401GO: Disrupting Small-Business 401(k)s at Scale

[0:00] JD: Wrong, Justin. He don't get loud like that. [0:04] Justin: He gets high. [0:04] JD: Yeah, yeah. Justin, that's not true. There you go. [0:07] Mark: That's much better. [0:09] Chad: Are we peeking or are we good? B. All right, [0:18] JD: Let me know. Let me know when you do intro. [0:42] Mark: Yeah, I need. [0:43] Speaker E: Oh, there we go. [0:44] Mark: That's a chair. [0:47] Chad: Carefully. [0:47] JD: Welcome, everybody, to another episode of Retireholics. We are coming at you from the wealth at Work conference in National Harbor, Maryland. Right, Robbie. [1:02] Mark: Day two. [1:03] JD: I want to take this moment to thank wealth at Work for once again coming through on our rider. We'll be the judge of that. [1:12] Chad: Okay, they came through. [1:13] JD: They delivered. This was a celebrity writer that we put together for the conference. Again demanding. If we're going to come and bless you with our presence, we require a few certain things. Two dozen Twinkies. Check, check. Three Whoopee cushions. 24 uncrustables. [1:32] Justin: I was planning to feed my kids with that. [1:34] Mark: I haven't eaten a thing. That's all I eat. [1:36] JD: Coloring books with crayons. Trying to. William Hackler. [1:43] Speaker E: Whoa. [1:43] JD: Wealth at Work. Not so good with the batting average. Basketball hoop. [1:47] Justin: Got it. Yep. [1:48] JD: Got it. Extra strength Tums. Yep. [1:50] Chad: Yep. [1:50] JD: I could use one of those. Four beach balls. [1:53] Mark: Yes. [1:54] JD: Two lava lamps. [1:55] Mark: One. [1:55] Justin: One lava lamp. [1:56] JD: Okay, I'll give them a pass. A chocolate fountain with assorted fruit for dipping. No, not here. Ukulele. [2:03] Justin: Yep. [2:03] Mark: Yep. [2:04] JD: Check. Disposable cameras. Two goldfish in a bowl. [2:08] Justin: I was planning to eat those. [2:09] JD: I don't see those anywhere. Remote control car. [2:12] Chad: Got it. [2:12] JD: Yes. Mike and Ike's. [2:14] Speaker E: Yeah. [2:15] JD: Chewy Spree. [2:16] Mark: Yep. [2:17] JD: Charleston Chews. [2:18] Mark: Nope. [2:18] JD: Oh. Flashlight and first aid kit. [2:22] Chad: Yeah. [2:22] JD: Check. [2:22] Justin: Check. [2:22] JD: Well, you need that. And an assortment of temporary tattoos to our guests for free. We'll even. We'll even apply them for you. [2:32] Mark: So I think I'm gonna make this permanent. [2:34] Chad: I'm. [2:35] JD: So what's the grade? Are we coming back next year or have they failed us with our writer? We'll leave that to be. [2:40] Chad: Might have been Amazon that failed us because that's where he gets all this. [2:42] JD: All right, well, I would like to say thanks for having us, but step up your game a little bit when it comes to the writer. We got a beer of the episode, sort of. Kinda. I got a buddy here in Washington, District of Columbia, and he pulled these out of his. His little cellar and handed them to me. So thank you. To you, Greg. You know who you are. [3:07] Mark: Thanks, Greg, whoever you are. Thanks, Greg. [3:09] JD: They're an assortment of kind of local breweries. So we got. [3:12] Speaker E: Well, we were jerks. [3:13] Mark: Though we all have one from your buddy. And then we gave our guests. [3:16] JD: Yeah, I know. [3:18] Chad: This looks good. [3:19] JD: Cheers. Cheers. [3:20] Chad: You want an actual one? [3:21] Mark: This is good. [3:22] Justin: You sure? [3:22] Speaker E: Yeah. [3:23] Mark: Thank you. [3:24] JD: All right, let's dive right into headlines, shall we? Headlines, Brandon. [3:33] Chad: I love not knowing what we're talking about. [3:41] Speaker E: Boom. [3:42] JD: All right, puppy. Are you ready, everybody, for the boringest headlines ever in the history of retireholics? These are three that will knock you over. [3:53] Chad: Tell me the story. [3:54] JD: Tax filing deadline extension in Cali is pushed out another month. Does this include Internal Revenue Service 5500? [4:03] Justin: Chad, I don't know the answer to that yet. [4:05] Chad: I know. [4:06] JD: Nobody does, right? [4:07] Chad: Maybe. [4:08] JD: We think so. [4:09] Justin: We're getting guidance that, yes, it's going to allow the 5,500 to be pushed out. Although they released that on. [4:15] Chad: How about. Yeah, how about that notice going out yesterday? [4:17] Justin: 15th. [4:18] Speaker E: Yeah. [4:18] JD: So for you lazy plan sponsors out there that didn't get your in on time, you might have an extra 30 days. [4:25] Justin: Hey, kudos to the advisors that called yesterday, though, and asked that question and forced me to research it. That just tells you there's a lot of plans out there that haven't filed [4:32] JD: yet for a third party. [4:33] Chad: And you guys dealing with this crap, too. [4:35] JD: You didn't want to put the champagne down because the filing deadline has not come and gone. It's 30 days out and you still got some work to do those late clients. [4:44] Mark: Wait, hold on. Hey, Power moved it on us. He said they're all done. Oh, yeah? [4:48] JD: Well, are they done correctly? Contribution limits. It looks a 4K specialist. Mag has a really exciting article on the new proposed contribution limits for 2024. And it looks like a $500 boost to the deferral. [5:08] Chad: Massive. [5:10] JD: So I told you these were shocking. And today, October 17th is. Drumroll, please. National Third Party Administrator Day, created by John Hancock, now endorsed by John Hancock's competitors. I got a lovely email from Fidelity today wishing me a happy Third Party Administrator Day. [5:35] Speaker E: Are you? [5:35] Mark: So since we are a third party administrator and we have employees who are really working, unlike us, who are working right now. Are you like, sending them gifts or lunch or doing anything for them? [5:46] JD: I bought them all lunch for the last two weeks. It was cheesy. I bought them two lunches each week coming up to the deadline. [5:55] Justin: I know a bunch are taking time off. [5:57] Speaker E: What a slum lord I am. [6:00] JD: Here, have a Subway sandwich on me. Now get back to work. No, I think that's cool. To have National Third Party Administrator Day. And for everyone out there, it falls on the day after the deadline. Right. I wonder, should it be? [6:14] Justin: Is it now? [6:15] Mark: Is it going to be November? You have to celebrate it twice. [6:18] JD: Just in California. And then lastly, I want to add a little juice, a little excitement in the headlines. Okay. Because those are three boring 401k headlines. [6:27] Mark: I don't know, those are kind of cool. [6:28] JD: Let's go outside. [6:29] Speaker E: 401K. [6:31] JD: Taylor Swift. This is breaking news, by the way. Taylor Swift and Travis Kelce have broken up. [6:38] Speaker E: What? [6:39] Mark: Apparently she didn't see that coming. [6:41] JD: Cheating. And in secondary news has acquired his purchase, the Kansas City Chiefs. And Travis Kelsey has been let go. You heard it here. [6:53] Mark: And then she trains the Algeria homes to the Raiders. [6:56] Speaker E: I don't know. I don't know. [6:58] JD: With that, let me hand it over to my buddy Silent J and you can introduce our guest. All right. [7:04] Chad: This man is about to go down as one of Mark's favorite guests of all time. He's a self proclaimed financial wellness nerd with a bit of an entrepreneur spirit. He's been a part of more than a dozen small businesses and throughout these years he's come to realize that in business as well as many other areas of life, size does not matter. Thank God. [7:23] Mark: Thank you. [7:25] Chad: Don't judge his company by their terrible swag game. That is the socks. [7:29] Mark: Come on, those are great. [7:30] Chad: Or that they hire goons because they're here doing some great things with twice the amount of plans. As JD previously stated, he's here to set the record straight that they're here to stay. The co founder at 401go. Mr. Dan Beck. [7:44] Justin: Is he only the co founder? [7:47] JD: Thanks for being here. [7:48] Mark: Of course. [7:48] JD: And you are one of those stories that I love where I get drunk on a Thursday night, I try to accumulate a bunch of data on a company and I start spitting non truths to everyone in the industry. And you politely wrote me a few days following sand. You were close on some of your numbers but you had a little like humble brag. You were like, but we're not at a thousand plans. We're north of 2000 plans. So check yourself. You didn't say that. So that to me is a wonderful opportunity to invite someone on the show and talk about it. I think if you remember though I did give you guys props towards the end. I said we've been in business for almost 50 years. We've got just north of a thousand plans. You've been in business for like six. [8:32] Speaker E: It's because your sales guys are doing [8:34] Mark: this instead of actually doing our jobs. [8:36] JD: So I can't talk that much when it takes me 50 years to get half the plans you have. So I think we should try to learn some things from you today. Do us a favor for people out there that don't know, Set us up a little bit for 401. Go. I think, like six years when you started, we've said 2,000 plans. How many employees do you care to share assets? Like, just give everyone a feel for if they don't know what it is. [9:01] Mark: Before you say anything, do you know the rules of the show? [9:04] Justin: Give them the rules. [9:07] Mark: Well, I'm really excited to have this sake, so let's see if I bring it. [9:11] JD: How many employees are you guys at right now? [9:13] Speaker E: We're about 50. [9:14] JD: Okay. [9:15] Speaker E: Yeah. [9:15] Mark: So, I mean, we more than doubled since the start of the