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NWA Founders is a voice for Founders, Owners, and Builders driving growth in Northwest Arkansas, and is hosted by Cameron Clark and Nick Beyer.
'NWA Founders' is a voice for Founders, Owners, and Builders driving growth in Northwest Arkansas, hosted by Cameron Clark and Nick Beyer.
To recommend a guest or ask questions, reach out at nwafounders@gmail.com and follow us on YouTube and LinkedIn for video content.
Joe Ehrhardt: [00:00:00] The user experience is actually what matters the most. Then we can go and say, "Okay, now the bank needs what's easy for them."
Nick Beyer: Why does that matter?
Joe Ehrhardt: I'm a big believer in community banking. I want community banks to succeed. They need great technology.
Cameron Clark: How do you coach, call it, disruption?
Joe Ehrhardt: There are two things that I think is critical, and I see it, and we've had to hire and fire people on this.
It's absolutely critical to not care what people have already done and what's been done before. The second thing is...
Cameron Clark: Well, Joe, thank you so much for coming on this morning. Uh, this building is beautiful. Uh, driving up, uh, I mean, it's probably one of the most beautiful buildings in, in the area. Um, and, you know, one of the first things I was reading and looking at, just what you've done, and as we're prepping for the show, I was curious, the, the Mark Cuban experience.
Maybe you just, like, give us a little bit of that, and then we want to [00:01:00] hear your whole story and, and hear the, you know, what's going on at Teslar right now. But how did y'all get to meet, and do y'all still stay connected?
Joe Ehrhardt: No, definitely don't stay connected, but it's, uh, it's actually... It- There are things in life that sometimes opportunities come up, you take them, you don't know where they're gonna go.
They could be bad, they could be good. So, uh, I'll try to make it a short story, but we were at the, uh, venture center for the ICBA Accelerator, and we met a banker there, a lady, her name is Jill Castilla. She's the CEO of Citizens Bank of Edmond. Didn't think much of it. She wasn't looking at Teslar, but she knew we were innovative.
Maybe they wanted Teslar. Fast-forward, all the COVID PPP stuff happened. We are telling all the banks, like, we think forgiveness is a big deal, and I get a random call from our, our chief revenue officer, Colin Savell, who says, "Hey, Jill wants to talk to us about, um, PPP forgiveness." And so Jill says, "Hey, Joe, I've got a great offer for you."
She's like, "How about you guys give me your [00:02:00] forgiveness software? We're gonna make it available to the public. You can't charge for it. It'll be free. And a friend of mine is gonna sponsor it, but not really, because we're not gonna pay you anything. But, but we're gonna take all the credit, and we would prefer you not to really mention yourself much, because a lot of people like to throw his name out there, um, for this.
Would you be interested in this?" I was like, "Well, I have to pay for it. I have to code it. I have to give away my software that's gonna make me money. I... Jill, this sounds like a horrible idea. Why would I do this?" And she's like, "Well, my friend's Mark Cuban." And that's how we met Mark Cuban.
Nick Beyer: Okay. And
Joe Ehrhardt: we were like...
And I'd always told people, like, "Listen, if I was on Shark Tank and Mark Cuban said, 'I'll give you $100 for 50%,' I would say, 'Done.'" And so every time people are, like, challenging that, I'm like, "What are you, an idiot?" And so I had to tell myself that in that situation. I was like, "Well, wait a minute. You told yourself this is what you'd have done if you're on Shark Tank."
So I said, "Okay, Jill, well, sign us up." The story gets worse because about w- that probably happens on like a, a Tuesday, Wednesday, Thursday, Monday, I can't remember the day. The very next week we're getting started to [00:03:00] make this stuff free, and it's on Tuesday, and Jill calls me and says, "Hey Joe, can this be all done by Thursday?"
And I was like, "There's no way we're gonna get all this..." I mean, we've been working on it for a while in coding, but we gotta translate it to, we gotta put it on AWS, we gotta make it so it runs there so it can scale. Uh, I said, "I don't know." She's like, "Well, we got reporters from Forbes and other people coming in Thursday morning.
We want to present it then." And so we stayed up 24 hours, two days in a row, so essentially 48 hours total, released it at 7:00 a.m., told Jill it's ready to go, and went to bed, and hoped when I woke up that it wasn't a disaster. We woke up and there were thousands and thousands of people on it. It all went great.
And then long story short, even though we made no money there, um, later on in PPP round two, three, uh, Mark Cuban, um, had some fintechs that really wanted to get into it go to him and say, "Hey, who'd you guys use?" And he's like, "I don't really remember. We lost Jill. Uh, it was the Teslar folks."
Cameron Clark: Wow.
Joe Ehrhardt: And so, and what we did get from Mark is Mark did send us a video.
Um, and so we, you know, all the whole team saw it, and Mark just said, "Hey, I want you to know," a- a- [00:04:00] and he knew we stayed up a long time. He said, "I used to code, and when you gotta get it done, you gotta get it done, and the good ones do. Thank you." And that's the video he sent us to tell us thank you. Mm. So that was a cool story, but there's a lot more to Teslar than that.
That was just one instance. And no, we didn't know Mark Cuban. I, all I ever got was an email and a video. Um, and we did follow our end of the bargain. Uh, you hear about it more now than then. We, we didn't really... The only way you'll even know we worked with him on it is if you go find the Forbes article that was written, uh, Mark Cuban PPP, you look it up, at the very bottom, you'll see Teslar Software coded.
Cameron Clark: Mm.
Joe Ehrhardt: But we did, it was all our software. But it all, at the end of the day, that, that turned into a huge opportunity for us later, which is why we're sitting in this building today.
Cameron Clark: Well, one of the things I saw on your website was like the, the, uh, the value of figure the F out. Like, just- Yeah ... a- and that, that to me, to me that's what that story, story shows.
And I was... I mean, it really stood out of like sh- you just gotta , there's uncharted waters- Yeah ... in business. You gotta, you gotta go for it. Um.
Joe Ehrhardt: Well, and sometimes, [00:05:00] a- and this is what I tell my team, I tell my, my, my kids this, like, "Listen, you may be batting every day, and you're an expert at what you're doing, but that may not give you a lot that day, but one day a door's gonna open when that expertise matters."
People are like, "Oh, you got lucky that you did this for Mark Cuban." We only got lucky because we had been doing bank technology over and over and over, and when the opportunity arose, we were able to take it. Mm-hmm. So the door opened, but you still gotta have the skills behind it. And, and you gotta be willing to take the risk.
So you gotta take the risk, you gotta have the skills. And, you know, and it was risky. That, that whole thing turned into us processing a ton of the PPP program, um, out of s- you know, Springdale, Arkansas. Uh, we processed around 22, 23, 24%, depending on what number you use, of all the nation's PPP loans, um, in the back end.
And, you know, we did it from our old office over there on by the country club.
Cameron Clark: And when you say risk, is that, I mean, is that liability and then also, like, the financial risk on having to hire a bunch of people to, to scale this thing? Is that
Joe Ehrhardt: the risk that's kind of- Well, during COVID, [00:06:00] it had been really hard to scale, so we...
You took the risk on, uh... The way I looked at it was we had a good reputation as a company. We had done lots of things. Nationally
Cameron Clark: or locally?
Joe Ehrhardt: Lo- locally and growing. So we had just before PPP, and this is always about, um, uh, at the ribbon cutting here, I, I made a f- I was trying to make a funny story 'cause our color's orange and the road's called Orange, and so I said, "Here's how you turn lemons into oranges."
Uh, instead of lemons to lemonade. Mm. But right before all of COVID, we had a brand-new program releasing that was all mobile-based, and it was mobile-centric, phone, out in the field, all of that, and COVID happ- happened. All that technology went to garbage overnight. Wow. And so there we are with we're, we're...
We got a good reputation, but our main platform that we were trying to... Our new version is dead.
Cameron Clark: It's irrelevant.
Joe Ehrhardt: It's irrelevant.
Cameron Clark: Yeah.
Joe Ehrhardt: And then we're trying to figure out what you do. Mm-hmm. And you're guessing, right? Is the market... Is all the loans gonna go bad, so we should focus on helping bad loans?
Which, by the way, never happened 'cause the government bailed out [00:07:00] so much there was never actually a, a loan crisis like there was back in the '08 time.
Cameron Clark: But it was a real thought at the time.
Joe Ehrhardt: It was a real thought. Yeah. So we had to make decisions, and we made a decision to go PPP forgiveness. We never knew...
Everybody's like, "No, the government's gonna do that," and they did, by the way, in the end.
