Transcript of From Wall Street to Homelessness: How He Rebuilt Everything & Deployed $250M | Ep 308 with Frank Scarso Founder of Avanza Capital Holdings

So Frank, man, I read your story and it's pretty incredible. And it even reminded me of some of the things that happened to me in my life. And I know that it seems like entrepreneurs who've really gone through the mud are the ones that persevere and become the most successful. And I know you spent two decades on Wall Street, and then you lost everything, and that was a rock moment for you. What made you decide to rebuild and get up? What was that motivation?

For me, the motivation was I just wanted to go home.

I have been separated from my wife and children for almost three years, and I was estranged from them. I didn't get a chance to see my kids for 18 months. Really, I just wanted to go home, whatever it took, however long it took. I just wanted to fix it. That was my driving force. If I was a single guy I didn't have kids. Probably, we would be talking about a completely different story here. But given the fact that I was responsible for three little children, and then plus my wife, gave me no choice but to fix what I broke.

The motivations, right? Family, I think, is always a great motivator for you to want to better yourself. What made you say that entrepreneurship, being a founder, was the right path versus you getting a job?

I've always been like like a team leader.

I've always worked for myself, and I just figured that I'd have to find a new way to make a living. I'd have to leave on Wall Street after 21 years. This business fell into my lap, and I just didn't want to work for somebody and I just wanted to move forward and have my own company.

Started out little drips and drabs and then snowballed over the last nine years.

When you look at the industries and the problems that you can solve, I think it's always fascinating to see why somebody said, Oh, this is the problem that needs to be solved. So what was the draw for you that was this whole thing with small businesses and funding. What was the draw where you said, Okay, This is the problem, and I want to solve this problem.

Coming from a Wall Street background, it's been always customer service and service-oriented.

And in the MCA space, customer service is really not something that's out there. So I brought a little bit of a human touch to this industry and service the merchants and the brokers and hold everybody's hand when hands need to be held and giving them that little extra attention. There's work phenomenal for us. Just be the human being and listen to people. When a merchant is having a problem, making payments, you have to understand life happens and walking them through situations rather than Pushing them through is a lot easier to deal with.

I imagine that most businesses, the funding side is the make or break. If they're not selling and making revenue or they don't have the money to buy equipment or invest in something, then the business just goes out. I think it's like 90% of businesses don't even last past five years or something similar to that stat. What does every business owner do you needs to know? What could you teach them right now around this whole funding? Because I think most people I know, they have no clue about funding, and it's very a complex situation. It's a challenge for them to the point where I think they just say, I don't even want to do it. I'm not going to do it. But then their business is hugely at risk.

The piece of advice that I can give to the merchants is try to pinch your pennies where you can because it all adds up at the end of the day.

And The MCA space, it's expensive money. So I tried to believe it or not, I try to talk merchants out of it unless they really need the money. Then you take it and you use it. Unfortunately, a lot of people abuse the merchant cash advance base and just take multiple, multiple advances, one on top of another. And they get stuck in that gerble wheel, which is what you want to avoid. So I tried to bring that out and make them understand about the risks of dealing the merchant cash advance space. It's important that they understand the risks as well as the benefits. There have been numerous merchants over the years that have benefited tremendously from borrowing and have grown the business exponentially. But caution is a word of advice.

Where in their business journey are people normally looking for funding? All aspects of where they're at, we don't really deal with startup companies.

We like to see at least a year or two under their belt. But we have companies that have been around for 30 years. We have doctors offices. We have businesses that have been around for 18 months. So we service all different aspects.

It's not just one niche market. We credit services of as many people as possible.

I know you deployed over $250 million to businesses. And many times, I'm guessing, traditional banks just are not able... They're not touching these companies. Which is sad because I think it's like half of the jobs that exist in the US are for what they would consider to be a small business, which I'm guessing most of these banks are not servicing these people, but they need it probably more than these other larger corporations. So what do you see in these businesses that banks miss, and why are you betting on them?

Well, we see the opportunity to help a niche market. Unfortunately, like you were saying, banks are really not looking to bet on small businesses. They'd rather bet on the bigger corporations and do big servicing of bet versus servicing small businesses, which are the backbone of this country. Like you said, the statistic is pretty high out there. I think it's like 40% of the workforce is in this small business somehow, one way or another. If they don't get the capital when the capital is needed, it's just inevitable that they're all going to fail. Unfortunately, no one's out there to help them. You go to a bank, it takes three months just to get the client, where we can get your funding done within a couple of hours, having the money in your account. But we pride ourselves in speed, and that's what differentiates us from some of the other lenders out there.