year, and we're. We're definitely on. [9:21] JD: You double in terms of staff size. [9:22] Mark: Staff and 20. [9:24] JD: 23. [9:24] Mark: Yeah. [9:25] JD: Okay. We should find out, like, where those are coming from. We'll get that from us, probably. You had 2 million in seed funding? [9:33] Mark: Yeah, we're in total. We're about six million. [9:36] JD: Okay, now you. Six. [9:37] Mark: Yeah. So we had about two and a half in seed, and then we picked up another, you know, three. Three and a half just recently. And safe agreements recently. [9:44] Chad: And how many Lambos do you have? [9:47] Mark: We don't talk about this. [9:48] Speaker E: Okay. [9:49] JD: You've seen this growth, and you need more money to kind of continue to fuel it. [9:54] Mark: Yeah, because we're focused on small businesses. You have to get to a certain size before you have. You know, we're leveraging economies of scale. We're using mostly technology to make that happen. But then also, we do have to be a certain size just to kind [10:06] JD: of COVID basic overhead people to do certain things. I'm going to ask you about the technology and kind of the scalability and the. And the profit in a little bit. Give us a sense for. Are these startup plans. Are these half a million dollars? Million dollar, like, biggest clients, smallest client, and what's the median look like? [10:25] Mark: Yeah, so our biggest clients are like, 6, 700 employees. We have a few of those. And then smallest is. We do a lot of solo ks. [10:34] JD: Solo ks. [10:35] Justin: Yeah. [10:36] Mark: Yeah. So average headcount is around 22. [10:39] JD: Okay. [10:40] Speaker E: Yeah. [10:40] JD: So definitely bigger than I thought. I mean, that's not super small. [10:43] Mark: I mean, that's where I would have expected. Yeah. [10:45] JD: Okay. [10:46] Justin: And a lot of it is our [10:49] Mark: primary distribution is really through financial advisors. So about 70% of our plans are through financial advisors. And so because of that, we end up with really whatever they bring to us. So we actually have quite a few. Like a lot of those first plans were conversions, so we take over conversions. [11:08] JD: 70. I would not have guessed that. Neither would I. I would have thought you were. Your growth was fueled by your strategic partners, payroll group, health people. [11:19] Justin: Let's ask that question. I get it. 70% of plans probably have an advisor on them coming through the channels. But are they coming from payroll and happen to have an advisor relationship? [11:28] Mark: Payroll for us is still kind of new, so we do have quite a few payroll partners, but they're. It's been, it's been really financial advisors. So from day one, we started working with financial advisors because we wanted to build a platform that still kept the advisor kind of centered. And the reason why is we felt we'd have better outcomes than if you just went like a pure tech play. [11:51] JD: You're preaching the choir with us. So. But of those 2,000, give or take, 70% of them have an advisor on the plan. [12:00] Mark: I mean, if it was up to us, 100 would. But unfortunately, you know, some of these, they either they had like, we see some of the time they're with another record keeper and there was a financial advisor that they never met. So when they come over, they're just like, you know, that's not going to happen. [12:15] JD: And I wouldn't blame you on solo ks. I don't think they need to be sitting on a lot of those solo kids and stuff. But. [12:20] Mark: Yeah. [12:21] JD: Is that a no? [12:23] Justin: No. [12:25] JD: Okay, well, that's new for me. I, I didn't know that. [12:29] Justin: I would have guessed that 70 of plans have an advisor. I would not have guessed that would have been your number one referral source. [12:35] Mark: Yeah, in a way I feel like we could grow a lot quicker with payroll, but it's also, you know, some of our competitors, that's where they focused. And so for us, like we, we view this, you know, the financial advisor space is kind of like our, our opportunity really. And then also we built something that works with them. And the way that we can layer in their services and what they do, their fund lineups, makes it so that our platform is just a better fit than some of the other things. [13:01] JD: It's a great user group to have. I'm sure they're going to teach you about a lot of things they want or don't want or that and that. But you do lose a little bit of control too. I think if I would compare you to guideline and human interest, and I do at times, they clearly came to market with a different strategy. Yeah, that's why we kind of labeled you that way. But we're gonna have you swap out here halfway through the show, and we're gonna bring in. Ted is a new hire for you guys. [13:29] Mark: Yeah. [13:30] JD: My understanding is his specialty is payroll stuff. [13:33] Mark: Well, you're trusting a new hire to just jump on. [13:37] JD: All right, so it sounds to me like you are opening up those channels now and see it as a viable way to. Yeah. Bring in new business. [13:44] Mark: Ted, when he was at Paychex, most of the people he worked with were financial advisors. So it was really during his tenure at Human Interest that he kind of developed the payroll side of things. So the good thing is he sees. He sees both of it. [13:58] JD: So he was part of their growth. So he'll be part. We'll get to that a little bit later. Okay, let's talk about your product types real quickly. I saw there's a Go Starter, there's a Go plus, and there's a Go Premier. [14:11] Mark: Yeah. [14:12] JD: Can you help me understand for everyone out there, the Go starter is just nine bucks per participant per month. No asset based charge. The go plus is that same nine bucks, a 29 monthly fee. So 350 approximately per year and a little 30bps on top. [14:27] Mark: Yeah. [14:29] JD: I don't know. [14:30] Justin: That definitely is the Go premiere. [14:31] JD: I'll drink for that. The go premiere is 9 bucks. The 29 and then 100 basis points. The 1% on top. [14:38] Mark: That one's iffy. [14:39] Justin: Right. [14:39] JD: Help me understand the difference between those products a little bit. And then how does that break down for your 2000 in terms of percentages? Yeah. [14:47] Justin: Well, Solo. Did you say the Solar K product? [14:50] JD: That's right. And then the solo K is 201st year and 150. Yeah. Second year. Cheap, cheap, cheap. Yep. This ain't me. [14:59] Mark: So the Premier, that's really the product that we kind of reserve for when we have a financial advisor attached to the plan. [15:06] JD: Oh, okay. [15:07] Mark: And the nice thing is we actually cut our basis points down to 10 when we have a financial advisor. That way, if they want to go the assets under management route, they can. We find a lot of times, because we don't have startup fees and some of those other fees oftentimes associated with setting up a 401k, the advisor can now charge something. [15:26] Speaker E: Yeah. [15:26] Mark: And so it allows them to. And it doesn't take, you know, several weeks to set up a plan. They can do it in literally minutes without talking to anyone on our team. And so for them, they can go down market and set up those plans without, you know, without a Lot of fuss. And then also they can monetize it. [15:42] JD: Sake is gross. So did I get that wrong? I said 100 basis points on the premier. You just said you. You ratchet it down to 10. [15:51] Mark: Yes. [15:52] JD: Oh, am I getting something wrong here? [15:53] Mark: No, no, you're spot on. So it's. We charge 30 basis points when there's no financial advisor. You know, one of the reasons we did that was to kind of help create some parity so that if there is a financial advisor, there's not an incentive for them to just go directly to us. We want them to keep that Advisor. [16:09] JD: Right, right, right. 30 without 100 with 10. [16:14] Mark: 10 with. [16:15] JD: And the hundred does not include 30 without. [16:18] Justin: I don't know where the 100's coming. It's 30 without 10 with 100. [16:21] Mark: That's what, 10? [16:23] JD: Okay, it's 10. [16:24] Justin: So the value of the advisor in that calculation is 20 basis points. Like the work that you would do when there's no advisor. [16:32] JD: Okay, just. Fair enough. That's a bit of a stretch. [16:34] Justin: That's the difference in cost. [16:36] JD: All right, cool. I think that's. People need to understand that. So that's good. [16:40] Mark: Well, then the starter and the go, those are just really like, for the starter, we want to get the barrier as low as possible to get employers to offer this because obviously, especially with state mandates, we'd prefer they do that. I think everyone would prefer they do that. There's a lot more benefits to the 401k. [16:56] JD: I'm assuming the starter is like a mandate on my Safe harbor. So we can. [17:02] Mark: It has to be Safe harbor has to be startup. So there are some limits to it. [17:05] JD: Just fine. I get that. It's super cheap. [17:07] Mark: Yeah. And then with the payroll side of things, we don't. So we have kind of like a concierge service. So if you're paying for those higher packages with a base fee, if we don't have an integration or some of the time, if the integration with the payroll provider is only 180, then this allows us to make it 360 so the employer, it doesn't have to worry about the ongoing administration. And really, that actually saves us a lot of money because we found that if you're pushing those notices onto the employer and saying, hey, you need to go and update this deferral election in the payroll system, because that's probably the one that is the hardest to