to money management for their clients. In their conversation, they drill down on the notion of cash flow and expound on the importance of cash flow to a company's success. But before we get to that interview, I talked with Cynthia Lowe, head of Beyond the Card at Capital One, to get even more insight into the importance of cash flow.

Cynthia, thank you for joining us today. Great to be here. Why is cash flow management so important? First, let's define what we are actually talking about. Cash flow management for business at its core is understanding how all the money in that they are generating from customers for their goods or services best covers all the money out. Inventory, payroll, rent, and other expenses. The challenge for many businesses is that there's often a timing mismatch between the money in and the money out, and therefore, a need to get access to cash. Over half of the 33 million businesses in the U.S. experience cash flow shortages at least once a year. Let's talk about how business credit cards and other tools can help manage these situations.

Business credit cards offer a variety of tools and integrations to manage cash flow. In addition to the typical 30 days of float you get with a credit card, all Capital One business cards let you choose your own monthly due date to control when you pay, reduce time spent on paying bills with auto pay and avoiding late payments, authorize recurring transaction, and easily see subscriptions. This also helps with avoiding duplicate fees and tracking price changes. Credit cards also offer protection against fraud, which can impact your cash flow as well. What are some other tools that can help businesses pay their vendors? What I find fascinating is that 81% of businesses today

still use paper checks for payments, even when there are faster, cheaper, and more protected ways to pay bills. Capital One offers a tool for all small business customers, which allows businesses more flexibility in how a business makes payments and can offer the ability to pay 100% of your bills digitally and track all vendor payments with an easy-to-use dashboard. As a small business, you can choose the way you pay, even if the vendor doesn't accept credit cards. Are there other financial planning benefits that business cards can offer in addition to supporting cash flow management?

Business credit cards can contribute to strong financial management practices overall, including year-end summaries that give you an itemized report of your spending to simplify budgeting at tax time. Integrations with platforms like QuickBooks, Concur Expense, Expensify, and others to seamlessly transfer spending information and see your accounts payable in one place. And finally, fraud and security alerts that let you know about suspicious or unexpected charges on your account.

Thank you, Cynthia, for sharing these insights about expense management tools to streamline your business. Really appreciate it. And now, here is Ayesha Bowe's conversation with Farther founders Brad Gensler and Taylor Matthews. Enjoy. Thank you for sitting down with me again, Brad and Taylor. I'd love for you to take a moment and walk me through the major phases of growth for Farther.

Well, thanks very much for having us. We really appreciate being here. Major phases of growth for Farther. At our very beginning, we kind of defined a few phases that we would progress through as a company. And these are in part phases that we had established for ourselves. They're in part influenced by what we expected the market to demand of us as we continue to grow and advance through these phases. But at the very high level, seed phase, where we're just getting started, we're trying to figure out product market fit and prove that somebody somewhere is going to buy what we're selling. Then an early growth phase where we have some sort of semblance of a product market fit, rapid iteration continuing to progress through there.

A somewhat later growth phase where we're hitting scale and we're really trying to put the pedal to the floor, continue to do what we do really well, but that next level of scale over and over. And then finally, and we're not quite there yet, a maturity phase where we get to profitability. And we can start to really think about how do we grow a very mature company from there, expand into different areas, and be really excited about hitting that kind of profitability mark. Building a business is a wild adventure,

but it's something that's very structured, and you have to be very cognizant of what you're taking risk on, and what's fixed in each phase, starting with the seed stage. The seed phase, we know that that can be a messy place. So can you tell me a little bit about your approach to seed, some of the things that worked for you, and how you navigated that tricky area?