Cameron Clark: Yeah.
Joe Ehrhardt: But then that led us to that situation. So it's, it's a, it's a lot of risk-taking. You're strategically betting this is where you're going, but you don't know. I, I always joke with my team, in fact, we literally talked about it yesterday.
I say, "As a CEO, I only have three jobs: the right strategy," which of course that's, that's a hard one, "hire the right people to execute that strategy, and then make sure I have enough money to pay them."
Cameron Clark: Mm.
Joe Ehrhardt: And I mean, there are always little things. When the company's smaller, you're doing tons of things, but no matter how big you get, you always have those three.
Cameron Clark: Yeah.
Joe Ehrhardt: And so that, for us, we got lucky. We picked the right strategy, but we had the people, the, uh, the people behind it, the, the money to pay for it, and more importantly, the, the talent to do it.
Cameron Clark: [00:08:00] Yeah. So what would you tell someone to... How do you prepare for luck?
Joe Ehrhardt: Well, uh, you, you, you prepare for luck because you're available, you're known in your field as an expert in it, and then when the opportunity arises, people look to you Right?
So that, that's what happened for us. We've been working and working and working, and we were good at it. We just haven't had that, uh... It's kinda like baseball, and I'm not a big sports guy, to be honest, but I like the analogy. You know, you're gonna swing a lot, but once in a while you're gonna get that perfect pitch right down the middle, and if you've been practicing a lot, that's gonna be your home run.
Cameron Clark: Mm.
Joe Ehrhardt: Um, but you, you know, I like, uh... My kids hate the movie 'cause I've watched it 50 times, but I like The Founder about Ray Kroc.
Cameron Clark: Oh, yeah.
Joe Ehrhardt: And I, I love the line because I agree with it. We're persistent. We're- we, we come in to bat every day. Uh, you know, Tesla has four new products launching right now. I know most new products are garbage that we launch.
And you know, my customers are like, "What do you mean gar-?" We just, we know we're gonna fla- fall flat. We think this is what's great, but we're gonna pivot to get it better and better and better.
Cameron Clark: [00:09:00] Mm.
Joe Ehrhardt: And so we're just gonna be persistent, and we know one of those will be amazing. We don't know which one. May not- maybe it's the fifth one, not those four we're launching.
But we're gonna keep being persistent. And, and that is actually, people are like, "What is the, the key to your success?" It's just we are persistently at what we're doing. Uh, we don't like to fail. Um, when I say don't like to fail, I wanna stress, like, I don't mean you don't fail at something. We fail all the time.
Cameron Clark: Mm.
Joe Ehrhardt: But we don't give up. We just keep mar- marching on.
Cameron Clark: How do you do that well in the software space? Like, when do you... You know, I... To me, it feels like a timing thing. Like, okay, uh, how do you keep moving fast enough, keep changing things fast enough? Is, is, is there a secret to it? Or, uh, uh, how do you do it?
Joe Ehrhardt: Yeah, I think take the next two years or the last two years and the next two years away for a second. So let's remove AI 'cause that's a weird equation in the software field. Software is actually one of the best fields to be able to fail, right? So we take commercial real estate, something you know very well, right?
You, you, you bet on a building, you put a ton of money in, you borrow on it. That's a hard failure [00:10:00] if it doesn't work. Mm. That one's real hard to recover from. Software is actually super forgiving- Mm ... because you can write something at a low cost, and then you can deploy it out to your customers, see what they like, and then go again.
Mm. It's why a lot of startups in Silicon Valley, you hear about this, 'cause they could, they could iterate faster than most businesses. You can go really fast in the software field.
Cameron Clark: Mm.
Joe Ehrhardt: Um, I'd say forget the last two years and the next two years coming because the software field's going through a massive change right now.
AI's making it even easier and easier, but it's also at the same time adding some- Mm ... what we call garbage code. Yeah. And so how does... So that field's gonna change a little bit. There's a lot of discussion if, if going fast used to be the big thing, the software company that could go the fastest and change the most was the most successful- Mm
if they could listen to customer. N- that's gonna change. I think now there's gonna be a little bit of the software company that can deliver and keep security and performance, and customer service is gonna become more critical as [00:11:00] the speed of delivery is gonna become, I won't say a commodity, but very well could become a commodity in the software business.
Cameron Clark: So what are y'all doing to adapt there?
Joe Ehrhardt: Um, w- kinda what I just said is, like, you know, for us, we're lucky or unlucky We are in a highly regulated field. Um, most of our customers, um, people don't realize this, like when we sign up a bank, they're like, "Congratulations," you know, "Did you talk to them last week?"
And I'm like, "Uh, we talked to them two years ago." Right? This is a, this is a six... On a fast day, it's six months. On a slow day, it's two years. Like, you don't close... Like, when someone starts to be a salesperson here, we're like, "You need six months before you can close anything, and you probably need to be here two years for your pipeline to really, really starts rolling."
Cameron Clark: Are those folks on commission?
Joe Ehrhardt: Yes, they are.
Cameron Clark: Hey, man,
Nick Beyer: you can buy that new
Cameron Clark: car in two years. Hey,
Joe Ehrhardt: but you're from... I mean, that's commercial real estate, right? Yeah, yeah. That's why it
Nick Beyer: is. Working on a deal for a long time.
Joe Ehrhardt: It just takes a long time. Yeah. Yeah. And so-
Cameron Clark: That's good ...
Joe Ehrhardt: that does protect us in a weird way- Mm-hmm.
Yeah ... from just the next person just popping up because, I mean, think of the sensitive [00:12:00] data and, you know, you don't want it to go into your bank and then something not work, right? Sure. Mm-hmm. Like, the availability of software to run an institution. Same thing medical. Medical is probably more severe than banking.
But I, I would really rate it to, if you think the way people think, it's probably medical, then my bank account.
Cameron Clark: Yep.
Joe Ehrhardt: Yeah. It's probably the order of importance to people on availability of stuff to work and security.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: Um, and so that does help us. So what we tell people is like, "Hey, our competitor or other people are gonna be able to innovate probably as quick as we can, um, as far as building new code."
Cameron Clark: Yep. "
Joe Ehrhardt: But are they gonna be able to have the availability, the uptime, the support, the consistency? 'Cause that really is gonna be critical." Mm. You could have the coolest new internet banking app, and we don't write internet banking, but if it's offline for even five minutes, you would have people revolt. You know?
Like, if you can't use Apple Pay, if Apple Pay didn't work for one hour, there would be... But imagine that in any banking sector, like- Mm-hmm ... so there's, there's something there. Now, that's not true in every space. Mm. But in our space, there's... So that's where we're focused on is like, okay, [00:13:00] we need to scale, have good support, ba- make sure that bankers feel safe in our technology.
Mm. Uh, still have to be innovative, though. We still have to stay on top, and for us, you know, we have a mandate. Every person here must be using AI. So we, we, we do a three-tier AI system. There's the free AI that you get in a tool, there's the AI we pay for that's enterprise, and then there's the AI that we give to our customers that runs their banks.
But no, if you, if you work here, and you don't use AI, you're gonna have a conversation.
Cameron Clark: You mean that's just like you just continue to speak that to everybody?
Joe Ehrhardt: Absolutely. That
Cameron Clark: makes it okay. Yeah.
Joe Ehrhardt: Well, it's also like, I'll give you an example. Our chief administration officer, uh, Tamara Noe, one of her goals, I set major goals for every leader every year.
One of her major goals is that every team must implement what's called a custom GPT. So we use ChatGPT for a lot of internal tools. Mm-hmm. Coding's all Claude, although they're different AIs are d- are good at different things.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So but ChatGPT is very good at text data, [00:14:00] parsing knowledge base, and so every team here is required to build a knowledge base, put it in ChatGPT.
We call it a custom GPT when you build it custom. Mm-hmm. And then now if I'm like, "Hey, I have this issue, I'm new in support," I can just ask ChatGPT, and it'll tell me the answer out of our own knowledge base.
Cameron Clark: Wow.
Joe Ehrhardt: And every team is required to do that, and that's Tamara's goal is to enforce, did every team do it?
What have they got done? So if you want to know what our branding colors are, and you think I would know, but I have no idea what the hex code is, you can go ask ChatGPT, it'll tell you. Teslar's brands are, these are the colors that are required.
Cameron Clark: What's one or two things you can tell the Northwest Arkansas service company or, you know, other sales company what they need to be doing on a base level with AI right now?