push to some of these payroll providers. If we rely on the employer to do that, mistakes happen, and then it's down the line. We're spending time fixing it. The employer's not happy. And so for us it's a like, hey, let's just, you know, take a few minutes. I want to ask for them. [17:54] JD: I want to. [17:55] Mark: I love that. [17:56] JD: I love that. I want to ask you about that. So if, if I do loose math like I did before on your company, I don't know, your revenues are two and a half million or something not quite that high. [18:08] Mark: Yeah, about two. [18:10] JD: And you're at 50 employees, you're saying, so, I mean, you're not profitable yet. If I do the math, you're making like 1,100. Sorry, 1,112 50 bucks per client or something like that. Okay, here's the old school guy. Okay. Been in this business long time. Father started in the 70s. You're doing compliance, administration, testing, 5500 prep. And you're going to use this tech to do it is what I want to learn about genuinely. And you doing record keeping, which word on the street is you built this up yourselves. You're not. You didn't outsource that to anyone. You literally coded it and built your own thing. When I hear just over a thousand bucks per client, I say that's impossible. How will you ever get to profitability knowing what I know of servicing a thousand of my own clients now? I service them with people. I use antiquated software where people pull levers and push buttons to run an ADP test to prep a few. [19:14] Justin: Yep. [19:15] JD: Oh, yep, yep. You are doing it different. Show me the light. How the are you doing this? Payroll integration. Get it? You're telling me your little developers just coded all this stuff and it's just pumping through an actual deferral percentage test and, and through natural contribution. I don't even know what those things stand for anymore. Testing and, and qualify non elected contributions or, or non elected. [19:48] Mark: What about cross tested profit sharing allocations and other things? [19:52] JD: Yeah, you know what I'm asking you. So you've cracked this code? [19:56] Mark: I wish I could say I knew a lot more about it, but. So my brother's actually one of the co founders. He's the cto. There we go. The Chief technology Officer. [20:10] JD: You like sake warm? [20:13] Mark: It's better warm. That's not too bad. It is. [20:15] JD: I don't like it. [20:15] Chad: Oh, isn't it? [20:17] Mark: Yeah. So he, we spent about two years like looking at the industry. We looked at all the different platforms out there, technology, evaluated competitors. He read the, the Internal Revenue Service code. Yeah. Spent a lot of time just researching it. Yeah, exactly. I mean in his spare time. And so we did all that and decided hey, there's an opportunity here. But obviously we needed some more expertise. So we started consulting with individuals in the industry. Found somebody that was at, he was at Transamerica on the administrator side of things for his entire career. [20:52] JD: Someone who could kind of show you everything. [20:54] Mark: Yep. Brought him on. It is, it's messing that thread and [20:58] JD: it keeps pulling right. [20:59] Mark: Like, but we kind of had the opportunity of not really knowing a lot about the industry. And so I feel like in a lot of ways if you're in the industry, you kind of know, hey, to do this it's steps one through ten. And we didn't know that. [21:12] JD: Fresh. [21:12] Mark: Yeah. So it's kind of like we just went step 1, 5, 8, 9, 10. So we're able to just kind of completely rethink the way that it's done. So like all the non discrimination testing, like a lot of that, it's, it's an algorithm that does it. [21:25] JD: It's not rocket science. [21:26] Mark: So I mean at the end of the day when you're working with a government entity like everything is very rule based. Everything is, you know, there's, there's numbers, [21:33] JD: there's, I mean that in a good way. That, yeah. [21:36] Mark: So it makes it really easy to automate. There's no, there's no reason why, you know, because I imagine for those who are doing it manually, you're using spreadsheets, you're using tools. So really. Yeah, software. And so it's the, you know, you have individuals that are inputting that data. We're just kind of skipping that step. [21:51] JD: Go ahead. [21:52] Justin: Let me just state, I understand that and agree with the average plan that has guardrails on it. That might be the case. But you have a lot of businesses that are sole proprietorships and you got to get a net schedule C and then they want to do calculations of what profit sharing might look and there's back and forth there. It's not black and white. [22:09] Mark: The new comparability profit sharing. We're not like we, we get help on, on doing that but the you know, other profit sharing stuff is, but [22:18] Justin: how many of your clients have related entities and now you're, you're looking at an attribution rules and that stuff's not black and white. There's a lot of determination that needs to be done and that kind of work. And in the micro space those are a lot of the businesses that have overlap. [22:33] JD: Yeah. [22:33] Chad: How are you guys addressing that in the onboarding process? [22:36] Mark: So we can handle different groups. And a lot of times this is especially true when we take on a client that's like a franchise and they've got maybe four or five, you know, say Wendy's restaurants and they've got a bunch of employees but they'll oftentimes set up payroll through different bank accounts for these different entities. And so obviously they all need to be covered and we can, we can manage that. So each group kind of has like their own login, but we can put. Yeah. So we can structure it. We've had to go through these complexities and again, this is one of the advantages to working with advisors from the get go is the stuff they do is messy. And so the stuff they brought us was messy. And we had to build a platform that could accommodate all that. Most of our plans were takeovers. So it's easy to build something where, you know, I think guideline they're, they're probably the only other ones that actually built a record keeping platform fairly early on. And because of that, but they had a. If it doesn't fit within their box, they don't do it. And so we had to build a box that could really fit anything we don't like. The only thing that we don't do are implant digital conversions. [23:42] JD: Yeah. [23:42] Mark: So that's about it. Like anything else. Like we've never had a plan where we say, hey, we can't take that. My next question. [23:49] JD: Yeah, well, I thought you would have and I thought I would have been okay with that. [23:52] Justin: And I. So I have to, I have to argue. I love our Advisor partners, but I've never met a single one that in the onboarding phase has the understanding of this space to have a consultation about related entities or common ownership. So when you said earlier you can onboard a plan in 15 minutes, I started giving a thumbs down. Like that to me is diminishing the value that I think we all need to be offering clients, which is to be that consultant and be that resource. If the Advisor in my opinion is not capable, nor should they have that skill set, are you guys spending time having those conversations with clients as they're onboarding or is it all tech based? [24:30] Mark: So when you look at a lot of the way you design a plan, the way I think about it is there's like 50 different variables. And oftentimes when you're working with Advisor, they want to push all 50 of those buttons because they think they can add value that way. [24:42] JD: Yeah. [24:43] Mark: But to the business owner, when you look at most of those are related to administration if administration is automated, then suddenly you can focus on what really matters to the business owner. And there's like four or five, like eligibility, entry dates. Exactly. [24:55] JD: You have a match or not, and [24:57] Justin: we call it the five Ws. We're with you. [24:59] Mark: But yeah. And so during that setup process, we've got those five W's. But then if somebody needs to, there's. There's almost like a super user menu, if you will, where you can get it. So we're making a lot of assumptions to kind of help them along the way. But if they need to get in there and dial something in, maybe change the, you know, set of 18, it's now 21 in order to participate. I guess they can do that. [25:20] Justin: I have to. You skated right past that question though, which was not about the provisions of the plan. It was about the consultation of related entities. [25:28] Speaker E: Yeah, things along those lines. [25:29] Justin: Are you asking that question in the onboarding and someone reaching out to help? [25:32] Mark: We do. And so there are, there are definitely like exception handling. So if there's an existing plan, we have to obviously review that plan document. We need to make sure that lines up. So in those instances we have manual review. So we'll ask them upload the documents so that we can start to review things. But for a startup plan that doesn't have, you know, any of those complications, which I'd say that's a good, you know, more than half of them. [25:57] Justin: That's, that's my fear though. Let me ask these guys that are [25:59] JD: out there in the field nerdy today. [26:01] Justin: It's because I have an issue with this. Of, of the plans you will bring on. [26:07] JD: Yeah. [26:07] Justin: How many understand that they have an issue with a related entity when they actually have a related entity? [26:13] Mark: Well, we don't use that term. That's why. And