Latest / Success Story with Scott Clary / Lessons - Why VCs Don't Want You to Know About This | Darren Marble - CrowdfundX CEO

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Lessons - Why VCs Don't Want You to Know About This | Darren Marble - CrowdfundX CEO · Success Story with Scott Clary

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  In this lessons episode, explore how turning customers into investors reshapes the path to
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  going public. Discover how ownership deepens loyalty and brand advocacy. Understand why retail
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  investors often act like long-term institutions, and uncover how this model gives entrepreneurs
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  both capital and an engaged shareholder base.
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  Now I'm curious for the entrepreneur that's going into this. An entrepreneur goes and raises some
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  money, and they usually want to find some investors that are going to provide some value to their
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  business. What is the benefit to somebody that has, for example, 50 million ARR or annual recurring
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  revenue, 100 million, annual recurring revenue, to get this crowd-funded investment? Isn't that
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  just, is that headache pre-IPO, or at that point they don't care because they're already going
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  to be publicly listed? Turning customers into investors in an IPO is potentially the most strategic
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  and savvy move any company in the United States can make, and we know this is going to be a breakthrough
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  mechanism. When customers become investors, here's what happens. Those customers are now emotionally
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  invested in the deal. They're financially invested. They're literally invested in the outcome of
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  the business. So what does that mean? It means their lifetime value to the business is going to
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  increase. Those customers and now investors will buy more products, buy more services. They're
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  less likely to use products or services from competitors. They're more likely to tell their
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  friends, family, social network that they're an investor, that they're a customer, and so the
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  network effect is tremendous. Not only that, but what we've seen over the years Scott is that when
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  companies turn customers into investors and those companies end up actually going public,
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  those investors, they tend to act like institutions. Institutions are tend to be long-term
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  shareholders. They're not slippers. They're not day traders. An institution that buys 50 million
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  dollars in an IPO, usually long-term. They hold those shares for a number of years. They believe in
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  the vision and the founder and the business opportunity down the road. They're looking ahead.
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  Well, the customers tend to act the same way. So creating a shareholder base, actually in this
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  series it's a mix of institutional investors alongside everyday Americans, the customers of
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  the company, the fans, the followers. They're coming in together, investing into the IPO at the
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  IPO price, and the smart money, the institutional investors, by the way, they're not getting the
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  discount. There's no favors. They're all buying the same shares at the same price, and these are
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  both different constituents because the average retail investor might buy a thousand dollars of stock.
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  But they act like an institution because they're buying into the vision of the company. They're
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  satisfied customer. They've generated value or received value from the product, and so that's
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  really valuable for the business. So from the company standpoint, what do they have to gain by
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  having 30 or 50 thousand customers become investors? Well, those will be the most valuable
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  customers in the history of the business. They are a massively powerful type of brand ambassador
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  that can promote the brand, and they're going to be long-term shareholders as well. So we think
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  that this is really a winning formula for founders and entrepreneurs to empower their customers,
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  return the favor, and it's a thank you. And if you think about this, it's really interesting.
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  Companies like Uber and Lyft, these companies that stay private for 10 years, 12 years, they raise
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  billions of dollars, venture capital from private investors and private markets, and those companies
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  would never have multi-billion dollar valuations in private markets if it weren't for the millions
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  of customers who use the app. Yet it's the customers who are effectively left out and are always
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  excluded from becoming owners. And you and I, as customers of Uber, for instance, the only thing we
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  could do is buy shares of Uber after it went public. Well, by that time, Scott, it's too late.
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  The values already been realized by the early investors, and you and I end up looking like
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  the suckers, because we're now holding shares of Uber that has stayed private for too long. The
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  chances of you and I getting a 5X or 10X on our investment is slim to none. So we're changing that
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  paradigm by allowing customers to become owners in these businesses at much earlier stages in the
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  companies growth and in their life cycle. Yeah, that makes a lot of sense. And I just wanted to
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  highlight that point you mentioned about. I didn't even think about that, but the point that you
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  can turn your customers into these evangelists early on by getting them to invest financially,
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  that is one of the strongest commercial plays you can have. Regardless of your share price,
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  just the whole customer base being your raving fan group and evangelizing your product,
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  I didn't think about that, but that's a huge, that's a huge plus to getting people, to getting
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  your customers to buy in. So that's a very, very smart point. And I'm just one more question about
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  about the show itself, because this all makes a ton of sense. And I think it's a very exciting
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  story that you're going to be telling what when somebody watches this show, what do they see?
