Lessons - Why VCs Don't Want You to Know About This | Darren Marble - CrowdfundX CEO

In this lessons episode, explore how turning customers into investors reshapes the path to going public. Discover how ownership deepens loyalty and brand advocacy. Understand why retail investors often act like long-term institutions, and uncover how this model gives entrepreneurs both capital and an engaged shareholder base. Now I'm curious for the entrepreneur that's going into this. An entrepreneur goes and raises some money, and they usually want to find some investors that are going to provide some value to their business. What is the benefit to somebody that has, for example, 50 million ARR or annual recurring revenue, 100 million, annual recurring revenue, to get this crowd-funded investment? Isn't that just, is that headache pre-IPO, or at that point they don't care because they're already going to be publicly listed? Turning customers into investors in an IPO is potentially the most strategic and savvy move any company in the United States can make, and we know this is going to be a breakthrough mechanism. When customers become investors, here's what happens. Those customers are now emotionally invested in the deal. They're financially invested. They're literally invested in the outcome of the business. So what does that mean? It means their lifetime value to the business is going to increase. Those customers and now investors will buy more products, buy more services. They're less likely to use products or services from competitors. They're more likely to tell their friends, family, social network that they're an investor, that they're a customer, and so the network effect is tremendous. Not only that, but what we've seen over the years Scott is that when companies turn customers into investors and those companies end up actually going public, those investors, they tend to act like institutions. Institutions are tend to be long-term shareholders. They're not slippers. They're not day traders. An institution that buys 50 million dollars in an IPO, usually long-term. They hold those shares for a number of years. They believe in the vision and the founder and the business opportunity down the road. They're looking ahead. Well, the customers tend to act the same way. So creating a shareholder base, actually in this series it's a mix of institutional investors alongside everyday Americans, the customers of the company, the fans, the followers. They're coming in together, investing into the IPO at the IPO price, and the smart money, the institutional investors, by the way, they're not getting the discount. There's no favors. They're all buying the same shares at the same price, and these are both different constituents because the average retail investor might buy a thousand dollars of stock. But they act like an institution because they're buying into the vision of the company. They're satisfied customer. They've generated value or received value from the product, and so that's really valuable for the business. So from the company standpoint, what do they have to gain by having 30 or 50 thousand customers become investors? Well, those will be the most valuable customers in the history of the business. They are a massively powerful type of brand ambassador that can promote the brand, and they're going to be long-term shareholders as well. So we think that this is really a winning formula for founders and entrepreneurs to empower their customers, return the favor, and it's a thank you. And if you think about this, it's really interesting. Companies like Uber and Lyft, these companies that stay private for 10 years, 12 years, they raise billions of dollars, venture capital from private investors and private markets, and those companies would never have multi-billion dollar valuations in private markets if it weren't for the millions of customers who use the app. Yet it's the customers who are effectively left out and are always excluded from becoming owners. And you and I, as customers of Uber, for instance, the only thing we could do is buy shares of Uber after it went public. Well, by that time, Scott, it's too late. The values already been realized by the early investors, and you and I end up looking like the suckers, because we're now holding shares of Uber that has stayed private for too long. The chances of you and I getting a 5X or 10X on our investment is slim to none. So we're changing that paradigm by allowing customers to become owners in these businesses at much earlier stages in the companies growth and in their life cycle. Yeah, that makes a lot of sense. And I just wanted to highlight that point you mentioned about. I didn't even think about that, but the point that you can turn your customers into these evangelists early on by getting them to invest financially, that is one of the strongest commercial plays you can have. Regardless of your share price, just the whole customer base being your raving fan group and evangelizing your product, I didn't think about that, but that's a huge, that's a huge plus to getting people, to getting your customers to buy in. So that's a very, very smart point. And I'm just one more question about about the show itself, because this all makes a ton of sense. And I think it's a very exciting story that