Victor Lopez of FlexPoint

[00:00:00] , and I'm going to get to the housekeeping, like we normally do at the beginning, every one of these sessions, and then we'll get into the good stuff. So, here we go.

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[00:03:28] So that is the housekeeping MSP initiative.com. So today our special guest and for the first time ever on the show, Victor Lopez from a company called Flex Point.

[00:03:41] How you doing today, Victor?

[00:03:44] Good George, how are you? How's it going?

[00:03:46] Yeah, you know like we're, you know, we're kind of chatting right before we jumped on. Yes, I'm definitely from Philadelphia. There's no question about it.

[00:03:53] No question. No doubt. No doubt in everyone's mind. Yeah.

[00:03:56] So WrestleMania was in Philadelphia for people who aren't, you know, watching, you know, WWE, you know, and the most recent one was. Yes.

[00:04:05] Shut up really?

[00:04:07] So it was like a couple hundred thousand people coming through Philadelphia like it's their Super Bowl right it's the professional wrestling Super Bowl so it was good.

[00:04:16] It was nice to see everybody out about I got a chance to go into you know my building the Philadelphia Eagles home stadium and see it in a different way in a different format.

[00:04:25] I grew up in the you know Rockstone Cold, you know, I know I was gonna say I think I vividly remember the first wrestling match I ever watched it was like 1994 on TV and then but it really kind of tapered off probably in like the early 2000s so it's actually

[00:04:45] new to me that you know WrestleMania is still going so.

[00:04:49] They had the largest ever, the most people ever the most viewers ever social media.

[00:04:56] That's incredible. That's incredible. When you think about like other sports right like like I'm a huge baseball fan and like people always talk about baseball as being like a dying sport like only like old people or like you know people are age like baseball but it's

[00:05:11] how did how did wrestling stay relevant with like you know especially like the cell phone like internet age. I'll tell you what the rock came back. That's my guy.

[00:05:23] Even though he was off doing movies forever and ever and ever like you know I think it's all post online where it was like when I see the rock I just see Maui from Moana that is the

[00:05:31] Yeah, exactly. I'm the pro wrestler. I still see the pro wrestler. It was awesome. I really enjoyed it. I feel quasi bad because one of the nights of WrestleMania like it was kind of colder and if you didn't have layers and like as people who go to Eagles games all year long

[00:05:44] like Jordan season we're ready for that. Oh it's outdoors right yeah yeah.

[00:05:49] I think like one night they had like like 72,500 the next night they had like 72,800 and then they also had

[00:05:59] 72,000?

[00:06:01] Yes.

[00:06:03] That's a huge amount.

[00:06:05] They also had SmackDown on Raw beginning and after so when they were together it's pretty pretty crazy but just cool to see the back yard highlighted on TV.

[00:06:16] Yeah I bet.

[00:06:18] The second night I flew to Denver to scope out some venues for our black party up here.

[00:06:25] Yeah I feel like anytime I open up LinkedIn I see like George is going somewhere. George or Alec is going somewhere on a map somewhere far.

[00:06:33] You know, as I've said to many people right it's the benefits of traveling there's many we can talk about all the cool stories but for people who do it on a regular basis and if you're like not mentally in the right

[00:06:46] place it can also wear on you too right. Good and bad to all things but don't worry we love to be out and about even ask Jen in the background we sent her places too she loves it.

[00:06:57] I'm on at a show probably at least once a month myself so not as bad as probably you guys but like yeah definitely but I mean there's no better way right like there's no better way to like

[00:07:13] anyone like what better way to like see your people and like who you're trying to serve them like at a show where you can like actually talk to them right like physical thing it's just it's like it's almost like a like a you know different

[00:07:28] thing now being able to see people face to face and like talk to them. And a good thing to be totally honest.

[00:07:34] So anyway, Victor for people who I've never met you before don't know your story. I always ask anyone that you want to the show.

[00:07:42] Hey just kind of tell us your journey right like you started somewhere you made it to you know into MSP IT land like what did that look like.

[00:07:50] Yeah, yeah no it's a it's actually. I mean for most right it's probably it's probably a long and winding road to get the magic land the IT channel but for me it was a little little odd and interesting so actually

[00:08:07] I actually started my career as a lawyer so I went to law school yeah so fun fun fact.

[00:08:15] Yeah, I recently did.

[00:08:20] So, so yeah I actually went to law school. You know it's one of those things you go to college and you're like I don't really know what I want to do so I majored in philosophy so as you can imagine all the jobs available to people who major in philosophy

[00:08:34] right. And so logical step for me was like I'm gonna. Yeah, yeah exactly keep counting is not that many Starbucks barista I think was number one on the list at the time.

[00:08:48] The baristas out there right.

[00:08:51] Pause let me pause. Yeah, since a lot of people know that we travel. I have forwarded my colleague Mr centers a real this morning. If you are a delta person.

[00:09:03] And you're also a Starbucks frequenter I'm sure Jen already has this so done. You can link your accounts every time you go to Starbucks you get delta rewards for.

[00:09:12] Oh no way.

[00:09:14] There you go I had to give that freebie out there for all of you traveling.

[00:09:18] Everyone know yeah. So anyway so I went to law school and so I serve my career as an attorney doing primarily private equity M&A. So, that was fun.

