Turning Social Capital into Financial Capital

Alana Muller 0:10
Welcome to Enterprise.ing, a podcast from Enterprise Bank & Trust that's empowering business leaders one conversation at a time. Each week, we'll hear from top business professionals about lessons on leadership and entrepreneurship that they've learned along the way. I'm your host, Alana Muller, an entrepreneurial executive leader whose primary focus is to connect, inspire and empower community. We at Enterprise Bank & Trust thank you for tuning in to another episode.

Alana Muller 0:41
Friends, welcome back to Enterprise.ing podcast. Today we have in the studio Mat Goldstein, co-founder and chief strategy officer of DealMaker, a high-performance team building solutions that streamline the capital raising experience for investors and issuers alike. The company has been listed on Deloitte's Fast 50 Tech Companies to Watch and Fast Company's Best Workplaces for Innovators. Mat Goldstein, welcome to Enterprise.ing podcast.

Mat Goldstein 1:05
Thanks, Alana. Delighted to be here. Thanks for having me.

Alana Muller 1:07
It's so great to have you. Let's start our conversation by having you tell us a little bit about DealMaker. What I want to know is what's the inspiration that led you and your team to create the company?

Mat Goldstein 1:17
Oh, great question. So let me rewind just in terms of my personal career. I was a lawyer in New York for years and I ended up being a partner at an international law firm called Dentons, along with Rebecca, which is how she became my co-founder. We practiced law together and we always looked at the way tech companies were innovating and bringing scalable solutions to the market. And a lot of our practice as lawyers was dealing with entrepreneurial founders, companies who were scaling and just watching how they applied creative thinking to solving problems that were thorny and challenging and created value. So we set out to build a solution that leveraged the principles that tech companies have been able to deliver over the last 10 years, which is innovative thinking, global mindset solutions that scale. And it's been a very exciting journey for the last five, six years.

Alana Muller 2:12
That's so great, so great. I love that you saw this need and then you became innovators yourself that you were able to hone in on what that need was for the clients you were serving. So I think that's great. In what ways have your professional relationships played a role in that success, and really the success of DealMaker?

Mat Goldstein 2:28
So it starts with deep subject matter expertise. Rebecca and I understand the capital markets really, really well from both sides of the border. I'm still paying dues in the state of New York for my legal license there. And of course, from a global perspective, we've got people in a number of different countries. So having a very strong understanding of how the capital markets work as lawyers, it just became clear to us there's so much friction in between a buyer and a seller, right? When companies go out to raise capital, it's really just sales, isn't it? Right? You're selling shares, you're selling bonds, you're selling securities.

Mat Goldstein 3:04
And all across the economy, sales have become easier and easier because of innovations like the internet. But the capital markets were one of the last holdouts where technology wasn't really being adopted. And the regulations are complex. And companies raising capital, which I'm sure you're familiar with, have to have either a prospectus or some big disclosure or register their shares. Otherwise, they can only sell to accredited investors. And you have this market where people might want to become owners and the companies who own the shares might want to sell the shares. But you have all this friction, preventing a transaction from occurring.

Mat Goldstein 3:40
So we just said listen, in the modern day and age, where the internet breaks down barriers between buyers and sellers, you don't have to limit the sale of securities to a small pool of accredited investors anymore. You can use the internet to find people who are interested in buying your shares. The same way companies use the internet for product marketing.

Mat Goldstein 4:02
And one of our first kind of marquee customers on the DealMaker tech platform was the Green Bay Packers. So a paradigmatic example — huge brand, hundreds of thousands of followers, they wanted to raise capital, they decided to go to their community. They have millions of people who follow them who want to become owners, and they may want to buy one share, they may want to buy two shares. And so using our platform, they were able to convert their fans into owners through the sale of securities online. People buying from their mobile phones and using a credit card. You might buy something online. Same way somebody might buy shoes online, they can buy shares, and that's really the mission of DealMaker.

Alana Muller 4:42
I love that. I mean, I always think of the Packers as sort of the “people's team,” right? That's owned by the community, therefore the community, of the community, by the community. So I think that is such a great example and using that. Kind of leaning on that example, talk a little bit more about, why would a founder wish to raise capital from their community? I mean, it seems rather obvious, and yet, to your point, it's not been done really before. So talk a little bit more about that. How does another kind of company do that?

Mat Goldstein 5:08
Great question. So it hasn't been widely done. But if you think, if you step back and you think about it, every brand out there has some sort of a footprint, right? By definition, in order to be a brand, it has an email list, it has an Instagram following. It has people who are stakeholders in some way, it has traction in the market, it's been able to win trust, all of the things you have to do in order to be a successful company in the modern internet era, are things that are going to be very helpful when you're raising capital.