see, this is. So my background is a small business owner. So when they start talking like related entities or profit sharing. Profit sharing in the 401k world is completely different than the way an owner use. Proper sharing has nothing to do with profit. Like whether I'm profitable or not. [26:29] JD: Contribution. [26:30] Mark: Exactly. [26:30] JD: Shouldn't be called profit sharing. [26:32] Justin: So we. Sorry, go ahead, keep going. [26:34] Mark: No, so we, we decided, hey, let's redefine this and what that means. And so we just say, hey, do you have other businesses you're involved in? Same question. We can't approach it the same way. [26:45] JD: Those are going to be outliers. When you look at 2,000 clients, you don't have a lot of those that have. [26:50] Mark: I know, I agree. In the small business space, you find a lot. I mean, at one point I had like five different businesses. [26:55] JD: Okay. [26:56] Mark: So it is, it's a lot. [26:57] Justin: And if. And kudos to you all for asking the question. What I find in many of the folks that say we can onboard a plan in 15 minutes is that they don't ask the question and then they play the. We're just the administrator. You didn't tell us that. We don't have to worry about it. [27:09] JD: Negative viewpoint on the fact that can [27:10] Mark: happen in our process too though, if [27:12] Justin: they, if they don't have the information. Let me give you my one last point real quick. Would be around upfront costs. You all don't have any. And you're assigning time and energy and effort to supporting. Kudos. But shit, back to that profitability side. If that, if the employees are spending that kind of time and effort, you gotta be charging for that somewhere in the model. [27:31] Mark: We also have a. For us, 401k is the gateway drug for a lot of these employees. They are, this is their first time saving for retirement. So when you're focused on the small business space, these are individuals that are hourly, they're lower wage, entry level, they're younger, so they've never saved. And so this is their first time doing that. And with employee Turnover at like 47%, they're with an employer for maybe two years and then they leave. So what happens after they leave? We keep them. And so that's, that's one of the ways that this is a long. This. We're playing a long game. We're playing a long game. [28:05] JD: I thought you were about to drop something on. I was going to ask you later, which is, are you, are you going to try to get revenue somewhere else? Because I definitely, like, if I want to get really opinionated here, I definitely feel like at 1200 bucks per client, if you came to me wanting millions of dollars, I would be like, you [28:22] Justin: gotta show me where are you going [28:24] JD: to turn a profit. And based on what I'm hearing right now, with 20, 50 employees, those metrics don't work either. Which is fine because it sounds like for now, this is an investment from the future. Yeah. So at some point you need to have 5,000, 10,000 clients and maybe only 75 employees. Or I'm making up numbers here, but where you're at right now, you're overloaded with staff, which to me is expense, because that's payroll. But I like, payroll's got to be more than revenue you're making. [28:53] Mark: Yeah. [28:54] JD: And So I just don't. And I'm, I'm an old school, not creative, not very entrepreneurial guy. I just don't see the clear path. Unless you came to me and said, well, jd, we're going to, at a certain point we're going to sell them wellness or we're going to sell them [29:08] Justin: retaining assets like you just mentioned or [29:10] JD: this or that individual retirement account. I mean, I know you've ex. On your LinkedIn profile it says exited, exited, exited. Help the dumb surfer understand that that means you sold those companies, right? So are you going to sell this fucker in another three years? Is that the plan? Like, so maybe you don't even care I'm buying it. Maybe you don't care if you get to profitability, you just need to get to some type of valuation. Maybe when markets change, gets better and you sell. I mean, I don't know. [29:36] Mark: Yeah, and the prior businesses, those were bootstrapped, so self funded and I had to be profitable. I didn't have deep pockets, I wasn't relying on venture capital. So this is different. You know, here the focus is on growth reaching a certain scale. And for us, you know, for me at least there's a, there's a bigger vision. Like this is something, this is a passion project for me. It's not just to make a bunch of money. If I wanted to, I could have retired with some of those previous exits. I took all that money and I plowed it in here. So it's almost, it's all in, it's all or nothing. And so for us, you know, you mentioned financial wellness, like that's built into the product. So we're trying to make something that's sticky, we're trying to help these individuals. Even we don't use the term internally retire or retirement. And the reason why is because in a lot of ways I feel that's kind of a loaded term. Retirement for my dad is very different than it's going to be for me and probably even my kids. So we, you know, it's more about financial independence. And what does that look like? Is it. Do I have to wait until I'm 65 to be able to access that? Or maybe that means I want to. [30:35] JD: I also understand that investors, when we talk about guideline and human interest, these companies and their private equity or venture capital, I get it. To get your foot in the door to Wall street, which has been something that no one's had access to for decades. Right. It's dominated by the fidelities and the vanguards and these large Fortune 500 companies. So to walk into an investor and say, hey, I think we can disrupt this and I think we can get in there. Maybe the long term game does play out. There's plenty of Silicon Valley companies that are not profitable for years and years and years, and they're just building up their customer base. I mean, even you could take it on a simpler level. The freemium concept is the thing that's out there. Let's offer something of value, give it away, and build up our customer base, and we'll get to a point of strength or opportunity at some point where we can scale the switch and start to do something. So, yeah, I'm just trying to learn and open my brain a little more. [31:28] Chad: I'll tell you, the growth you've had in this space over the years, it's just profound. I said the amount of growth you've had in this area with these, you know, you know, disruptors, it's just profound. [31:42] JD: Thank you, Justin. I'm a, you know, I'm a kind soul. Okay, we are going to play one game before you go, and we're going to swap out for your. Your new halftime halftime show. We're going to spin the wheel of ice, and I only have got one smear knoff left, so if it lands on the mug you're drinking, you don't have to. [32:03] Justin: Okay, it's working. [32:04] Speaker E: Here we. [32:04] Chad: It lands on the mug, what I'm drinking. [32:08] Justin: Oh, look at that. [32:09] Speaker E: You haven't really touched that beer. Well oiled machine. [32:14] JD: All right, Dan, thank you. Appreciate it. Thank you. This is great. [32:18] Mark: Thanks, guys. Absolutely. Thanks, man. Thank you. Okay. [32:21] JD: All right, Robbie, grab your. Yeah, your smear knob. And Justin, why don't you [32:28] Mark: back again. [32:29] JD: All right, we'll have them come and sit down. And Justin, you tell us who is filling this center chair. Well, sit on down, Ted. Right in the middle here. [32:40] Justin: All right, I must switch it. [32:42] Speaker E: You might be getting cold there, J. [32:43] JD: Sir. [32:44] Speaker E: You guys some 401 go socks? [32:46] Justin: Justin's already talking on those, so. [32:48] Speaker E: Yeah, let me just tell you. We, you know, I probably just dropped my profitability down a little bit farther, but, you know, I think we can afford it for you guys. [32:55] Justin: I know we were sharing to get Bombas. [32:58] Speaker E: Bombas? [32:59] JD: Hey, at just over a thousand per client, you can't afford bombas. All right, intro this guy. Justin. Well, [33:07] Justin: see your mic. [33:08] Chad: We gotta check his mic. Hold on, guys. [33:12] Mark: Oh, are we good? [33:15] Speaker E: Can you hear me? Testing. [33:17] JD: Doing a little mic check. [33:20] Justin: He's green. [33:21] JD: Mic check, doctor. Nice job. This Is better like that smeared off. [33:29] Chad: I mean, I don't smock that much. You just want to use my mic. [33:33] JD: Well, go ahead and intro him while they do the mic. [33:35] Mark: Okay. [33:35] Chad: Well, this little pecker head showed up at the bar last night just wanting to headbutt people. And that's about all you need to know about him. [33:44] JD: He wanted to headbutt me. And I was like, why do you want a headbutt? [33:47] Mark: Can we get some explanation? [33:49] JD: I play hockey. So I said, justin plays hockey. And then I realized I have been headbutted once in my life. By who? Justin. So I thought I'd get the two of them together and see what happens. [34:03] Speaker E: Got so fired up and excited that, you know, sometimes, you know, physically act out. [34:10] Chad: Well, let me finish this. [34:12] JD: Yeah. [34:12] Chad: The Chief Revenue Officer. 