Yeah. Seed phase is an extremely gritty phase. And this is where you're running everything in spreadsheets from a finance perspective. The people who are joining you are not necessarily, they might be very committed to the journey, but they might not necessarily be the most capable at creating structures and the like. And you're surfing this kind of uncertain wave of your platform as you do this. So really, we will say people, process, and technology are always in view. People are getting used to what you're saying and the mission of the company. From a process perspective, there are almost no processes whatsoever, and you're building those out. And from a technology

perspective, it's all quite nascent. You're trying to figure out the technology that you're building as well as the supporting systems that you're not building. I'll bring it back to the theme of today is cash flow. Before all that, you need to get some money. And we need to run a business. We need to hire people. We need to build all of those people, process, and technology, and that demands cash. So the way that we started with that was PowerPoint in a dream, talking to our friends and family, and progressing from there to a series of angel investors and ultimately our first institutional investor. But the idea was we knew that this was going to take some amount of cash to get off the ground. It's wealth management. It's not the minimal viable product for wealth management. It has a higher bar than most

businesses because it's people's money. It's everything that you've ever built for in your entire life, everything that you've saved. We acknowledged that. It meant that we needed to invest a little bit more upfront before we could go after those first true target customers of ours. And again, that demanded capital. Can you share a little bit about how you approach the process of raising your friends and family around? When I started out, I immersed myself in Guy Kawasaki. I was looking at pretty much everything Y Combinator. And I think you guys both know there's like this entire art to creating a pitch. And there's even more of an art

when you're talking to friends and family, many of whom are not ashamed to tell you how they truly feel about your idea. Did you find that you needed to iterate a lot? Give us some tips and best practices at this phase. Sure. My mom definitely didn't understand why I was leaving a very well-paying job to go to this.

I think both of us were also immersed in the kind of lean startup sort of environment. Both of us went to MIT together. That was very much how entrepreneurship was taught there. much time on crafting a deck and a financial model and all of these kind of artifacts that you're supposed to have in telling your story and kind of bringing it to market, especially as first-time entrepreneurs. There's a pretty high bar to get folks to part with their capital. And that is part of it. But what matters way more, I think, is the story. And that was something that we got better at telling over and over as we heard some yeses. Thanks, mom and dad.

But also some no's as well. And trying to understand where the gaps were was pretty important to that process. Did you find that the deck ended up becoming less important than the story that you were telling? Sure, and probably less important than just who we were as people. I think that that is fundamentally what you're investing in at the earliest stages of company.

At some point, we were selling ourselves. We're the type of people that have grit, that we're going to figure things out. It probably won't progress just as it is on the page. It didn't, by the way. But we are the type of people that will be good stewards of that capital. I want to ask you about that, because I found that the amount of money that I thought I needed was very different from the amount of money that I actually needed. So can you talk a little bit about how that worked out for you? How much did you intend

to raise versus how much did you actually need at that point in time? It's a good question. And I'm not sure like if need is the right word, but we set out to raise $800,000 as kind of a, as what we thought it would take to get to some first product. What we didn't really consider was there's probably some thing that we need to do after we get to that first product. So we ended up raising about twice that amount of money at the earliest stage of our company. And that gave us not only the ability to get to launch, but also go through launch and prove some level of traction. Also, as it happens, coincided with the onset of the pandemic. So if you remember at that time, everybody was terrified. Like the walls were crashing down.

Nobody knew what was going to happen. We definitely had to rethink our plans. No big marketing launch or anything like that. It was just kind of batting down the hatches and prove that we could probably progress through founder-led sales more than anything. But that was, luckily, we raised enough capital to get us through that period and then some. Can you talk about the importance of founder-led sales during the seed phase? First, what our product is, is financial advice.

At the end of the day, that's what we're selling. And financial advice is At the end of the day, that's what we're selling. And financial advice is built around trust. When we launched, we had a very bare bones version of our technology product. But what we did have was the trust element. I was the first financial advisor on the platform. I was able to kind of bridge the gap between what people could see and kind of the dream of where it would become to where people were right now. And when you're asking somebody to part with their wealth or entrust you with their wealth and give you a chance to manage everything that they've ever built up in their lives, that's a big ask. So being a founder adds a bit of credibility

to that process. Can you talk a little bit about cash flow at this stage? When we were fundraising, for example, I remember we flew to Boulder and we ate, we were like, we're spending $800 to go to Boulder. And we stayed at like some off-site, like, so we shared a room at like, you know, like the Motel 6 across from the Outback. And we treated ourselves to a Bloomin' Onion when our meetings were done. So I think that there's so much unknown of how long this phase is going to last. Whereas later stages, you start to get a little bit more clarity on your runway and the like, that you really have to sort of hoard cash, if you will. Every single expense is saying, do we need that subscription? Do we need this thing? Can we get this thing for free? Can we use some other solution to sort of get us there to the point where we can invest in this?