Hey, there's always different spaces and niches and markets for people. I'm glad that you're helping to solve a problem for these businesses just because I know how it is. You put your heart and soul into something, and many times you're making less, then you could just go work at a basic job with the hopes that it grows into something. When you say it out loud, it almost sounds crazy to be an entrepreneur. You almost are better off getting a job somewhere and you'll make more take-home money. I'm glad that you're helping those people. Let's talk about, I know your father has instilled some things in you, and he told you something, If you're going to go do something, do it right and treat it like it's your own. I think that's so fascinating how you've taken what you've done with that. Tell me about these lessons that you've learned from others.

Lessons I learned from my father, he always taught me to have pride in everything that we do, whether you're working in a bagel store as a kid or whether you're working on Wall Street as a young adult, or whether you're showing shoes, whatever you do, just be proud. Just be proud, do it correct or don't do it at all. And that's something that stuck with me throughout my lifetime. My father was a big influence in my life, and still to this day, I think about him every day. And what he taught me was a good heart in person, and he's missed. But his legacy is his children and his grandchildren, and I still listen to those words he said to me a long time ago.

When you think about mentorship, do you find that for yourself, have you used people as mentors, or do people come to you for any mentorship, or do you find that business is a lonely place where you just got to figure it out as you go?

I think I'm a big believer in mentorship. I always, over the years, have taken on a pet project, the younger guys, where I've directed them and I like sidekicks or pertejés, whichever one you want to call it. I think that's important. I was always taught on Wall Street as we were growing up in the financial aspect is you want to surround yourself with people that are smarter than you so that you can learn from them. That's a true fact. I mentor and I help people for free. I don't want anything for it. Just it helps me give back a little bit something to the world. I'm very grateful for the position I'm in, especially after everything I've been through. I'm a very big believer in giving back and helping out those that need to help.

It's wild when I talk to people and they say, I notice they hire people, and they're almost afraid to have people around them that are smarter than them because they might become a competitor, but I'm thinking the same way like you. You only grow and learn if you have people that are around you that are smarter, knowing that the people that you lead, specifically, will go on to do great things. Let's talk about leadership for you. Thinking back to when you were in Wall Street, more a corporate environment, what type of leader were you then, compared to the leader that you are now, having over eight years of sobriety, the ups and downs and downs and ups that you've gone through, what's changed in your leadership style?

Well, I used to be a lot rougher, guns blazing, always pushing the envelope That's what we were taught in Wall Street.

It's a young man's game. But my style has changed. I'm a little bit more of embracing as a boss and understanding that employees do have issues and not having fear of anything because going through what I went through was probably the worst thing that someone can endure. And if I can get through that and I can get through addiction, there's nothing that I can't get through. Everything else will fall into place as long as you just push forward and work hard. But hard work is something that I believe in for my employees, and I do it firsthand. I'm a full hands-on owner. I don't just sit here and delegate. I work all aspects of this business, wherever health is needed, I will always jump in and help my employees.

Yeah, and thank you for sharing that, being vulnerable. It's amazing how not only time changes us, but the experiences that we have completely changed. Thinking about how I am today might have been the complete opposite as I was 20 years ago. When you're looking at the industry itself, because I know the private credit is just insane. It's projected to hit over $2 trillion dollars in the near future. What do you think is driving this shift in your industry away from traditional banking? And do you think there's still going to be or maybe a new opportunity will arise?

Well, I think what's driving the shift is the actual banks themselves.

Considering small businesses unbankable and leaving no choice but for them to go to alternative financing. And that's why the growth is just going to be tremendous. It's growing at a faster pace, I think, than the 2. 8 trillion that's expected over the next couple of years or so. I think that that market grows. You've seen a lot of institutional money starting to pour into this side of the business because there's money in lending, and institutions know that. Banks know that. Unfortunately, they don't want to take shots on these small businesses, so they'll let the hedge funds that manage risk a lot better than a bank would. Take that role and run with it, and that's what we've been seeing.

Pretty much, the banks have cannibalized themselves, so to speak.

There's been a lot of interesting things with banks. I was just looking at Bitcoin like plummeting right now, going up. The finance world is fascinating, and I don't understand most of it, but I'm always interested to hear what's happening. When you look at growing and scaling your company, what has been something that has been critical for you as you've grown and scaled past certain milestones?

One of the most important things, I think for me, has been talent.

The talent pool up here in New York is a little bit more competitive than it is in some of the other smaller markets like down south. I think having the office in North Carolina and Florida, where we really got lucky, we were able to hire some really good talent. I think that changed the game a little bit. Up here, you have five people chasing that one job, where down south or out in the Midwest, in some of the smallest cities, you find talent that is still looking for a job, and there's still some good talent up to hire.

We're going to look into expanding to the south and into the Midwest, hopefully in the next couple of years.

How about when it comes to technology, AI is obviously in every single thing it seems like that we're doing. Are you finding that there's any technology, software, anything that you either see that's going to be helping your industry or it's already helping you?

The AI aspect of it is all fine and dandy when it comes to looking at bank statements and basically data mining, the data that's on there.