401. Go. Mr. Ted Hasse. [34:17] JD: Clap, clap, clap. [34:19] Justin: Is Dan. Is Dan theoretically your boss? Or maybe not theoretically. Is he actually your boss? Because he bounced. I think he's worried about what you're about to say on here. [34:28] Speaker E: He just bounced. He had an important meeting that. I mean, not as important as you guys, but he had to go. [34:34] Mark: Is this. It's like, go at your will. [34:36] Chad: Get after it. [34:37] Justin: We had that. [34:38] JD: Thank you for the over under grab. We got to get them closer. [34:41] Speaker E: Oh, what do we need to do? [34:42] JD: God damn it. [34:44] Justin: I'll get him. I'm in. I'm going to go in the center. [34:46] JD: Oh, good, we got him. Of course we got him. Of course. Okay, Ted, check this out. There's a word on the street that you're a bit of a payroll integration and strategic partner all star. Coming from a long career at paychecks. You were there for like two decades. [35:02] Speaker E: Scaring me. [35:03] JD: Then you had a spread out. Then you had a short stint. Wow. Weird. [35:08] Justin: There it goes. [35:09] JD: Then you had a short stint with human interests, which I find very interesting and apparently shortest short stint, four years. [35:16] Justin: I'm like, that's not short. Today's workforce. [35:19] JD: And you were instrumental in creating tons of payroll strategic partners for them and really kind of fueling a lot of their success. I saw some posts from me on LinkedIn of them going from like 10 million in recurring revenue to 100 million recurring revenue in that four year period. Right. So tell us a bit about why the leave from human interest and why 401 go of all companies. [35:47] Speaker E: Yeah, I mean, my story probably goes back to Paychecks and, you know, as part of the Paychex group that sold 401k as a primary product. And I think Paychex doesn't get its due for bringing really small market 401k down market at volume. [36:04] JD: You're right. [36:05] Speaker E: So, you know, and I was fortunate to start like their large market channel. And you know, it's funny, if you go back 27 years ago, even our payroll reps, we had to at Paychex we had to convince to refer us, you know, your own people. Yeah, our own people. And so, you know, you fast forward. I had 21 great years there. I had four years at Human Interest. I've only worked. This is my fourth professional company I've worked at since college. [36:30] JD: You're not a hopper around. [36:31] Speaker E: No. So if anything, I, you know, I, I don't want to replicate another 21 years possibly anywhere. But it was a great run at Human interest. I came in at Human interest was probably at about the same spot 401 goes at. [36:43] JD: Okay. [36:44] Speaker E: And you know, one of the things that you kind of look at in a lot of the I think the fintechs is, you know, they're really like these robo advisors and then they kind of become record keepers, meaning their original [36:55] JD: goal was to manage money B338, make [36:59] Speaker E: the revenue that way. I think they kind of look at it as like, what's really difficult is the fees for the, for the investments. It's really hard. So I think a lot of them think they're solving that whole. [37:09] JD: Making it simple. [37:10] Justin: Yeah. [37:11] Speaker E: And they're. But through the. It's the robo advising. But you know, the problem with 401k is it's such a payroll driven product. So, you know, a conversation I had was actually with a bunch of payroll companies, if you can imagine. I love this guy already. [37:22] Justin: I love you already. [37:23] Speaker E: Thank you. And I love you. [37:25] Justin: Appreciate that. [37:25] Speaker E: Yeah, Be, be gentle. This whole profitability thing, scary. I'm already worried. But you've heard of into it, right? I have, yeah. Very micro pricing, high profit. So the cool thing is. Absolutely, yeah. [37:40] JD: So anyway, it's payroll driven. [37:41] Speaker E: So. So we, you know, like I grew up with the guys that founded Paylo. [37:46] JD: Okay. [37:46] Speaker E: So I went to a lot of the payroll companies after I left paycheck. So, hey, why don't you guys start your own 401k? Look at how well we did. And everyone's like, oh my God. They were like, that's scary. [37:55] JD: That is a funny point that we've never really talked about on this show. We always see it the other way. You would think a company like Paylocity, who's big and successful, would look at actual record and paychecks and be like, we should follow what they're doing. But none of them do really. [38:15] Speaker E: And I was really untalented at pitching that to a lot of payroll companies. So no one did that. [38:19] JD: Yeah. [38:19] Speaker E: So, you know, it was great. I've. I cut my career in the Bay Area where I during the dot com days. So I saw a lot of those startups, a lot of the tech things go giants. So I was go Cardinals. Actually [38:32] Chad: made heaven. Here we go. [38:34] Speaker E: St. Louis Cardinals. [38:35] JD: Sorry. [38:36] Speaker E: And blues. But hockey. [38:39] Mark: That's right. [38:40] Speaker E: I forgot. [38:40] Mark: Headbutt guy. [38:41] Speaker E: Yeah, Headbutt guy. Yeah, sorry about that. Anyway, I lost my train of thought. [38:45] JD: Payroll. You're just saying. [38:49] Speaker E: So, you know, you start looking at it. It's just kind of scary to them all. I found human interest because, you know, they had gone through some struggles and I wanted to work for a Bay Area company. I had always seen these fintechs. And you know, I came in and you know, I asked them if they needed some help with the advisor channel. Like we got that handled. And I'm like, well, I mean that, that's cool. I only did like 8 billion of assets and 4 years of paychecks doing the large market thing. So I'm like, I think I know advisors pretty well, but they're like, hey, can you help us with some payroll companies? They're like, can you help us get an integration with Paylocity? And I had actually had sent in a note to the vc. [39:29] JD: Yeah, you got a drink for me? [39:30] Speaker E: Ted had ground rules. [39:32] JD: Not yours. It's really tast would be venture capitalists. Yeah. [39:38] Speaker E: And I, I was like, hey, why don't, why don't you just go? I don't. I think we're looking at like some benefit brokers. They're looking at some different avenues. And I was like, why don't you just go and basically go to some other payroll companies and, and do the paychecks thing. [39:51] Mark: Be. [39:52] Speaker E: Be like a retirement plan that can integrate with another platform. And like if you think about a payroll company, they're going to be running into paychecks and ADP clients all the time. It's just, in fact, we start looking at it. [40:05] JD: You got a drink for the what? [40:07] Speaker E: I didn't say automatic. No, I'm not going to do that. I refuse to. Because that is actually in their logo. If I, I have seen the bylaws on this. If it's in the logo, I don't have to drink. No, you guys have to drink for trying to make me drink. [40:23] JD: Turn off the lights. [40:24] Justin: Turn off the lights right now. [40:25] JD: Shut it down. Close the laptop. [40:27] Speaker E: Justin, headphone definitely. And you guys are drinking. There you go. [40:33] Justin: We constantly will. But you got a penalty drink. [40:37] JD: They're going to light you up automatically. [40:39] Speaker E: I'm not going to promote them this much. [40:41] JD: I think that that's really cool and very interesting. But when you, when that's your job and you're going to represent a company and go to a payroll vendor like paylocity, it's not just a handshake and hey, let's do this deal. Like we could be your 401k provider. And they say yes. And maybe it even is a handshake and a sign of a contract or whatever. I'm guessing you have a couple goals. One is to be like their only partner or at least the one that every new client they're bringing on. You want them to make sure that you're their partner for the 401k. And then what does that look like in terms of after the handshake? There's got to be a lot of work still to be done to make this shit actually happen. [41:25] Justin: Actually build that integration with the sales team. [41:30] Speaker E: I don't think any, I don't believe that any company should just be referring one 401k company. I think there's a huge fiduciary thing. I think you're also only as good as like your last deduction and your last investment. So there's just some realities that I think you need to have multiple partners. So all the partners that I signed over with my former company, I didn't expect to have an exclusive. First off, you think about it as you grow, you're going to want those efficiencies. You can't really be a fintech and have efficiencies without these integrations. But remember a fintech like 401 go. Like we're built to integrate. They've already integrated all of our systems. That's why it'll be profitable. It's, it's a. You just got to get out of the paradigm of kind of the world that we were out of and. Or that we all kind of came out of which is a little bit, I wouldn't say like it's just not as tech forward possible. [42:19] JD: Antiquated. [42:20] Speaker E: Yeah. So you know, when you start looking at it, the conversation's just like, you know, what do you do when you go against like a paychecks or adp, they have. Let me finish my thought before I get ready but I mean if you look at how much of the micro market they really handle. If you run into a client, let's say I'm Coastal Payroll, I run into a paycheck. Yep. 25 employees. You know, it has a 401k. It's probably going to be most likely 80% of the time with paychecks or with ADP. So, you know, they need to find a way to solve for it. So one of the issues like a lot of the payroll companies have is that, you know, they take a client, they still have a termination fee and they basically have taken a client, they've lost all their integration, they then are doing it manually. It's very expensive. And