[00:09:30] I did that. I like to tell people I was in law school for more time than I was practicing law so as you can imagine it was, it was a fun experience but from there actually transitioned over into finance so I spent close to six years at a place called blue out capital which is $150 billion investment

[00:09:50] fund. So we did a ton of different things but primarily invested in small and middle market businesses so across the board not just MSPs but actually a ton of software vendors that serve MSP so connect wise for example.

[00:10:07] And so I did that for a good while and actually myself and my co founder Sam, who I met there we spent a lot of time just you know understanding the MSP space was actually a lot of how we made our original relationships in the space.

[00:10:26] I got to meet people you know like Adam Slutskin who you know been at connect wise for a long time. And so, over time you started to, when you're in that role you start to identify areas, you know gaps in the market areas where something isn't currently solving a problem right

[00:10:47] and for us, what we were looking at at the time was when you look at an MSP when you look at it service company right generally speaking using generalities here, generally speaking those are started by people that are extremely, extremely good at providing it services.

[00:11:06] So, technical people right really good at either being in house it or working at another MSP when they go into starting MSP and you've lived this journey George so tell me if I'm wrong here.

[00:11:20] But when they go into starting MSP right like a lot of times right especially the ones that are successful it's like, they sort of stumble into this business right it's like oh I was, I was out here to like help people with their IT and you know sort of do this thing that I'm really good at.

[00:11:36] And all sudden, you fall into. Well now I'm running a business now I'm running a business and now, you know I realize all the challenges that come with running a business and especially, you know, a service based people business right.

[00:11:52] So for us we saw, you know a huge gap in tools and software to help these business owners these accidental business owners in a lot of ways.

[00:12:06] Help run their businesses and so the first thing that we sort of identified was, well there's payments right there's traditional accounts receivable. How do you receive your payments how do you get paid, making sure you actually get paid it.

[00:12:20] You know, we talked about this all time my cash flow is the lifeblood the oxygen of any business right. And then on top of that we also realize that there's this you know interesting thing in the MSP space where so many MSPs are in the business of providing credit to their clients.

[00:12:41] And so we thought wow that's, that's really interesting you know you have all these thousands and thousands of many banks. I don't know if that's formally providing credit I think it just came in here.

[00:12:51] I think you probably realize the sarcasm there but yes.

[00:12:56] Obviously not intentionally. And so, so yeah so we set out to build a solution that essentially helps MSPs run their business primarily through automating their accounts receivable from billing and voicing payment, and also very importantly, helping them not be a bank.

[00:13:17] So, you'll hear me talk about that a lot but no longer be a credit provider be a, you know, IT service pride.

[00:13:26] Okay, let me let me go backwards for a second because we're going to get into flex point what you guys do.

[00:13:33] I think that in a very interesting chair that a lot of people on the MSP side of the aisle. Just, I mean, imagine the stories in the comments and the Reddit threads on this topic right VCB.

[00:13:49] And a lot of people don't like you.

[00:13:51] I'm trying to point you, you know just general industry okay don't take it very well. A lot of people don't like those guys. A lot of people think that they're kind of like they're forcing change in a negative way right to the to the program right to the system to the sandbox.

[00:14:07] And at the vendor standpoint they feel like once that transaction that event occurs like innovation stops and like, you know, like things just slow down and maybe like access to the resources that start to disappear from MSP perspective we're seeing.

[00:14:24] And I guess with how many there are let's say 20 to 25 recognizable platform, been invested in by the same group of people, you know, same type of investor who are like literally rolling up MSPs right as much as they can.

[00:14:37] Yeah.

[00:14:38] So, and they don't like that.

[00:14:41] Yeah, like people don't like I'm sure like the people who get a check out of it probably do somebody's making any money out of this but that being said like, you know there I guess the point I'm trying to make is from somebody that sat on the money man side right on the investor

[00:14:57] side.

[00:15:00] I'm curious how you saw how you see the world right through your glasses. And I'm curious, like some of the decision making that's made. We speculate right how do you how did you decide that this was a good investment and what is your 100 day plan post acquisition to get what you

[00:15:17] need out of it versus what's been happening so like, if you were to like give me a big picture right like from yeah.

[00:15:23] Okay, so I'll break it down into two parts right so like first.

[00:15:27] I'll talk a little bit about, I think the first part you mentioned which I think is like very top of mind for most people it's not just MSP right it's like how private equity is affecting all our lives right like I was, I was telling my wife this the other day is like you

[00:15:42] I was looking for a brand of deorderant right something like brand of the order.

[00:15:47] And she's like oh why don't you buy Tom's of Maine right it's just like crunchy granola brand.

[00:15:52] And then little did you know it's owned by some like big conglomerate right you thought it's just like, so eventually right you unwrap everything and everything is either, you know made in China or owned by private equity firm right.

[00:16:05] So I'm not really about that point but so so so focusing on that part of it and then I'll get to the second part of your question but you know I think there's always two sides to everything or nothing's ever black and white right so I think the, the private equity and just to be clear

[00:16:24] to sort of defend it or anything that it's done right so I just give you my perspective on my experience.

[00:16:31] I think part of the success of a big contribution to the success of this country, everything that we do here is because we are driven by innovation right so.

[00:16:44] In order to innovate. Oftentimes you need capital right and so I think one of the big positives that has come out of the industry is, you know that capital to drive innovation so I think that's definitely something that people tend to overlook at the same time the other part to it is like who are investors in

[00:17:06] the private equity firms right so it's not you and I right or maybe it is George that's definitely not me, but it's primarily pension plans state pension plans right like all the people public works right you look at like the state of Pennsylvania

[00:17:21] and say to me Jersey or saying like some of the largest investors in private equity funds.

