How To Free Tied Up Funds & Reinvest Back Into Your Business ⎜ Kickfurther ⎜ EP 81

Ryan Cramer: What's up, everyone. Welcome to my corner of the internet. I'm your host, Ryan Cramer. This is Crossover Commerce presented by PingPong payments, the leading global payments provider, helping sellers keep more of their hard- earned money. What is up everyone? I'm your host, Ryan Cramer, and welcome to episode 81 of Crossover Commerce presented by PingPong payments. PingPong provides marketplace sellers and entrepreneurs global solutions for controlling their domestic and international funds all with one account. PingPong enables companies to significantly reduce their costs when receiving or making international payments and a platform to increase operational efficiencies, saves time and allow sellers to manage their business profits from one single source. Pay your VA's, pay your suppliers, receive from multiple marketplaces all over the world. Just sign up for a free PingPong account today and save yourself some money. Go ahead and check out that link below in the comment section where it says, " Save on a free month of international FX". Just check it out, sign up for free today and make sure that you note that you listen to Crossover Commerce. Thanks for joining us on Facebook, YouTube, LinkedIn, and Twitter everyone. If you're watching us or if you're listening to this show, thanks for tuning in on Amazon Music, Spotify, Apple, Google Podcasts, really just wherever you can download a podcast, that's where I'm going to be. Just search Crossover Commerce and you can ring that notification bell to make sure you are notified when we go live and send out new episodes. Do me a favor on that note, go ahead and follow, like and share this episode on social media and hit that bell button to be notified of those future episodes because guys, guess what? We go live about four to five times per week on the show with experts like our guest today who are going to bring knowledge and insights in the Amazon and e- commerce field. You don't want to miss it. I'm going to do my best to bring you information to apply to your business today so you can start growing and become a more successful business and entrepreneur. Again, you don't want to miss a single episode. If you're watching this live as well, go ahead and tell us what you think in those comments below. We'll be able to see those live and respond to any questions or comments that you might have today. If you aren't watching this live, go ahead and still do so and ask your questions as well. Just tag us when you have that question and we'll be able to make sure that you get a great response. About our guest today, again, episode 81 of Crossover Commerce, I decided to bring in Sean De Clercq who is the CEO of Kickfurther, who's the world's first and only inventory funding program. Throughout his entrepreneurial career, Sean's driving goal has been always to create a solution of one the most difficult in the growing businesses face, it's overcoming funding, the production of their inventory. Fittingly, he actually created Kickfurther to fund inventory for direct to consumer and major store brands such as Target, Amazon, Aldi and more. A native of Watchung, New Jersey. I hope I said that right but that sounds about right to me. I'm just going to go with it. He studied philosophy at Rutgers University before beginning his career in the supply chain management company, later growing merchandising firm where he encountered the financing issues that would inspire the founding of Kickfurther, which took him to Boulder in 2014 and where he attended BoomTown Accelerator. In addition to running Kickfurther, he also works as an entrepreneur mentor at Rutgers Business School. Kickfurther, as a company, helps businesses grow faster by funding$ 20,000 to $1 million in inventory as costly production runs arise. Welcome to the show with Crossover Commerce. Welcome Sean of Kickfurther. Sean, welcome to Crossover Commerce. How are you doing today?

Sean De Clercq: Hey, Ryan. Thank you for inviting me. It's great to be here.

Ryan Cramer: Of course, yeah. That was a little bit of an an introduction. Of course, I'm reading your intro and bio but tell me a little bit about who Sean is. Why did you get into a space that was super important to you that lots of people are trying to problem solve of funding an inventory? This is probably one of the number one topics that I hear is, " How do I make my money fluid when it's tied up in inventory?" How did you come up with Kickfurther? Maybe start from the beginning, walk us through and then how you got to today.

Sean De Clercq: Yeah, sure. I've always been an entrepreneur my whole life. I think that comes from a deep- seated belief in capitalism and effectively, if you're working for somebody else, somebody else is getting the value of your labor. I always really wanted to own the value of the work that I produced. That always, really drove me to entrepreneurship. As you mentioned, I had my own merchandising company. We were taking products from manufacturers overseas, customizing them a little bit and then selling them as exclusives to retailers here in the US. That business went really well. We went from 600,000 of sales to about a million of sales between year one and two. What we found was as that business scaled up, we just encountered this inventory finance issue. Everybody we would talk to, we would go to these vendor conferences where you have all of these vendors selling to the same retailers. You'd go talk to people and it's like, " How are you funding your inventory?" Everybody had a different answer. It would be like, " Oh, my uncle Bob, he wrote me a check and he helps me." Or, " I've got it running on a credit card," was a surprisingly common answer. It just really seemed like there was not a good unified solution for a problem that pretty much every product business was facing. At the same time you would sell to some retailer like Target, Walmart, whoever, and they put their inventory finance issues on you because they pay you on net payment terms, net/ 60, net/ 90, whatever. It just felt like the smallest businesses were getting forced to deal with this inventory finance issue both from the manufacturers that don't extend credit and from the retailers that are essentially forcing you to provide inventory finance to them. It was just this big problem. We looked around. I was earning 0% in my bank account. It was like, " How can my cash sitting in a bank account be worth nothing but I go to an AR factor and they're talking about charging me 3% to 5% discount per month to fund my purchase orders?" It just seemed like there was a massive gap in the market and there was an opportunity to create a more efficient solution. We took that idea of let's connect people with businesses that have inventory needs. We'll allow them to pre- purchase. I mean Kickstarter and Indiegogo really paved the way with rewards crowdfunding. We said, we'll allow people to pre- purchase the inventory. We place it on consignment with the business. As the business sells through the inventory, they pay our community of users back. You take the people that have the capital, they can put it to work in inventory and support entrepreneurs. It feels like we really hit on a nerve. We started this coming up on 7 years, August, 2014. We've just been growing since then.