apparel companies didn't solve for that issue. Right. It's like a payroll rep just trying to get that sale and run off. So really, you know what I think 401 go and some of the other fintechs are able to do is provide that, you know, inexpensive 401k that paychecks and ADP I think really made famous. [43:25] Justin: Go ahead. [43:25] Speaker E: And then, you know, really provide that service. And you know, even, even Paychecks and ADP have not been able to. [43:31] JD: I'll drink for that one. [43:33] Speaker E: Thank you. I'm just gonna keep going until you guys. [43:37] JD: We're getting played right now. [43:38] Speaker E: Yeah, we are just about to say that. Yes. [43:40] JD: I sat in my conference room with ADP20. Oh, jeez, 20 years ago and had that same pitch to me as a third party administrator, basically saying, who's your competition? Paychecks and automatic data, whatever. Right. And they're saying to me and to my industry, I would say, hey, let's start to get record keepers and payroll providers together so we can combat against these two behemoths. And people talked about it, we had meetings about it, we even went on joint meetings together and we've never came to fruition. So I'm just trying to figure out like how all of a sudden y' all are cracking the code with it and our whole industry missed the boat. [44:29] Speaker E: Like, you know, it's, I think sometimes being the right place at the right time. But you know, I have this kind of weird background where I've done a lot of 401k and I've done a lot of payroll. And if you look at how many companies, first off, I don't think 20 years ago it was necessarily thought of as tech, wasn't ready. And I don't think it was thought of even as like them being truly leaders in number of plans. They were still growing, you know, now it's my last Quota, you know, at Paychex was like, 14,400. [44:58] JD: Everyone knows we talked about this show a lot. They. They were 1 and 2 for new plan sold for years and years and years and years. [45:06] Speaker E: You know, so, yeah, I mean, it's. I mean, it's. It really brought it down, but I think so. I have a lot of relationships with a lot of these payroll companies. I grew up with a lot of them. A lot of them came out of a automatic data processing or paychecks. [45:17] JD: Thank you. [45:20] Justin: He learns. [45:23] JD: I want to jump to your pessimism here. VO is a big company. Empower is a big company. They have payroll partners that they integrate with and have 360, you know, functions. So why the is guideline beating them at this? [45:40] Justin: It seems very clear to me the answer to that question, which is. And I think this is what you were trying to get Ted to say in the past. We're trying to ask the salespeople to talk about 401k at a payroll company. Hey, you're with Paylocity. Talk about 401k and refer the business over. [46:00] JD: I want you to see if Chad's right. So pay attention. [46:03] Justin: And so what I think you all have done, and I'll say you all at four, long ago and in prior relationships at your prior company, is that you've looked at it and said, we're not going to rely on the salespeople to talk about 401k. We're going to blend this right into their process of onboarding a payroll client. [46:19] JD: And. [46:19] Justin: And it will be asked, and it will be addressed, and it will be talked about, not necessarily by the salesperson, but by the process of onboarding. [46:25] JD: You're saying when a new client onboards a Paylocity someone. [46:29] Justin: No, Paylocity is not a good example. They're not doing it. [46:31] Speaker E: No, it's not. It's not. Because their whole goal is to have an open platform so that if you want to see. So Paychex is a closed environment, which, you know, ADPs marketplace, they're an open environment. [46:42] JD: I'll drink for an hour. [46:43] Speaker E: Yeah, please drink to that, jd. You guys keep setting me up with this ADP stuff. So, I mean, I. [46:49] Justin: He's good and he's terrible. [46:50] Chad: This is like Ross year two all over again. [46:52] Speaker E: Hey, it took me, like, 25 years to get on this. You expect me to be this good on the first one? I've just been like, please, put me on. [47:02] JD: Take a sip. You won't die. [47:03] Justin: It's a Chicago delicacy. It's Malort. [47:06] JD: Oh, God. Don't go anymore, okay? [47:08] Justin: It gets worse. [47:09] Mark: It really does. [47:13] JD: You're scary. Let's get back to the lab. [47:17] Justin: So let me rephrase your statement. [47:19] JD: True, if they don't all have exclusives, [47:23] Justin: I don't think you need exclusives. Although the ones we've talked about have kind of had exclusives. But what you need is right now, it needs to be part of the process. [47:33] Speaker E: Why not? [47:33] Chad: It's. [47:34] Mark: I just don't focus. Ever. [47:35] Speaker E: Oh, gotcha. Well, that's good then, right? [47:37] Justin: The past. Correct me if I'm wrong. The past. And the. The Paylocity world is to say, if you're a 401k provider, we want that sales agent at Paylocity to talk about 401k. And then me at Voya or anywhere else that integrates is going to say we want the opportunity to then come in and talk to them about setting up. [47:54] Speaker E: So I don't know if Paylocity, first off, they, they are open. [47:58] JD: Use another example, then don't use them. [48:00] Speaker E: So what I would say is down market. And so let's talk about like a coastal payroll. You look at all I solves. You know, there are 2,000 payroll companies out in America, and I probably met with 800 of them in the last four years. A lot of them are underserved. Advisors, don't want their clients. Then you have the state mandates that are coming out. So, like, they're forced to do something. And boy, if you're a payroll company, you know what you don't want, there's a client on the state mandate, because those are great integrations. Oh, and by the way, what if you have to have someone, you have five employees now in New York, 10 in California. You have like three or four different state plans. So I think there's this huge convergence where actually now other payroll companies are thinking like, oh, my God, what do I do? The other thing is they have to solve if they're taking someone from another payroll company that offers their own 401k. So what I would say is Paylocity, they're. They're great partners with a lot of different advisors. They're a great partner with a lot of different platforms. However, if you're going to work with them, they have field reps and whoever can go and do combat with their field reps, and they have an opportunity. [48:59] Justin: That is my point, you know, and [49:00] Speaker E: where they probably want to bring in someone is like when they're going to go against a competitor that has an incumbent 401k with that other hand to [49:07] JD: hand combat is not how they got paid for the next five years. [49:11] Speaker E: No, but really. [49:12] JD: Right. [49:12] Speaker E: Because you know what's great, what was bad about COVID is we had to use Zoom. What was great about COVID is we had Zoom. I used to like, it was like get an appointment and my old boss Rakesh and I'd be like, we're getting on the next plane. [49:23] JD: Yeah, right. [49:24] Speaker E: Literally at. To start our relationships. Suddenly I could do a whole relationship and have a signed partner agreement just doing a Zoom like this. So, you know, it starts becoming scalable. So what you'll see at like 401 go. You know, people already understand and I think small business owners are sick of like a tribe of people coming in to sell them a small business product. So it's actually a great time. Like everyone understands insurance. Everyone gets a concept. They should have a retirement plan. What they want is somebody who can make it easy, simple, and you know, and then we can give them. [49:54] JD: Yeah, well, simple, low cost. [49:57] Justin: I still don't feel like it's been answered. So let me rephrase a little bit. [50:00] Mark: How much time? [50:01] Speaker E: Just a position. [50:02] Justin: If you're trying to get a certified public accountant and, and they're doing tax filings and you want them to refer all their business to you, you can't rely on the person doing the tax filing to talk to the client about their 401k. What you need to do is have them in their process of collecting information, ask the question, and as soon as the client says, yes, I have a 401k, while you're doing the tax filing for that business, the next question is, did you know we have an integrated relationship with 401 go. And you should spend some time looking at our solution. It has to be built into the process to have the success that human interests and these other groups have had. [50:37] Mark: Yeah. [50:37] Justin: And that's the difference. It is no longer hand to hand combat when it comes to payroll relationships, in my opinion. [50:42] JD: I don't know, Chad. It's gotta be integrated. Remember the exclusivity there though. What if they have relationships with five foreign? [50:48] Justin: I'm not denying that, but the goal would be to have that integration. Which was JD was trying to get you to answer is when you got in that relationship and you had that handshake, it wasn't just a, okay, I'll see you later. Sales folks. Make sure you talk about us at human interest. It was, no, we're gonna build this directly into your process so that every Time it's asked, the question is asked and conversation starts from it. I don't think the sales guys aren't going to ask. [51:11] Speaker E: Yeah, well I think part of that is they're being forced to ask and you know, you