Joe Ehrhardt: I think at a very base level, if you were doing nothing else in AI, you could do what I just described to most. That is basic knowledge base. One of the biggest challenges in any organization is knowledge transfer. Well, we used to do SharePoint sites, FAQs. Well, those are hard. Most of us as humans just want to [00:15:00] talk to another human and ask the question.
Cameron Clark: Yeah.
Joe Ehrhardt: AI gives you the first ability to do that. Mm. I can talk to AI like a human, and it will go find the answer for me out of some huge Word document. Mm. That is way better than a search that would just be searching for a keyword or something else. It's a human, "Hey, what should I do?" You should do these three steps.
That is the most basic level of a... if a, if you're a company. If you're just a person, using it for tedious task. So example, um, in the tech world, but you could do this anywhere. We configure hardware all the time that I don't have the whole manual memorized. Maybe it's a firewall.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: I have not looked at a firewall manual or anything in the last year and a half.
If I need to configure it, I just ask Cust- I ask ChatGPT, who read the manual and said, "Oh, it's, this is the command you should run."
Cameron Clark: Mm.
Joe Ehrhardt: But that could be true in any business. You could be a plumber, and you're installing a new dishwasher. Instead of pulling up the manual, you could ask GPT, "Hey, w- how does this particular dishwasher want this handled?"
Cameron Clark: Mm.
Joe Ehrhardt: You could be a person installing lights, an [00:16:00] electrician, and say, "Okay, on this particular model, does it have dim ability?" And that's where, like, AI's knowledge at the most basic level is it is the best search engine on the planet.
Nick Beyer: Yeah. And talk about the trust in some of those things. So I think the pushback from someone will be like, "Well, yeah, I did this, and something broke," or, "I caused an issue."
Like, talk about- Adapting quickly using technology, but then also, like, the critical thinking skills as a human that... How do those things pair together?
Joe Ehrhardt: Yeah, absolutely. So first off, AI will always give you an answer. They're like a two-year-old. I always tell this, like, it's like y- you got that three or four-year-old kid, you know?
I say it's two year, probably, probably three or four, but you can ask them anything, they'll tell you an answer. This isn't... They don't even know if it's cl- close right. You'd be like, "Why is the sky blue?" And they'd be like, "Well, 'cause the ocean's up there." You know, whatever it is. AI is the same way. You have to realize that.
So one of the things when AI gives you an answer, most of them, including ChatGPT, will give you a quick reference and say, "Here's where I got it." Does it make sense? [00:17:00] So in our office we have motion detectors, and we were trying to figure out how to adjust them. They're in these rooms. And I took a picture, gave it to ChatGPT, and it's like, "That's a fire alarm detector, smoke detector."
I'm like, "No, it's not." But it was very convinced it was a smoke alarm. I was like, "Listen, this is not a smoke alarm detector." But it c- made me concerned. I was like, "This thing's just being dumb." And I had to take, like, four pictures and then finally, I hate to say it, but I went to Google's Gemini. Gemini was like, "That is a motion detector."
I was like, "Thanks, Gemini."
Cameron Clark: Yeah.
Joe Ehrhardt: So you do have to use some knowledge there. But, like, um, I, I mean, I'm a little nerdy here, but I might go into a firewall and there's some command I just don't know, but when I use AI to tell me, I'm like, "That looks right." So you still have to have your expertise. Yeah. If you're blindly following it, that's all the horror stories you hear about where someone deleted all their files.
Cameron Clark: Yeah.
Joe Ehrhardt: Because they didn't use any... But what it does do is, you remember in school when we used to take like, I don't know if you guys did, but we'd take math tests, and you'd get, like, a one-page cheat sheet that you maybe you gotta take- Mm-hmm ... on your math test?
Cameron Clark: Oh, yeah. Yeah.
Joe Ehrhardt: And that's-
Cameron Clark: Formulas.
Joe Ehrhardt: Yeah. Yeah.
So you'd write it down. [00:18:00] ChatGPT's your new cheat sheet.
Cameron Clark: Yeah.
Joe Ehrhardt: Cheat sheet's useless though if you don't know what to do with it.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So that's the way I look at AI. It's your new cheat sheet. It's gonna... It's got everything you need real quickly, but you better know what... You gotta have a, at least a general idea of what you're trying to do with this cheat
Cameron Clark: sheet.
Yeah, where you're trying to go, what you're looking for.
Joe Ehrhardt: Yeah. It's not just gonna... If you blindly follow it, you're gonna have lots of fun, so.
Cameron Clark: Let's talk about how you got here. Yeah. So you born in Fayetteville, grew up in, uh, Pea Ridge. Is that right?
Joe Ehrhardt: Well, I grew up everywhere.
Cameron Clark: Okay.
Joe Ehrhardt: So I was born in my... We moved a lot.
I was born in Fayetteville, lived in Elkins, went to kindergarten there, then went to first grade in, uh, uh, Bentonville, and then second grade in Bentonville, then ended up going to Neosho. So my wife will joke the furthest I've ever lived in my life is Neosho, Missouri. Went there from, uh, half of second to eighth grade.
Moved back, went to Rogers to Oakdale, and so, and then from Oakdale, then Pea Ridge. Wow. So it's kind of a little... I always joke with my kids, I'm like, "The only place I never lived was Springdale."
Cameron Clark: And here you are.
Joe Ehrhardt: And here I am. And my kids have gone, uh, my oldest daughter's a freshman in university, and she went K through- 12 in Springdale School District.[00:19:00]
Um, all my kids will go K through 12 in the Springdale School District.
Cameron Clark: Wow.
Joe Ehrhardt: Great school district, but just randomly, uh, have a go. But yeah, went... Born and raised here, I would say. I mean, you could joke, I lived in... My wife's like, "You've only lived in four counties in your life, Washington, Benton, McDonald, and Newton."
So two in Missouri, two in Arkansas. The
Cameron Clark: most well-rounded northwest Arkansas person we've had on this podcast. Yeah. Um, um-
Nick Beyer: Good
Cameron Clark: or bad ... and, yeah, so y- went to University of Arkansas.
Joe Ehrhardt: Yep.
Cameron Clark: And then from there, straight into banking?
Joe Ehrhardt: So I was... This is a true story. I was a, when I was a junior in high school, I, um, the way I paid any bills I had or other stuff, I grew up with a single mom, um, is I cut thistles.
If anybody knows what thistle is. Mm. I worked for farmers, cleaned out, uh, feed, feedlots and other things. Not, not the greatest job. And, uh, I went to Arkansas's Governor's School, and when I was gone, my mom was a beautician. The president of the Bank of Pea Ridge said, "Hey, would you like a job here next year?
We always like to hire one college kid, or one high school [00:20:00] senior." Mm. Excuse me. And my mom was like, "Hey, would you wanna be a teller?" I was like, "Okay. I can outside cutting, wearing long sleeves in 80 degrees, cutting pointy things and hauling hay, or I could work in a bank. I'll take the bank." Never did I know in my life that one decision would change the rest of my life.
Wow. Because to me, it was just like, I don't wanna be outside anymore. Um, it... No, I love outside, but I didn't wanna be outside doing that. I wanted to want a job I thought was a little cooler. Mm. Plus, the banker people I thought had lots of money. Found out that's not true. The bank has a lot of money. Bank teller, not so much money.
Cameron Clark: Just because you're in the building-
Joe Ehrhardt: Doesn't mean- ... doesn't, doesn't
Cameron Clark: mean-
Joe Ehrhardt: You don't get taken even home. Yeah. I know I get a new car. Yeah. You know, any other job, like, they give you, like, a free sandwich. They don't... Banks don't just- Yeah ... give you free money.
Cameron Clark: Yeah.
Joe Ehrhardt: You know? Like, you work at Chick-fil-A, you get a free meal.
You don't get free cash at banks. Yeah. So I, I started there. Um, when I went to college, um, I had to help pay my way through college, so it was a natural fit to continue to work at a bank, so I continued as a teller, uh, working. I [00:21:00] worked for a bank called, went from Arvest, which was the Bank of Pea Ridge was actually an Arvest branch.
Cameron Clark: Mm.
Joe Ehrhardt: Um, and went, ended up going to, uh, A&B Financial.
Cameron Clark: Okay.
Joe Ehrhardt: And, uh, being the amazing stellar student I ha- I was, uh, you know, D was for diploma, so I was doing a really great job and somehow managed to be eight hours short of, to graduating. I tell my kids, "Do not repeat." That was a bad, very poor student. Um, and so I was eight hours short of graduating, and so I'd already walked, but I still needed eight hours.
