How The Credit Connection Reached $500,000 in Revenue with a Bootstrapped Loan Readiness Platform (Interview with CEO Daniel Massimino)

Introduction and Revenue Overview

Nathan Latka

00:00Guys, I'll do $500,000 in revenue this year at uscreditconnection.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-architected 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.

00:20He's a serial entrepreneur with more than thirteen years of expertise in the world of startups. He's from Pittsburgh, born, founder, and CEO today of the Credit Connection, a groundbreaking loan readiness platform. Also, venture capitalist artist and thought leader. Daniel, are ready to take us to top?

Daniel Massimino

00:33>> Let's do it.

What Is a Loan Readiness Platform

Nathan Latka

00:35Alright, man. What what does a loan readiness platform mean?

Daniel Massimino

00:38>> So essentially, we work with loan professionals across The United States, like loan officers, realtors, even property managers. So anytime a consumer goes to apply for a loan or apply to be approved for credit in the case of, say, getting an apartment, if they get declined, then our partner network sends them to us, where then we essentially take a look at their finances and then their credit report, and essentially strategize and guide them to get to a

01:09>> position where instead of being declined, they're able to get approved within typically about three to four months.

How the Partner Referral Model Works

Nathan Latka

01:15So can we maybe 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, BB and T or Truist now, right? Or Chase, let's use Chase, right? I'm trying to get a thing from Chase. Chase uses will 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

01:33improve their credit?

Daniel Massimino

01:35>> Right. So currently, we don't work with, like, Chase itself, we work with the loan officers. However, yes, so 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 history or accounts on their credit report. 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

01:59>> the areas that we need to work on? And then on our end, we go to work for the consumer to get those accounts removed, if possible, so say a collection from Verizon. 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.

Who Pays: Consumer vs. Loan Officer

Nathan Latka

02:21And 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?

Daniel Massimino

02:28>> The con the consumer does. However, there are some companies that I'm aware of that do have agreements with, you know, the loan officers themselves where they will cover it.

Competitors and Market Positioning

Nathan Latka

02:39Who who are some of the, like, competitors in your space that do deals with the loan officers directly?

Daniel Massimino

02:44>> I would say the biggest one would probably be Lexington Law.

02:48>> 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 loans.

Nathan Latka

03:17And so if I'm a consumer wanting to prepare for a loan or I got declined and I wanna improve my credit, what would I pay you? And what's the model monthly, annually, one time to help me fix my credit?

Three Pricing Models Explained

Daniel Massimino

03:29>> That's a great question. So there's actually three models that we use. There's, you know, a monthly model, so the consumer would pay anywhere from 99 to $299 as what's called a first work fee. And then they would pay anywhere from $99 to $199 a month. The second model is a performance based model. So the consumer would pay a first work fee or an enrollment fee of like $299 to $499, and then they're only paying for what

04:01>> 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 a thousand to $2,000.

Nathan Latka

04:14Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:38your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:02get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is

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06:38interview. Interesting. And so when you look at your total revenue from last year, call it a 100%, what percent came from each of these three buckets would you say?

2021 Customer Count and Revenue Breakdown

Daniel Massimino

06:46>> It was all pay it was all the performance based. However, we realized that in order to do that successfully, we needed a much more robust accounting and billing system, which we didn't have at the time. So now we do, and we're able to do that model. And just from my, I guess my opinion, 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

07:16>> because they know they're only paying for what gets done. Yep. You know what I'm saying?

Nathan Latka

07:20Yep. Yep. Yeah. So I guess in last full year, so 2021, how many consumers paid you to help them fix their credit?

Daniel Massimino

07:28>> Roughly around 500.

Nathan Latka

07:31Wow. Okay. That means you're getting up there at best. 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 $100 if you get my $200,000 mortgage approved? Like, how do you associate the carrot and sticks there?

Daniel Massimino

07:48>> 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, child support, things like that. Then you have another bucket, which will be collections. So if you don't pay your Verizon bill, Verizon sends it to a collection company, they put it on your credit report. You have hard inquiries, which when you apply

08:13>> 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, that would be $100 per item per bureau. So if you say had a bankruptcy on all three credit bureaus, you would be paying a $100 for Experian to get it removed,

08:38>> $100 for Equifax, and a $100 for TransUnion.

Nathan Latka

08:41Yep. Interesting. So when you look at your total revenue last year, what percent of revenue was the base fee versus the performance upside that you earned?

Base Fee vs. Performance Fee Split

Daniel Massimino

08:49>> It's, like, 25% base, 75% performance.

Nathan Latka

08:53Oh, wow. Wow. Okay. Got it. So 500 times 300 is about $150k 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, $400 on top of the $150k for the performance fees.

Daniel Massimino

09:10>> Yeah. Give or take. And that was only running that model for maybe, like, five or six months.

Nathan Latka

09:18Mhmm. What were you running before that model or after that model if you shut it down?

Stealth Mode and Product Refinement

Daniel Massimino

09:24>> Well, it sort of went into, like, a a stealth mode after that to refine the process and then put together a lot of the 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

09:46>> and then, you know, sell, prove that you can sell it. 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. When

10:06>> he comes to the market, it's a perfect product. You know what I mean? Mhmm.

Nathan Latka

10:10No. No. Totally. I mean, maybe some people would argue when the latest release of o OS comes out and their whole phone stops working for two days, but they get it fixed quickly. Your point's well taken. The 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?