start looking at it. I think I agree with you. They have to ask. But I think it's not even just in their process. It's just, it just starts coming up. You have a lot of trusted business advisors. That account is going to be like, hey Ted, I heard something about this, like Cal Savers, what do I do? Like oh, here, call 401go. [51:31] JD: I'm also guessing your goal is higher level too, to make real big numbers and make it scalable. You just have to convince that payroll company that will be in the best interest of them long term and short term to have a 401k solution. It'll make their clients stickier, they can keep them longer, they can compete better against the big one. And so if the company believes in that as one of their main virtues, then they're going to push it and do it. And I'm imagining you need to convince them of that and continue to convince them of that. [52:02] Speaker E: Well, I think that's what we, you know, did at my former place. You know, you look at I think 401 go, you know, one of the things we really want to do is be able to introduce kind of like an ecosystem of the financial advisor with those local payroll people. So if you're like a MassPayout Massachusetts, you know, they have some local advisors that we work with that can refer them. Everyone's building these local networks. So the secret of this is how do you build just like what you guys do, build these local referral networks and because we're so advisor friendly and we're really advisor first so you know, and then I think it's like we can have relationship with you guys. There's things that you guys let's say will do a lot differently than us. You might even want to look at our platforms. Cool thing about four one Go is, you know, let's say it's a large record keeper that's up market. An insurance company, they don't have a good solution down market. I can instantly give them a product right now and just have like Joe's insurance company powered by Go. So you know there's a lot of cool things within our table. [52:57] JD: Yeah, we need to keep our eyes wide open for a lot of this stuff. More and more I don't believe this to be true but more and more. I think it's possible that there could be a death to the legacy record keeper at some point if you guys can continue to innovate and create new things. And they're kind of, as Aaron Shum puts it, they're the big ocean liner that can't kind of change direction. Which. [53:20] Mark: Or the legacy. This buys this. [53:24] JD: Well, that is kind of interesting too. We do always have that question. I asked it. But maybe that's what you're saying. It hasn't been answered. Is that I always ask like, why wouldn't those big deep pocketed people just do what y' all are doing? [53:38] Speaker E: Because the investment and the time. So you know what. [53:41] JD: What they don't want to get off their current platforms. [53:43] Speaker E: What's. They don't even. Those tech people are not tech people. I've worked like. They're just not like tech forward. So. [53:50] JD: And you're right. Unwinding it would be a nightmare. [53:52] Speaker E: The difference with I think Dan, you know who was just on our CEO and Nate Beck. What is. [53:59] JD: Yes, Chief Executive officer. [54:05] Speaker E: So the CEO of 401. Go. [54:07] JD: Jesus. [54:08] Speaker E: You guys got to drink down. [54:09] JD: You're supposed to drink every time you say it. [54:12] Speaker E: I did not sign in my waiver. In my waiver, it said I could use. [54:16] JD: Keep going. [54:16] Chad: Sign a waiver. [54:17] Speaker E: Good point. Writer. Sorry, Writer. Not Weaver. My writer says that I also wanted my jelly beans. So I'm a little upset. [54:25] JD: I al. I do understand that unwinding off of their legacy systems. That makes no sense. Here's. [54:31] Speaker E: Here's the thing, Dan. You know, like I think I know you guys hit on profitability quite a bit. One of the things that's really unique is Dan put his own money in and for like basically two years he bankrolled his brother and another engineer to figure this out and do it from scratch. Like so it's. We're not really. Yeah. We're not really VC backed is what I would say venture capital back. Because I think that's a misnomer. This whole thing was really funded as like a small business. This data small business just grew. And I've told Dan that, I mean this is a viable thing. Like I don't have to go add, you know, 20 wholesalers tomorrow as soon as we get funding. I'd like to but you know, there's a lot of ways it's profitable enough to just keep running. [55:12] JD: I think you guys did 2000 in a short period of time is impressive. And you know me, I'm the little business guy. I would love the Idea of just a smaller grown from the ground on its own. But I also understand, you know, they [55:26] Speaker E: have like 24 1k people there. Like what we would think is traditional. They don't have it. I mean they did it through like a good product. Dan and the founders being very honest and just trying to help them. They had their, their last company was the first company to use 401 GO. So I really think we're getting like typecast as, like as venture capital back. We're going to go get venture capital back. But you know, even if you look [55:50] JD: at level 200 million of money invested, [55:53] Speaker E: we don't, we don't want to have 200 million because otherwise there's dilution and like Ted would like to eventually not continue to work. I've worked pretty hard. So you know, I think this is a. It's all about the technology though. [56:03] JD: Oh, God bless you dude. I hope it works. I just, I still at this point to go back to the profitability, I, you heard my numbers where I said you're at 2000 and you're not fucking profitable and you employed too many people. That's okay. That's an investment for the future. But if you can grow that to 10,000 based on what you're doing right now, based on what I know and based on letting you have a little magical box of technology that works and is scalable, you're still not fucking profitable. So then you got to get to 20,000 or something or 30,000 and at that point you might, you might like eek a profit. But so the what, it's not enough money? Like I just don't think you're charging enough for what you're doing. Bottom line, period. [56:48] Speaker E: There's, you know what, maybe this is the best time to be signing up for four one go. [56:53] JD: Well, [56:56] Speaker E: I think, Well, I don't think. I think there's. You can be so low that you almost look cheap instead of inexpensive. I think we can be very inexpensive. And the other ones, like I said, you are investor deck. If you'd like to see it, like, there's a path to profitability. Venture capitalists aren't actually tools. [57:12] JD: There's not a path to profitability at 1200 per client. [57:15] Justin: Really, unless there's another level of servicing that's going to come out of it. [57:19] Speaker E: Take a look though, at Intuit. Like I'm a shareholder of Intuit. Like they are these micro quickbooks. Like look at that thing. [57:26] JD: You know, people, do you guys have 50 employees right now? [57:29] Speaker E: I don't think I would get so wrapped up in, like, whether or not we have 50 or five employees. Because the one thing is, like, if you start looking at how much scale, [57:37] JD: you know, what I love about this is fine. What I love about this is. And this is why I'm not in your world, which is fine. I'm admitting my own deficiencies here is to me, there's certain logical physics, like you drop an apple and a fall and hits the ground. When you run a business, your overhead has to be a certain amount. You employ a certain amount of people to a certain amount of revenue to provide a certain amount of quality service to your clients. And all those things have to kind of mesh together like, like pieces on a puzzle. And when the math doesn't add up at one plus one equals six, you can't sit there and tell me that it's okay. How about you go long term on me and start to cloud borders? [58:15] Speaker E: You look at a retention rate, lifetime value of a client. You also know that if you have a client and they're with a payroll company, it's going to. I mean, it's the most profitable product that probably one of the other publicly traded payroll companies has is a client that has 401k and payroll, it stays forever. I think you start looking at you also making money. But the 401k is the most profitable product at one of those two big companies we keep referring to. [58:39] JD: They're not charging a thousand bucks. [58:40] Speaker E: Well, I understand that, but it's still there. And by the way, there's a lot less manual work with us. I would get so wrapped up. We'll see on what happens. The future will hold. [58:50] JD: But I want to sell my bankers that if I said wrapped up, I know my accounts are negative. Wrapped up in that four and a [58:56] Speaker E: half years ago or four years ago. And I said, here's what we're going to do at human interest. [59:00] JD: Yeah. [59:01] Speaker E: And then 649 signed payroll partnerships later and over 200 integrations and it's $115 million. You know, you would have said, like, that's not even going to happen. [59:09] JD: I'm going to jump on your bandwagon there, but I'm not going to use that example because no offense, human interest, but I think they're a little over their skis. And I'm not. I don't like their business model right now from the financial metrics either. Guideline proved me fucking wrong, okay? Guideline proved me wrong. Human interest, the amount of money they're spending, the amount of people they have the new offices that are opening and I'm not