[00:17:26] Wow, I don't know that to be honest, I think it's a common misconception.

[00:17:30] I mean that's you this is all public you can look it up like I think it's called pieces like the Pennsylvania State Employee Retirement Fund is one of the largest private equity investors right and why do they do it, they do it to fund the pension plans for like the firefighters and nurses everyone else.

[00:17:49] There's that whole side of it right it's like this uncomfortable relationship between the blue collar, the you know the state employees who have their pensions with these funds that require, you know some level return to be able to support that so I think putting all that

[00:18:09] aside, I think part of why we at flexpoint saw an opportunity was because, frankly, we saw from the inside what it looks like to, especially on the vendor side, the ramifications and what that looks like when you know these vendors are bought by large private equity firms.

[00:18:30] And so everyone has right like every MSP owner probably tell you like my goal is to one day sell this business and make a lot of money for me and my family.

[00:18:40] That's just being an entrepreneur right like that's the reality of it. And so I think that's that's part of the challenge is this uncomfortable challenge and this uncomfortable dynamic between.

[00:18:54] Yes, everyone we all are striving for this opportunity this exit where you know we're all you know live the the entrepreneurial dream but at the same time, we're all you know talking about the outcome what what does that mean for for everyone else.

[00:19:10] So yeah, I mean I think that's a challenge I mean I think for us with at flexpoint specifically we think of it as an opportunity, frankly we we continuously innovate we listen to our partners we make the changes that you request which when you know you're a much larger

[00:19:27] company, and you have private equity owners let's be honest like the focus is something else right it's not it's not so much.

[00:19:38] How can you deliver the best product to your customers is how can you deliver the best product that's extremely profit so.

[00:19:47] Yeah, so I'll get off my self box there but just to maybe hit on the second part of your question. I mean, I think it focusing on the MSP space right and I think what's happened in the really the last five years right and there's so many more intelligent people that can

[00:20:05] do this than I can but I think what's happened in the last five years is you just have so much capital, so much capital, and they don't know what to do with it right like they being the investment funds private equity firms and so they're all chasing this special MSP that the reality of

[00:20:25] this is that it's probably like less than 10% of the total market of what an MSP is right so has to be a certain size doing certain EBITDA has to be like, you know certain types of clients, etc.

[00:20:38] And so I think what that's done is, if you talk to almost any MSP right like even an MSP is just getting started moving from break face to manage service.

[00:20:50] I was focused on like well how can I get my business to fit into that mold of, you know, the type of business that are private equity wants.

[00:21:00] So like everyone's talking about like EBITDA when I think you should probably be talking about well like do you actually have managed service clients is your model man services a break effects right.

[00:21:11] And so I think what's happened is the the upstream effect you have all this capital that's trying to find this very limited number of MSPs that fit this mold has then, you know had a sizable impact on the whole market in a lot of good ways right because it's a good thing that people now care about their margins it's a good

[00:21:32] thing that people care about their EBITDA and you know some of these other operational aspects and part of what you know we try to help people with as well.

[00:21:41] But the reality is, you know, it's very, very early days in that so I mean you talked about some of these platforms but some of these platforms have only existed for, you know, less than five years so I don't think we've seen right the true outcomes

[00:21:57] in that there or what the true reality would be sort of post acquisition of those.

[00:22:05] Yeah. Well, one thing's for sure.

[00:22:11] Every deals a little bit different. I have talked to a lot of people have gone through buy or sell side of something right.

[00:22:17] I was actually talking to an MSP yesterday who, you know was asking me things about valuation and how do you come to the proper valuation I'm like a lot of it is correctly categorizing your revenue.

[00:22:29] Right. Like, is it you know like maybe times have changed right because the market always changes up and down over all year every year.

[00:22:38] So I think that companies were usually valued differently than a professional services company right like, is it still true in your mind that a SaaS company is valued more on growth, top line reoccurring revenue and churn percentage generally.

[00:22:55] So I think it depends on the bottom line of an MSP's calculation which is more EBITDA. Is that still generally true or is it been more great out.

[00:23:03] I think, I think it depends so I think it depends and I'll tell you kind of how we thought about things and sort of what I think is pretty common these days.

[00:23:13] If you have a software company that's growing 200, 300, 400% year over year. The focus is 100% going to be on revenue top line revenue.

[00:23:22] And the reason for that right is the growth rate right because the balance and you'll hear this from most financial type investors the balance is between investing in growth versus investing in profitability right so you spend a ton of money into sales and marketing.

[00:23:40] You should be growing very rapidly. Now, if you scale back the money that you're spending on sales and marketing, your growth rate is probably going to go down, but your profitability is probably going to go up right so it's that balance of at what stage does it make sense so when you look at most

[00:23:59] like later stage software companies when they go public right, they're generating over $100 million of revenue, but their growth rate generally tends to come down into like the regular people atmosphere right sub 100%.

[00:24:14] And so that's that's always going to be the case right like investors anyone is always going to pay an additional amount for that growth right.

[00:24:25] I think the more common scenario is valuation based on profitability multiple in this case, even.

[00:24:35] And so, I think there was a period of time where it was very hot. And I think some investors probably looked at MSPs and we're like, Alright, they're, they have you know x amount of revenue I'm going to value them at eight to 10 times that multiple.

[00:24:52] I would say that's probably not that common. And was proud was the best pride don't really exist anymore.