Ryan Cramer: That's awesome. There's so many different companies out there trying to extend lines of credit. Amazon even has their own program that's financing and whatnot the terms of everything. It depends on who you're working with. This concept, obviously, when I was looking through you guys last night, and I'm a consumer, I'm looking through everything. This reminds me of Kickstarter. I literally just funded a project yesterday on Kickstarter. I was like, " Oh, this feels very similar in concept." Why this concept? Is it because it's cashflow. You're not sitting on a pile and you're just figuring out how much to get people. This is more let the product speak for it instead of the transactional process of bank versus lender. Does that make sense? That's where it seems people use their passion to fund products they like and then they almost get a kickback. That's almost the smaller way to invest. Does that make sense?

Sean De Clercq: Yeah. It's a way that you can support entrepreneurs. The key difference between Kickstarter and Kickfurther is if you're selling to someone like Target and you go to Kickstarter and you fund 10,000 units, normally, those 10,000 units, somebody is expecting to take delivery of them. You can't then go and take the same inventory and ship it to Target. It doesn't fit because people are expecting to pre- fund and they're expecting to get delivery of that. The other thing that we've encountered is with Kickstarter, it's a great solution for getting pre- orders. Let's say you've got a backpack company. You love the backpack company. Maybe you know the entrepreneur or you really want to support their ongoing growth, but how many of their backpacks can you really buy before you've got too many backpacks? Kickfurther gives you a way of supporting businesses you like without having to take delivery of their goods but continuing to support their ongoing growth and expansion into the market so more people can discover these great companies and great products.

Ryan Cramer: Interesting. You're building out inaudible 6, 7 years since 2014 is what you said. I'm a person who is selling online. What is my threshold to work with a company like you guys? Is minimum threshold, you have to have a certain amount of sales? Walk me through what you guys need in order to let people into your marketplace, if you will?

Sean De Clercq: We have some restrictions on which products we fund just due to logistics, so no refrigerated products, no frozen goods. That stuff is just too expensive for us to ship and store and deal with. We don't allow regulated products, so no alcohol, no tobacco, no firearms, those kinds of products. Essentially, it depends on the regulation around it. Certain supplements, I think, are okay as far as I know. We have an operations and a quality team that helps to determine that. It's like if we can get the FDA certifications, then it's normally okay. The key test for us is can anybody that's 18 years old anywhere in America buy this product? If that's okay, then we can normally fund the inventory. Our basic measure, the basic hurdle is 150, 000 of trailing 12 months revenue. We hope to extend into the long tail of the market and continue to provide our support but that's the level where we've been able to provide a good experience for all participants.

Ryan Cramer: Awesome. In this context, if you're a beginner seller, obviously, what are the issues that you would suggest to a Amazon seller, an e- commerce seller from the beginning to maybe avoid... Obviously, we want people to work with you at the end of the day. To maybe avoid this situation, what do online sellers have to do from the get go? Because ultimately, you're investing into an inventory level if your three PL or a third- party seller and private label seller, I should say, and you're sitting on$ 100,000 potentially worth of goods and you don't have that capital in your bank account to pay other people. My question is, how do people avoid that from the get go? It's almost like how do you prevent those issues to help with cashflow?

Sean De Clercq: The best way of getting ongoing credit for a business is the same as personal, which is to use credit, pay it back on time, and then you build up a profile and then you're able to access more credit from more providers over time. When you're a small business and you're really getting started, let's say you've got zero revenue, initial production run, those are people I say, " You should be going to Indiegogo and you should be going to Kickstarter." That's actually the perfect use case for rewards crowdfunding because you have no capital, you have no customers. You've got no product market fit. That's the best place. You go to rewards crowdfunding. If you're successful, you get all three. You have your customer base. You have initial revenue and you have product market fit. You've identified a market that wants to buy your stuff. That's the best place to start. Then that normally gets you going. We've worked with companies that have done nothing other than a rewards crowdfunding campaign that got them over 150,000 of revenue. Then we've been able to come in and provide the inventory funding for them to continue to grow their business from there. If you can't quite get there with a rewards crowdfunding campaign, there are other options. I encourage people to speak early to the Small Business Administration and see what SBA loans are available. There's a lot of stuff out there to support small and medium businesses. Use the advantages that you have. Then also look at potentially alternatives. I always give a shout out to Kiva Zip. They offer up to$10, 000 of interest- free loans, small business loans for people that are just getting started. I think they run a great program for people that are a little bit earlier in the cycle in their growth.

