Tribevest // making it easy for individuals to pool their capital and invest together [UP084]

Travis Smith 0:00
I used to be when I was in in high school or college, you went to a party and you talked about Microsoft and Qualcomm and all these stocks. And that was that was like the hot thing you talked about. Now you’re talking now you’re at these parties and people want to talk about investing in the local coffee shop. Want to talk about investing in a startup they want to talk about investing in local property around the corner.

Jay Clouse 0:22
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside.

Eric Hornung 0:51
Hello, hello. Hello, and welcome to the Upside podcast the first podcast finding upside outside of Silicon Valley. I’m Eric Hornung, and I am accompanied by my co host, Mr. Master Mind himself, Jay Clouse. Jay I am not referring to your brain when I refer to this mastermind.

Jay Clouse 1:09
You’re not talking about my big brain.

Eric Hornung 1:11
Nope. Not talking about your small brain.

Jay Clouse 1:13
Yes, throwing it back to the days of the Unreal Collective Eric, my independent business and accelerator and community that has since been acquired, but is relevant for today’s show and today’s guest.

Eric Hornung 1:27
Before we get to today’s guest, I just want to bring up something cool you did recently. Look at this. This is gonna be a compliment Jay on the podcast.

Jay Clouse 1:34
This is why I love when you have to come up with a nickname

Eric Hornung 1:37
Because they’re always so flattering.

Jay Clouse 1:39
Uhmm.

Eric Hornung 1:40
One of the first podcast I ever listened to was actually the Smart Passive Income podcast with Pat Flynn. And now you were just on it as a guest. So you are a big, big shot in the industry.

Jay Clouse 1:51
Big Shot and doing a webinar with Pat this week tomorrow if you’re listening to this on release day, Eric I think I’ve made it i think i think i’ve gotten there.

Eric Hornung 2:00
That’s it check the box walk away into the into the horizon.

Jay Clouse 2:04
We used to play frisbee golf or froth as as some people like to call it in high school. And we had this rule that if you got a hole in one, everybody signed your your disc with a sharpie you went home You nailed to your wall and you went to bed because your day couldn’t get any better than that. And that’s how it feels.

Eric Hornung 2:23
I’ve always felt like people who played frisbee golf were in like a cult like they had this own little like tribe that went off and into the woods and threw a frisbee at a chain link fence.

Jay Clouse 2:32
Well speaking of tribe, today, we are talking with Travis Smith, the founder and CEO of Tribevest. Tribevest is an all in one platform to assemble your people align, file an LLC, create some bylaws, open a business bank account and easily pull capital from your members. Eric, Travis calls this social investing, which is very interesting to me and seems very hot in the Zeitgeist right now.

Eric Hornung 2:57
Yeah, I mean, we just saw the social version of investing with what happened with GameStop and AMC and Dogecoin. And you can make a case that a lot of investing is becoming more and more social right now.

Jay Clouse 3:11
I first met Travis back in gosh, I want to say 2017 or 2018. He was one of the first members of the Unreal Collective accelerator when this was just an idea he was still full time at his full time job. I was I was by his side when he won a $25,000 pitch competition at Columbia Startup Week. Now he’s got investment from mucker Labs. The product has come a long way. But I haven’t spoken with Travis in quite some time, several months. So I’m excited to hear where the company has gone since we last spoke.

Eric Hornung 3:41
I mean, Travis is definitely the kind of guy who’s living his one life he has to the fullest.

Jay Clouse 3:45
And if you want to live your one life to the fullest, the one life that you have to lead, you can visit upside.fm/ethos to learn more about our friends Ethos Wealth Management. And Eric, you can say that again because Travis and his brothers have made some interesting investments. One of which being a racehorse.

Eric Hornung 4:04
A racehorse?

Jay Clouse 4:05
Yes. That’s a way to bet on yourself.

Oh, love that. The company was founded in 2016. It’s based in Columbus, Ohio, as I am also based. Yeah, I just decided to catch up with Travis. Eric, I know you haven’t met or known Travis as well as I have. But this is firmly in the finance realm. So I expect that you’re gonna enjoy this interview too.

Eric Hornung 4:26
I’m definitely looking forward to this. And dear listener, if you enjoy this interview, you can reach out to us @upsideFM on Twitter. Or if you have something a little longer reach out to us at hello@upside.fm. And we will get to that interview right after this.

Jay Clouse 4:43
Hey, listener, have you ever wanted to get a message in front of the Upside audience but weren’t sure how to sponsor the show or weren’t able to do a long term sponsorship? Well, now you can just go to upside.fm/classifieds, and let our audience know anything that’s going on in your world. Whether it’s an event, an application, a special coupon or deal, or just letting them know who you are, what your company does, all you have to do is go to upside.fm/classifieds. And you can place an ad on this show. That’s upside.fm/classifieds.

Travis Smith 5:22
So I graduated from Ohio State and finance, and was hired by Morgan Stanley trained in New York City wanted to be in wealth management, helping people reach their financial goals and dreams. And I quickly realized that that wasn’t the right industry to be in to help people build wealth. And there’s a number of reasons for that. But in the end, it was really selling a lot of products, and less about helping people strategically. And I often say I was saved by software, I went to work for a super exciting unicorn now in Cleveland, Ohio, which it’s hard to believe Highland software on base, great company was an early employee there. And throughout my career was in software. And even more specifically, FinTech. And just before starting Tribevest, I was with a company called Jack Henry and Associates or Profit Stars, and they work with over 3000 banks being the back end and front end. And I headed up their strategic alliances in their enterprise payment space. And so that it was really a destination job, great, great, great company to work for. Of course, that was right when Tribevest was hitting hitting me over the head, and was trying to figure out ways to leave my dream company that I’d worked towards getting to my whole career.