Mm. And so I went to, um, Dr. Beavers in the computer engineering department, said, "Is there anything I can do, Dr. Beavers, to get eight hours?" And it was all computer elective. He's like, "Why don't you do a, a complex project for your, your bank you work at, your... And, and we'll give you eight hours. We'll set up a program.
We'll let you do it." I was like, "This is amazing." So I went to Dan Dikema, the CEO of A&B, and I said, "Hey-" As a teller, every day I come in, it takes me 10 minutes to clock in, so I'm shorted $10... I'm shorted 10 minutes. I wanna write a program to fix this. And he [00:22:00] looks at me, he's like, "You think that would interest me pretty much?"
It's like, he didn't say that, but I got... I realize now as a business owner, I'm like, "That was not a good pitch." And so he's like, "Hey, Joe," and, and- You
Cameron Clark: can pay me more. Yeah,
Joe Ehrhardt: yeah. It was a poor pitch. Yeah. But he came back and, and Dan being an innovative guy, uh, he, that he was and is, um, he's like, "No, how about this, Joe?
How about instead you create me a program that'll let a customer come in here, we'll load a loan to Jack Henry, we'll pull if they can get insurance, and we'll pull if they can get a credit card, and we'll do it all in one click?" Of course, this is like 2004. I was like, "Sure." No idea what Jack Henry is. How do you pull credit?
I have no idea. I'm just a, a stupid college kid who had spent too much time playing Diablo II, and that's why I couldn't actually, uh, get my degree finished.
Cameron Clark: Did you c- I mean, were you coding back then, though?
Joe Ehrhardt: I was coding.
Cameron Clark: Yeah.
Joe Ehrhardt: But, I mean, coding in college, like, I'm still... You know, it's not like today. We did have Google, but, you know, it's not like you had AI to do it.
Like, this was... You had to go... We still bought books.
Cameron Clark: Yeah. You know what I mean? You gotta figure it out, yeah.
Joe Ehrhardt: But again, [00:23:00] this is a banking space. I don't know. I work as a teller. And so I... One of my favorite memories, I actually told this story here at the ribbon cutting, is when I was working on that, I had a phone call with a bunch of executives that were in charge of integrations at a company called TransUnion, which at the time I had no idea how big they were.
And I'm having that call in the little boardroom of the branch I work at in Fayetteville by the, the, the, the Walmart there in the mall area. Um, and I'm sitting in there on a call, and of course it's not video call, it's just a phone call, and they think they're talking to some smart guy working for this bank that'll see this integration.
And one of the lenders bu- bust in and said, "Hey, Joe, can you get back to the teller line sometime soon?" And closes the door, and the guys are like, "What?" I was like, "I don't know what he's talking about." 'Cause I, I still remember it like it was yesterday. Uh, that guy actually works here. That, that lender's name is Brian Buckley.
So Brian Buckley opened that door and said, "Hey, can you get back to the teller line soon?" Not realizing I was on a call. He thought I was just sitting in there. That's hilarious. And, um, I still remember that because I was like, "Crap, I don't know what I'm doing." And I had no idea what I was doing.
Cameron Clark: Yeah. Uh,
Joe Ehrhardt: I told Dan, I [00:24:00] said, "Listen, I'll never be able to load it to Jack Henry.
I don't know how in the world I'll approve a credit card, but that insurance stuff sounds easy." Fast-forward, um, I worked that project through the summer and ended up ironically making the credit card part work, boarding to Jack Henry, which is a major core provider. You probably don't know, but they're, they run...
They're just a big OS for banks. Okay. They still are today. They're, I don't know, probably a $5 billion revenue company- Mm-hmm ... um, based out of Monett, Missouri of all places.
Nick Beyer: No
Joe Ehrhardt: way. Um, but, um, I managed to make those two work, and the insurance I never got to work. So until that bank closed, um, every customer that ever opened an account ran through that system.
And so- Wow ... the CEO looked at me and said, "Hey, would you like a job?" At this point, I still hadn't officially graduated. I was working as a teller. I thought, "Yeah, I'd like a job that pays more than $8 an hour."
Cameron Clark: Yeah.
Joe Ehrhardt: And so that's how I got into technology of banking. People are always like, "You had such a foresight."
I was like, "I was just going day by day trying to pay my bills." And th- from there, it's been an amazing journey. That's actually how I got into it, is paid my way through [00:25:00] college, was a very poor student, but that opportunity... So I, I joke sometimes if I had been a good student, I may never be in banking.
Nick Beyer: Hmm.
Joe Ehrhardt: Now, I'm not... I tell my kids, "Don't do that." But I do always joke
Nick Beyer: D is for diploma, so. So talk about, I mean, you didn't have the depth when he asked you that. You didn't have the knowledge to know, like, is that a big ask? Is that a little ask? Like, sometimes it's maybe nice to have eyes that are fresh, maybe even some ignorance is bliss.
Like, talk about you didn't really know what you were getting into, and you were able to build something. Just talk about that in the, in the technology space, maybe in the banking space. It's such a legacy space. It's so regulated. What does having an outside perspective look like? And, and h- do you still feel like you have that?
Joe Ehrhardt: I think it's one of the most critical things. So there, there are two things that I think is critical, and I see it, and we've had to hire and fire people on this. One of the things is to definitely... You call ignorance is bliss, but it's, it's absolutely critical [00:26:00] to n- not care what people have already done or what's been done before.
One of the things that we struggle with all the time, especially if you hire bankers, like we... Sometimes we hire bankers into Teslar, so we need to write this next module. Mm-hmm. They can only dream up of what they've seen, and sometimes it's good just to be an idiot and say, "I don't know wh- that wasn't possible"-
Nick Beyer: Mm-hmm
Joe Ehrhardt: and go do it. Um, the second thing is I've always had, and still do to this day, and this is the hard part, is roll up your sleeves persistence. Mm-hmm. Like, I didn't know what I could or couldn't do, but I knew that I was gonna die trying.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: Um, but sometimes just being ignorant and not knowing that you're not supposed to do that, right?
Like, even in PPP, we talked, we talked a little bit, and we'll get back to that story, I'm sure. Like, we shouldn't have been in the right mind probably doing what we were doing. Now, we did it securely, we did it safely.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: But we were... But again, the only good news was no one knew at that time. So I think when I, you know...
And I know people have different opinions, but one of my favorite parts about, like, companies like SpaceX is everyone else is building rockets that cost a billion dollars is the only way you can do it, then someone took a new, fresh perspective, [00:27:00] and I think that fresh perspective, you call it ignorance, whatever, is critical.
So we find our hardest people to hire sometimes are skilled bankers. So if we hire them in, and we do hire a lot, we have to tell them, like, "Stop thinking about what the way you've always done it. What could you do that would be different?" Now, we have regulations to follow on that- Mm-hmm ... but yeah, a lot of times it really is not knowing that you're not supposed to be able to do that.
Cameron Clark: How do you coach, call it disruption?
Joe Ehrhardt: Yeah, so we, we, we have a cultural value, um, that's like essentially be innovative. When I tell people, it's like our customers are not innovative. I'm not trying to be mean to them, and they are. Bankers can be, but a lot of time bankers are conservative by nature- Mm-hmm
and so they're just trying to look for the next be- best tech But how are we gonna give them the tech they didn't expect?
Cameron Clark: Hmm. And
Joe Ehrhardt: that's a hard thing to coach. Some people just naturally get it, some don't. A- and you need all. I, I, I, I joke all the time in engineering, you probably need more people who aren't the innovators that can get a lot of the work done, but you need at least three or four, [00:28:00] um, or, you know, depending on the size of your company, people who are like, "Why don't we try this?"
Cameron Clark: Mm-hmm. "
Joe Ehrhardt: Why don't we do this?" So, uh, we literally are just facing this and, uh, it's still probably my biggest involvement. We're writing, um... I don't wanna get long story on it, but it's what's called a loan origination. So when you go and you get the docs that you sign when you get a loan, um, we, we are writing the system that helps create those docs.
We get them from, uh, third parties that cr- are legal third parties.
Nick Beyer: Mm.
Joe Ehrhardt: Well, the legal company will come back and say, "I need you to ask these 15 questions." Well, we do the same thing we did in PPP. If you did PPP, if you went to certain banks, I shall not name their names around here, and you went to fill out PPP, you would've gotten the application in the order the federal government gave it to you.
It'd been three pages long, it'd been 100 questions. If you would've used ours, it'd been about 12 questions in a backwards order, because we realized we could answer all the same questions much quicker and more efficient. So even now we're doing the same thing. And you may... Here, I'll give you an example.