Ryan Cramer: That's awesome. Then obviously you guys would take over and help with that because for people that don't understand, Amazon doesn't pay you out just because you send them$ 100,000 worth of goods. That's not how this works. If you're on this stream in here and you think that's how it works, that's not how it works. For, I should say, cashflow issues, obviously, lots of people are going to like, " How do I pay back people and whatnot?" And these kinds of concepts. What are the other ways out there that, we've touched a little bit on it, that exists and people may not know? I didn't know I could go to a bank and get these loans but it may not fit my business model. Every business can help with other business models and maybe yours doesn't fit everyone's. Obviously, that's not the case. Who's the perfect customer for you and how do you help them be the most successful possible? What does that avatar look like, if that makes sense?

Sean De Clercq: Our best customer is a growing product brand that... We describe them as omni- channel distribution. What that means is you're selling often through Amazon, maybe through your own Shopify store and maybe Target or a few wholesale accounts, REI, or someone like that. They also like your product and they're stocking your product in a few stores. That's the perfect business for us to work with. We fund their inventory. It doesn't matter where it goes. Whether it goes to REI, whether it goes to Amazon, Shopify, our inventory funding consignment model works for all of those different use cases. I think that there are lots of opportunities for trade finance out there. It really depends on the characteristics of the business. If you're a pure wholesale company and you're only selling to REI, traditional AR factoring might be a good fit for a business like that. What we see is that increasingly more and more of the market is moving to omni- channel distribution because if you're selling to a retailer at a 30%, 40%, 50% margin, they're doubling your price again and then selling it to the end user. If you can go direct to consumer with a 70% margin, that's the gravy for these businesses a lot of times. What we see often is businesses that sell wholesale to increase their quantity so that they can improve their margins. They make almost all of their profit on their direct to consumer channel.

Ryan Cramer: Maybe walk through a math problem, how this works. If I'm a business I'm going to work with you and I need$100, 000 worth of inventory, walk me through the process of how much am I ultimately paying out? How much am I going to be able to keep? Where are you guys making the money? I just want to understand too because finances specifically and any type of money, you want to know where all the money's going towards. I think this is beneficial to you to say, " This is why we excel at... It's after you guys, not before you sell something. It's after you sell something. You're benefiting. We're benefiting." Same thing like that. Maybe walk me through$ 100,000 worth of inventory I need and how does that work for you guys on Kickfurther?

Sean De Clercq: Let's say you've got$ 100,000 worth of inventory and you're selling it at a 66% margin, a direct to consumer through a Shopify store. You need to buy$ 100,000 of widgets. We're going to call it 1,000 widgets at$ 100 each. You've got these$ 100 widgets. You're buying them. You want to ship 1, 000 in. You would come to Kickfurther and you'd say, either at two points, one is prior to the production, " Hey, my factory needs$ 100,000 to produce 1, 000 widgets for me. Can you guys fund it?: Then you come to Kickfurther. We go through our qualification, our checklist scorecard process of the business. Then as long as everything looks good, great. We qualify the business. We fund the deal. This is where Kickfurther earns our revenue. We'll actually fund 5% more. If you need$100, 000, we'll fund$105, 000 give or take a couple of rounding percentages there. Then we earn a 5% funding success fee only when the funding is successfully raised for the business. We raise$ 105, 000. Kickfurther earns$ 5, 000. Then we take that$100, 000, pay your factory, have the inventory produced, shipped to your warehouse. Then we're looking at the same inventory reports that you're looking at. Then you get 1, 000 units shipped. It arrives, let's say, in January. We check in 15 days later, January 15th. You've sold 100 units at$ 300 a unit. You pay Kickfurther back with the consignment profit that's offered. Let's say, you expect to sell through the units in 6 months, you might offer 1.5% to our users. You'd be looking at paying 9% in 6 months. Then you get the inventory. We fund it at$ 105 per piece because we've increased the cost of goods. You sell it for$ 300. When you sell it for$ 300, you pay Kickfurther back about$ 114, which is our 5% fee plus the 9% profit that's going to our community.

Ryan Cramer: Got you. Kickfurther is not the one sending out$ 100,000 worth of inventory. It's a community. It might be from myself. I'm like, " Here is$ 100 or something like that." How has that concept worked and how do you work with individuals who are putting money towards this inventory? I'm not checking it out or anything like that. " My stimulus check is going directly to Kickfurther," or something like that. This sounds like very much like investment and opportunity that me as a person who wants to see businesses succeed, I can't lose. Is that true? Like me putting money towards inventory can't lose. Is that concept.

Sean De Clercq: If you look at your community, we all know that retail industry entails some risk. Who hasn't had the experience where you funded some products and they didn't sell as well as you thought they would? What we typically do tied into the inventory systems, is we'll give our users the ability to take delivery of inventory. If you fund something that doesn't end up selling as quickly as they expected or doesn't end up selling at all, what you have the option to do, is to take delivery of the inventory as a user, at the cost price of where you funded it. As a user, you can participate for as little as$ 20, depending on the co- op, the consignment opportunity that you find on the platform. Your downside is typically that you can take delivery of the inventory at cost, but going back to the backpack example, you might not want another 10 backpacks. So we also offer our users of liquidation option, where... If anyone's been through liquidation, you're not getting a significant return there. That's where we see that our users take a haircut. What we try to do, and this is why we qualify the businesses and run them through that checklist scorecard, is try and select for the businesses that are going to be more successful with their sales projections.