Eric Hornung 6:51
Where did this interest in finance come from? You mentioned Morgan Stanley, you work for an enterprise software company that worked with banks. Tribevest is financial in nature. Where’d that come from?

Travis Smith 7:03
My family always really valued education. As a result, you know, high earners, getting good jobs. And, you know, looking at my family, again, always having really good jobs. And again, highly, highly educated, never really building wealth, you know, always struggling, struggling a little bit, you know, always wondering what the next month was going to be really living paycheck to paycheck and a lot of ways. And it just bothered me and I read, I read a great book, rich, rich, poor dad, Rich Dad, Poor Dad, game changer for me. And that was when I, I decided to go into finance, not because it was I was exceptional at math or anything like that. It was it was really, I wanted to change the trajectory of what my family had done before me.

Jay Clouse 7:57
You mentioned a minute ago, that Tribevest was starting to hit you over the head, as you’re working at Jack Henry, what were the things that were going on that were hitting you over the head and calling out to you about this opportunity of Tribevest?

Travis Smith 8:09
Well, a couple of things were going on in parallel to my professional career. And one of them was about 10 years ago, actually 12 years ago. Now, my brothers and I always got together and talked about going into business with each other, talked about building wealth and ways to do that. And investing in real estate, we always saw real estate as a way to hack wealth, without having to give up our day jobs. Yet we had no investment experience. But that was kind of part of it. We liked the idea of learning and growing together. But we had a more bigger obvious problem than that. And that was lack of capital to break into real estate or any private market for that matter. It was it was required that you have capital lump sums of money. And that was that was a problem we had. And on a fishing trip that we couldn’t afford. We had our breakthrough. And we we realized that to to get over this threshold, we needed to come together and start pulling our capital, and not just pull our capital, but do it in a manageable and monthly way. And we each committed to $500 each month. And that was a stretch for us at the time but manageable. And between the four of us that was $2,000 a month $24,000 a year. And one investment led to another led to another and by forming and funding that investor tribe. We secured a future we could have never dreamed of. And so that was going on, you know as my side gig if you will, or just kind of a fun social project with my brothers. And over the over time we just we were blown away by how much it had changed our lives and how much wealth we had created. And we started to get a taste of financial freedom. People started asking us could could we help them form an investor tribe too? And that’s when we set out to build the platform we wished we wished we had. But get back to your original question. You know, it was far from this leap from leaving my old company, as you know, Jay. Far from leaving my old company to starting Tribevest. It was very strategic. I say I slowly burned the ships, and did it as a side job for a little bit and then joined a really awesome mastermind and community to help support me and give me good ideas. And it wasn’t really for another year and a half that I did jump with both feet and in left Jack Henry,

Eric Hornung 10:47
Do you recommend that to other founders? Do you recommend the slow burn versus the rip the band aid off approach?

Travis Smith 10:55
No doubt you’re one of my favorite books is The Originals are an impactful book anyway, for me as I was going through this process was The Originals. And Adam Grant starts off with an awesome story about Warby Parker, and how he he missed this investment into them because they weren’t quitting at Wharton. And they weren’t going full time after they graduated Wharton to to do Warby Parker. And, and really what the book goes on to, to show and prove is that most successful founders are doing very systematic leaps of faith, small, small steps of risk. And I absolutely recommend that, you know, get yourself in a position and slowly burn those boats. Before going in full time.

Jay Clouse 11:43
I have a couple of follow ups on your story with your brothers here. How many years did you guys invest together? pre Tribevest really started in earnest.

Travis Smith 11:53
Was probably eight years, eight years where we were pulling capital, doing our first deal, rolling up the profits and cash flow from that deal back into our investor, tribe business bank account. And then all the while and still to this day, right? $500 a month, right? It will probably always do that. But you know, eight years, and it was it was a little bit of a, the initial stage was, wow, we’re doing this. We’re part of an investor tribe. And when we’re out at parties and things like that, we could talk about how we had an investor business and investor group that was out there looking for deals, it was just really cool, because we’re getting into conversations we had never been into before. But over time, we kind of look back and see our portfolio now. And it really has afforded us a whole different life. And it afforded me to leave Jack Henry an amazing salary, income and everything else, to start Tribevest.

Jay Clouse 12:54
For people who aren’t super familiar with investing in real estate, when you tell me that you guys are investing $500 a month, $24,000 a year between the four of you. That doesn’t sound like a huge amount of money. It doesn’t sound like I can go and just buy a house with that cash. Right? So how does this work that you guys are able to leverage that amount of money to buy multiple properties or invest in multiple pieces of property?

Travis Smith 13:19
Great question. A lot of it has to do with just consistency in terms of the capital coming in. So those $500 monthly contributions add up. And but you’re right for us, there was this period where we weren’t investing, it was really 10 months before we got to critical mass. And we always say about, you know, depending on what you want to invest in 10,000, 15,000, 25,000 usually starts to get you into a few different markets depending on what you’re looking at. And for us, it was a $20,000 investment into a physician’s office mix retail space syndicate, where that was the threshold that was the threshold to get in. We had that $20,000 now all of a sudden, we were in the conversation and got the deal done. And it was incredible. And then we just kept putting more capital in more capital in. Our next deal Jay was a single family rental actually working with a local, actually not local, but national homebuyer where we bought their mount model home. And they were our tenant, and we were cash flowing on that immediately. So all that cash flow starts to come back into the the tribe fund, if you will, and that then added up even faster. So we did our third deal within four months. And then we did our you know, fifth deal within another two months. And then we then we were leveraging leveraging and pulling out capital of our previous deals. So it just kind of adds up and that consistency and discipline is is so key to it.