But I think that when it comes to underwriting, you're always going to need that final human touch to bring you across the goal line because sometimes you have to look beyond the numbers. You have to look beyond the company. You have to give it a quick mental analyze of what you see and make decisions and pivot when necessary. And unfortunately, some of these softwares aren't there yet. They might get there one day. We just use AI just to help break down some of the bank statements.

But most of the rest of the underwriting process is done manually.

When you're thinking about future goals, You've already achieved things I'm sure you never thought you would achieve, especially going back to certain moments in your life. It seems like you're very grateful and you work very hard. You've really put the systems and processes and people in place, which is amazing. When you look at goals and milestones, forward thinking, how do you structure them and how far out do you normally... How far out do you have to look in terms of like, Okay, I want to hit these milestones at this time because this is success to me.

Well, what's important about setting goals and milestones is really setting goals and milestones that are attainable.

Anybody could say, I want to make a billion dollars. That's just not going to happen. But if you set attainable goals, stuff that is reachable. And I try to set short term goals, and I also have longer term goals. But it's the short term goals.

It's those are the ones that get you to the longer term goals that help you push forward from there.

So it's important that you're realistic in your numbers and then your goals. And hard work, pretty much remedy anything. And you need a little bit of luck as well in business.

Hard work and a little bit of luck, and you'll have a good recipe for success.

Yeah. Thanks for sharing that, Frank. I know you have something really special out. By the way, I just launched a book, and then you just launched a book, The Hard Way Home. The amount of time and energy and effort that went into my book was insane. I can imagine it's the same for you, but it feels so good when the book comes out. But I'm having a hard time even thinking about people reading a book. I don't know. I feel like I'm going to get judged. But how was the process of writing this, The Hard Way Home, and what was the inspiration behind this book?

The inspiration was trying to get someone to benefit, even if it's just one person, to benefit from my story and bring that hope across that you're never really truly alone, even when you feel like you are alone. When I was living on the street and I was alone, at that point, I really thought I was alone, but I wasn't. I had my whole family behind me. Even though I was estranged from everybody, they were still behind me, supporting me. If my story can help one person overcome some troubles in their lives, whether it's addiction or whether it's just employment or whatever the case may be or some mental health disorders, my story can help just one person. It was well worth it for me. Writing the book, hopefully, was more so for myself than for anybody else to give me a little bit of closure because I do carry a lot of regrets on some of the things that I did inside over the years.

So hopefully, it'll put to rest some of those demons It sounds like it was almost therapeutic for you. To tell my story and to say it out loud to myself and putting it down in words and paper was absolutely amazing.

I didn't realize for a while what I went through until I wrote the book, in a weird way, inspired myself again, if that makes sense. We forget when we take things for granted, and then you jog down memory lane, it opens up some good memories.

Some hard words also, but a lot of good memories.

But thinking back, what's a moment for you that was a great memory when you're like, Oh, my gosh. When I wrote that in this book and it's in the book, this was something that made me really smile compared to, like you're saying, all the memories that were obviously very tough.

For me, it was the one pivotal moment that happened in my life where it was almost like I had a moment of enlightenment.

I happened to be on the phone with my brother, and he said to me, he said, Don't you want your children to have good memories of their childhood like we did? And that just blew me away. It was just something that's so profound to me. I can't explain it, but it changed me as a person. And then from that moment on, it was all downhill from there. Every day that went by that I was sober and that I pushed forward just a little bit more was closer to home than I got, even though I didn't know it at the time. I was estranged from my family for three years. I never thought that I would go back. It was that one pivotal moment which was important for me. Just to remember that was what helped me come back.

I love that, man. It's always amazing how one sentence, one phrase, one or two words can completely change the trajectory of not only your life, but obviously your family's life, your kid's life, and then whatever generations to come later on just from that one sentence. But thank you for being vulnerable to even write this book. Again, I've We just went through the same process, and there were so many times where I wanted to tell them that I don't even want to put it in the book. I sent it in, delete it because I don't want that in there. But like you said, if one person can be inspired, but the Hardway Home and Avanza Capital Holdings. If people want to get in touch with you, Frank, they want to get the book, they want to find out more information about you, how can they do so?

Well, they can find the book on Amazon and some of the other bigger book retailers.

If they want to get in touch with us, they can just go to our website. It's www. Avanza. Nyc, and they can reach us through there.

Well, Frank, again, I can appreciate you being here. I can relate so much to your Founders Story. I think there's a lot of other people that are either in the moment or they're out of the moment. And hopefully, that they'll become entrepreneurs. And if they ever need anything as a small business, they can contact you. So thank you so much for, hey, changing the world. Changing the world, being vulnerable enough to write it down and change the world, which a lot of people are not. A lot of people will not do that. So I appreciate you for being here on Founder Story.

My pleasure. And thanks for having me.