Mat Goldstein 5:39
And so one way of answering your question, Alana, is founders would look to the internet and into online capital formation as a way to raise capital, because they already know how to do this, they just don't realize it. They already know how to put content into the internet that their fans will see, they already know how to engage an audience in a way that builds trust. They already know how to get people to believe enough in the value prop of what they're offering to put down their credit card and buy something online. And so if you're a founder, as a founder, you can achieve that. You can get people to buy your products online, you can get people to buy your shares online, because fundamentally, it's the same thing. It's just a sale. Does that make sense?

Alana Muller 6:20
It makes total sense. And it's one of the few examples I can think of where you're actually turning social capital into financial capital. I talk a lot about social capital as being "relationship money." This is taking that "relationship money" and actually quantifying it in a financial, capital sort of way. So that's a very cool thing to do. So not only are you leveraging the relationships you have in general, but you're using this technology to make it so. So bravo. That's very neat.

Mat Goldstein 6:48
I think it's really the coming together of two things. First of all, e-commerce is a trend across the economy, making sales online, bringing people in online, breaking down those geographic barriers, not having to sell in person. It's that, plus key regulatory developments in the capital market that sometimes people referred to as “crowdfunding,” which really allowed these widespread campaigns to people who aren't necessarily accredited investors, and aren't that small pocket of high net worth individuals and family offices, who used to see all of the deals. It used to be that if you were going out to raise capital, you might hire an intermediary, and they'd make a bunch of calls and you do a roadshow. And you engage in a series of activities that were totally different from your day to day.

Mat Goldstein 7:35
And what we're saying is, just do what you do every day. Every day you show up online, every day, you create content that's engaging every day, you might have people asking you SEO questions on a webinar every day, you might have a podcast, and you open up the sale of securities alongside the sale of a product. And you can let your customers become owners on the same day that they buy your product.

Alana Muller 7:59
And so talk to me about the logistics of that. So let's say my company has come to DealMaker. I'm now on your platform. I'm leveraging your platform, how do I then turn a customer relationship into an ownership relationship?

Mat Goldstein 8:12
Yeah, so whatever your website is, and our technology is fully white labeled, so it's always going to sit behind you. Somebody's buying a share from the Green Bay Packers, they're buying from Green Bay, they're not buying from us, we're just powering the transaction. So, on your website, you've got what you're selling. You might be selling an e-bike, you might be selling shoes, doesn't matter what you're selling. And then you've got a button that says, "Do you want to become an owner?" Right? "Buy now, if you want to become an owner." Or you might unlock it, like you might have to be a customer that's a platinum customer, you might have to be a customer that gives an NPS, a net promoter score, above a certain threshold.

Mat Goldstein 8:45
So you can choose how you want to promote the sale of securities or how you want to invite people to become owners in the company. But it's fundamentally just a checkout. It's an online checkout the same way you go to Amazon, or you go to Shopify, and you buy something with your mobile phone, you can buy shares the same way. That's our mission.

Alana Muller 9:03
I mean, it's really democratizing this process of becoming an owner of anything. Right?

Mat Goldstein 9:08
You got it. You got it.

Alana Muller 9:09
So cool. I want to go back to something you were talking about earlier, you mentioned that you were working for Dentons, the largest law firm in the world, I believe, I think still, and you were doing work around the world. I also know that you're an attorney, both in the U.S. and Canada, and you've done a lot of cross-border work over the years. Can you talk a little bit about the differences and similarities and business etiquette that you've observed? And what helps you to do business with a global mindset?

Mat Goldstein 9:34
Yeah, I think that's a great question. So first and foremost, the U.S. is the world's largest, most robust capital market. So for the formation of capital, the buying and selling of stocks and bonds, the U.S. is the world's, kind of, central marketplace. Every other market in the world is just smaller. But, there are some really interesting innovations that have come out of the U.S., like the Jobs Act that was initially passed in 2012 and got amended in 2015 and really unlocked the… What you forget is the democratization of capital raising that was really kickstarted by the Jobs Act. And that's what opened up the sale of securities to non-accredited investors and the marketing of securities to the public at large, the kind of public solicitation, without being too technical about it.

Mat Goldstein 10:22
So, the U.S. has really led in terms of the innovation in the capital markets. And it's done that because Congress, what's called the Jobs Act for a reason. Congress wanted to stimulate economic activity, and capital formation has a direct relationship with economic activity. You know, every entrepreneur who's trying to achieve something, having access to capital is a pretty important part of that. And so, our company is set up to do business globally. In our view, stakeholders are global, the borders don't matter. If you're Peloton or even Green Bay… I mean, if you're building a brand, and you're using the internet to do that, your loyalists, your evangelists, your ambassadors, your customers, are global, right? And so, we want to be able to follow the global trend in e-commerce, and empower entrepreneurs to sell shares in every jurisdiction to the same extent they can sell their product in every jurisdiction.

Alana Muller 11:18
That’s great. On a little different note, what's something you're working on now that you're especially excited about?