Eric Hornung 14:55
What is Tribevest today is it just a real estate platform. Where you can pull money and buy real estate? Or is it is there more than that.

Travis Smith 15:03
Way more than just real estate. For a while there, we were very focused on real estate because it’s a clear, big segment of ours, there’s a lot of people out there that want to break into real estate that want to invest their money into properties in single family rentals and syndicate deals and short term rentals. But so that will always be a big market for us. But Eric, people are building tribes for all sorts of things. They’re investing in startups, right in a round just, we just had about four or five tribes came together to invest in Tribevest, for example. And we’re seeing that across a lot of other little angel groups that are coming together. We also have people that are investing in vacation homes as a big market, collectibles, cars, classic cars, boats, another big thing that we’ve seen right now is cryptocurrency. So a lot of people are wanting to get in there, they’re curious, they want to learn, but they’re not willing to put you know all their money in. So coming together with a tribe to spread the risk around is really been exciting to see. Another really cool area, Eric is Pokemon cards, NBA trading cards is a huge business right now in the pandemic. And we have about a handful of tribes that are you know, doing that together, which is, which is fun, and very social, which, by the way, is a huge part of Tribevest.

Eric Hornung 16:34
A lot of what you’re referencing, if we’re gonna throw back your, your Morgan Stanley hat on here would be termed as alt or alternative investments. How do you think about individuals allocating money to these tribes versus more traditional products like a 401k, or retirement savings account?

Travis Smith 16:56
I think it’s a great way to diversify, we suggest do all those things you’re supposed to do first, contribute your 401k, your IRA. And then how do you get into what we consider you call them alternative investment, we consume true wealth building assets, things that appreciate give cash flow, have tax benefits, all those things, you should be allocating a good portion of your investment, discretionary investment dollars to that. And if that is something you’re not an expert in, what a better way to go then to form a tribe. So you’re learning and growing together, it’s a very safe way in a way to spread risk. So but we love that idea of people thinking strategically about where they’re putting their their investment dollars. And we see the day, everybody has multiple tribes that they’re putting their money into. It used to be when I was in, in high school or college, you went to a party, and you talked about Microsoft and Qualcomm and all these stocks. And that was that was like the hot thing you talked about. Now you’re talking now you’re at these parties, and people want to talk about investing in the local coffee shop, we want to talk about investing in a startup, they want to talk about investing in local property around the corner, and not in the too distant future. You’re not gonna be talking about those things you’re going to be talking about what tribe are you investing with? Who are you investing with? Not what are you investing in? But who are you investing with?

Jay Clouse 18:27
Help me understand some boring logistical things, which is to say, you and your brothers were were saying, hey, let’s invest together. Does that mean that one of you says, Okay, I have a bank account? The rest of you just send me $500 a month and all invest in these things? How does that look? How does it need to look for that to work fluidly?

Travis Smith 18:46
Right. So when we, when we were asked, could we help people form investor tribes, we had to ask ourselves, what would we do differently? And the answer was everything. I mean, everything we did everything wrong. And that’s what everybody else is doing too. So not too hard on myself. If you don’t have a country club network to pull it all together, or expensive attorneys at the ready. It’s hard. It’s a little bits, where do you start? And so to answer your question, Jay, before Tribevest, it was just like what you said you had to go out and find an attorney, or do Legal Zoom, and then you manage everything on a spreadsheet. And then how did you vote? Maybe you’re using Slack or text? Where do you housing these documents? Maybe it’s Dropbox or you know, Google Drive? How you managing your your books, is it QuickBooks or some other free app? Then you see how all these things on their own, not a big deal right on their own, not a big deal. But when it falls on normally what we call as the founder, right? It’s the initiator every, every group of friends has one, right, the one that pulls it all together. So you think about the burden on them. It’s significant. That’s where Tribevest when we set out to build the platform we wished we had, that was all about all in one place all at one dashboard, accountability through transparency, and being able to truly collaborate, collaborate on investing.

Jay Clouse 20:16
What does that what does that flow look like? How does somebody leverage try best to do these things? Or I guess what I’m asking is like, Can you give me like a tour through the onboarding without being able to see the product?

Travis Smith 20:28
For sure, like I said, it always starts with the founder, the initiator, and they come in, they register, they give their tribe a name, which is, which is kind of an important first step, you give your tribe a name, we asked the the tribe goals, and it’s not just return on investment, which is always you know, most of the time is one of the goals, but it’s also learn or grow together, or, or purchase a shared space to collaborate in, you know, so there’s going through the different goals, they write a mission statement. And then you pick which types of investment types you’re interested in, how much capital you might need to, to raise to be able to achieve your first investment. And what we’re doing in that five minute onboarding, is helping you create a business plan, you’re creating a business plan, and we make it super easy to share with your your prospective partners. And then you can collaborate on that. And then it’s a matter of inviting them in formally to your investor tribe to the dashboard. And they’re, they’re actually agreeing to contributing a certain amount of capital, whatever you guys agree on, or girls agree on, you know, it’s, it’s whatever, whatever is, whatever you decide, and then we help you start pulling capital, immediately, we have a FDIC insured escrow account, where it’s insured up to $250,000. So literally the same day you join, you can actually start to put capital in. Now, it’s it’s not the tribes, you haven’t pulled your funds yet. But it’s almost like this engagement period, you’re not married yet. But you’re engaged, and you can start making an impact right away. And then in parallel to that, you you work on your operating agreement, which we help you with, you file your LLC, you can file it on our platform and all 50 states, you get your ein Articles of Organization, operating agreement, yeah, everything you need. And then from that, we leverage that and make it super easy for you to open up a business bank account, again, FDIC insured all on the platform. And then once that business bank account is opened, all those funds that are in those escrow accounts, flow into that business bank account. So now you can transact together, and then do anything you want with it. Whatever the group decides to do with it, I should say.

