How The Credit Connection grew to $1.3M revenue and 550 customers in 2023.

guys I'll do half a million bucks in Revenue this year at usecreditconnection.com when you go apply for a mortgage and they decline because some Verizon bill hits your record he'll help you get that cleaned up to make sure you are ready for your next loan that's why he calls it loan Readiness re-arctica this program this year totally bootstrapped hoping to grow a bit more next year as they look to scale hey folks my guest today is Daniel massimino he's a Serial entrepreneur with more than 13 years of expertise in the world of startups he's from Pittsburgh uh born founder and CEO today of the credit connection a groundbreaking loan Readiness platform also venture capitalist artist and thought leader Daniel ready to take us to the top let's do it all right man uh what what is a loan Readiness platform mean so essentially we work with loan professionals across the United States like loan officers Realtors um even property managers so anytime a consumer you know goes to apply for a loan or apply to be approved for a credit for credit in the case of uh say getting a um an apartment if they get declined then uh our partner Network sends them to us where then we essentially take a look at their finances and their credit report and um essentially strategize and guide them to get to a position where instead of being declined they're able to get approved within uh typically about three to four months so can we use an example here just so my audience can follow along let's say I'm trying to get a home loan from a big Bank uh BB t or truest now right or chase let's use Chase right I'm trying to get a thing from Chase Chase uses well they actually use the credit connection as the tool they use to verify people's credit history or they'll just only they'll send declines to you to help them improve their credit right so currently we don't work with like Chase itself we work with the loan officers um however yes so if if somebody was to apply for a mortgage they get declined there's a reason they got declined typically it's because of some poor uh history or accounts on their credit reports so they send them to us we do a free credit Clarity call where we go over their entire credit report with them and then we're identifying you know what are the areas that we need to work on and then on our end we go to work for the consumer to get those accounts was removed if possible to say a collection from Verizon um and if not possible then we would guide them on the best practice to take care of that account rebuild their credit so that they can get back to the closing table in three to four months and so who's paying you for this the loan officer because they want that eventual loan once they can approve that consumer or the consumer because you're helping them clean up their credit the consumer does however there are some companies that I'm aware of that do have agreements with um you know the loan officers themselves where they will cover it who are some of the like competitors in your space that do deals with loan officers directly I would say the biggest one would probably be Lexington Law um that's probably the biggest most common one however you know most of our competitors are structured as a credit repair company and what we're focused on is more so the loan Readiness because loan Readiness isn't just credit repair it's also debt to income so how can we lower debt and how can we raise income along with the credit and so now you have a holistic view of the person's finances when it comes to getting approved for lends and so if I'm a consumer wanting to prepare for a loan or I got declined and I want to improve my credit what would I pay you and what's the model monthly annually one time to help me fix my credit uh that's a great question so there's there's actually three models that we use um there's you know a monthly model so the consumer would pay anywhere from uh 99 to 299 dollars as what's called a first work fee and then they would pay anywhere from 99 to 199 a month um the second model was performance-based model so the consumer would pay a first work fee or an enrollment fee of like two 299 to 4.99 and then they're only paying for what we are able to successfully get removed from their credit report and then you have the final model which is just a flat one-time fee of anywhere from uh a thousand to two thousand dollars oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is 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right let's jump back into the interview interesting and so when you look at your total revenue from last year called 100 to what percent came from each of these three buckets would you say result it was all the Performance Based um however we realized that um in order to do that successfully we we needed a much more robust accounting and billing system which we didn't have at the time so now we do um and we're able to do that model and just from my I guess my opinion I I think that the Performance Based model is the way to go and it's also more profitable and also the customer themselves likes it because they know they're only paying for what gets done yeah you know what I'm saying yep yep yeah so I guess in La last full year so 2021 how many consumers paid you to help them fix their credit uh roughly around 500. wow okay that means you're getting up there but that's I mean that's some scale so how do you for those 500 customers how do you obviously we're getting paid for performance you have to Define what good performance is so is it like a hundred bucks if you get my 200 000 mortgage approved like how do you associate the Keratin sticks there oh yeah it's a great question so basically the items on the credit report are categorized into a few different buckets so bucket one you have public records which would be like bankruptcies tax liens judgments um child support things like that um then you have another bucket which will be collection so if you don't pay your Verizon bill Verizon sends it to a collection company they put on your credit report um you have hard inquiries uh which when you apply for credit at a car dealership they're gonna run your credit and that's a hard inquiry and then you have public records and so each one of those buckets it breaks down to a specific price point so for instance for a public record something like a bankruptcy uh that would be a hundred dollars per item per Bureau so if you say had a bankruptcy on all three credit bureaus you would be paying a hundred dollars for experience to get it removed the hundred dollars for Equifax and 100 for TransUnion yep interesting so when you look at your total revenue last year what percent of Revenue was the base fee versus the performance upside the that you earned it's like 25 25 base 75 performance oh wow wow okay got it so fight what 500 times 300 is about 150 Grand of just base fee sales and then you guys actually work you know it actually it does actually work you can get people removed from these bureaus and so you made an additional call at 300 Grand 400 Grand on top of the 150 for the performance fees yeah give