Ryan Cramer: You almost have to vet all these people before they even enter your marketplace. Like before they even tap into your marketplace. How do you build this marketplace? That's a very cool concept, I would say. Just being able to... This reminds me very similar, I don't know if the company Pick Food. They've built a com community of AB testers. I can go to my community. I can survey quickly 100 users around the world, depending on profile, demographic, things like that. I can say, " Do you like logo A, or logo B? And give me specific details why you like either, or." So I can prove my concept beforehand, before I sell it or a logo or idea or whatnot. And they'll give me honest feedback, I just pay per user. In this case, you're building out a marketplace of people who are funding. Like, " Hey, this is our concept." How do you build off this collection of people? You're not going door to door or anything like that. How are you still... Maybe you are, I don't know.

Sean De Clercq: A little bit. Yeah.

Ryan Cramer: Tell me about it. Tell me more.

Sean De Clercq: There's this funny story I tell. When we first got started five years ago, it was just me a developer and another co- founder right. It was like, I was doing business development. I had one guy doing sales, trying to close businesses to bring them to the platform to get them to sign these consignment contracts. Then we had a guy doing the development. The sales guy said to me at a certain point, he's like, " All right, well, if we bring a business, who's going to fund it?" I was like, " I'll go on Reddit and I'll tell Reddit about it, and Reddit will fund it." No joke, that's exactly what happened. We brought a business on, it was a small offer, $ 1, 400 and a small inaudible.

Ryan Cramer: Like a recruitment fee almost.

Sean De Clercq: Yeah. We went out to Reddit and we essentially just said, " Hey, is anybody interested in supporting American entrepreneurs and product entrepreneurs and small and medium businesses?" That's a thing that people do want to support. Then once people started seeing that it was working and they were able to find lots of really interesting... Find new products and also find interesting companies and entrepreneurs that they were happy to support, we did the PayPal route. So we offered a$ 10, 10/ 10 referral fee. You get 10 bucks and your buddy gets 10 bucks. Then from there, we just saw that the referral program just took off. That's more users brought more users. We've run a very active recruiting section of our business for the businesses. We do a lot of selection and we're out there working with partners to find the best entrepreneurs to bring to the platform.

Ryan Cramer: Can people make a lot of money by working with you guys, to be honest? This seems like there's a win for everyone. Like you guys as a company are winning, because ultimately people are funding through you. Sellers are winning because they can have more inventory or they can have more inventory, sell quicker. Don't have to sit on inventory as long. And they maybe can order quicker. I've always said in the show, we've heard it before, and time and time again, the valuation of your business always comes at the quicker you can turn your inventory. A company like an aggregator, like a Thrasio or like an Elevate Brands, for example, they'll look at a valuation of your company. If you're turning your inventory often at a very high margin, that's good for people, because that means people are buying it consistently. What can the community itself, can they make a lot of money doing this? I don't know what the average person's making in terms of when they're investing and their returns.

Sean De Clercq: If you look at it, it's not a lottery ticket. You're never going to make like-

Ryan Cramer: I'm not saying like inaudible. That's not what I'm saying. But if I'm an average person, I want to support other businesses and growing, if you're investing this much, how much is the typical investor making?

Sean De Clercq: You're going to go kickfurther. com, all of our deals are public. You can take a look and you can evaluate the co- ops for yourself. But if you go on right now, I think we've got like three or four co- ops live. They offer anywhere between 1% to 2% consignment profit per month. If you annualize that out, you're looking at maybe 12% to 24% annualized, if you're able to find that kind of consistent deal flow. But at the end of the day, it's based on picking out good companies that are going to perform. I did mention that we have one out of 20 of the co- ops on Kickfurther, ends up getting canceled and they're unable to sell through the inventory. So there is that risk that you end up potentially taking delivery of the product. What I look at is this is an industry, funding inventory is not new. AR factors, banks have been doing this for a very long time. What we're really doing, is just creating access to something that has existed for a long time. There's been some AR factors have been much, much more successful than other people that have funded inventory. It's kind of like we know for a fact that there are people that have uneven outcomes on the platform.

Ryan Cramer: Right. Gotcha. I put the website again, it's also in the show notes, but for people who are while listening to this, please don't tune away. But kickfurther. com is where you can look at it. And you have live deals that go live two and five a day? Like two o'clock and five o'clock? Is that inaudible?

Sean De Clercq: All of our deals go into upcoming. They go up and then they go live at 2: 00 PM Pacific, 5: 00 PM Eastern. They always get released live at the same time every day.

Ryan Cramer: Why those times, I'm curious. I'm a data nerd. Is that because everyone's like active around 2: 00 PM. They're like not post lunch nap time, but it's like before you're productive on the back half of the day? Or how's that work? Is there an insight that you can share with us, why you chose those times?

Sean De Clercq: I wish I had a better answer than we picked it and it works. We picked it-

Ryan Cramer: crosstalk the analytics or anything like that behind it?

Sean De Clercq: No. We literally, we were like, " Oh, people will be off work on in New York City, so that seems like a good time." We picked 5: 00 PM and it's like kind of always worked for us. And it's kind of like now we look at our traffic and our traffic goes crazy and spikes up at 4: 55 PM. We set the rule and then our whole community has adapted to our rule. It has been pretty interesting to see.

Ryan Cramer: This is what I think, like it's happy hour. You're like, " What can I do on the internet right now?" You're flipping inaudible fun product. There you go. That makes sense. We're just going to go with that, right? Happy hour. inaudible.