Jay Clouse 22:53
Eric, we’ve been talking a lot about syndicates on the show lately. That sounds like what I’ve learned to be an SPV. Is that accurate?

Travis Smith 23:00
I can give an answer. No. And here’s the big difference. Tribevest is super simple. First of all, you know, I think anytime we’re talking to sophisticated investors, they may immediately go sophisticated. And what’s the beauty of Tribevest, it’s just how simple it is, you think about it, all you’re doing is forming a multi member LLC, with your business partners. And the key there, Jay is they’re not passive investors, they need to be active members, which means they all have a vote, and they all own this entity. And that’s why it’s so easy to set up and very clean. Now, the alternative to that is if you’re doing something with a deal that you’re you’re wanting investors for, or you’re looking to pull a fund with the intention of somebody or someone investing, you know, other people’s money, that all of a sudden becomes passive investors. And, and also, you know, all of a sudden, you start to get into different regulations and different concerns. So that’s the big the big difference between an investor tribe, which is a true multi member business with business partners, versus a special purpose vehicle or syndicate, or even crowdfunding, all those things, you have to actually register with the SEC, because you’re because you’re working with passive investors.

Eric Hornung 24:35
So tell me about the founder than you mentioned, every tribe has a founder is that significantly different from a syndicate lead both structurally and legally? Is it more of like, explain that?

Travis Smith 24:49
Yes. So a founder just like anybody, any group that comes together with a shared goal or mission, there’s always one right? There’s always one and We call them respectfully the founder and

Eric Hornung 25:03
We call them Jay.

Travis Smith 25:04
That’s it, the coordinator. Anyway, the the founders, you know, very driven, they have a certain personality type. And we serve them we make we we enable them to do what they want to do easily, and they appreciate it. And then of course, we make it really easy for them for them to share their plan to formally invite members in. And then we make it really easy for those invitees to come in and be members and be a part of the investor tribe. So in a lot of ways, it’s similar, but in other ways, it’s just so much simpler, you know, and it less expensive, right to form a I know to work for the syndicate attorney, depending on what you’re doing. It’s $10,000-$15,000 do something like that, with Tribevest, you know, $5 a month per member per month.

Jay Clouse 25:54
Is this something where if I’m putting in twice as much money as everybody else, you can help me tear the percent ownership allocation in the LLC?

Travis Smith 26:03
Absolutely. So we manage a very simple cap table, and it’s burst based on you know, the capital that each member comes in. And, again, that transparency of being able to see, you know, who’s put what in? And what percent of the business of the investor tribe business do you own? And then together, you make those decisions to deploy that capital from the business. But yes, absolutely. We help you manage your investor, cap table.

Eric Hornung 26:32
When you think about growth, how do you think about the difference between friends telling friends, hey, there’s this Tribevest thing, obviously, that’s awesome word of mouth, versus like, partnerships and other types of kind of products. I’m thinking of you mentioned, investing in the local coffee shop, and we had a guest on that runs a company called Main Street, that allows you to do just that. So are their business to business partnerships. In the growth world? Are there celebrity influencer party partnerships? Or like, how do you think about your growth strategy?

Travis Smith 27:03
Right now those feel a little bit like a luxury as you know, the stage that we’re in, it’s all about the utility and just making custom, more about the hundreds of tribes that love us right now. And, but, you know, really exciting opportunity in terms of growth. You mentioned the mouth, you know, verbal, you know, introductions and referrals is really a huge part of our business, we have a 4.5 virality rating, or K factor, which basically means, you know, every founder that comes in brings another four and a half paying members with them. So that’s really exciting. About 20% of the members that come in, are forming a new and additional tribe, and bringing in an additional four and a half members on average. So lots of growth opportunity there. But to your point, the partners really good opportunity there too think of real real estate agents, right, that’s actually a channel that we go to market through, they’re seeing this as a as a niche for them to be able to do to leverage in their market, and they’re bringing in their clients to Tribevest. The other real exciting thing in which you might think of as, as competitors. So like you think about Republic, or Wefunder or Fundrise, or realty mogul could be a competitor, if you think about it, and some expenses, it is like where people are allocating their money. But really, they’re they’re already trying to build a feature, like Tribevest, right? They’re trying to help people figure out how to invest more roof stocks. And other one, you know, use, you’re still buying single family rental, you still need to come up with a big chunk of change. And people are coming to them and saying, Hey, can I do this with my relatives, my friends, or whatever, and they’re trying to build those products to help them. But we see, we see the day when we just were the best in class, you know, group investing feature. And we actually can be white labeled or integrated into those different apps, which is super exciting.

Eric Hornung 29:11
So you see yourself being infrastructure for those other types of apps. That’s really cool. Absolutely.

Travis Smith 29:17
Yep. And we actually have some pilots going with a really exciting company called Doorvest. I should I should introduce you guys to them for sure.