[00:25:00] But I had some bad bad bets there. So I think what is much more common is a multiple of either right so it's a multiple of this metric that essentially just measures profitability and cash flow.

[00:25:13] And so, for most service based businesses and most businesses generally it doesn't matter if their software or an MSP right like that's going to be the metric that they're measured on.

[00:25:27] And then things come into play like okay, how much of that revenue is recurring how much of it is tied to a man service contract how much of it is low margin you know hardware reselling and etc.

[00:25:40] So, regardless of SAS company or MSP.

[00:25:45] The starting point is the same as what you're saying right they're going to work backwards.

[00:25:49] Oh yeah I think so I mean I don't the the the key difference though is like at those early stages right like you might be an MSP let's say in your first year.

[00:26:00] And you're doing 500k right 500k you have a good first year that's just getting started.

[00:26:06] And you grow 200% right like the next year you're doing, you know, much more than that. I don't think most and again I can be wrong I'm not the expert in this.

[00:26:16] But most likely you're not going to get a revenue multiple right even though you grow because you went from 500,000 to $2 million right but your software company that goes from a million dollars to 10 million dollars of revenue and you're growing right you're growing that

[00:26:32] that rapid pace you're probably going to get a multiple based on on revenue.

[00:26:37] Okay, there it is guys you heard it from somebody that was behind the glass and the other side.

[00:26:42] So, you know, know know your numbers so that you understand what you're working towards. The last thing I want to do and we've heard this on the show right you work for 20 30 years.

[00:26:51] In your head you think you know what's going on you get to the point where you're ready to do something you find out, not good.

[00:26:58] Yeah, I mean it's it's definitely a process I mean I think. I think in general, from my experience, every successful MSP that has had an exit has spent at least two to three years kind of preparing for that.

[00:27:13] And so, not just from like an operational standpoint but from like, you know making sure your employees understand that that's part of your plan right and like I think the worst case scenario is, you know the MSP owner that sells the business for you know this awesome

[00:27:31] number. And there's a huge earn outtide to it and then the next day all the employees including you know the GM and all the important key people are like well, you didn't tell us this.

[00:27:43] I quit. Right. And they're often goes somewhere else and now that business is because it's a people business at the end of the day right service based business.

[00:27:51] So that that becomes a challenge and I think that's a challenge for a lot of MSPs, especially MSPs that are in that sort of range of you know one to 10 million. It's just, do you have a team, an executive team that surrounds you so that you know, you go straight get hit by a taxi

[00:28:11] business still runs right and still runs without very low interruption.

[00:28:17] So, the end is going to take over when I disappear.

[00:28:22] Like what did he just say?

[00:28:25] Let's flip it over into flex points. So like, let's look at the market for a second right you came into a market with a handful of options two of the most notable one have been acquired by the platform software companies right.

[00:28:37] So, BNG connect booster who got acquired by the cassette group and then you had why sync out of Australia that was acquired by connect wise.

[00:28:46] Then they're you know listen they're still, you know like the gateway services that every bank offers right you know like authorize net and you know the card version processing and a ch buddy at yada yada yada.

[00:28:57] So, you know, there's options out there that are a little bit more ubiquitous right like a bill.com or something like that right there out there and then there's good old fashioned QuickBooks merchant services, which I'm surprised still is a thing but apparently it is so you know so when you play those options

[00:29:11] out there let's say that there was like five options other than good old fashioned checks and the tech scanner machine or the mail right.

[00:29:20] So, as all things go and you've been on the other side of this when people get gobbled up in the terms change people look elsewhere fine.

[00:29:28] So, other, you know so so based on those options, you came in and you said, hey, I'm going to create a sixth option. It was probably more but I'm going to create a six lane.

[00:29:39] And what is the value that that we're going to provide in this lane that you know differently.

[00:29:45] I think I think the best way to kind of describe this right it's it's where we are today versus where will be a year from now. Right, so I think I think it's a very accurate comparison to say you know and I think, frankly, the connect boosters in the

[00:30:02] world have done a great job right like they've done a great service to the market. In the last 10 years, they've provided something that I don't know five seven years ago, most people didn't either know that they needed or didn't have a solution to solve

[00:30:17] 100% true. Totally, totally transparent there that I think they've done tremendous job. And so when we think about ourselves and why, why we started FlexPoint right and what we think the differentiating value proposition really is is like,

[00:30:33] I guess today, we can essentially do everything that you know a connect booster or wise pay provides with a little bit more.

[00:30:45] But again going back to what you're saying right like those businesses have reached what I would say a peak right like they are now part of a large organization, they're tied to those businesses.

[00:30:58] And so for us, what we're doing today is just the beginning right and so really for us goes back to what I was talking about earlier and why you know I left this career and finance to start FlexPoint for us is really building a suite of financial

[00:31:15] for MSP. So payments part of it, it's a big part of it right, but even from the beginning right like we're not just doing payments we're also helping with short term financing helping MSPs not be a bank.

[00:31:28] And so from there we have a lot of other incredible things that we're working on constantly developing innovate. So, I think the value proposition today is very clear I think most people understand the need for accounts receivable

[00:31:44] for payment software, making sure it's works within your existing workflow so integrates into your PSA and your accounting software. So I mean, we can talk about the author is that dot net so the worlds but I think you know, you're using that you probably have some other issues that you need to solve for

[00:32:00] first. I saw a post of a guy yesterday I forget where one of the groups on one of the platforms Facebook whatever, and he said that authorized net this so far this year has held up $100,000 of transactions that they had to go and get released basically

[00:32:14] right like they transacted the customer came out of their account and went into limbo. Yeah, and they had to fight to get the money released and it's like, wait a minute why why is this so difficult.