So it's very much about like basically taking the most conservative approach that you possibly can during this phase. We break down the seed phase into three parts. First is financial principles. Second is business priorities. And third is the financial markers. So you can kind of look at your company through that lens, through each lens during a stage. And those are important lenses. From a spending perspective, very, very conservative. So you don't actually know how long this phase is going to last, or even if it's going to ever end realistically. So you basically are in

the most conservative position on spending. You are not out there flying around, staying in nice hotels or buying really anything. And from a product perspective as well, your investment is really towards getting to a minimal viable product. And the minimum, when we say minimum product, that could literally be a website that says, hey, we have this product. And I think that this is something that people get sort of wrong about how small you can be in terms of your product before you start the learning process. Because ultimately, at the end of the day, starting a learning process is the key to success because you will never plan all the way from zero to 10. You have to go from zero to one to two to three to four, and you don't know what two through nine look like thus far.

From an operations perspective, you're absolutely, it is the founders doing everything, just about, and you're keeping the team pretty small. You're trying to find maybe some strategic vendor relationships that can help you scale a little bit, but for the most part, it's gonna be on you to do everything. From a business priorities perspective,

we're trying to get a proof of concept into the market. And we're really trying to prove that there is a market and really trying to prove that we have a product that could address that market. So for us, it's winning clients. So people giving you their money and paying you to give financial advice is the proof of concept and that's a very hard proof of concept we have a trust-based business and those businesses are just naturally

kind of harder to build and again you're kind of like just trying to build that initial enough proof that there is a thing here that there's a market that you have a product and that you can take it to the next stage from a from financial perspective you are absolutely in the hole no matter what you do. Even if you buy a McDonald's biscuit for breakfast, that is negative cash flow. You do not have enough cash flow to cover that biscuit yet. And from a revenue perspective, we're really not targeting on optimizing revenue at all. What we're doing is we are beginning to prove kind of the initial that someone will pay for it, and then maybe gets a little bit of small data about what they're willing to pay.

So to confirm, you were definitely cash flow negative in this phase. Extraordinarily negative. Not only from a company perspective, from a personal perspective as well. Like both of us took pretty big steps back from what we were earning before. But, you know, with great risk comes great reward, hopefully. As we kind of progressed through that early seed stage, we had some level of interest. Like somebody somewhere had decided that we're worthy of their trust. And what that serves as a marker of is like,

okay, well, maybe there's something here. Maybe it's not just me. Maybe it's not just Brad, but maybe there's a company around this that we can build on. So the next thing that you need to do is to prove that you can do it at some next level of scale. For us, that was moving from one financial advisor

to three financial advisors and showing that other folks could sit in the seat and build a business on our platform. And so that's what we set out to do. That's what we raised just a little bit more money to do, is to show that they could be successful just like I could. And that's kind of the foundation of this next phase. Same principles, financial business and financial metrics, but just a little bit more. So we have now tried to demonstrate that we can grow to the next level. We also have to show that we can continue to iterate on the product. And part of that growth to the next level is just making the product more attractive, making it, we're in a weird business where there's a kind of a B2B element. So us selling our platform to financial advisors to come over and build their

business on, but there's also an element of us selling to in-clients, folks who are actually managing their wealth. And so we needed to iterate on both sides, listen to the clients, folks who are actually managing their wealth. And so we needed to iterate on both sides, listen to the clients, listen to the advisor, and make improvements over time. And it's never as fast as they want it to be, but we listen and we continue to give it a try. And then over time, as you do get those proof points, hopefully you're able to show that not only is this immediate next level of scale successful, but that you can add a little bit more and a little bit more and a little bit more. And those were the business priorities. Demonstrate that traction, show that we're growing, show that we can move at least through early adopters, maybe not quite beyond that point