Jay Clouse 29:24
Yeah, cuz so far, what you’ve described here seems like a really elegant solution for the creation of the tribe. And then ongoing, you know, sounds like Tribevest is facilitating the poll of monthly savings from each member. I was going to ask what happens in the lifespan of the customer after they’ve kind of been formed? Where does where do you see the vision for Tribevest going as far as how Tribevest serves the tribes that have already been formed?

Travis Smith 29:52
You’re right. We’re really focused on entity formation and you know, helping these these groups, these people come together. They know, like and trust, come together and set up an investor tribe the right way. And that’s incredibly exciting because there’s a huge void in the market for that. But then what? Right? And you think about that, I mean, really, we see the entity formation is when an investor is activated. Right? And we’re, we’re creating a whole new customer, a whole new investor on their own maybe or maybe not, they’re an investor together, when they become an entity. It’s a it’s a brand new entity, it’s a new brand new investor. And so how do we serve them once they’ve they’ve become that investor entity? And the answer is a lot of that the dashboard. I mean, really, our value props are so simple, but we own it, we own it, we own our niche. And that’s that idea of like, Where can we all do this together? is there is there an operating system out there designed for groups like us? Yeah, it’s Tribevest. Is there an operating agreement? Or is there a platform out there? That is a neutral third party that can help us work through different conversations? Yes, that’s Tribevest? Is there a place where there’s full transparency onto our cap table? And who’s putting money in and you know, where all of our investments are? Yeah, that’s Tribevest. So you think about it, we have a really broad solution. But our value props are just so simple. And that’s the value that we’re going to continue to bring. We see a future with a lot more network, you know, capability and connecting a community. But you know, right now, again, that seems a little bit like a luxury right now. We’re so focused on the utility. And we’re happy to be doing that, because we’re seeing really good growth.

Eric Hornung 31:42
How do you think about managing human behavior? And the eventual disputes and litigation that will arise? Is that, like, what does that look like down the road when an investment doesn’t go right? Or when we know that family members tend to sue family members, it happens when there’s money involved? How do you how do you think about that future set of services?

Travis Smith 32:04
Eric, you know, this, that’s our business. That’s our niche, you know, for solving a big problem in the world. That’s it. That’s it. And we, and we look up to our big brothers and big sister in it’s not like, unlike Uber, or Airbnb having to get over this idea of strangers equals danger. Right? Well, now we summoned, you know, strangers to our house, and we jump in the backseat of our car with them, right? That technology’s incredible. And that’s what Tribevest is doing tribe vest is making it super safe to invest and come together and do business with your friends and family. That’s part of it. And part of that technology is more, you know, helping people realize that more important than the rules are the rules up front. So in this case, a good offense is the best defense. And you know, when disputes happen, it’s because the what ifs happened, and the what ifs always happen. But the what ifs happen, and they don’t know how to manage it. And then the moment it becomes emotional. But if you if you work with if you work with the Tribevest platform, we give you the guardrails to make sure you’re you’re answering all those questions up front. So when those what ifs do happen? You just say, how are we going to handle this? Well, let’s look back at the operating agreement and see how we handle it. Okay, cool. That’s how we do it. So those are the things and what we’re doing is we’re completely flipping it, we’re flipping this from fear to let’s go on and journey together. Like, let’s go, let’s, let’s have an experience. And as soon as people start thinking like that, it’s not a scarcity mentality anymore. It’s not a winner or loser. And, you know, it’s no, no, we’re gonna go do something really, really cool. And we now have a vehicle to do that in. And so it’s also about switching the mentality, right? Well, how people come in to partnerships. And again, the rich have been doing it forever, right? You talk to the wealthy, they’ll tell you to do business with people they know, you know, like and trust. And they have their country club networks. And they go by all sorts of things all the time. But they have attorneys that make that simple. Take the emotion out of it. And the rest of us don’t have that. But now there’s Tribevest. But really, I mean, you really hit on our niche and our big problem that we’re solving in the world.

Jay Clouse 34:26
I want to make sure I understood something you said a minute ago, which is you mentioned like republic in the in these platforms that basically house investing opportunities. You guys are creating investors, you could build your own marketplace, theoretically, in source your own opportunities as well. But it sounds like you’re saying that your immediate strategy is to instead partner with existing investment platforms.

Travis Smith 34:50
You’re right. There’s all sorts of ways we could take this. But you know, more than ever, people have access to alternative investment. That’s right. You just named a number of different platforms out there. We don’t think that’s a problem. You know, same thing with education. You know, there’s plenty of education out there. And we want to bring that all together, right? So yeah, absolutely. We want to be investment agnostic. Now, if a group wants to come together and invest in a Wefunder startup, we want to integrate with Wefunder right? If they want to, if they want to do a old school investor Club, which a lot of our tribes do, we wanted them to be able to integrate with TD Ameritrade and have that on their dashboard, too. So can we integrate or have open API’s, which we’re absolutely designing for, is really our strategy there. We don’t want to make money on selling investments. You know, that’s a huge differentiator for us. We don’t want to present we don’t want to cut the deal. We You know, that’s not our thing. And but there are other partnership marketplace opportunities. So you mentioned a marketplace. So our marketplace looks more much more like this. What path are you on? So if you’re you’re doing short term rentals, single family rental vacation home? Well, we know what that that’s a very predictable path. And can we help you with bookkeeping? Can we help you with your realtor? Can we help you with insurance? Can we help you with taxes? So all those things are super convenient, and paying the butts for people like, man, I gotta figure this out? I gotta figure that out. Well, shame on us, if we can’t help our tribes get to where they’re trying to get faster and easier.