Have you ever been bankrupt? Have you ever, um, filed for any [00:29:00] type of, uh, lawsuits? These are questions we have to ask when you get a loan.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: Instead of asking you all 10, we just said, "Or has any of these ever applied?" One checkbox. And if you hit yes, then we say, "Okay, which one applied?" Yeah. But if you didn't, we just want check marks instead of 15 check marks.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And sometimes that's hard because people are like, "Well, this is the requirement." But i- it is the requirement, and we need to follow it.
Cameron Clark: We're not skipping it.
Joe Ehrhardt: We're not skipping it. Yeah. But can we reword it to be more intelligent? Can we flip the order? So like every government form is always backwards in order, if you don't know this.
Fill out your taxes, you'll know what I mean. All the schedules that give you the numbers that go on the first page are on the back pages.
Cameron Clark: Yeah.
Joe Ehrhardt: You have to fill out those back pages to get the first pages. So if we're trying to help you apply for a PPP, a government loan, their forms are the same order.
Well, we'll flip the order and start with the schedule questions, smash them down, and then start getting to the last page.
Nick Beyer: Hmm. So that's, that's the, the what, but why? Why does that matter? Like who, who care... Who does that impact? Does that impact me, the consumer? Does that impact the bank, your customer? [00:30:00] Who, who benefits the most from that?
Joe Ehrhardt: Uh, that's a great question because most people get this wrong. Most people when they're building software for their customer, it's focused on them. I tell my team all the time, "We are not focused on the bank usually. We are focused on their end customer who's actually impacted." Because right, if I build it in the right order with every question, who's the most protected there?
The bank is, 'cause they did it exactly how the government wanted. There could be no kickback.
Nick Beyer: Mm-hmm.
Joe Ehrhardt: But you as an end user have a horrible experience. If I can flip that, and that's why Fintechs have taken off, and that's what banks have had to realize is like actually the real person that matters is the end user who's the paying customer.
Nick Beyer: Yeah.
Joe Ehrhardt: And if I make them happy But I still protect you, we are in a better situation. And I think that's why you've seen the rise. Now, they haven't all done well. There's so many fintech challenger banks, we call them, because they've realized like, man, the user experience is actually what matters the most.
Um, then we've gotta go and make sure that, you know... Then we can go and s-say, "Okay, now the bank [00:31:00] needs what's easy for them." My order of operations is the banks and customer, then the bank, but at all times protecting the bank. Yeah. 'Cause if we don't protect the bank, they're gonna fire us.
Nick Beyer: Sure. Uh, and by challenger bank, are you meaning like neobanks like Meow or some of- Correct
some of those-
Joe Ehrhardt: Or even just, uh, more technology forward-leaning banks like, um, Lender USA, which is the division of, um, some of the other bigger banks, or even the funny ones that try to be like Redneck Bank. Okay. It's a real bank if you wanna look it up.
Nick Beyer: Okay.
Joe Ehrhardt: Um, their website has a fly flying around on it with a horse.
All right? They're, they're... but they're, they're a real bank- Yeah ... but they've got a little, uh, an off-site core that they are going after. So, but those banks realize, like, can I give an experience to an audience that would be particular to them? Um, you got banks that focus only on, um, music industries or other things.
So just saying, what can I do? Do I understand their, their business, their challenges, and can I bring it back? And banks have done this for a long time. It's just now taking the experience and pushing it out.
Nick Beyer: Hmm. Well, take us back to the early days. So it was bef- when you started [00:32:00] Teslar, it was called 3E.
Joe Ehrhardt: Yeah. So I worked for that bank, A&B- Mm-hmm ... for quite a few years. We wrote their internet banking. We did other stuff. We were very... A&B was one of the most technology advanced banks I've ever seen. Now, technology advanced does not mean making good decisions. We entered a couple markets, mainly St. George, Utah, uh, which is a suburb of Vegas, um, and, uh, Jackson Hole, Wyoming.
Um, we entered those two markets right before the financial crisis, and those killed the bank. Hmm. So the bank failed. Um, and so when the bank failed, I went to my wife, um, like a, a good husband. We have a, we have a daughter. I mean, I'm like, "Okay, hear me out. I'm a conservative kinda person," as in, like, I don't like to take too much risk, is what I mean by that.
"I have no job. I mean, I'm being... I'm contracted right now with the FDIC 'cause everybody that, at a failed bank gets contracted for at least a few days." Hmm. I said, "What can we do? I could go work. I've got a job offer from, um, a f- a f- a bank, a bank tech vendor. I've got a job offer from a bank. [00:33:00] I could go work and stay in the same industry, or I could start a business."
And she said, "Okay, I'm okay with you start the business on one condition, that in six months if it's not working, we, we quit." Which by the way, it didn't work for like 10 years. So- ... I obviously didn't keep my word to her on that one. It took me like 10 years to realize it wasn't working. But, um, and so we took the risk and said, "Let's start."
And so when we went to go start it, we're like, "Well, who's gonna be our first customer?" Um, and we got lucky enough, this is a true story, the FDIC, the, the second in charge of the FDIC at the time, came to me and said, um, he said, "Hey, Joe We would like, and he reported up to Sheila. He's like, "We would like you, if you're interested in it, to go to a lot of our other failed banks and extract data for us, 'cause we need that."
And I said, "Sure. I mean, I already work for you guys, so just keep paying me." He's like, "No, they don't understand how the red tape works. You work for this failure. I can't pay you on your pay at this failure. You're gonna have to be a contractor to work over here."
Cameron Clark: Hmm. I
Joe Ehrhardt: was like, "Well, how long will it take me to become a contractor for the FDIC?"
He's like, "Oh, that'll take, like, two to three years." And I was like, [00:34:00] "Well, that's not gonna work." He's like, "Don't worry. I've got you covered. We know how to work around these things." He's like, "What we're gonna do is we are gonna work for this guy who's already a approved, approved contractor- Oh, yeah ... and we're gonna tell them to pay anything they need to pay you to you from us."
And I was like, "You guys have amazing systems here." So we went immediately... So Teslar's very first customer indirectly was the FDIC, but we got paid from a different organization. Um, and so it seemed like a great start rocket ship. We went through a lot of failed banks. Um, that ended, and then we're like, "Crap, how are we gonna pay the bills?"
So while that was going on, I created three products. The company was called 3E. Uh, it was supposed to be called Earhart Software, um, but my wife's like, "Hey, you're an idiot. Nobody can spell Earhart." And one of my, uh, friends in college is a roommate. His company was named after him, and so I wanted to be, uh...
H- His company's name was Dozier. I was like, "Well, Nick can have his last name. I want my last name." But Margie's like, "No, Earhart's impossible to spell. You're an idiot." And I was like, "Okay." So I had a wife and a daughter, so I called it 3E. And so I was like, "All right, 3E Software." [00:35:00] And so during that time, we made three programs, Teslar, uh, 3E Scripter, and 3E Oreo, which I won't get into what Oreo is, but essentially failed real estate-
uh, the bank has. Um, but... And that was how Teslar got started, but we couldn't pay our bills because FDIC wound down, and so we just did a bunch of custom work.
Cameron Clark: Hmm.
Joe Ehrhardt: So we did ton of custom websites, everything from tow truck companies, to attorneys, to, uh, cupcake makers. And we did custom software for... This is Walmart, so a lot of CPG people.
Cameron Clark: Hmm.
Joe Ehrhardt: So we were helping find zero sales or other weird things that-
Cameron Clark: And did you have other employees at the time?
Joe Ehrhardt: We did. We, we, we grew from one to 13 employees. We were based in Bentonville, Arkansas, so- And
Cameron Clark: how old were you?
Joe Ehrhardt: Um, it was a long time ago. I was in my 20s.
Cameron Clark: Hmm.
Joe Ehrhardt: So, um, I was in my late 20s at the time.
So we grew that quite a bit, and then I hated it. I hated every part of it. I hate... By the way, custom software, if there are people that are doing it today, God bless their soul. It's some of the worst work you can do [00:36:00] Um, because as a software builder, you're building software constantly that you don't own.
Mm-hmm. You're paid an hourly rate. Typically, people aren't happy with your results, so they want more, so your hourly rate gets squished- Mm ... because you're giving them work that you don't have. And if you don't get their work... A- and it's a project, so it's not like, um, if I- I'm out there mowing yards, there's nothing wrong with mowing, but if I'm mowing, I've got a consistent yard to mow.