Mat Goldstein 11:24
Well, so a number of large brands, it's very on point, a number of large brands have come to us and said, "We've done really well raising capital in the U.S. We're starting to develop our product in the U.K. Can you help us enter the U.K. market to sell shares?" Because it was kind of a hypothetical, but there's really interesting techniques out there where founders will sell a product and a share at the same time. If you buy a case of beer, you get a share…

Alana Muller 11:50
Wow.

Mat Goldstein 11:51
…if you buy...yeah, yeah, so really uniting those two worlds of product marketing and capital raising, because for all the reasons I said before, like it's really fundamentally the same thing. And so, we're working on our globalization strategy and supporting U.S.-based founders and building communities in the U.K as well.

Alana Muller 12:10
So fun. Well so, what advice do you have for innovators who are facing challenges in their work? Are there specific ways that you've overcome obstacles and emerged as a stronger leader yourself? Or for DealMaker?

Mat Goldstein 12:24
Yeah, and usually the specific context in which we get questions is about raising capital. “And oh, it seems so hard. And there are all these barriers, and I've got lawyers, and there's Y Combinator, and there's a safe and bla bla bla.” And you probably hear that, too, right? So we always tell people, listen, one step at a time, right? Believe in yourself, believe that you can do this, believe that you can find people to invest in your company, the same way you believe that people will buy your product. You take the same self-belief that you take into product marketing, and you bring that into capital raising. And we'll help you understand the sequence and the steps. And step one, have a brand. And step two, have a fair pricing strategy. And step three, do your disclosures. It's all laid out pretty simply. But if you have that self-belief, and you know that what you're doing creates value for other people, then there's no reason you can't successfully offer shares to the public and raise capital from your own community. You don't necessarily need to go out and hire an intermediary to raise money for you from people you don't know.

Alana Muller 13:27
That's super inspirational. I love it. Is there a specific piece of advice that you and your partner received as you were getting your business off the ground?

Mat Goldstein 13:37
I have to think back to the very, very early days, because the evolution of the company today, from when it started, it's like, sometimes I'll say to people, when you start walking, suddenly the path appears, right? So momentum is the most important thing for early-stage companies. Just every day grow a little bit, take another step, keep marching and the path appears.

Mat Goldstein 14:13
Or another one that stayed with me is the image of, in the early days, especially coming from capital markets, we had enough expertise that going into entrepreneurship, you can see a little bit of light into the cave, because the light streams in from the outside. But the deeper you go, and the darker it is, you reach a point where your eyes adjust because you're moving in incrementally, but to everyone else, it's pitch black, right? So, you develop the ability to see in the dark if you keep taking incremental steps towards your goal. And so, it's another version of, fear is real, fear exists. But if you have a strategy, you move forward relentlessly regardless. And I think that's really important for people to remember because I think people find the highest and best versions of themselves when they have the courage to go out and create. And it's so important to recognize founders that we're empowering other founders to go out and create in capital formation is a big, big part of that.

Alana Muller 14:55
I love that. Well, Mat, there's one question that I ask every guest and I want to ask it of you as well. If there was one person that you could meet for a cup of coffee, whether they're living not living, fictional or nonfictional, who would it be and why?

Mat Goldstein 15:10
Oh, okay. I don't know how much other people will connect to this. But I use a lot of sports analogies as we build our team. And we have 115 people so, but it's not the early days where you kind of can cajole everybody using the force of your own personality, you need real management techniques. So, I always think about sports and sports teams. And there's a legendary coach who if I could, I'd love to sit down and think about his strategies and motivating a team and building a team and achieving a goal and developing a mission and developing a culture and really bringing that winning mentality and winning mindset because yeah, I find mindset to be very, very important..

Alana Muller 15:45
I love that. Will you share…who is it?

Mat Goldstein 15:49
Arsene Wenger from Arsenal FC.

Alana Muller 15:50
Nice. Nice. That's very fun. Very fun.

Mat Goldstein 15:55
Little bit obscure European Premier League soccer, but that's what it is for me.

Alana Muller 15:58
That's super fun. Well, I have loved learning about you and learning about DealMaker. I so appreciate you coming on Enterprise.ing podcast. Mat Goldstein, where can people go to learn more about you and about DealMaker?

Mat Goldstein 16:03
dealmaker.tech. We've laid it out on the website, dealmaker.tech. That's where you'll find us and that's where you can fill in the form and someone will get back to you.

Alana Muller 16:18
Fabulous. Thanks so much for being on Enterprise.ing podcast.

Mat Goldstein 16:22
Thank you, I had a lot of fun.

Alana Muller 16:26
Thanks for joining us this week on Enterprise.ing. Be sure to visit our website, enterprisebank.com/podcast to subscribe so you'll never miss an episode. If you found value in today's program, please consider leaving a review on Apple Podcasts or telling a friend about us. Enterprise.ing, powering business leaders, one conversation at a time.

Alana Muller 16:50
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