Sean De Clercq: We'll call it that. Exactly.

Ryan Cramer: Friday happy hour. I bet you, you see spikes on like towards the weekend. Is it on the weekday or weekend? Is that every day that you guys are going live with these campaigns?

Sean De Clercq: It's interesting. Is we get an interesting amount of traffic from entrepreneurs during the weekends, people that start to create accounts and start to like construct their co- op funding opportunities. But more of our users are active on the weekdays. It seems like our entrepreneurs are like busy working during the week, then they use their weekends to work on that important, not urgent stuff.

Ryan Cramer: "Crap. I looked at my week's worth of sales and I need more inventory or something inaudible." Interesting.

Sean De Clercq: Exactly.

Ryan Cramer: Here's another question. You guys are on the financing side. Is there anything else that you're helping entrepreneurs grow? Whether it's forecasting when you need to order more inventory or even how to tap into like other parts? How to grow sales and velocity? This seems like an opportunity at the core, you fix a problem, but then there's offshoots of like, " This is how we grow your business even more," through your services, product offerings. Have you guys thought about that in terms of it, or do you even offer that?

Sean De Clercq: Yeah. There's some stuff that we're going to be doing ourselves. Then I would say we also have an excellent, excellent stable of partners to provide some of the other attributes we know are needed. If you go to kickfurther. com/ partners, you can review. We've got partners that help with distribution, packaging, digital marketing. Depending on the business, as you know, these entrepreneurs just have such different needs. They're trying to meet all of them. We can do inventory, which is common to pretty much every single one. But then some need support here or there or the other. We rely on a very strong, stable of partners to provide a lot of that. One of the areas that we have identified that we can create a lot of value is in supply chain management. That's been my background. It's also common for every single business that has inventory, that has physical goods, you've got a supply chain. Whether you call it that or not, you've got a supply chain. What we've identified is that, businesses that have better supply chain management tools and have better supply chain management rigor, can command better prices. If you've got redundancy in your supply chain, you can get multiple quotes, you can pick the best factory that's going to deliver the best quality at the best price. What we see is actually much more common, is entrepreneurs end up kind of married to one manufacturer and that one manufacturer knows how to make their stuff. That kind of creates a fragility to these product businesses. So one of the things we're deploying that I'm pretty excited about, in the very near future, is a mobile app that we're calling Snow Melt. Which will be a product spec and supply chain management tool to help entrepreneurs build redundancy in their supply chains. Which we view as being an important point of resiliency.

Ryan Cramer: Almost like an SOP of sorts of when other people can help manage it and you know exactly when it's going to build into your ecosystem. Specifically, you can put in all your own stats, data, analytics, and needs. Is that kind of what it would be like?

Sean De Clercq: Actually, so it's almost more simple than that. It's a product spec tool. Essentially it's like, if you're buying this cup, it's like knowing exactly what goes into this cup. What's the paper? How do they construct it? What's the press? Blah, blah, blah, blah. There's all this stuff that goes into how things are manufactured. If you know exactly how something is manufactured, you can take that spec sheet and you can take it to five different manufacturers and you can compare apples to apples. Like direct comparison of costs. Whereas if you're just buying from one factory and you're like, " Hey, give me another 10,000 cups." Great. They're going to give you the other 10, 000 cups. But if something happens to that factory, trying to get the exact, same product-

Ryan Cramer: Complicated.

Sean De Clercq: ...is actually pretty challenging, if you don't have these product spec sheets set up on the front end. Pretty much the app is just a guided walkthrough to help entrepreneurs create a product spec sheet. And then we invest in customer success, to kind of help guide, " All right, now that you have the product specs, what are the next steps of building redundancy in your supply chain? How can you use this product spec sheet to command better prices and better margins for your business?"

Ryan Cramer: We've actually had like Kian Azari, he's with Titan Network, and he has a lot of great insight in terms of manufacturing. He always says the more prepared you are with negotiating with the supplier, whether it's the first one, or just other ones that might not give you everything you specifically need, you need to be able to have, " This is everything I need specific to this product. I don't want just cup." They're going to say, " Okay. What does that mean to you? Here's like 10, 000 different kinds of cups we can produce." Or you're like, " This is how I want to be specific. This is the quality we expect. How can you work with us in that regards?" Then they'll give you like their best foot forward. Because you sound like an entrepreneur who knows what the hell they're talking about. Then they want to work with people like that. Instead of like, " I'm thinking about creating another fidget spinner and I'm going to be the next millionaire. What's your cheapest price?" They're like, " Pass. No thank you." Or like, " Here's the cost and it's not a great price." But if you know what you are as an entrepreneur, that sounds like something you can help weaponize you to help negotiate from the get go. It's really cool. Congrats on that. Is that something available now or is that something coming soon? Like TB determined?

Sean De Clercq: We expect it to go live-

Ryan Cramer: inaudible on the side of the screen, I can tell you that they're like, " Oh crap. That was due today. I forgot. I forgot about that."

Sean De Clercq: Exactly. No, I expect that it'll be coming out in let's say four weeks from where we are today.

Ryan Cramer: Awesome.

Sean De Clercq: We're really, really close. We've been working on it for about four and a half months now. It will be a beta and it'll be a little rough around the edges, but it'll be out soon.