2022 Revenue Outlook and Customer Expectations

Daniel Massimino

10:34>> No. No. I mean, we have a we have a new system we implemented through Brex, 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 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

11:08>> the way, I hate that. I hate the phrase credit repair. That's why I like loan readiness better. But it's about $1,207 per customer.

Nathan Latka

11:17And 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?

Daniel Massimino

11:24>> Yeah, give or take. 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, loan 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

11:46>> of the lenders we're affiliated with, so we earn revenue off of that. I mean, we were able to earn revenue probably seven different ways, honestly.

Nathan Latka

11:58That's funny. And and then, obviously, we're almost done with 2022, so you probably have a pretty good idea here. How many customers will you serve in 2022?

Daniel Massimino

12:06>> In 2022, I would I would expect it to be probably the same, if if not, maybe a little bit higher. And that's just again for for that sort of scaling back to perfect the the model. Yeah. So five I would rather go ahead.

Nathan Latka

12:23No. I was say a little more. So you're saying, like, little more than 500. So maybe 550 customers this year will pay you an average of about a thousand bucks. Is that about right?

Daniel Massimino

12:31>> Yeah. Give or take.

Nathan Latka

12:33Yeah. Yeah. Yeah. Okay. Well, good. Mean, so that puts you you guys will do more than $500,000 in revenue this year?

Daniel Massimino

12:37>> We should be on track to do that. Yeah.

Team Structure and Contractors

Nathan Latka

12:39Yeah. And who is we? How many how many folks are on the team today?

Daniel Massimino

12:43>> So I have two partners, and then we have probably, I don't know, like, 10 to 15 contractors we work with.

Nathan Latka

12:51Oh, nice. Okay. But three really are only the full time ones?

Daniel Massimino

12:55>> Yep.

Nathan Latka

12:55What do the contractors do? Like, engineering? And if so, how'd you find them?

Daniel Massimino

13:00>> 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. And then, you know, the the bigger tasks, like, obviously, development, marketing, you know, search engine optimization, all of that. And how do I find them? The Internet. You know? Like, the Internet.

Nathan Latka

13:22Yeah. Sure. But there's lot of really shitty SEO specials on the Internet. You gotta find the good ones.

Daniel Massimino

13:27>> 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 a business for, like, the last ten years. So I've just built up a pretty good, you know, Rolodex of experts in the their chosen fields.

Nathan Latka

13:49Mhmm. That makes sense. That makes sense. And have you guys bootstrapped the company or are you raised?

Bootstrapped and Fully Self-Funded

Daniel Massimino

13:55>> I'll bootstrap.

Nathan Latka

13:56I'll boot you probably sent a little type of money.

Daniel Massimino

13:59>> Yeah. Yeah. My money and time, pretty much.

Nathan Latka

14:03Yeah. Yeah. Yeah. Fair. Okay. So bootstrapped, you know, you'll do, call it, a $500,000 in sales. As you so you're about flat year over year then?

Daniel Massimino

14:10>> Pretty much.

Nathan Latka

14:11Yeah.

Growth Plans and Market Opportunity

Daniel Massimino

14:12>> But I mean, what's the plan?

Nathan Latka

14:14Yeah. Yeah. Yeah. Yeah. You rearchitect it. I mean, what do think you'll do next year?

Daniel Massimino

14:20>> It really depends. You know? I attune it to like a, I used to race the motocross and it's a lot like a throttle, you know, it's like, well, how much revenue do we want to generate? It's not a question of generating revenue, more of a question of creating a great product and service that our customers really like and enjoy and really benefit from, and also our partner network really enjoys and benefits from. And then from there,

14:46>> I mean, we can sell as much as, I I could sell a lot of I could sell a lot. So our industry is supposed to double in the next three years. So from, I think it's like 3,200,000,000 to like 7,800,000,000. So there's a lot of market share up for grabs.

Nathan Latka

15:03We'll see what happens. And when do you launch the company? What year?

Daniel Massimino

15:07>> So this specific brand, I guess, I launched in 2020. But I've been in this industry since '20 like, late twenty eighteen.

Famous Five Rapid Fire

Nathan Latka

15:17Fair enough, man. Well, we're rooting for you. We're out of time though for today. Let's wrap up with the famous five. Number one, favorite book?

Daniel Massimino

15:24>> The Magic of Thinking Big.

Nathan Latka

15:26Number two, is there a CEO you're following or studying?

Daniel Massimino

15:31>> I mean, I've I I I stick to Elon Musk pretty much, but I study a lot of CEOs.

Nathan Latka

15:37Number three, what's your favorite online tool for building credit connection?

Daniel Massimino

15:43>> Wow. That's a tough one. Probably Google.

Nathan Latka

15:47Fair. Fair. Number four, how many hours of sleep do you get every night?

Daniel Massimino

15:52>> Probably about six to eight.

15:55>> Six. Eight. Alright.

Nathan Latka

15:56And what's your situation? Married, single, kids?

Daniel Massimino

15:59>> Single.

Nathan Latka

16:00Alright. And how old are you?

Daniel Massimino

16:02>> 27.

Nathan Latka

16:03Last question. Something you wish you knew when you were 20.

Daniel Massimino

16:07>> 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.

Nathan Latka

16:18Guys, I'll do $500,000 in revenue this year at uscreditconnection.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-architected 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 top.

Daniel Massimino

16:37>> Appreciate it.

Nathan Latka

16:40One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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