yet. And again, not run out of cash. This is going to be a recurring theme. Not running out of cash is a good thing. Can you tell me a little bit about how you approached estimating what you would need to withstand this phase? We constructed a financial model. And as I think anybody who has ever constructed a financial model knows, it's the only thing that you can know for sure about it is that it's wrong. But it did give us a semblance of what we believed that we needed, how we thought that we would grow, and a range. And I think the range is more important. We were encouraged to take just a little bit more than what our projections implied. And quite frankly, it was pretty darn important

as we, at the tail end of that phase, came very close to running out of cash. We were probably not at the point where it was existential. We were pretty much through a fundraising round, but it would have been embarrassing to have to go back and say, actually, we need a bridge right now to close out this process. But we came close. When you say that you're encouraged to take just a little bit more, could you express that in a percentage? Like, is it 10% more, 20% more? For those who are potentially entering this phase in the future, I'm curious if there's, like, maybe an idea you could give them about how to navigate or estimate. I don't know if I have the right rule of thumb.

We ended up taking about 30% more than we thought that we needed. Having spoken to a number of entrepreneurs who have gone through this process, some have done exactly that. Some raised exactly what they were hoping to. Some raised double or triple or even more. And I think a lot of that depends on where the market is. Can you raise that much more?

If so, at what price? What does it cost you from an equity component of your company that you're giving up? And you have to, only you as the entrepreneur, really have a good sense of whether that's a good decision or not. But take a little bit more than you need, I think is probably good advice. I think it's important to note that you don't run out of cash just because of bad things. You run out of cash because of growth, too. So it's basically, if you're successful, you need more than you think you do. If you're not successful, you need more time and therefore money than you think you do. It's basically just in the fact that in the case where you exactly predicted your

growth and your costs, which is impossible to do, that you would be exactly on point. Yeah, and I think that's such an important point to make, right? Is I feel like we spend a lot of time planning for the situations that could go wrong. But what if you're outrageously successful? What do you need for that? And factoring that into your estimation, I think, is a powerful approach. It's definitely something that you want to think about, but probably not give too much mindshare to. Quite frankly, if you're that successful, and if people are just running over you to get to your product to really beep down the door to what you're selling, then you won't have a problem raising additional capital.

But could you talk a little bit about the timeline to raising capital? Because yes, you could be successful, but it still does take time to bring the money in, even if you have strong indicators of success. So we took a very systematic approach to fundraising at every phase. Probably too much, though, because we had heard all of the horror stories about how long does it take. And I would say the longest period of time that it ever took us to complete a capital raise is about three months. But over that three-month period, this would have been at the very beginning

of the early growth phase, we probably talked to 110 different firms that could write the check, that could serve as the lead. And over that three-month period, we got probably 90 no's. And then the other 20 were probably folks that, you know, were mostly just not telling us no to keep the option open. But you only need one. And we were very fortunate that, you know, especially the higher tier firms saw the opportunity that we were bringing to the table in a way that maybe some other folks were not able to. But being really systematic,

treating it like a sales process, and following up, that's the other thing, and knowing when to cut your losses, perhaps. That's what you need to do. So one of the things I'm really excited about is just your approach, your rigor, the discipline. Can you talk a little bit more about this process of, okay, we started with 120 and we got to where we needed to be in three months. I'm impressed by that. that I can do to potentially be successful like you guys? What are the key takeaways? Was it the deck? Was it the outreach? How were you structuring your approach to we're gonna make 120 pitches?

You start with something and just like any product, you're effectively selling yourself. You're the product. So you need to iterate. You need to listen to what is working and what is not. Probably for the first third of those pitches, the story that we were telling was just not the right story. The metrics that we had was mostly just me and two other financial advisors. So there wasn't a metric around how do we bring other financial advisors to the platform.