[00:32:24] Yeah, I mean we, I'll give you an example we had it we had a partner who joined flex point after using PayPal. And they were using PayPal, and they were paying an obscene amount of money using just for the benefit of using people so.

[00:32:40] So anyway, so, so yeah so the way kind of to get back to your questions kind of summer is there is. Yes, today, our solution is very much focused on providing payments automating your payments automating the working capital side of it.

[00:32:57] That's just where we are today, and we're we're fairly new business you know we've been around for two years so I think what we've accomplished in those two years right we have hundreds of MP partners at this point now.

[00:33:09] It's only the beginning, so I think when you look at where we're going and you know what we're planning on doing in the picture for can you can you share.

[00:33:21] Yeah, I'll share right again. Someone someone on my engineering team is going to get really mad at me, but so.

[00:33:29] So we think of it as a full cycle right so there's the accounts receivable side, which is what we're solving for now.

[00:33:36] But in terms of running your business as an MSP we focus on a few other key areas. So reporting being able to have accurate data around things like DSO accounts receivable aging.

[00:33:50] But also forecasting so taking a step further, like how do you take that information and be able to forecast it in an efficient way so that you know we talk about this very often but you have a lot of people a lot of businesses not just MSP small

[00:34:08] businesses generally that live by the bank state right like you don't know that you're running out of money until you see the bank statement.

[00:34:15] That's never be the case right you should have reporting you should be able to forecast you should know what your cash flow coming in going out looks like.

[00:34:25] So that's an area that we think is, you know, very, very important to focus on, but then as we think further right then there's the, the accounts payable side of things how do you handle the other side of sort of the payment

[00:34:42] and then the other side of things like the work flows, and then beyond that into a full suite of tools, like even think about I mean now we're getting a little bit into the future but even think about how most people deal with things like payroll.

[00:34:59] It's like, how do you get the your text time right and and all the other time and information that they're putting into the PSA. How do you get that accurately into your payroll system so that you know how everything is, you know, works together.

[00:35:15] So I think there's a lot of opportunity and frankly, we don't go too far into the, the planning stages because a lot of what we do comes from our partners right so having those conversations so when we hear about like here's the new challenge this is the new thing that I need to focus on these are the things

[00:35:36] that we're worried about. Like that's, that's what's going to drive us not so much like hey we have this whiteboard with all these grand ideas of all the things. I mean, you know, paper ideas are good but it's like the people that are actually using and you know providing the feedback or the ones that are driving where we're

[00:35:54] Yeah, okay so right now today you're another option for bank and credit card transactions automated into the PSA and accounting system so that like you're not waiting on your money right cash is king.

[00:36:08] There was another part to that that you said was like the equipment financing or something like that let's talk about that in a second but on the future, your goal is to like not just live at the end of the conversation which is am I getting paid, you want to streamline into the entire life cycle of a transaction

[00:36:27] Right.

[00:36:28] You might have full back office so think of us as the back office solution for the industry.

[00:36:33] Okay.

[00:36:34] All right.

[00:36:36] So, you know, probably, you know, you know reporting visibility and automated some stuff but there's probably some quoting in there or something.

[00:36:46] I don't know I'm not going to put your words in your mouth but I'm just thinking about what it takes to get from across those bridges when we get there for now.

[00:36:53] All right.

[00:36:54] May have stepped on something.

[00:36:56] So, so talk to me about the equipment finance part then is that part of the story.

[00:37:00] So all yeah so I'll make it clear it's not equipment finance so we do partner with leasing companies to do traditional leasing so we do leasing.

[00:37:09] So like hardware leasing what we focus on is the working capital so less than a year. So like let's say you have a client that has a new client $10,000 on Morgan feed right.

[00:37:22] Generally speaking as part of the sales process that's a hard conversation to have right it's like, hey you're going to you're going to send this man service contract and on top of this, we're going to charge you $10,000 up front to be able to scope everything out make sure everything

[00:37:35] is in order. So what our solution provides is you take that $10,000 invoice and you break it up into six monthly payments. So you pay that over six months pay that over three months pay that over 12 months without it affecting the MSP cash flow so MSP

[00:37:51] paid up front, we're the one that fronts the money where the ones on the hook if the client doesn't pay.

[00:37:58] And so that's just one use case so think of it is really working capital financing so anything from that 30 up to 12 months doesn't have to be hardware related.

[00:38:10] So a couple other use cases so I'll give you an example of partner bars. So we had a partner, not in Indiana, Patrick Kemp I'm sure he'd love it if I mentioned him but so Patrick and his partner were, you know they were growing growing MSP, and they were looking to go

[00:38:27] to the market. So like they were going from like mostly SMB to more upmarket mid market enterprise clients. So they had these opportunities to work with a regional franchise so coffee shop franchise.

[00:38:43] And so they were going to have hundreds of locations across the Midwest, but the challenge there was because larger more mid market enterprise style client.

[00:38:54] They required terms. So they were, you know, they were bidding for the preferred partner to install security cameras all the infrastructure every single location.

[00:39:04] So, you know, you're growing MSP you're getting started, you know been around for a little bit but you don't have access to, you know, $10 million line of credit, right.