or take and that was the only running that model for maybe like five or six months what were you running before that model or after that model if you shut it down uh well it sort of went into like a stealth mode after that to refine the process and then put together a lot of the uh Integrations and you know apis and sort of the other things on the back end that we needed to really make it work flawlessly and you know I talked to my partners a lot about this and it's like you know you could everyone's like well you just want to get a product to Market and then you know sell prove that you can sell it and in my mind I'm like I can sell anything to anyone for me if I take a product to the market I want it to be a pretty good product like you know if Steve Jobs is you know unveiling the iPhone he's not just unveiling like the you know the screen that like is connected and rigged together that you know you sort of be plugged in like when he comes to the market it's a perfect product you know what I mean no no totally um I mean maybe some people would argue when the latest release of os comes out and their whole phone stops working for two days but they get it fixed quickly your Point's well taken um no moving forward now though into this year right so so is it fair to say that it's hard for you to have visibility on future recurring revenues because so many are paying one time plus performance um no no I mean we have a we have a new system we've implemented um through uh Rex it's called pry and pry is probably the most advanced like Financial modeling software that I've seen and so we're able to account for pretty much every different scenario and every different sort of Target and goals and kpis um and plan accordingly so no I mean the average ticket in the industry just for if we were using the term credit repair which by the way I hate that I hate the phrase credit repair that's why like low and Readiness better but um it's about twelve hundred and seven dollars per customer and is that would you say when you look at your customer base you expect each in a year would pay on average about a thousand bucks yeah give or take I I think we could get a little higher just because we have more of a full Suite of services where you know if somebody comes to us for one thing say you know learn Readiness for a house a lot of times those customers are business owners so they can also use our business credit products and a lot of times they also need loans and so we are able to connect them with a lot of the lenders we're affiliated with so we earn we earn Revenue off of that um I mean we're able to earn Revenue probably uh 77 different ways honestly that's funny and and then obviously we're almost done with 2022 so you're probably a pretty good idea here how many customers will you serve in 2022 in 2022 I would I would expect it to be probably the same if not maybe a little bit higher and that's just again for for that sort of scaling back to perfect the model yeah so I would rather go ahead no I'm gonna say a little more so you're saying like a little more than 500 so maybe 550 customers this year will pay you an average of about a thousand bucks is that about right yeah give or take yeah yeah yeah okay well good I mean does that puts you guys will do more than half a million bucks in Revenue this year we should be on track to do that yeah yeah and who is we how many how many folks are on the team today uh so I have two partners and then we have probably I don't know like 10 to 15 contractors we work with oh nice okay but three really are only the full-time ones yep what do the contractors do like engineering and if so how'd you find them uh I mean I I used contractors for pretty much everything from the smallest tasks like you know I was just ordering my lunch on Uber Eats right that's a contractor um and then you know the bigger tasks like obviously development uh marketing um you know search engine optimization all of that and how do I find them um the internet you know like the internet sure but there's a lot of really shitty SEO specials on the internet you got to find the good ones yeah yeah I I agree so I mean I I honestly don't know like I've been I've been experimenting with like software and marketing and and pretty much every aspect of the business for like the last 10 years so I've just built up a a pretty good you know Rolodex of experts in the their chosen fields that makes sense that makes sense um and have you guys bootstrap the company or you raised money yeah yeah my money and time pretty much yeah yeah yeah Fair okay so bootstrapped you know you'll do call it half a million bucks in sales as you so you're about flat year over year then pretty much yeah but I mean what's the plan yeah yeah yeah you rework architect I mean what do you think you'll do next year um it really depends you know I I attuned it to like uh I used to raise the Motocross and it's a lot like a throttle you know it's like well how much how much revenue do we want to generate it's not a question of um generating Revenue it's more of a question of creating a great product and service that our customers really like and enjoy and really benefit from and and also our partner Network really enjoys and benefits from and then from there I mean we we can sell as much as I mean I could sell a lot of I could sell a lot so um our industry is supposed to double in the next uh three years so from I think it's like 3.2 billion to like 7.8 billion so there's a lot of market share up for grabs we'll see what happens and when do you launch the company what year uh so this specific brand I guess I launched in 2020 um but I've been in this industry since 20 like late 2018. fair enough man we're rooting for you we're out of time now for today let's wrap up with a famous five number one favorite book uh the magic of thinking big number two is there a CEO you're following or studying um I mean I I stick to Elon Musk pretty much but I study a lot of CEOs number three what's your favorite online tool for building credit connection okay wow that's a tough one probably Google fair fair number four how many hours of sleep do you get every night um probably about six to eight six eight all right and what's your situation married single kids single all right and how old are you 27. last question something you wish you knew when you were 20. how to how to ask for help and more importantly how to accept help and guidance from people that are a lot smarter than me guys he'll do half a million bucks in Revenue this year at usecreditconnection.com when you go apply for a mortgage and they decline because some Verizon bill hits your record he'll help you get that cleaned up to make sure you are ready for your next loan that's why he calls it loan Readiness re-arctica this program this year totally bootstrapped hoping to grow a bit more next year as they look to scale Daniel thanks for taking us to the top appreciate it one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back-end dashboards their expenses their revenue our poo CAC LTV you name it they share it and the buyers try and make a 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