That was the ultimate goal of the company was to build using the advisor channel. But what we had were direct-to-consumer metrics. And it turns out direct-to-consumer fintech is literally uninvestable. So we needed to change the story once we started hearing no. I think we probably, in fact, I know for a fact, we went through 20 versions of our slide deck and probably as many versions of the financial model to really hone what we were saying, to handle concerns, to build out that next level of materials for each due diligence process. And then again, it's knowing who your audience is. We started with a group of roughly 100. It was probably fewer than that. It was probably 80 friends.

And over time, we got introduced to other folks. But we did the research on who invests in this space. And we tried to target firms that were specific to our market that would understand a little bit more about what we were doing. And then over time, you have an intro meeting. You have a second meeting. You enter a due diligence phase, and hopefully that leads to a term sheet.

But that's just a sales funnel. No different from any other sales funnel. Discovery all the way through conversion. It sounds like you guys started growing really quickly. Can you walk me through the expansion phase? Sure, I'll take you walk me through the expansion phase? working. And the way that we know something is working, you asked about founder-led sales, is we have people who can go out and sell what we have without us necessarily being there. Sometimes we have to be there for bigger deals. Yes. We both know that's true.

We both know that's true. And, you know, it's so interesting when you go through these phases from kind of initial growth into expansion. No one looks back and was like, yesterday you were an early stage company. They're like, okay, now like, where's your chief financial officer? Where is your kind of security program? Where's all these things that are infrastructure? So there's a lot more focus on infrastructure and for both the purposes of,

there's just higher expectations for a company and a product and processes from every stakeholder involved. But there's also we have more people. So we're 170 people now all in. So if you think about it, when we have processes that are suboptimal, that means our people are not acting optimally. So we get big force multiplication through the use of culture setting, through infrastructure. And those are the phases that we're going through today. And it really is about, again,

people, process, and technology. If you've got to set the right culture with your people, they have to be able to carry the message forward for you and be able to say, this is our mission, this is what we're doing, and be able to act independently to get towards that mission. And that's an educational process that takes a lot of place. Second thing that you'll notice too, sort of on a financial perspective, guess what? We have seed stage companies within our company as well. And it's kind of interesting

being a founder. I think that as you go through these phases, your job as a founder is actually to establish these new markets. You are at the forefront of doing founder-led sales and new businesses. We have a new asset management business that we have launched recently. I lead that. And Taylor is leading a bunch of new expansions and sort of new markets that we're doing and new kind of ways to serve advisors. So you're seeing a lot more going on all at once, and you're seeing a lot of kind of infrastructure kind of development at the same time, which is a lot. It's a lot to take on as a founder. The nature of a venture-funded business or any really high growth business is that you have to do twice or three times what you did the previous stage. So if you think about it, your problem is getting progressively harder, so your foundations have to be very, very strong for scale.

And in terms of business priorities, we're moving along, we're scaling our operations up to meet demand. We more than doubled now, like basically every few months. And so we are on a constant curve of kind of going up and being able to serve more, making sure that nothing's breaking while we're doing this at a higher standard. We're investing a lot in marketing and sales. So making sure that we're getting out there and telling our story to the broader market helps with penetration. And cash flow is a tough thing to manage during this stage.

We have this massive infrastructure investment that needs to happen, but that doesn't pay off immediately. So we have to balance that and we're also growing fast, which causes cash to keep going. So we really need to be tight on how we're managing that. And then from financial markets perspective, revenue growth is much, much larger now. And it's kind of amazing as a founder to go from the phase where you're like, we got our first dollar across the gate to like,

okay, now we're signing multiple million dollar deals and doing that at scale. And, you know, unit economics really are starting to matter. And this looks forward to the maturity phase where people are asking, what kind of company can this be? How big is it? And you have to show in great detail, this is where every dollar that comes in goes

and the filter and what comes out the bottom and what will come out the bottom. So it's a lot more going on, gets a lot more complicated, and it's much more important that you're very, very disciplined in basically everything. Because when you have 10 things going on,

if you miss on five of them, it's going to be bad for you. We're going to take a quick break and be back with more. Here's a little tip for growing your business. Get the VentureX business card from Capital One and earn unlimited double miles on every purchase. Plus, the VentureX Business Card has no preset spending limit, so your purchasing power can adapt to meet your business needs. And when you travel, you'll have access to over 1,300 airport lounges. Just imagine where the VentureX Business Card from Capital One can take your business. Capital One, what's in your wallet? Terms and conditions apply. Find out more at CapitalOne.com slash VentureXBusiness. Can you share a little bit about how your spending changed during the expansion phase?