Ryan Cramer: That's cool. Is that both Android and iOS?

Sean De Clercq: Yep. It should go out live, Android iOS at the same time. When we launch it live, it'll probably be a limited release, like a beta. We probably won't market it in too much. But if anybody wants to look it up, it should be live in April. We're going to call it Snow Melt, will be the app. Snow Melt by Kickfurther.

Ryan Cramer: Awesome. Very cool. Congrats on that success. Kind of going back to the holistic nature of funding and kind of freeing up inventory. You guys are working with just United States companies, or are you tapped into like funding all around the world for businesses, if they're in Europe or in Australia and they want to sell in the United States? What are the other qualifications that a business might have to need in order to work with you guys?

Sean De Clercq: We fund manufacturers that are around the world, but the entrepreneur and the business has to be located in the US. So if you're a US- based company, but you're buying from a European factory, we can fund that production in Europe and have it shipped to you in the US. But we need the entrepreneur and we need the products to be sold in the US. That's where we're operating currently. We'll probably end up expanding to like Canada and the UK, are probably like our next places to go, and then going from there.

Ryan Cramer: Interesting. Basically, that's still a wide variety of where sellers are, if they're sourcing from international locations and whatnot, and they're selling in the United States, more often than not that I'm assuming that's a high percentage of people. We have questions of people who are in... There's a statistic that came out, lots of people are growing in terms of new sellers and growth in terms of India, as well as China, but also like around the world, but they're selling in the United States. That was my question of, can those people tap into your business? That definitely makes sense. There's a couple of other questions I can go down in terms of, what's kind of the end point? Because ultimately these businesses, and I can maybe come in from this perspective. I think a lot of entrepreneurs are now seeing the ability to exit a business more so now than ever. You have aggregators/ roll- up companies. You have private equity firms who can take a brand and want to" take it to the next level." When you, Sean, are encountering a brand that's using your platform consistently, and they want to exit a brand, how does that affect you? How does that relationship maybe extend to a Thrasio or again like Elevate Brands or a inaudible or whomever? How does that relationship change when they make that exit strategy? Do you guys have something when someone exits that you are also getting paid out? How does that work in that regards? Or if they have inventory that they're exiting, that sounds like a sticky situation potentially.

Sean De Clercq: We don't take any equity. We're non- dilutive, so there's no warrants at Kickfurther. Though you're starting to make me think, maybe an opportunity there.

Ryan Cramer: I'm all about giving free business advice here at Crossover inaudible.

Sean De Clercq: I like it. So no, we don't take any equity, we're non- dilutive. And in an exit scenario, we're not taking a piece of that pie. When the inventory transfers, typically what happens, we have an option in each of our contracts that says, at any time, if the business wants, they can just buy the inventory from Kickfurther at the option price. Then that just ends the obligation. In cases where businesses have sold, you can imagine that they want to have inventory. If we own that inventory, what they'll do is they'll just exercise that option. They'll buy out the inventory from Kickfurther. And then they start with the business, stocked up, ready to go right in to continue to drive and grow. Typically, unfortunately, that normally terminates the relationship with the business as well. These big firms, they have their own financing and they typically are not very interested in paying for somebody else to provide inventory financing. If you've got a billion dollars of cash sitting in a bank account like Thrasio does, why would you pay for additional cash? They're sitting on a mountain of it. Typically, what we see is private equity, they'll extend a deal. Then they'll say, " By the way, we also want all the inventory finance. Here's three, four million bucks to buy your business. Then we're going to do$ 3 million on a revolver for inventory finance to take that entire piece of it as well."

Ryan Cramer: To be honest, there's other businesses, and obviously this is a conversation like each aggregator in the space is different. They're all going to have their level of ability to have their own either financing or they're a little bit smaller and like you said, more of a not a niche, but maybe more like a niche or like a boutique, if you will. A little bit smaller scale. They don't have the capital in order to exit and just like extend inventory and just let it sit out there. They're taking on the ability to... Because that's the number one place where a lot of your inventory or your money gets tied up is inventory. Until you sell through it, that's not when you're getting paid out. Even then, that's when people have to reinvest into more inventory. With that being said, how do you guys work with trajectory in terms of like, people are scaling so quickly, how do you guys help manage the process and support it as they quickly start to rocket ship, hopefully quicker than they've ever thought possible? How do you help manage expectations and grow with them in that regards?

Sean De Clercq: One of the things that we do, I think this is actually one of our key strengths as an organization. What did we do really well is, we look at present revenue trailing 12 months revenue, from the date that a business wants to launch their co- op, and then we fund against that. If a business is growing really, really quickly, then we can grab that revenue that they're looking at right then and there, and we can increase the limit of how much inventory they can fund with Kickfurther, relatively quickly. We scale much better than other inventory finance solutions or merchant cash advance or daily debit or anything like that. And that's one of the reasons for that is because we fund on the cost basis. Your revenue is always like, you got 60% margin or something like that, but your cost basis is usually one third of what your revenue will be. Then based on the way that our business works, as long as you're not looking at and trying to fund like 12 months of inventory at once. If you've got like you were mentioning, like a solid four months, six month turn on your inventory, we've been able to scale businesses up really, really well. There was one company that we started with them, they were at 300 K of trailing 12 months revenue. And then within 18 months they got up to five million. In that time in 18 months, we funded 1.6 million of inventory for that business.