in the money they owe back to their investors. That to me is not, they have not cracked the credit code on success yet. You can call it evaluation and claim that you're all going to get some kind of money. That doesn't mean that that's actually happened. That's, that's, that's invisible. [59:48] Speaker E: And I'm sure out of everyone here, I'm probably the most invested in wanting them to do well. No, I mean, listen, stock. [59:55] JD: I'm. [59:57] Speaker E: Listen. No, I, I totally agree. It's. You don't know. I mean it's, there's a lot of risk in this. There's risk me going to 401 go. I, I just see the platform and I love this industry. Like I really love trying to help people save for retirement. I'm not in this for like a big valuation. I'm not in this for really anything more than like making sure that Americans have the opportunity to save for retirement. You know, my, my kids, you know, benefit from my mom's 401k after she passed away with the RMDs. Like my mom worked for a required minimum. But I mean my, my mom, June Hasee was a accounting clerk. Made no more than $21,000 a year. And you know, that insurance company she worked for never gave her really a raise, which always made me angry. But they did give her a 401k plan. And when she passed away she's like Teddy, I wish I had more money to leave. And she was really sad. And I'm like, are you kidding me? You're leaving life, leaving some money to your kids. You supported yourself so we didn't have to, you know, we weren't in a spot where we had to, you know, basically take care of you. And I think everyone wants to be self reliant, right? And she ended up passing away with still $200,000. I mean this little account of clerk St. Louis, Missouri. God bless St. Louis Blues and Cardinals, God's teams. But you know, let me also Praise [1:01:10] JD: you and 401go and even your old employer. What they are doing in a good way is they did go down market. So they weren't kidding. They helped small companies start up new plans. They actually did a dent on the coverage gap and continued to do a dent on the coverage gap and they need to be a part of that paychecks. [1:01:30] Speaker E: Did you just remember the amount of times. [1:01:31] JD: I like that you said that earlier. Yeah. [1:01:33] Speaker E: Thank you. I remember when, because I got to Work for the founder. Founders of Paychex, which is super. I mean, great. Tom Galisano and Gene Polissini. I remember they're talking about coming out of like it was like Morgan Stanley or someone. And they pitched this idea of having a small market 401k plan. And they're like, can't be done. And you know, literally my boss at the time, Tony Tortorella and Gene Polissini basically on their way down. He's like straight Italian names. It is Rochester. So they were. They literally like, so we're gonna do it, right? Because they were basically like, never will happen. You can't do it. And you know what that was the birth of 401k is someone saying they couldn't do it. You guys remember, you guys, I mean, a little younger than me, maybe you guys Remember back to 2000, but do you remember webvan? You guys remember that it was a service out of the Bay Area during the dot com days. That was a van that you could buy online groceries and it would deliver [1:02:26] JD: it to your kaput. Right? [1:02:28] Speaker E: Yeah. Quickly they put in like 500 million nothing. [1:02:31] Mark: By the way, we've always been taught if a van's giving things out, do [1:02:34] Justin: not trust [1:02:36] Mark: from the start. [1:02:38] Speaker E: Good point. However, put it in a. You Fast forward like 15, 15, 15. Get a little Silence of the Lambs there. Yeah, it rubs the lotion. Yeah. You don't go to the van. However, now we have vans dropping off crap every day. It's called Amazon. Right. It's just before its time. So I think like this whole industry is just like kind of some things have been before its time. I think technology and there are very few, I think technology companies that are saying they're fintechs. I just spent time because I left on great terms with my former employer. I met with every fintech. I really wanted to see like what was out there in the industry. And I chose 401. Go over everyone else because they're kind of not last to the market, but they came out just late enough. So it's like, it's like a Prius from like the other guys. Remember that movie? And like this is like a Model Y Tesla that I have. Like this shit works. And so what I think you have is the opportunity for 401 go to really take it to the next level. [1:03:37] Mark: Also probably give you like the biggest offer too. Like that. [1:03:40] Speaker E: No, this is not the biggest offer. This was not a zero. [1:03:43] Mark: You're like, I'll sell it. [1:03:44] Speaker E: No, I had three offers and I chose 401. Go. [1:03:46] JD: Well, I just want to be clear. I've said many things on this show that turned out to be inaccurate and not true. So every show I could have this totally wrong that we'll still, still continue to see how this plays out to these disruptors and we wish for and go the best of luck. We do. And, and human interest too, man. I've been. [1:04:06] Speaker E: I think, I think we need right everyone to do be successful. There's so much opportunity out there. You know, if, if everyone like we don't need one to go down in scandal. We don't need one to go. We don't need anyone to go down because like they have the valuations. We need everyone to do well. [1:04:22] JD: But can I be a little bit negative here? I apologize. What's not good is that I'm going to end it on a positive. But no, no, no. I have to say this very. Listen, what's not good is that if, if you put out a product that's not profitable and I'm not just price for the, for what it's bringing to the market low. What you're doing is you're setting up this industry to push their prices, diminishing the value and your price isn't even profitable yet. So if that company, and I'm saying this is forum go or human interest or whatever. But if, if that company then goes under because the business model was wrong, because they chose a van instead of a Camaro, or they chose too low a fees to actually float the boat, they didn't do a good thing. They did a bad thing for the industry as a whole because you're squeezing everyone and then making it hurt all across all these sponsor tables. All these things that by the way you say there was nothing small plan solutions. My company is approaching 50 years in business at a point. We've been doing small business for five decades, dude. This isn't new. We've been helping small companies start up four 1k plans forever. [1:05:32] Speaker E: But we have four and a half million small businesses that aren't serviced by you for 50 years. [1:05:37] JD: Another debate, this whole debate. Some of those come back. [1:05:40] Speaker E: Do I get to come back? [1:05:41] JD: Sure. I hate to say this, I know it's controversial. Some of those companies just don't need a 401k. They're not big enough for it. They don't solo key. [1:05:50] Speaker E: That's great for them. [1:05:51] JD: Maybe, maybe get an ira. We're gonna play a game. We're gonna play the totally original no for dope game. It's gonna take like 10 seconds. [1:05:58] Justin: 10 seconds. [1:06:00] Speaker E: 10 seconds. [1:06:00] JD: You ready, Ted, what are we doing? Graphics happening right now. [1:06:06] Justin: Katie's gonna ask you some questions. [1:06:08] Mark: Oh, these are fun. [1:06:14] JD: I'll get a cue. Okay. Best game ever. I'm gonna ask you a question. You let me know. Thumbs up or thumbs down? Are you dope with it or you. Nope on it. And then tell me why. Today we're gonna do one question and one question only. Oh, it's a controversial one. [1:06:29] Chad: Oh, boy. [1:06:29] JD: Are you dope or. Nope. On seahorses. [1:06:32] Justin: Oh, geez. [1:06:35] Mark: I have another question about the seahorses. [1:06:37] Speaker E: Then I'm dope. [1:06:38] JD: You're dope? [1:06:39] Mark: Yeah. [1:06:39] JD: Why? [1:06:41] Speaker E: I mean, I think what they have to do out there in the wilderness in the wild, I think with global warming, the little plankton that are swimming around, those little guys, those little seahorses, those. Those little Are just going, yeah. And I'm just so proud of them. I'm so proud of them. [1:06:57] JD: Even though they're a horse, they don't have, like, legs. So. Yeah. [1:07:00] Speaker E: I mean, you see them going up, [1:07:01] JD: up, up, but they don't even really have fit. They're just kind of viral tail. [1:07:05] Mark: What the is that all about? [1:07:07] Speaker E: Can you. Well, I'm not like, the evolutionary scientist here, but I mean, like, I'm just proud of them. Right? Look. And they went from the sea, and now, like, they're big horses. You got, like, mustangs, you got quarter horses, you got Kentucky Derby, how they [1:07:19] Chad: came out of the water. [1:07:21] Speaker E: Tell you what I'm so proud of. [1:07:22] JD: Those guys are so great. I think we need to. [1:07:27] Chad: We don't need to ask any of us anymore. [1:07:28] JD: It's been. It's been fun. Thank you for being on our show. [1:07:32] Speaker E: Thanks for having me, guys. [1:07:33] JD: Thank you to wel. Work up your rider game, and thanks to all you for tuning in. [1:07:38] Speaker E: Love you. [1:07:39] Mark: To the. [1:07:39] Speaker E: To the. [1:07:39] Mark: To the what? [1:07:40] JD: To the sea. We love you. [1:07:41] Speaker E: Appreciate it. [1:07:42] Justin: Thank you. [1:07:42] Speaker E: To seahorses. [1:07:43] Mark: For seahorses, Sea animals, we are the retireholics. [1:07:48] JD: Changing retire plan. Industry war. Beard.