Constantly the grass is growing. Mm-hmm. Custom software, there's no consistent. The project's over, it's over. So you're constantly hunting new work, you're constantly getting squished down, and you have nothing to show for it. If you stop tomorrow, the business is just dead.
Cameron Clark: Mm.
Joe Ehrhardt: Custom software work is some of the worst work, in my opinion, as a programmer, because you...
unless you can become an Accenture or somebody that has a book of business where you've got revolving customers who are always gonna have projects for you, it's real tough business. I mean, it's like- Yeah ... any type of business like that, like a marketing agency or anything else where you're constantly hunting projects.
So I hated it, and at the time, we had one project that was still alive called Teslar [00:37:00] that we were doing that we owned 100%. We had a few banks on it. And so I made the decision, I said, "Teslar or nothing." So we went from 12 people to one person, back down to myself- Wow ... and pivoted our business. Uh, we went and raised capital.
We started getting going. We started getting some good clients. Um, and then in 2017, we raised capital like any other startup. So when people ask how old Teslar is, it depends on who I'm talking to. If a bank wants to hear, they wanna hear lots of years stability, I'll say, "Oh, it started in 2008," 'cause that's when 3E, the official company, started.
But if you're like, hey, if an investor asks like, "When did this actually get rolling?" It's about 2017.
Cameron Clark: And so ta- talk about going to 12, letting go of all, all, all of, of all of your employees then. What was that like? How hard was that decision? And then just, and refocusing just on Teslar.
Joe Ehrhardt: It was really hard, but it, in a weird way, it happened naturally and badly.
Like, I hated the going out and hunting the business so much, I didn't hunt as much. And then you just naturally lose revenue. Well, then you're [00:38:00] naturally forced to do it- Mm ... because you have no choice. Some folks saw the writing on the wall. They were smart enough to go find a job. You know, I always try to take care of people, um, no matter what, no matter how bad the situation was.
I've never missed a payroll. I think it's critical to take care of your folks. So a lot of them, I just said, "Hey, here's the route we're going. I don't know if we can afford it."
Cameron Clark: Mm.
Joe Ehrhardt: Um, a few of them are part-time. Um, anybody that we actually did have to let go, I've always given a l- severance no matter what.
So we tried to think through it logically, but a lot of it just happened through attrition, to be honest. Uh, we, th- a lot of those folks I'm still... I know very well. They're like, "Hey, can I come back?" Some of them came back to work here when Teslar grew.
Cameron Clark: Oh, cool.
Joe Ehrhardt: So it wasn't like, uh, we were like... You know, it wasn't like, uh, Oracle and I sent somebody an email.
Uh, uh, that's not how I manage. Culture is very important to me, and how you treat people.
Cameron Clark: Was it hard to convince your wife, "Hey, this is the right decision to pivot to this," or was she, her gut kinda the same as yours?
Joe Ehrhardt: Well, my wife, I love my wife very dearly, and she probably would never say anything negative, so she helped with the books and all kinds of other stuff.
Um- I think her argument would be is that I made more [00:39:00] money in 2007 when I was managing a software team and had an offer to make more money than we did for the next decade. So for her, there was a decade of... We, I mean, we always made our bills, and we were always fine, and our kids were always good, but a lot of people are like, "Well, it's just easy."
I was like, "Easy?" Um, from, from my wife's viewpoint, we had a pay decrease for the next 10 years. It took over a decade for us to get back to the same payroll I made before.
Nick Beyer: Wow.
Joe Ehrhardt: But at the end of the day, I think she would say it's worked out well.
Nick Beyer: Talk about that for an entrepreneur, someone who's building something.
That sacrifice is hard. It's hard, it's hard now looking back in the rearview, but, like, when you're trying to start something, and that's likely what's ahead of you. Talk to somebody who's up against that or-
Joe Ehrhardt: So I think there's- ...
Nick Beyer: has a great job right now just... but has always dreamed of doing something. Just talk, talk a little bit about that.
Joe Ehrhardt: I think there's two things you always have to do, and they're very difficult. One is you need to make [00:40:00] sure that your family's financials are stable before you do something. Now, stable doesn't mean great. We had friends that were going on vacations. We had friends that... We didn't go on any vacations. There was a lot of sacrifice, but we weren't unstable where we couldn't pay the electric bill.
Mm-hmm. That would add to... It's already stressful enough. I don't think you can add that layer of stress. I think if you hear any, um, investors that ever raised a company, they're like this, the, the founder needs enough money for home life to be stable. Now, stable doesn't mean you have a new car. Stable doesn't mean you don't have lots of finan- I mean, we couldn't afford to put a fence around our, our, our house for a while 'cause we had to save up to afford the, the fence.
Like, it is stable. My wife knew that there was enough coming in that we could pay our bills, our kids could go to school, they have shoes. There was no poverty. Like, I grew up with a, with a mom who was a beautician. That was unstable. A beautician's salary is how many people got a haircut, how big was the tip.
Mm. That's an unstable salary. That's very hard because there's not enough money this week. [00:41:00] So I think the first thing is can you put your family... And this is me with, this is with kids. If I didn't have kids, it's very different. I think if you're solo, no kids, you can be a lot more unstable. You just ne- you know, you can eat ramen noodles and Hot Pockets.
You'd be great. Um, so that was one thing. Now, what does stable look like? For us, it meant 50 grand. If I could bring home $50,000 from the business a year, that was enough for us for a decade to be stable. So I'll just put a number out there. That's compared to a six-figure salary that I had had before.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So, um, so that was... We knew the magic number. So that's the first thing. I, I... When people tell me, like, "I'm just gonna borrow everything and go all in," at the beginning, I'm like, "Whoa, whoa, whoa." I'm a big fan of borrowing and, um, and it definitely got worse for Teslar. Um, but at the same time, y- if your wife's not happy and your home life is crushed- Y- y- that's your only outlet as an entrepreneur.
Mm-mm. Like, when you're at, when you're at work, and I hate to say it, like I, I, I love my teammates, but they're looking for me to help their living. My board is looking [00:42:00] to see am I doing a good job. They're all great counsel, but at the same time, when there's a lot of stress, home is where you're gonna go home to talk about
Cameron Clark: it.
Mm-hmm.
Joe Ehrhardt: So you don't want to make that miserable. Again, though, it is a sacrifice. Like when I talk about it, I wanna stress, like it's not... There were lots of things. My wife's like, "Could you get a real job?"
Cameron Clark: Yeah. What kept you going year seven? I mean, do you remember, like what was going on during that time?
Joe Ehrhardt: I am, I am somewhat of a optimistic person. I'm like, "It's gonna... There's something good gonna happen." And there were good things that happened. Like, you know, I can remember we signed up a larger bank. We saw progress. We started to raise some capital. There were, there were good signs. But I will say for that first 10 years, it was really difficult to see the, the progress.
You know, we, we grew revenues. Saw the revenues shrink. Um, I guess to me is I, again, back to I said, I'm very persistent. I don't like to fail. And I looked at it like, "Man, if I, I give up now, I just failed, and I wasted..." And, and I'll be honest, this is the worst conversation, but I literally would have this conversation with myself.
I'd [00:43:00] say, "I've wasted eight years and not made a penny more. I make less. How do I go to my wife and say it was for nothing?" I was like, "I don't know if I..." I mean, she... Margo would support me, whatever. But I'm like- Mm ... "That's eight years in. For sure I can't quit." But there would've been a day, let me tell you, in about year 10, if you would've asked...
if you would've given me even $100,000, maybe a million, I'd have sold, given you everything in a heartbeat, like just to had some kind of thing. And then this sounds crazy, and this is, this is gonna get the worst part. About year 10 probably, we started borrowing SBA borrowings to get stuff moving, so now I had the pressure of the debt.
Mm. So now I had the home life, and I had an SBA loan, um, that was secured against our house.
Cameron Clark: And- And when you say you were also raising money at the time, was this like friends and family, or was, was that after that?
Joe Ehrhardt: We, we didn't raise till 2017. Okay. So this... The, the debt we took on was before 2017. To get there, we needed some engineers to really make Tesla move forward.
We had a couple of good customers sign up. Mm. There was a logic behind it, but it does add an extra level of stress, and we did put our house on it. [00:44:00] Sure. My wife was very unhappy with that, but the SBA loan required it. Yep. Um, and I was like, "No, no, no. It'll be good. It'll be good." Um, so we, we did that, and, and trust me, there was the time where we may have taken out a credit card to pay payroll once or twice-
Cameron Clark: Sure
Joe Ehrhardt: and had to pay the credit card back off. Like, that stuff still happens, but when we started early, we tried not to... My rule is not to start that way immediately.