Ryan Cramer: That's amazing.

Sean De Clercq: That's another thing because as they pay it off, there's like a few things that trigger. One, is that the revenue's growing. That's one of the measures that we use to limit how much inventory a business can fund. The other thing is, as they continue to perform on the platform, that also increases the limit. On- time performance with a growing brand, we're able to scale that revenue and inventory funding for that business just right alongside them. I think we do that really well.

Ryan Cramer: In terms of production runs, do you guys have specific connections with manufacturers or distributors that might like help you with a quicker turnaround or cost in terms of savings? Do you guys have that network, that's a part of like your ecosystem? That you're able to say like I go, " Hey Sean, I think if I could find a manufacturer, I just don't have the time to find. If I could drop my cost of goods from seven bucks to six bucks, I can instantly make another$ 150,000 a year." Do you guys have a network of people that you can say like, " Hey, why don't you try..." Like a referral system of networks of manufacturers?

Sean De Clercq: My background is in supply chain manufacturing. My family runs a 30 person office out of Beijing that just does supply chain management.

Ryan Cramer: Wow.

Sean De Clercq: That's like-

Ryan Cramer: inaudible. Where is all this from, from the beginning? That's awesome. That's really cool. You have family in Beijing, who's helping logistics. Are they partner with you as a company, or how does that work with you guys? Is that a part of Kickfurther or?

Sean De Clercq: No. We crosstalk work with them. That's their business, Kickfurther is my business. We work they'll support us sometimes with factory qualifications. We're looking at potentially partnering up with some of those larger manufacturers overseas, to kind of do a deal flow referral thing. We look at Snow Melt as being like a really excellent way of helping to solve that problem of being able to control your supply chain, being able to manage your cost basis and being able to do it in a scalable way, where we can help thousands of entrepreneurs. Because supply chain management, it's detailed and it's high touch. It's a lot of work and it can be expensive, if you've got a more complicated product. We don't have the ability to support that, particularly as a US- based company, with US labor costs. We can't do that for all the entrepreneurs we work with. We have partners that can help with that. And we're looking at technology solutions to enable that as well.

Ryan Cramer: How did 2020 fair for you guys? Was that a nightmare of a situation with... This is how I see in terms of like maybe this being a struggle for businesses like this. When you get inventory backed up and you can't get it landed quick enough. You as a company, only scale when people scale. When you have logistic backups and nightmares like Amazon only accepting essential goods, how does that affect you as a business, when a solution just like Amazon will shut down and not accept inventory and then you're not selling? Therefore you're not making money and your audience is just sitting on investments that are not being sold. How does that work and how did you guys problem solve and come out on the other end? Or if you're not on the other end, then inaudible, what's the mess and like right now, then?

Sean De Clercq: What we saw was one of the things we look at for the businesses we qualify, is diversity of distribution channel. If you're just relying on Amazon, that's a riskier business, than if you've got like 10 different places you're selling your inventory.

Ryan Cramer: inaudible the number one customer. That makes sense.

Sean De Clercq: Exactly. We think that those are the most resilient businesses. Exactly for what you said. The one channel blows up, you've got other places you can go. We were fortunate that those protections were in place prior to the pandemic hitting. We put that in place back in 2017. So we were able to get through it pretty well. It was also fortunate that because we're funding inventory, we had a pretty significant concentration in e- commerce. And you probably saw this, but there was like, e- commerce went up like 20%, 30% in a lot of cases. People are at home, not going to the movies, not going out to dinner, they were just shopping. They're doing a lot of online shopping. A lot of our brands got significant lifts. Then there was a huge supply chain finance in for stuff like disinfectants and cleaners and gloves and this, that, and the other. We onboarded a few companies that had big, big demand needs and had supply constraints. We were able to do really well by them and they were able to do well by our community. That helped us get through it as well. The unfortunate reality is that, there's some companies that were very focused on travel accessories that didn't do so well, and they continue to struggle. But they still have the inventory and they're trying to sell through it. We hope that things will come back and they'll have a rough year, but they'll make it out.

Ryan Cramer: Yeah. Before the top of the hour, where is the growth happening for you guys? Is it focusing more opportunity to help people grow into Shopify or into like marketplaces like Target and more retail stores? Or is it going to be continued that focus internationally to other marketplaces? Where's that next step for Kickfurther, helping direct sellers kind of push them further, kick them further, if you will? Man, I'm like a jokester today. Kick them further down the path to entrepreneurship.

Sean De Clercq: We're looking at America as being a huge market. We're going to do about$ 8 million of inventory funding in Q1. That's nothing compared to how much is out there. For me right now, it's like, there's so many entrepreneurs and so many people we could be helping in our current market, that just getting the word out there, spreading awareness. I look at this as putting the Kickfurther tool in as many entrepreneurs pockets as I possibly can. That's my mission right now. In terms of where we see it going, I think it's in technology and development of better data sources, so that we can continue to support and identifying and support entrepreneurs that are doing the right things for their businesses. And building out the technology that helps those entrepreneurs that might not know exactly what the right things to do are, but to build that support so that we can create a path for entrepreneurship. Because at the end of the day, I mentioned at the beginning of this that, I'm a deep believer in capitalism and a deep believer in entrepreneurship. The more that we can do to support that and to make that path available to more people, I think that's our mission statement.