Jay Clouse 36:45
And so your guys’s model, I’m looking at your pricing page. It’s basically a pure SaaS subscription model. It sounds like, how did you land on that as the model?

Travis Smith 36:56
Well, as you both know, I mean, the SAS model is tremendous, in terms of valuations, and, you know, just getting putting together a good business model, it’s, it’s really solid. But it really comes down to being different. I mean, we look at ourselves much differently. But a lot of people look at us in the wealth tech into FinTech. And we’re different than everybody else in those spaces, we’re not charging for a transaction, we’re not charging you to have your money in our accounts, we’re not charging you to to, we’re not selling you an investment so we can make money on it. And that service is really valuable to our customers. And they’re very willing. In fact, we’re doing a lot of pricing tests right now, which is super nerdy and fun. But, you know, they have no problem with the cost that we’re bringing, and we love it. Because we’re in this to scale, like, we’re well on our way to our first 1000 tribes. And we won’t be surprised we have 10,000 tribes on our platform by the end of the year. And we’re going to have hundreds of 1000s of tribes another year after that. So you start to you start to look at those numbers, all of a sudden, our subscription model is really exciting. And that doesn’t include this marketplace of predictive services that is around the corner.

Jay Clouse 38:15
And just for clarification, for folks who aren’t looking at the same page that I am, what what is the subscription model.

Travis Smith 38:21
So it’s $5, our business ready is $5 per month, per member. And that actually caps at seven members. So if you have more than seven members, it doesn’t get more expensive than, you know what it would cost with with only seven members in there. And by the way, that includes the filing of your LLC includes your Articles of Organization includes your ein includes the opening of a free FDIC insured business bank account, it’s all in there.

Jay Clouse 38:56
My last question is, how have you found the easiest way to explain this or get the founder on the platform? Because this feels like something that if I know what I’m trying to do, I’m going to find Tribevest. But how many people are out there saying, I want to form an investing tribe?

Travis Smith 39:13
Well, as you guys know, I mean, we are still early stage, we’re post seed, but we’re pre series A. So we’re still learning, we’re still learning. But once we figured out our pricing and our funnel, we realize that people are looking for this like they’re we were so focused on educating people on this to the point of playing keep away, like we were playing keep away with what they really wanted, which was to use the platform. And, you know, sometimes we just have to get out of our own way. But once we did, you know, over 75% of our of our conversions are first time visitors. So they’re out there looking for this and when they find it They are, they are stoked. They and they want to call me and they want to, they want to, you know, they want to talk to our team. And they want to tell us how excited they are that the platform like this finally exists. So there’s, there’s a lot of pent up. I mean, think about it. How many times have you, you know, have been at happy hour and said, you know, we should invest in that, you know, we should do this together. It happens, you know, millions of times every day. So when people see this idea, it’s one of those things where like, I can’t believe something like this doesn’t exist. Of course, the people that are actively looking for it. They know it doesn’t exist until they finally find Tribevest.

Jay Clouse 40:41
This has been awesome. Travis could have been talked even more about this, but we’re at time unfortunately. If you want to learn more about Tribevest or get started with their tribe, where should they go?

Travis Smith 40:49
Go to Tribevest.com. And click on the Get Started button can also email me it’s Travis@Tribevest.com. And we’d love to get your feedback and tell you all about Tribevest and how it might help you form an investor tribe. So you can build wealth as an experience. It’s a multiplayer experience.

Jay Clouse 41:15
Well, Eric, we just spoke with Travis Smith, the founder and CEO of tribe vest. What do you think you want to invest in some companies with me.

Eric Hornung 41:23
As a two member LLC, I think we need at least a third, fourth or fifth person because we already have a two member LLC, Jay.

Jay Clouse 41:30
Well, Eric, I alluded to this in the intro, but Travis and I haven’t connected in several months, mostly since the time that he entered the mucker Capital accelerator program. And my gosh, feels like Tribevest has been accelerated from the last time that I spoke with him.

Eric Hornung 41:46
I think that you captured something in the intro here, which is that this is so in the Zeitgeist, like, technology is enabling people to go back to the kind of roots of finance which was you lived in a little community, you had a bank at the center of the community, and that bank essentially was a community bank, it’ll let you put money and take money out when you needed it. As we kind of got bigger, those institutions got bigger. And now the internet is allowing things to get smaller again. So you can go invest with your family and friends. And it also has that social component, I just see like a lot of positive trends here. The thing with bigger pockets, being like a peer to peer real estate kind of forum blowing up, I see the fire movement, there’s just so many things that are running in parallel and at where Tribevest is going, that it makes a lot of sense thematically for me.

Jay Clouse 42:36
I also think there’s just a lot happening in the world right now that’s bringing people’s awareness and interest to private investment a lot higher, mostly because we’ve been on a bull market that’s going crazy. And people feel like all I have to do is invest in a stock and I make a bunch of money. But those headlines and things like the GameStop situation, situation is an interesting word to use there but we’ll call it a situation it’s it’s bringing a lot of awareness to the world of investing and getting people interested in investing. And here comes Tribevest which when I started talking with Travis in 2016, it wasn’t as in those zeitgeist, then it was harder, it was a question of how do you get people interested in the idea that they can invest in things together. And now it feels like the product is in a good spot. And that zeitgeist happening? It might be that magical timing that investors talk about on the show and kind of uh, you know, why now, type of answer.