you're going to be telling what when somebody watches this show, what do they see? What's the, like, what do they see the operations of a 50 million dollar company? Do they see the struggles of a founder CEO? Do they see the fundraising process dealing with the lawyers or what, like, what's the actual show look like? It's a great question. So the format is what's called a serialized narrative. And what that means is that in episode one, we're introducing company A and company B. And the founders of these companies spend 12 minutes talking about their backstory, almost nothing to do with the business. You know, who are they? Why did they become founders? What inspired them to create a business? What problem were they solving? What obstacles did they have to overcome to be successful and build the business that they're now CEO of today? And what that's doing is it's really providing insight into the individual and helping the audience understand the character of the founder, which creates a strong emotional bond. In episode two, the first two companies begin developing the marketing materials for their campaign. We introduce company number three. In episode three, the first two founders are now going out and raising capital. They're on a road show with institutional investors and retail investors alike. And, you know, in the IPO process, it's the most intense time period in a company's history as they're going public. It's filled with drama. It's filled with excitement, disappointment, panic, euphoria. We're going to capture the excitement of that process in this series. And in the second half of the season, the companies closed their IPOs in a staggered closed, just like they were introduced in the staggered start. And we're filming the IPO's Ceremonia Nasdaq. And that's the culmination off of each of these businesses. We've brought in an incredible production company to help highlight the drama and the excitement of these IPOs and the IPO process. And that company is INE Entertainment. They're based in Studio City. The principles are best known for co-creating and co-executive producing the TV series, the biggest loser. And so when people say to us, well, hey, the IPO process sounds a little dry. And you said, hey, what about the lawyers? We're going to film the lawyers. What we say is, look, our producers have a credit in one of the most successful television franchises in history. And that's a show about weight loss. They made weight loss exciting. So imagine what they can do with the IPO. I mean, it's a scale and their exercise. They found a way to make that really entertaining. And everybody knows biggest loser. And they have a brand. And you could buy biggest loser branded stuff. And it's everywhere. Imagine what they can do with the IPO process. So this will be a very entertaining series. And I think we're going to bring out some of that drama and excitement to bring the viewers along the journey right there with the founders as they're going public. Very exciting. This is like my, this is like my kind of TV there. And I want to watch this already. You got to get this film. You got to get this, because I seriously like this. This sounds very exciting. I've never seen anything like this. I've never, I don't think there's anything like this to be honest at all. Well, look, I'll tell you what there is. You know, there's Shark Tank. And that's the show I'm thinking. Yeah, we all know Shark Tank. And listen, I'm a fan of Shark Tank. I love that show. I loved it from the moment it came out. And to see the judges critiquing the deal and bickering with each other. It's massively entertainment. There's no denying that. And what we believe is that it's a great show. Shark Tank will always be a great show. The model is outdated. The model is old. And at some point it will be obsolete, because I think that people are tired of watching the rich people get richer. Mark Cuban adding another, you know, zero to his net worth. And what are the viewers able to do? Well, they can buy the product. They can help squatty potty go from 500,000 and sales of 50 million. But they don't, they're not getting the value, right? Because they're not owners. They don't own any shares. They don't own any equity in the business. They're just a customer. So who makes the money then? Well, the sharks make the money in those deals. So that's the parallel here is this is similar to Shark Tank in some ways. One of the differences is that, of course, there are no judges. There are mentors, but there's no Mark Cuban or Kevin O'Leary bashing these entrepreneurs, trying to take advantage of them, put in 30 grand for half of the company, these ridiculous deals. It's the viewers. It's the fans that now can participate and in companies they like, they can invest and you don't have to put in 50,000 dollars. You put in a thousand dollars by a thousand dollars worth of shares and then have liquidity in that investment immediately. So that's the difference. And in the companies themselves, we're not featuring pre-products or pre-revenue companies. We're featuring companies that have traction, have millions of dollars or tens of millions of dollars in revenue are ready to go public to Nasdaq, different segment of the market. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.