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  What's the, like, what do they see the operations of a 50 million dollar company? Do they see the
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  struggles of a founder CEO? Do they see the fundraising process dealing with the lawyers or what,
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  like, what's the actual show look like? It's a great question. So the format is what's called
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  a serialized narrative. And what that means is that in episode one, we're introducing company A
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  and company B. And the founders of these companies spend 12 minutes talking about their backstory,
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  almost nothing to do with the business. You know, who are they? Why did they become founders?
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  What inspired them to create a business? What problem were they solving? What obstacles did they
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  have to overcome to be successful and build the business that they're now CEO of today? And what
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  that's doing is it's really providing insight into the individual and helping the audience
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  understand the character of the founder, which creates a strong emotional bond. In episode two,
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  the first two companies begin developing the marketing materials for their campaign. We introduce
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  company number three. In episode three, the first two founders are now going out and raising capital.
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  They're on a road show with institutional investors and retail investors alike. And, you know,
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  in the IPO process, it's the most intense time period in a company's history as they're going
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  public. It's filled with drama. It's filled with excitement, disappointment, panic, euphoria. We're
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  going to capture the excitement of that process in this series. And in the second half of the
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  season, the companies closed their IPOs in a staggered closed, just like they were introduced in
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  the staggered start. And we're filming the IPO's Ceremonia Nasdaq. And that's the culmination
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  off of each of these businesses. We've brought in an incredible production company to help
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  highlight the drama and the excitement of these IPOs and the IPO process. And that company is
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  INE Entertainment. They're based in Studio City. The principles are best known for co-creating and
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  co-executive producing the TV series, the biggest loser. And so when people say to us, well, hey,
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  the IPO process sounds a little dry. And you said, hey, what about the lawyers? We're going to film
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  the lawyers. What we say is, look, our producers have a credit in one of the most successful
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  television franchises in history. And that's a show about weight loss. They made weight loss
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  exciting. So imagine what they can do with the IPO. I mean, it's a scale and their exercise.
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  They found a way to make that really entertaining. And everybody knows biggest loser. And they
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  have a brand. And you could buy biggest loser branded stuff. And it's everywhere. Imagine what
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  they can do with the IPO process. So this will be a very entertaining series. And I think we're
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  going to bring out some of that drama and excitement to bring the viewers along the journey right
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  there with the founders as they're going public. Very exciting. This is like my, this is like my
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  kind of TV there. And I want to watch this already. You got to get this film. You got to get this,
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  because I seriously like this. This sounds very exciting. I've never seen anything like this.
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  I've never, I don't think there's anything like this to be honest at all. Well, look, I'll tell
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  you what there is. You know, there's Shark Tank. And that's the show I'm thinking. Yeah, we all
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  know Shark Tank. And listen, I'm a fan of Shark Tank. I love that show. I loved it from the moment
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  it came out. And to see the judges critiquing the deal and bickering with each other. It's massively
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  entertainment. There's no denying that. And what we believe is that it's a great show. Shark Tank
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  will always be a great show. The model is outdated. The model is old. And at some point it will be
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  obsolete, because I think that people are tired of watching the rich people get richer. Mark Cuban
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  adding another, you know, zero to his net worth. And what are the viewers able to do? Well, they
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  can buy the product. They can help squatty potty go from 500,000 and sales of 50 million. But they
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  don't, they're not getting the value, right? Because they're not owners. They don't own any shares.
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  They don't own any equity in the business. They're just a customer. So who makes the money then?
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  Well, the sharks make the money in those deals. So that's the parallel here is this is similar to
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  Shark Tank in some ways. One of the differences is that, of course, there are no judges. There are
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  mentors, but there's no Mark Cuban or Kevin O'Leary bashing these entrepreneurs, trying to take
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  advantage of them, put in 30 grand for half of the company, these ridiculous deals. It's the viewers.
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  It's the fans that now can participate and in companies they like, they can invest and you don't
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  have to put in 50,000 dollars. You put in a thousand dollars by a thousand dollars worth of shares
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  and then have liquidity in that investment immediately. So that's the difference. And in the companies
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  themselves, we're not featuring pre-products or pre-revenue companies. We're featuring companies
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  that have traction, have millions of dollars or tens of millions of dollars in revenue are ready to
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  go public to Nasdaq, different segment of the market. Thanks for tuning in. If you found this
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  valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want
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  to dive deeper into this conversation, check out the links in the description to watch the full
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  episode. See you in the next one.