Eric Hornung 43:28
The why now in this case was stick around for four years until the why now was right.

Jay Clouse 43:33
Well, it took four years to build the platform to I’m sure,

Eric Hornung 43:35
Right. But that’s incredible that so often we think of why now is this, what’s the what’s the phrase cross section is like a cross section look into something. But why now is actually just can you survive long enough until now becomes the right time for the product that you’re building.

Jay Clouse 43:50
So what sticks out to you as well start with the founder and start with Travis what sticks out to you about Travis’s background as it relates to this opportunity.

Eric Hornung 43:58
He’s obviously interested in the space. I think that when you build a product to scratch your own itch, you inevitably scratch other people’s itches. So it was very much built off of something that he created. It reminds me a lot of passive coming on the podcast, he created something to scratch his own itch. And other people saw that as valuable. I also really liked that he kind of built it. Our friends at Ernest capital have this phrase, calm companies, which is like you don’t just dive in both feet first. And like hyperscale he built it over time. He was doing it on the side and then left his job. It wasn’t like oh, I have this idea. Let me go join an accelerator, raise $50,000 and hope this works. I think that type of like measured approach is going to pay off in the long run for Tribevest.

Jay Clouse 44:44
Yeah, I liked the the part of his story of having invested with his brothers for eight years in this very manual way. We didn’t get it to dig into this in the interview, but I’ve heard it from him before. The manual process of doing this right now without Tribevest is possible. But there there are all those components I mentioned in the have one person figure out okay, how do we form an LLC? How do we form our operating agreement? How do we have communication be seamless between us? How do we make sure that we’re all interested in the thing that we’re potentially investing in? He experienced all of those pain points. And micro interactions are like important inflection points throughout the process, many, many times for for eight years. And he’s told me before in the past that people asked him, like, how did you and your brothers do this? And that kind of became the answer? Or what led to the answer of tribe vest, because the answer to how we did this is not a very straightforward, well, here’s what you need to do. It’s, you need to do this. And then the next month, you’re gonna need to do this. And then when tax time comes, you got to make sure you do these things. There’s a lot of ingrained knowledge that came from those eight years of investing with his brothers.

Eric Hornung 45:48
And the shadow that I have is something that I brought up on the discussion, he said, this is core to our business, which is, he’s had these eight years of experience with his brothers, he didn’t mention one experience where one of them wanted to sell or liquidate their position, or someone went off the deep end and just started suing the LLC, right? Like there’s a lot of having lived in the money world, and lived in the friends and family world, there is a lot of things that can go wrong when investments don’t go right. And when investments do go right, and life doesn’t go right. So my shadow is what happens when push comes to shove and things aren’t. Bitcoin to the moon.

Jay Clouse 46:27
Yeah, well, my my quick answer, and I want to, I want you to dig deeper into this because my assumption not nearly nearly as close to the legal step as you are, Tribevest help them form the LLC. Now that thing exists, and it serves as an escrow account, does Tribevest have to play a role in those messy situations, or is it like, well, you have the business, you have your LLC, you have these assets yourselves? Why does Why does tribe s even need to play in that area of conflict?

Eric Hornung 46:51
So as Travis explained it to us, they help you think through your business plan, but also your operating agreement? and all that, which has a ton of clauses that should I think, in his term, handle the what if scenario? Well, I can understand how Travis went through the what ifs of getting everything set up. But if he hasn’t had the personal experience of seeing all the what ifs go wrong? Did you capture all of them? Do we start seeing some of that fall apart? And this is just me playing former bankruptcy advisor here. So likely, it’s not a huge shadow by any stretch of the imagination, and having those conversations early on will mitigate any animosity towards the platform specifically,

Jay Clouse 47:29
And your concern is more about animosity with the platform and not like liability.

Eric Hornung 47:34
Right. I don’t have any liability concerns here. Unless they wrote the worst contracts in the history of the world. They shouldn’t have any liability. But yeah, it would be with animosity, and that virality score, that he talked about where one person comes on in 4.6, I believe people sign up. That’s a score of good faith and goodwill and people being excited about the platform. What you don’t want to do is turn negative because people start having bad experiences when they want to sell and they realize, Oh, this isn’t as liquid as I know, it wasn’t liquid. But now it’s I’m really thinking it’s not liquid.

Jay Clouse 48:04
There’s a point in the interview where you kind of released your poker face and showed your cars were like what you guys are thinking about integrating with these different platforms. And you’re like, that’s really cool. So talk to me about your reaction to that, because that seemed to take you by surprise.

Eric Hornung 48:18
Yeah, I think that it goes back to like our conversation with the share and what a share does by being white label solution for venture syndicates and spvs. If they can create, there is so much complexity in this space. And there are he mentioned at country clubs or lawyers that do this, there’s so much that’s going on. But if they can create a process that is repeatable across asset classes, and within the alternative space, specifically, there are so many marketplaces and investment type companies that are spinning up right now we see it with like, Masterworks, or Republic, or any alternative asset, the NBA top shots, I think, is the thing that’s happening right now that I don’t really understand. We see what the NFT boom non fungible tokens. And alternative assets, I think are on like the precipice of exploding. And if this can be the new stripe here, it’s not the right terminology. But if it can be the back end infrastructure to support more of these alternative asset platforms to exist and having more people invest in those things. I think that opens up the market dramatically for Tribevest.