[00:39:13] So, so they partnered with us. And so what we have enabled them to do is every new franchise can now finance that project through us. So now the security camera installations, those look at franchise location buildouts

[00:39:33] can all be financed through FlexPoint without it affecting our partners cash flow. And so they grew revenue just to give you some numbers they grew revenue over the course of eight months 500% utilizing.

[00:39:49] Yeah. So we think of it as one, yes we help you get paid. We automate the accounts receivable side of things, but we can also help you sell more increase your clients wallet share like increase your clients purchasing power so they can do more with you buy more from you without you

[00:40:09] obviously taking on the credit risk.

[00:40:11] Wow. That now so that's interesting. That's different. That's new.

[00:40:15] And I would say that that's a huge that's a great case study by the way I'm sure a lot of people would love to do that in businesses. Absolutely.

[00:40:23] But at the end of the day, like, you know, like, to your point, a lot of people have decided hey I just don't. I can't play over here because I can't hold the 60 day terms I can't, you know, float the money like, you know, I just, you know, that disrupts how the

[00:40:40] business runs right you know based on the smaller guys so to your point like yeah I guess they could go and kind of go to traditional banking and see how far they're like you know they can get with a line of credit or that kind of thing and and I'm

[00:40:53] sure the people are giving out money. I'm sure at a crazy high percentage but they're there, but up to a certain point right like, you know, like an unsecured line of credit like you're probably not getting six figures without some sort of skin in the

[00:41:06] game right. Yeah, yeah I mean we had it. It's funny, we had a partner describe coming to us we had a partner describe what it felt like to them trying to get a line of credit from bank and the way he described it was like I walked in there and I felt

[00:41:24] like I was naked, you know, like I had no clothes on because they asked me for, you know, my last three years financial statements, my mother's made a name, everything and on top of that, the personal guarantee right so.

[00:41:39] And so, whereas with FlexPoint it's you know it's all in one place all automated seamless. We describe it as really a consumer like experience right so if you look at things that are now like ubiquitous like,

[00:41:56] Clarna or like a firm you go on the website, you click and you pay over three months. That's the type of experience we're trying to deliver.

[00:42:05] So that it becomes something that you know is that value add to both our partners and their clients.

[00:42:14] That's pretty cool. I love that story so that that is a tool.

[00:42:18] One that many people don't have today right in order to make things go.

[00:42:22] Yeah, that goes back to what I was telling you it's like, even today right like we are a new company we are two years old. And even today, our goal when we launched was yes we provide you with the Council see the bottomation the payment processing, but we wanted to provide

[00:42:38] something more out the gate and so that's that's the something more that we're doing now.

[00:42:44] But like I said before we got we got a lot, a lot ahead of us.

[00:42:49] Yeah, well, as a guy that's been in the chair of trying to build new stuff. I feel the big you know like sometimes you know it takes a lot it's like building a building anytime somebody gave you a day other building will be open it's like no well

[00:43:03] It's like a problem of

[00:43:05] Longer it's going to be weather, it's going to be delayed permit you know the inspector didn't come when you know who knows right like so I did like building stuff takes time building stuff well takes time and then like I think one of the cool parts is like, you know getting feedback from your

[00:43:25] customers your customers so that you can ultimately like build the right stuff to your point right I was I mentioned this on the last episode, I was on my way back from Australia a couple weeks back few weeks back, and I was watching the blackberry

[00:43:40] So yeah, I did. And they were like they're talking about how like us robotics put this motor motor in and then like they were like it was a motor that was never going to be like actually seen right they're like, you know, and actually it kind of hits your point right like they had this like $15 million

[00:43:56] contract that they haven't made a single payment on running out of money and so they called up US products and we're like hey what's going on oh you didn't know we canceled that.

[00:44:07] And the guys like what it turns out they were actually after you know like effectively died the other thing that these guys were building which was turned out to be blackberry right and

[00:44:21] needless to say they did not you know capitulate and just hand over the model, you know the idea of their cell phone over US robotics but that being said like, you know, had, you know if you remember the movie had the guy that they brought in as the CEO not gone to Verizon and make the

[00:44:38] picture of his life.

[00:44:39] Right right.

[00:44:40] Verizon to basically fund that.

[00:44:42] Mm hmm.

[00:44:44] And then probably go out of business. Yeah, well right exactly I mean and that's the thing they have to have them fund them. Otherwise there's no way they could have done that but yeah, it's, I mean that's a challenge I mean I think it's a common challenge we saw that on the other

[00:44:57] end right like that's part of why we did this it's like anytime you try to go out market even if like today right like the majority of your clients are small businesses, even if you try to go like mid market.

[00:45:08] It's a whole different animal right like you have different organization you have different stakeholders like even just getting paid is a whole different process right like there's a whole

[00:45:19] different level and so like if you don't have the right tools in place and the right plan in place to like be able to do that it's really challenging so you often find people not being able to take that next step because you know it's not, they don't have a plan in place.

[00:45:36] Yeah, or they take a shot at it and they find out that 80% of their time is on client because they can't. So it just takes a lot of energy to try and deal with somebody who's not the normal blueprint for you.

[00:45:47] Yeah, that's true. I mean that's another part of making sure you're, I mean we do this on our end too right we see this all time like making sure your solution is as well fitting for the type of client and so sometimes you have to turn away clients that you know seem like a good

[00:46:06] good client but at the end of the day would probably suck up a ton of resources.