Sure. I think one of the things that there's a lot of tension around is we've raised more money. We have to put that to very good use to be good stewards of it, and we have to grow. And to grow faster, you can apply more money. But if you apply more money to grow faster, that also means that you have to have somewhat stable infrastructure around you, the people and process and technology that Brad was talking about. So you're constantly trying to balance those two things, trying not to spend too much and not to be wasteful, while also growing fast enough and applying the money in intelligent ways to grow faster. I think that is exactly what you're expected to do, especially as a venture-funded business.

You're expected to be cash flow negative, but you want to be cash flow negative while posting very strong growth figures, and ideally more repeatable growth figures. So that's very much what this phase is about, is showing that you have a very strong repeatable sales motion, and then you're going to support that with solid infrastructure so that when you make a sale, people are happy and they stick around with you. As an organization that has a B2B and a D2C model, can you talk a little bit about how you approach spending in those categories for growth? My engineers would tell me we don't approach spending aggressively enough.

There's always more product to build. There's always more demand. There's always a feature that would satisfy somebody, especially on the edges. But again, you only have but so much cash. So you're constantly making choices about how can I build, what next best feature can I build? What next best market or target customer can I apply this sales model to? And not everybody's going to be happy all the time, but that's kind of the nature of everything. If I think my job and our job is saying, no, we're not going to do that as much as it is saying, yes, full steam ahead. I think it's really important to note that during this phase, the numbers are getting bigger, almost beyond like human scale. And people think there's hundreds of tens of millions, hundreds of millions of dollars out there. But your opportunity set is

also scaled with that. So you're always in a case where you are being disciplined about what you spend because you can outspend in your market no matter how much money you have. In this expansion phase, are you cash flow negative or are you cash flow positive? It seems like a theme at this point. We're continuing to be cash flow negative, but very much on purpose. And the idea is, if we can take that next dollar of capital and apply it to growth and push our growth that much faster, then we're delivering on the return expectations for that cost of capital. And we're constantly having to try to make sure that that's true, that that continues to be true. And really only when it's no longer true, when you can't apply that next dollar to pure growth, are you going to enter that true maturity phase.

And I think we have a long way to go before that. There's a lot of value to unlock, but we're very much intentionally cash flow negative and probably will be for a while. So we started at the McDonald's biscuit phase, cash flow negative. We went into the next phase, cash flow negative. We're in this phase, we're cash flow negative. Can you show me the next phase? Next phase. Taylor, you want to take maturity? So this is something where more aspirational and there are probably other folks

who are better guys through this phase, but we see where we ought to get to. And I think that's kind of the aim of the company ultimately goes to this apex of maturity. This is where no longer are we cashflow negative. We may approach profitability. And there's, I'm sure, going to continue to be a balance between growth and profitability there. But as you get to some level of scale, it means that you no longer have to rely on external funding,

where you should be generating some level of cash flow that supports your business, and then some, ideally. You're thinking about different markets, different, you know, how do you take what your original product is and upsell it and try and add more capability around that. And you're really trying to nail those operations and get, you know, automate everything that you can, get as efficient as you can, because all of that is now squeezing more towards that bottom line. And again, that drives more cash efficiency for the business. Can you talk a little bit about how your spending has evolved over the phases now and what your lifestyle may be like as a founder? Well, I think pretty consistently, especially through the early phases, the seed, the early phase, even the growth phase,

we're definitely not making market from a cash flow perspective. That's okay. We have, luckily, aggressively been able to pay ourselves a little bit more. But that's not the real focus of the company. A lot of our value will come in how we build towards this maturity phase, as opposed to whatever we make along the way. But we can afford to eat at McDonald's, get that biscuit now. And it's definitely been a weight off of, I think, both of our shoulders to feel like we have something that is on more solid footing. And I think that's the important part. When I say lifestyle, it's more than financial. It's also mental health, right? It's the ability to know that you've reached a certain point where the company