Ryan Cramer: That's awesome. When you're also educating people, you're also probably touting deals and discounts and how they can optimize their business in terms of like order quantities too. Like the more you order, the less each product costs. How are you educating people through this process? Because in my personal belief is, as a service provider, you need to also educate your audience of like, " This is a situation. You need to know all the options available." And providing value on the separate contexts, just as a service. What is that content piece for you guys that you're continuing to say like, " Hey, you only want 10, 000 units right now, but if you ordered 12,500, then you're going to drop that unit price down a dollar, which is going to save you down the road. Look at the math." How is that working for you guys? Is that a focus?

Sean De Clercq: We invest in customer success is one of the things I'll say. Every business that gets onboarded at Kickfurther, we'll have a quick customer success call, talk about some of the partners. See if there's a fit and any introductions that we can provide. I think that's a key piece. Because these businesses, like I said, they're super unique and they really have very varied needs and goals and desires. We try to understand first and then try and make them match if and where there's a match. But we also have a blog. In that blog, we kind of put out very similar content to what you're describing. Some of the stuff that's a little click bait- y like, " Five questions to ask your supplier for better pricing," whatever, stuff like that. Then we're also trying to get out and get the message out on podcasts like this one, and reach audiences. Because people are consuming media in different ways. I'm 34, I don't know, a little bit older, I guess now.

Ryan Cramer: I'm 32. I'm right around there, man. I don't feel old, you shouldn't feel old either.

Sean De Clercq: Yeah. But I've realized I am. I'm not big on podcast. I'm not like on TikTok or Instagram. Maybe I'm too old, but I used to just read a lot. And people aren't reading as much anymore. We're trying to meet people and reach people where they are, where they're consuming content. It's a learning experience for us too.

Ryan Cramer: That's awesome. Well, congrats on the success. It sounds like you guys are growing and there's opportunity out there. Obviously like there's so much of the pie to be had. E- commerce will continue to grow. We just saw that speed up five years in one year.

Sean De Clercq: Exactly.

Ryan Cramer: We saw all these pain grows like a teenager growing from five foot to six foot in one year. We're going to need new clothes. We're going to need new shoes. We're going to find things that fit our needs as we continue to grow. You kind of said, you're continuing to educate. Maybe quickly, off topic, you said you're a big reader. What are some big books that you're a firm believer that every entrepreneur should check out? You're a big capitalism person. Is there some educational materials that you, as a side educator, you're doing this on the side with your university stuff, how are you telling people to consume more education?

Sean De Clercq: I think there's this one book that I recommend to anybody that's interested in entrepreneurship, it's Traction by Gino Wickman. Which just is like a very interesting little handbook, that's kind of like a how to. How to run a business. It's like the principles in that book really apply to all businesses. Like, " Measure what you think is important, blah, blah, blah. Have accountability." It's a good book. It's short and very, very digestible. And very concrete, action items. Then a little bit higher level, I found Exponential Organizations to be very influential to my thinking about how I scale Kickfurther. I love, love, love Thinking Fast and Slow by Daniel Kahneman, who I think is just one of the most influential books I've read about human decision making. Which I really view as being... If you're raising money, if you're selling to customers, if you're marketing, it just goes into so many pieces of a business. It's very, very valuable.

Ryan Cramer: Awesome. Well, Sean, all this stuff is fantastic information. Thanks for sharing it. Again, for people who want to learn more, or just kind of pick your brain or just talk to somebody there, how can they reach out? How can they connect with you guys over there?

Sean De Clercq: You can reach me directly at sean @ kickfurther.com. That's my email address, if anybody shoots me an email. You can connect with me on LinkedIn. For Kickfurther, just head to our website, www. kickfurther. com and sign up, create an account, browse around and see how it goes.

Ryan Cramer: Awesome. Well, thanks so much again today for telling us how we can obviously grow and free up some of the tied up resources in our inventory and how to grow in a different way online for e- commerce and online sellers, I should say and shoppers. I guess if you're a supporter in community, go ahead and check out Kickfurther as well, and sign up how you can help your favorite brands grow as well.

Sean De Clercq: Awesome. Thanks so much, Ryan.

Ryan Cramer: Thanks for hopping on, Sean. Stay right there and I'll sign us off, real quick. Thanks again, Sean from Kickfurther, for joining us again on Crossover Commerce. Again, this is episode 81. If this is your first episode or your 81st, go ahead and make sure that you subscribe and hit that bell button, whether you're watching or listening to this podcast. Again, we are on any sort of audio, social media platform. You can find us just either find me Ryan Cramer on social media and I will produce all the content that we have out there. We go live four to five times per week, so you want to be notified when we do go live. Again, next week, we have another four episodes coming at you hot and fast, in terms of anywhere from building out your network. We have Athena from Titan Network. There's so many great guests. I'm so blessed to have people in my network, of people I can share content and resources with you, my audience and listeners that come to the show. Go ahead and check us out next week. If you miss an episode this week, go ahead and check out PingPong Payments on YouTube as well, and go ahead and look for the playlist, Crossover Commerce. I'm Ryan Cramer. Thank you so much for tuning in. Have a great weekend. Everyone, be safe, be smart and continue to be successful online. Thanks for tuning in.