[00:46:12] So that's cool so you're a couple years in the flex point, you know, sounds like you probably started with some cash right to get this thing going. So you use all the skills that you learned in your your VCP days to like start a business which is cool by the way like, I think that's one of the you know it's

[00:46:28] like I call it the actual American dream right you can do whatever you want.

[00:46:33] It's the actual American dream life but both my parents, not to get too, too, too into the weeds here but both my parents immigrants right so I'm first generation. So there you go.

[00:46:44] That's, you know, it's a, it's truly the American dream.

[00:46:49] And as somebody who's, you know, you know come through that lens right like these people came with nothing in their pocket and they were just like hey we're just going to work really hard and get the white picket fence and like live right nicely.

[00:47:01] There's more if you want it. Yeah, a lot of people don't want it, but there it is it is out there.

[00:47:09] That's true. I will say, you know, and I tell my kids is even now like, you know hard work. It might not be what gets you there but it's definitely not what's going to keep you from getting there. Yeah, so you work hard, and that's a constant.

[00:47:26] I like that line. I like that line. Yeah, no if anything market.

[00:47:31] You go for it. We have a recorded this is hard hard work kind of gets you through the hard time I think right like that's the thing that like holds you over until you get to the magic that you hope to happen.

[00:47:45] So, a lot of people don't put in the time right they you know and there and there's noodles and noodles of stories where people gave up too soon.

[00:47:55] And then all of a sudden like, you know, you know, something something happened to somebody in a similar position or something that per the next person in line you know hit it big right like here's a good one.

[00:48:05] McDonald's. Yeah, like that whole movie with Ray Kroc.

[00:48:11] And it was great the founder right and I was like those guys had a great idea, and they got squeezed by a guy who is just hungry. Yeah, yeah I mean and there's a I tell us to people as well it's like there's also a blind self confidence right it's like you take a look at me right

[00:48:30] and most people that I went to law school with right like, it's like oh the guy ended up running a business like it's a if you put yourself in those shoes. The some might call it naive right others might call it blind confidence but you also have to have that part of it right it's like the hard

[00:48:47] work but also like the belief that if you keep working hard, you will be successful.

[00:48:53] I agree what what your your your lawyer career wasn't like suits.

[00:48:58] Yeah, it was exactly like I'm stuck. I've never actually watched suits I get a lot of a watch. No no no I've never watched suits I've tried to. I tried actually now it's on Netflix like the whole like whatever 14 seasons on Netflix now.

[00:49:14] I'm not going to be fine but yeah and my wife is also a lawyer so we've met in law school. And so I tried to convince her let's watch suits and she's like, I can't watch that so I get there's too many things right it's like imagine watching a show you're an MSP and you watch a show about being an MSP right

[00:49:30] and like you'll be like, well that no that no no one uses that that's not how that works. It's not the same. Well, it was very entertaining. So if you do break down and I've heard yeah I've heard yeah, you may have to go back is very good and sounds like you from like what New York New Jersey that

[00:49:51] I live in New York. I grew up in California so

[00:49:54] Okay, well you live in New York so suits for free because it's supposed to be in New York.

[00:49:58] I did work in in New York City right like that I did work at a law firm New York City yes. Yeah, 82 hour weeks and you know for no money.

[00:50:07] I would say 80 hours on the on the low and yes.

[00:50:11] Wow. So you just had a cotton your play and you're in your eCoup and you just stay

[00:50:15] You know it's funny. And this is getting probably to tune the weeds again but there would be multiple weeks where you just work 90 to 100 hours a week.

[00:50:27] And it's not it's like you know people think about it, especially I don't know I mean for anyone who's out there looking to become a corporate lawyer let's let's talk let's make sure you understand what that means but

[00:50:39] But it's not it's not stimulating work right it's not sexy work you're generally what you're buying people negotiating deals getting out of line. I wasn't I mean I was a junior lawyer right like when you get to several years into by now yeah sure I probably be doing the exciting stuff

[00:50:57] now but you know that'd be 15 years later.

[00:51:01] But yeah in the early days you're just grinding you're just grinding, you're doing a lot of documents you're doing a lot of review.

[00:51:09] You're looking at a lot of you see a lot of things that you know you wonder wow how did this business get acquired for billion dollars but you know ultimately it's not your decision.

[00:51:19] That's crazy. Well, if I if I didn't go into technology vector, I would have tried to be a lawyer going to be honest with you. I don't know what a good one or bad one.

[00:51:30] But maybe I grew up watching too many lawyer shows I don't know.

[00:51:34] I think we all did right I think it's it's a classic you don't know what you're doing with your life and so you heard that, you know for me is like again coming back from the immigrants background is like well I know that lawyers are a good profession right I'm not going to be a doctor

[00:51:49] an accountant blood or you know numbers.

[00:51:54] But don't forget there's a junior doctor lawyer engineer that was gonna be too hard for me probably.

[00:52:01] Well, one thing's for sure I have. I've had a few more traffic tickets and average guy or girl out there but I drove a lot. So, you know law of averages in my opinion I digress but I have fought many a traffic ticket and I would say have a pretty good batting average.

[00:52:17] Yeah. Yeah. Wow.

[00:52:19] That's it.

[00:52:20] You know one of the things is if you show up right that's you increase your chances 50% that you're going to you're going to win the traffic.