is operating and it doesn't necessarily always require you to be there to make a sale or make a decision and you can start working on the business as opposed to working in the business. I think that's right. I think a lot of our job is to work ourselves out of our day jobs and that comes from hiring really fantastic people to join the company and take pieces of that work. Usually, they're going to be much better at whatever function that it is than we were in the same way. But that also requires a certain amount of scale to get to that point. It's an important thing to realize that both Taylor and I have another startup in our families as well. And that drives a lot of cash flow

problems. Kids are really expensive. I have three. And I think it's really, you know, from a founder's perspective, it's not like this is a decades long thing for us. And you only have one life to live. So you have to really balance like, you can't just like ghost your family and then like show up and be like, hey, I'm done with the company now. So you have to invest in their activities. You have to do all these things. And a lot of those are kind of structural. And you just have to kind of learn to be uncomfortable with the fact that your family is also an ever-expanding phase of cash consumption.

Can you share what maturity looks like for you? I think what we talked about, trying to get to a very stable place where our growth is predictable, where we have those people, process, and technology elements in place to really drive us forward profitably. So like at a grand level, profitable growth is what it looks like. We already have the kind of inkling of what that ought to look like. It's doing the same thing at greater scale and continuing to find those next pieces of business that we can add on, that we can build other smaller companies around. And that's the diversification element that we can talk about. And then from a business priorities perspective, what we end up with is something that is more akin to ongoing improvement.

We have a team in place. We have a product in place. We no longer are spending way more on R&D than we're bringing in. We're no longer spending way more on sales and marketing and other growth than we're bringing in. And I think that that generates a healthy cash flow over time. But big picture, financial stability and cash flow positive. Looking back, could you share what phase did you find to be the most challenging when it came to managing cash flow? I think it's all of them. And that's probably a disappointing answer for everybody who's thinking about starting a business. But it's never easy. It's always scary. There's always, especially as you're in those early phases of a company, you're constantly at the specter of

running out of cash, hanging over your head, especially if you are a venture-backed business, especially if you are a business that is in a growth phase. So I don't think we're out of the woods on that yet. It's still stressful. It's still scary. But we have more and more reasons to believe over time. And I think that that is endemic to how businesses are built is you layer on systems, you layer on process, you layer on people and technology that will help you over time, get to a point where you're maybe not eliminating the

stress, but eliminating. I find that each level of success demands a different level of you as a founder. There were days when I was stressed over $5,000. There are days when I've been stressed over $50,000. And it's each time the stress is still there. I still go through all of the pay stubs every single time we make payroll, even though I know that we have the money to do it. I don't know if you guys find that you have kind of similar experiences. It's almost like as you get more, you have more to think about. And so there's always sort of that underlying stress and tension of wanting to make sure that you're planning for the company to not only be successful, but be secure and profitable in the future. I 100% hear that. I would say the most stressful part of my job and like throughout

the entire company, five plus years now, is looking at our bank account because it's always a lower value than it was the day before. That is terrifying. And I would say the other kind of, I think, universal startup fact is that every day is a roller coaster. You're going to feel like, hey, this is finally working. Everything seems to be going my way. In the same day that you're going to say,

I cannot believe we're still doing this as a company. That's just how it works and I don't think it ever changes. I love that we share that. I wake up every single day and the first thing I do is I always check the company account. I check the company account before I check my account. I don't know, do you guys do that? I try to avoid it.

We hired a CFO for that. I still do that. I still do that. I still do it. Even with the accounts, I always look and I'm like, okay, okay, we're good. And then I can start my day. You're always thinking about it. From the first minute that you get out of bed in the morning to probably the last thought in your head at night or something close to it. It's always on your mind, even if it's in the back of your mind.