Jay Clouse 49:28
So talk to me about this opportunity, and how were your excitement comes in? Let’s just say that, let’s say that that doesn’t play out yet. And it’s just going to be a SaaS platform that that charges, I think it’s five to $12 a month per member capped at seven members. So per tribe, we’ve got $25 to $35 per month. How exciting is that peer SAS opportunity to you? Do you think the market is really big, huge, big enough.

Eric Hornung 49:57
I think that it’s really big. I don’t know if it’s like the biggest market we’ve ever seen on upside. I wish I had run some numbers on this. But my gut tells me, okay, BiggerPockets is a individual real estate platform where people go on forums and want to invest and would, maybe they’re investing in crowdfunded deals, maybe they’re investing in their own deals, whatever it is. So if we use that as a proxy, there’s 2 million people on that site. If we look at the fire movement, I don’t know how many subscribers mister money mustache has. But that’s probably a good proxy for what’s going on in the fire movement. The Reddit fire thread has 100,000 subscribers. So I think that there’s a lot of opportunity for people who are like, could be hardcore fans of this early on. And those hardcore fans to Travis’s point, can bring 4.6 people and those 4.6 people might not be founders or the hardcore fans, they might just be people who are generally interested in the space. So I do think it’s very big, because you don’t need everybody to be gung ho about it. You just need one person to be gung ho, who has a network, that’s also like, Oh, yeah, that sounds cool.

Jay Clouse 51:01
Yeah, he mentioned that there might be towards 10,000 tribes on the platform by the end of the year, 10,000 times $35 per tribe, that’s three to $50,000 in revenue this year, just from SAS revenue. So I wonder, you know, how quickly this is going to get into my sixth 18 months comment? How quickly can they ramp up these drives? Because you, you need to scale up that number of tribes, you need to scale the number of founders, really the founding members, as you’re saying, because with one person basically comes five, which is a really encouraging and exciting network effect. Not often do we talk to founders on this on this show. And it’s like, well, if I get one customer, I get five. But it depends also, I think about your customers, because if you just think about your tribe as your customer, then it’s it’s different.

Eric Hornung 51:47
There’s also something to think about in terms of tribes that we didn’t really get into, but there can be the Eric and Jay tribe. But there’s also probably the Jay, Eric and someone else tribe. So people can be in multiple tribes, I assume that have different purposes and different business models. So if you have that one person who comes in and brings in 4.6 people, they might launch another tribe and bring more people into that. And then more people know that that was my question around influencers, celebrities and platforms that are creating these tribes, repeatedly, kind of repeated tribe, founders.

Jay Clouse 52:22
I know you’re excited about the white label possibility, something else that strikes me as a real possibility. And I don’t know if it’s actually in the cards, or if it is, at what timeframe. But if Tribevest is as good at aligning people and forming tribes as they want to be, in my mind, theoretically, you could be a marketplace, matching up tribes of people where maybe I am an aspiring founder of my LLC, but I don’t have 4.5 people to bring with me, can I assemble a tribe wholly on the Tribevest platform? And theoretically, I would think that you could, if you do some intelligent matching, And to me, that’s a really exciting opportunity in the future, too, because that’s really making it social and and democratizing access to wealth building.

Eric Hornung 53:04
And in that you’d have to probably be pitching your business plan in your idea. So I think that’s super fascinating. The, your idea was so good that it made me forget my last point.

Jay Clouse 53:15
Well, as you’re trying to remember, what are you looking for from Tribevest in the next six to 18 months, I kind of already shared that I’m looking for tribe growth, and acceleration of the number of tribes on the platform, I see you thinking, so I’ll keep stalling here. What else is on your mind?

Eric Hornung 53:31
I want to see how their beta kind of conversations are going in regards to this kind of white label partner model, assuming that the tribe growth happens, assuming that they hit this almost 10,000 tribes by the end of 2021. What’s the next phase of that? What is the go to market in terms of partnership? What is the reach in terms of distribution because while it’s awesome to have your tribes being an it’s by far, the best way to do this is to have the people on your platform being advocates for you, and creating more people coming to the platform, because it’s essentially a free customer acquisition cost. There’s also gonna have to be a level two there of how are we partnering with people to get more and more platforms, bringing more and more people to try vest directly or indirectly. So the I remember, Jay, the last thing I want to mention, before we close this up, Travis started talking about how his time in New York was categorized by working on Wall Street and understanding that the wealth management space is primarily and specifically in these large warehouses created to sell products. And you can see that because if you look at how people get paid, you tend to see where their incentives lie. And in Wall Street, you get a percentage of transactions most of the time for things that you’re selling, or kickback on the same thing, so you want more transactions to happen. That is what Wall Street wants. When you ask the question to Travis early on. How do you make money? Essentially, why aren’t you taking a percentage? Why are you doing a true SAS fee? It made a lot of sense to me that Tribevest investing in relationships because the the money is following the method, which is we want you to be a longtime customer. So we’re going to have a longtime pricing model, we’re not going to take some percentage of the transaction and try to push you into more transactions. We’re gonna try to build long term value for you as a customer, which I, I really respect that there’s alignment centers there.

Jay Clouse 55:27
Well, listener, we’d love to hear what you think about this episode. You can tweet at us @upsideFM or email us hello@upside.fm to let us know. And if you’re interested in starting a tribe, we’d love to hear that too. Did this inspire you to start a tribe? Are you concerned about it? If so, why? just tweeted us @upsideFM. Thanks for listening, and we’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at hello@upside.fm. or find us on Twitter @upsideFM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there are a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties of the Upside podcast. At the time of this recording. We do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duffin Phelps LLC and its affiliates under a collective LLC and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.