[00:52:28] Except in Pennsylvania. Yeah, this is a good story in the way out of here but like Pennsylvania they get paid overtime to show up to court so by the way they're they're been their incentivized show up to you know we're one of the few states where the local police can't use like radar and speed guns they got to use like

[00:52:46] on the road in the stopwatch kind of thing.

[00:52:49] Like yeah it's so I mean really my lawyer brain all of a sudden there's a lot of there's a lot of loopholes there.

[00:52:57] You would think right but they're like oh we got you know we we the law says we have to calibrate our equipment every so many days and here's the certification and it so I was like okay I literally fought one of these where the lines on the road or like the police department went to Home Depot and like put them on themselves

[00:53:13] right nobody actually like surveyed these lines.

[00:53:16] And then like the road is on a curve so the lane one distance and the lane two distance aren't the same.

[00:53:25] And then like, at the time I have to go back and look now, you know and as I was reading through as a normal guy not from law school.

[00:53:32] Hey, the law said the actual measurement of point a and point b have to be plus or minus 1% right like measured this with like your car or some other instrument and then they go to actually measure it.

[00:53:45] You know normally what's the calculation difference got to be within 1% right.

[00:53:50] So I had, I had had one where I was coming down this is too late highway in each direction.

[00:53:56] And I got clocked by a guy who said he was clocking me in his rear view mirror or like a side mirror like the one where it says objects may appear closer than legitimately he says right writing.

[00:54:10] I was like, I'm clocked you in my mirror, going 82.2 miles per hour making a right hand turn.

[00:54:17] And I'm like, I'm not a, you know, like, you know, scientists, but I'm pretty sure my Volkswagen doesn't turn right at 82.2 miles per hour.

[00:54:28] And the roads backed up as traffic bumper to bumper. Did I fly over these cars? Like I didn't know I had a DeLorean with wheels that turn sideways.

[00:54:36] So anyway, long story short, if anything just a funny story on the way out the door.

[00:54:40] I went to Home Depot. I got a measuring wheel. I measured these lines.

[00:54:44] Oh my God, totally unsafe on the side of the room.

[00:54:47] And I was like, there's like 13 feet difference.

[00:54:50] Yeah, the measurement is and what the actual measurement is and like that's more than 1%. Right.

[00:54:56] So I got a court and they're like, well, your measuring wheel isn't a certified approved measuring. Like you didn't calibrate Mike.

[00:55:04] Okay. So in Pennsylvania, we're one of I think three states where you can get a de novo trial just for free. Right. You're just like, Hey, I'm feeling that's a good legal world.

[00:55:14] And I call up and I asked for the traffic engineer for like my area and I pay that person to come and survey the road.

[00:55:24] Like for real for and he got the same measurement I got created a report showed up the court to testify.

[00:55:30] Oh my God, how much would look fine if you can ask you how much was the fine?

[00:55:34] Well, it was a five point license suspension 90 days departmental like maybe you have to go back depending on the one. Yeah.

[00:55:44] Okay. Basically, you can't move right. Yeah. Okay.

[00:55:47] So like as a guy who is driving on some years, like 25,000 miles a year. My worst year like 38,000 miles a year I drove like it was crazy. Yeah.

[00:55:56] Just here in the Northeast. I need to drive to do what I do. And so I fought it and Jen's like these traffic violation started to trigger.

[00:56:07] You got to do it on time. Don't be late anyway. So long story short, I ended up doing well in that case. And so did six months of my fellow Pennsylvania drivers who also got their cases reversed.

[00:56:21] So that's great. Oh, it became a precedent so other people could like point to it.

[00:56:26] Well, it's well, it was the same officer who look at George DC versus the state.

[00:56:33] So like 444 tickets written by one guy on Wow, in six months.

[00:56:39] They're like you tell me. Yeah. Wow. That's congratulations. I think I mean that's a it's an accomplishment there.

[00:56:47] Wow, I just thought you'd find it funny as a guy who oh yeah no I mean we'd be on this for for several hours and probably not be able to do anything.

[00:56:57] And so I think we started to get into stories about, you know, anytime I could use some of my, you know, legal skills and to making sure, you know, I'm not getting screwed over by somebody.

[00:57:08] Yeah, well there's more of those stories but I don't want to trigger Jen anymore Victor. Where do people find more about flex points they want to talk to somebody if they want to see something there in MSP where they go.

[00:57:17] Okay, so just website so get flex point.com and anyone go through reach out to me my emails just Victor at flex point.com.

[00:57:27] Awesome. Why can't wait to trade more legal stories with you it sounds like you guys. This was legal advice. There's my, there's my, my experience.

[00:57:39] Anyway, although Brad gross is probably laughing at me somewhere.

[00:57:43] Um, the session was recorded guys. We're going to post it on all the podcasters YouTube MSP initiative that come under sessions.

[00:57:51] MSP Community wise next weekend in Nashville we got packs a beyond we're doing a MSP block pretty there we got that a condo and we're doing an MSP block party there register ahead of time.

[00:58:01] Yes we'll be in the schedule on the conference apps all that jazz but like don't you know have to be one of those people have to do it at the door.

[00:58:07] So, I'm going to go ahead and digress Victor. Thank you very much. I'm sure I'm going to see you on the road.

[00:58:11] I'm sure I'll see you at pack say yeah. Yeah for sure.

[00:58:15] Not earlier.

[00:58:16] It's gonna be a great time or that or in a court somewhere for sure it's absolutely.

[00:58:21] All right guys catch on the next one.

[00:58:23] Thank you.