You have a lot of folks depending on you. You have investors depending on you. Your family's depending on you. It creates quite a lot of, it's not just stress, but the burden of responsibility. And it can be a little lonely at times. Thankfully, we have each other to support us and talk to on that perspective. But it can feel lonely. But if you keep in mind what you're working towards, and if you keep putting one foot in front of the other and executing like you think you ought to, then people underestimate what you can do over a very long period of time. And I think that's what we're excited about. As you look to enter the maturity phase, can I ask, how are you approaching raising additional capital if needed, or looking at

the transition into maturity? Well, I think raising additional capital is always a question of can you put it to good use in the way that it is going to generate the expected return for your investors? Because if you raise that next slug of capital and you end up with linear or stagnant growth, probably not a good outcome on anybody's side. Before we raise any round, whether that was seed or all the way up through where we are now

and kind of getting towards that maturity phase, we need to have a plan for how we're going to double, triple, quadruple, 10x, really, the company from between here and the next two or three years. And that is, you know, that's how we approach it. Once we can no longer do that, then I think, you know, it's probably time to stop raising capital or to do it in a very different way. But while we have that opportunity, it's probably worthwhile to have a little bit smaller piece of a much bigger pie. Could you share a moment when maybe you experienced less cash flow than you would like and whether or not you had to pivot? All moments, pivoting costly.

No. No, but I feel that. I felt that. I really felt that. You know, our business is, we get wealth advisors to join us. They bring their clients. And it's been a big question of timing for us as we've gotten our metrics in place of how long does it take to get the actual revenue to hit from the time that we sign an advisor and when you're on a time frame of years not or like you know a year to two years months matter a lot so you know earlier on we weren't so as good at like understanding this dynamic because we just didn't have the learning we were taking longer to get assets over for mistakes that we made operationally or just because we didn't have the learning, we were taking longer to get assets over for mistakes that we made operationally or just because we didn't understand the different types of people in

our market. And that is a moment where you can watch these projections. Your projections are going down as opposed to up at the rate that you think they are. And you have to start, like Taylor and I have to rapidly start basically like cutting down on what we think we're going to do in the next phase. So roadmaps start changing. Team expansion started to change. But that was very early on in our journey.

But I think that's the story of every startup you're going to run into. Revenue never comes in on time or in the magnitude that you think it's going to. I really feel like they should just turn it into like a t-shirt, right? Like my t-shirt's like cashflow is king and revenue doesn't come on time. And did you get my invoice? It's going to be a whole company. Basically, basically.

And there is kind of a key thing for all the aspiring entrepreneurs out there is that just because revenue is booked does not mean that it hits. Or. Or just because you think you have it doesn't mean that it's there until it's in your bank account. Is there an example that you could give of, hey, this isn't working and we're going to need to try it a different way? Yeah, I can provide an example from very early on. So when we initially started, and you can still find vestiges of this on the internet, we had a direct-to-consumer motion. So instead of just a financial advisor-led client motion,

a consumer client could sign up with Farther without anybody talking to them. And as it turns out, people did. We advertised, we had articles, SEO, all the things that you're supposed to do. And what we found was it was not the target customer that we expected and not what we were really building for. That was possibly okay. There was maybe even an opportunity to pivot towards that, especially if it really started taking off. But what we found was it became operationally burdensome to support that client that really wasn't our target client. And we had to make a tough decision to shut down a revenue stream, a growth mechanism that we knew could work and that we knew could probably, especially over a longer period of time, progress. But it wasn't helping us tell our story

and it was complicating our operations. So we had to make that tough choice. This has been a really great conversation. Thank you so much for sitting down with me again today. I know personally as a founder, I took a lot out of it. Well, thank you so much for having us. We couldn't be more excited to be here. It's been great to be here.

Thank you. We're really be more excited to be here. It's been great to be here. Thank you. We're really looking forward to your next move. That's all for this episode of Your Next Move. Our producer is Matt Toder. Editing and sound design by Nick Torres. Executive producer is Josh Christensen. If you haven't already, subscribe to Your Next Move on Apple Podcasts,

Spotify, or wherever you listen. Your Next Move is a production of Inc. and Capital One Business.