Cameron Clark: Mm.
Joe Ehrhardt: Like we... When we saw there was product market fit, when we saw there was opportunities, then we'll take off more risk, and that's just my personality.
Mm-hmm. I don't like to take... And some people do amazing job. I don't like to take off too much risk at the beginning. Mm. I'm st- I do take risk obviously every day, but... Yeah, then I say in '17, we decided, this is my optimistic nature, we were gonna raise a million dollars, and we were gonna raise it in three months.
We did raise a million dollars. It took 18 months And I was... It c- took so long. We did not close that final round till 2019
Cameron Clark: What was the average check size in that deal?
Joe Ehrhardt: Um, anywhere from 50 grand to 100 grand.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: Uh, we didn't take anything less than 25. Mm-hmm. So we had 25, [00:45:00] 50. We got about 12, 13 people.
By the way, those folks had a very good return in the
Cameron Clark: end.
Joe Ehrhardt: Good. That's awesome. They're, they were, they were very lucky. I mean, at the time they were taking a huge risk. A- and I think the, the thing that hurt the most when you're raising money like that was they're not saying that you suck, but it fe- sure feels like it.
Mm-hmm. You know, and they're like... They'll be like, "Well, you're a solo founder, so that does... You, you know, we don't like solo founders," or, "Uh, we don't think you have a good potential." I'm like, there's not... It's hard not to take that as, like, you just suck.
Cameron Clark: Who were you raising from at the time? Was, um, was, was this pretty much all local, like, friends and family, or was this, were you going to-
Joe Ehrhardt: So I didn't actually raise-
raise money? ... from any friends or any family.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: That is my conservative nature that my wife would say was a negative. It's like, "Oh, well, if I... There's a 50/50 chance it fail, I still gotta see those people, so let me go raise from people I don't know."
Cameron Clark: We have the barbecue on Saturday.
Joe Ehrhardt: Yeah. I don't know if I can look them in the eyes if I lost all their money.
I mean, that's a... People do it all the time. It's a different level of stress. So I was like, "Uh, no." A- and, um, my mo- my [00:46:00] side of the fam- There wasn't a lot of money to be had anyways, so there wasn't gonna be.
Nick Beyer: Yeah.
Joe Ehrhardt: Um, but we did raise from people that I would say are now friends. So we ended up, uh, a lot of the local investors here.
Um, I met with a guy named Jeff Standers out of Conway. Jeff's on our board. Love Jeff. Jeff said, "Hey, here's the seven people you can raise money from. It's the Tonic Fund that Jeff Amory runs. It's the, uh, Cadron Fund that he ran, the, uh, Fund for Arkansas Future that, uh, that, that Hinson ran, and, um, Little Rock.
Um, and then there are investors, um, in the area that could raise money." But also sometimes it's just pure luck, um, or you could say a blessing from God. So true story. I was meeting a banker at Marketplace for, um-
Cameron Clark: Marketplace Grill in Springdale ...
Joe Ehrhardt: in Springdale. I'm meeting a banker there for lunch. He's a friend of mine.
We're walking in, and another guy's walking out whose lunch date, you could say, didn't show up. We went back in. All... He w- joined us, and he ended up being a big [00:47:00] investor and ended up being a, a friend in the end. Mm-hmm. And so... And has been an investor, supporter ever since. That was pure luck. I had no meeting with him, no nothing.
He just happened to be walking out as we... Because his, his... Like I said, the person he's supposed to meet didn't show up. And sometimes you can look at that and say, "God has blessed me," or I just took advantage of the opportunity. Mm-hmm. I think you can look at it either way. Again, it goes back to the door opened, do you take it?
And there's a lot of times where I tell people, like, you, you don't know... I tell my kids this. You don't know when the door's gonna open. Be prepared, and when it does, be ready to take it. Take the risk.
Cameron Clark: So what would you tell a, a someone who's in a tech startup right now in that similar phase, maybe needs to raise their first round?
Yeah. What would you say if you're in Northwest Arkansas in that condition right now?
Joe Ehrhardt: I would say it's, it's, it's, it's difficult, right? So if you're trying to raise a small amount of money, small being in raises about a million dollars, um, there are very few people that want to write a check that small.
So your only [00:48:00] choice is- Why is
Cameron Clark: that?
Joe Ehrhardt: Because you gotta look at any fund, the way funds work, and it's the nature of the fund. So if a fund is good and it starts out at a million dollars, let's say it's, it's a $5 million fund, and they're a good fund. When they close that deal in five years, they will have made maybe 20% to the people that ran the fund, right?
They maybe have a 10 to 20% management fee. They make 10 to 20% back. So if you do that math, 10 to 20% of 5 million, that's a million dollars back for five years.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So if you were a successful fund manager and you aren't gonna start a business, but you want it to be your business, the math automatically starts to make sense.
Well, if I only do 5 million fund, I don't make enough money, so I need a $50 million fund. Yeah. But a $50 million fund, if I did a million dollar check, that's 50 checks. I don't have enough time for that. Well, I need the checks to be $5 million now. Mm-hmm. And that just keeps happening and happening, and as the fund is more successful, they move upstream.
They keep doing... They get more people that wanna give them their money. And so naturally what happens is the good funds that are at the bottom are gone.
Cameron Clark: Yeah.
Joe Ehrhardt: And the ones that are left are the bad [00:49:00] funds who you don't probably wanna go to. The exception to that are funds like, like a startup junkie fund or somebody who is focused in that area.
So they're a good fund, but they're just gonna stay focused in there. Mm-hmm. So like Autonic, Accadren Funds for Arkansas Future. So that's what makes it hard, 'cause you're not gonna find a big fund that wants to write. But there's a lot of other things, whale hunting that goes on, but you have it difficult.
So when you're that size, you're, you're gonna have to raise from a lot of what we call angel investors.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And that just takes a while. You gotta go hunt them all down. You gotta go find them. Like I said, we raised, I think it was 10 to 12 angel investors, small funds.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So these were... We got some bankers that are our customers to give us money.
Um, but every one of them requires a month's worth of work.
Cameron Clark: Yeah.
Joe Ehrhardt: You gotta go visit with them, talk to them, show them the data, come back, convince them. Mm-hmm. Tell them. Um, I will tell any founder this, it's a true story, and if you're an angel investor, don't cry, but it's the truth. I've never raised money when you're in those, that phase where I hadn't already spent half of it by the time I raised it.
So by the time the last part of that million dollar check come in, we'd already spent a half a million of it. And that's true [00:50:00] of almost any founder I know.
Cameron Clark: Mm.
Joe Ehrhardt: Because you're getting checks piece by piece. This is... You know, you hear what's in Silicon Valley, where I raised, you know, they raised 10 million, they get it all at once.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: In Arkansas, where we live, and most people, you're gonna be raising from a syndicate of people, and you're gonna get checks over time
Cameron Clark: Yep.
Joe Ehrhardt: Now Tesla are at our age today, if we went to raise, we probably could raise it in one check.
Cameron Clark: Yeah.
Joe Ehrhardt: But it's... That's very different than your bootstrapping an, an established business.
Mm-hmm. Well,
Cameron Clark: it's super impressive. So to keep talk- talking about the next phase, so get that initial round done. Yeah. What-- How does, how does the company keep growing up until COVID? What does that look like?
Joe Ehrhardt: So we ra- raised our money. Things are looking great. I always like to say, things look great until they get really bad, and then they get better.
Um, things were look-look-looking great. We raised capital. We got selected to, um... We applied. Again, randomness about... I will tell you, so much of our luck has come from random items that you would think would be a waste of time that turned out to be really worth your time. Um, uh, Andrew Collins, um, from down in [00:51:00] Little Rock, he used to be part of FIS, ran the venture center.
Um, I was talking to him randomly about FIS. I needed something from FIS for a bank. And he's like: "Hey, Joe, why don't you come and present? I got this lunch thing we're doing for three, you know, three companies present just so people can see what's going on in the area." I was like: "Where's that?" He's like: "It's in Little Rock."
I'm like: "I have to drive to Little Rock to present and then drive home? This is a waste of my time." I was like, "Okay, fine." So I drove down there, did it. Nothing came of that. But when I was down there, they came up to me and said: "Hey, why don't you apply for this new ICBA accelerator?" I was like: "Never heard of this.
Okay, I'll apply." Well, we got in that accelerator. So ICBA is the largest, uh, you could call it lobbying group for the, for community banks. Um, and they wanted to start a tech system. So then they started it in Little Rock 'cause that's where the venture center was, and we were in the first class. They picked 10 companies from around the world, and we ended up winning that.
So they have a vote at the end, what is the best technology?
Cameron Clark: Mm.
Joe Ehrhardt: So we won that in national. So that took us from knowing, hearing of us to the day after we won, uh, we were-- There was a... We had a expo hall. We had 100 bankers at our [00:52:00] booth.
Cameron Clark: Wow.
Joe Ehrhardt: And it all came because I went to this random dinner in Little Rock that I probably shouldn't have gone to.
Cameron Clark: Mm.
Joe Ehrhardt: So I can look back and say I'm glad I took that opportunity.
Cameron Clark: Mm.
Joe Ehrhardt: Um, and so we ended up there, won that. ICBA put money in. We were one of the first companies they ever put money into as a, a thing. We raised another $1.8 million, so we're at $2.8 million roughly, um, raised, and then we're... Man, it's just a rocket ship, and so we're, we...
The ICBA program that we showed that was gonna, that was gonna just be our rocket ship was this new mobile thing, I think I mentioned it earlier.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: We have it all done. We are going to ICBA Live in 2020 in Or-Orlando. I can remember it like it was yesterday. We're going there to demo it. It's gonna be the next big thing.
We just won it on 2019. 2020 is kind of our, our party where we're gonna show you it's cool. We show up, COVID happens. Nobody wants to talk mobile. We go home, the world shuts down. So now I'm sitting on all this tech we spent a year building that has no purpose.
Cameron Clark: Why does no one wanna talk mobile at that time?
Joe Ehrhardt: 'Cause no banker's leaving [00:53:00] their house. You don't need a mobile app to c- 'cause the whole point of the mobile system was I'm sitting at lunch with you, and you're telling me you wanna borrow money. I'm gonna put all this data in, we're gonna send it back in. Oh, yeah. But now you're at home on your computer.
You don't need no, no, no, no sane person wants to fill out a bunch of data on a phone if they can have a computer in front of them.
Nick Beyer: Yeah.
Joe Ehrhardt: Like, I mean, there are insane people, but most sane people don't want that. Um, and so all the tech we had written was useless.
Nick Beyer: Wow.
Joe Ehrhardt: And so we were sitting there, and I was like, "Well, what do we do?"
So the very first thing you do, once again, my, my top job is to hire the right strategy, hire the right people, and have enough money. Well, we looked down, and we were burning a lot of cash. So the very first thing we did was raise cash. So when I said we raised 2.8, I think at that point we'd only raised 200- 2 million.
Mm. So we raised 800K immediately.
Nick Beyer: Mm.
Joe Ehrhardt: Um, and that was fast. We did that in about 60 days. And it's fast because we raised it from our current investors.
Nick Beyer: Okay. Yeah.
Joe Ehrhardt: It's a lot easier to go to somebody that's already given you money, that knows everything about you, and say, "Hey, we're, we're entering a tough spot.
We need cash to preserve, to preserve operations." So we raised [00:54:00] capital. That gave us time to think. We missed PPP round one, and I looked and said, "Banks are very scared the government will never give them their money back. Let's focus on forgiveness." So forgiveness was the ability for a bank to take your data, send it to the government, and the government to write a check back, to actually pay the bank back for the PPP loan.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So we did that, and of course, I don't have to go through the story again, but that's what led to the, the deal with, with Mark Cuban.
Cameron Clark: Yeah. And how do you... So this is your, your current investors, how do you cra- you know, have an honest conversation with them, "Hey, here's what's going on, but also here's where my gut tells me where we can keep moving forward"?
Obviously, it worked out extremely well for y- for you guys. But, uh, someone who's in that situation, like, what, what, what would you tell them?
Joe Ehrhardt: Yeah, I think it depends on w- it, it's, it's depends on what camp you're in. Who's the actual boss? So, and what I mean by that is, i- if you're a founder, you can find yourself in a couple of situations.
One situation is you raised, and you are now a minority owner. The boss is the board of [00:55:00] directors. At that point, the board of directors, you probably need to tell them what you're doing, and they're probably gonna have to bless it, and if you don't, you're gonna get fired.
Cameron Clark: Yeah.
Joe Ehrhardt: And I've had friends who have raised money, become a minority, and get fired.
That will happen. I selfishly never raised where I l- own less than 60%.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So at that point, I told the investors, "I'm gonna go this route based on my gut, and I think this is what's gonna be best for all of us."
Cameron Clark: Mm-hmm.
Joe Ehrhardt: Um, and so in a weird way, we didn't have to justify that to the investors. A- and again, angel investors are usually betting on the person.
Cameron Clark: Yeah.
Joe Ehrhardt: So for them, they're like, "Joe, we're betting on you."
Cameron Clark: Mm-hmm. "
Joe Ehrhardt: We believe..." Now if Teslar raises money, they aren't betting on Joe. They're betting on Teslar as an organization. But when you're an angel, you're, you should be betting on the team and probably the founders.
Cameron Clark: Yeah.
Joe Ehrhardt: I mean, so they're... Generally speaking, unless you get a psychopath angel, which you probably don't want They should just trust what you're doing.
Cameron Clark: Yeah.
Joe Ehrhardt: And you're gonna... They're gonna live or die their investment based off that person. So that's why when people raise, and I [00:56:00] kn- and I knew this rule before I raised, when someone says, "I'm not interested," that's why it always hurt. Mm-hmm. Because I knew they should technically be betting on me, and saying that like it's not personal, but it is personal.
Cameron Clark: Mm-hmm. '
Joe Ehrhardt: Cause I knew who they were betting on. They were either betting on me or they weren't betting on me.
Cameron Clark: Mm.
Joe Ehrhardt: And now as you get bigger, that completely changes. Like OpenAI, yes, they care a lot about the, the management team, but they're still betting a lot on the company itself.
Nick Beyer: Yeah.
Joe Ehrhardt: Yeah. So...
Nick Beyer: So you raise the money, you're burning through cash, COVID happens, you do the PPP stuff for free.
How do you start making money?
Joe Ehrhardt: So what happened is we did the forgiveness for free. Tons of people used it. Some banks signed up. We, we were probably making, you know, a million dollars in revenue off of banks signing up, which was amazing for us. But remember we raised $2.8 million, so it's not like making a million off that's probably...
And that's PPP. That's... Our core business is still operating. Mm-hmm. Teslas are still operating. Banks are still doing stuff. But what happens when you enter a crisis like this is banks are super conservative, so the very first thing they do is they buy nothing. So the [00:57:00] sales funnel dies immediately. And remember, our sales funnel is six months to two years.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So that's not a jumpstart to restart that when banks start buying in. So the first thing banks do is just go into non-purchase mode, and that happens in any crisis, by the way.
Cameron Clark: Yep.
Joe Ehrhardt: And so, uh, we always prepare ourselves for that. Like, okay, if we enter a crisis, we're gonna enter a non-buy mode, what happens?
Uh, and that happened to us again, by the way. We'll fast-forward to there when Silicon Valley Bank collapsed. Banks entered a non-purchase mode for a bit 'cause they freaked out of those collapses. But we, we did the PPP stuff, and we said, "Okay, if they ever did PPP again, we're gonna be ready." So PPP round two, the Trump administration started and the Biden administration finished, and round three started back up.
This time the government was gonna be more sophisticated. They weren't gonna run out of money. They were gonna support it. And we put our hat out there and said, "We will be the top provider of that, and we are gonna charge per loan." So we... We're gonna charge per loan. We're gonna help you book it, banks.
We're gonna be there. Well, a lot of fintech, seeing what happened in the first round, said, "We want to be in this." So they went to Mark Cuban and said, "Hey, we can't get in this without a bank, but we need a software provider that understands banks. [00:58:00] Who do you know?" And Mark Cuban indirectly sent him to us.
So we ended up getting five of the top 10 banks to process their loans. So we processed around 80,000 loans every single day. If we're processing, what does that mean? It means the bank, the, the banker took care of the front end or the tech company. They sent it to us. We held the data, let the bank come in.
Oops, didn't mean to hit that. We let the bank come in, who was back behind it, and we let the bank look at it, review it, and say, "I want to send it to the SBA." Then it was our job to send it to the SBA team. When the SBA approved it, we would then send it to DocuSign to get signed. And then once it got signed, we would send the money or the...
create the envelope to send it to the US Treasury to fund it. US Treasury sent it to the bank, then we would send the ACH to actually fund it. So, like, we moved all of that money. And let me tell you, it's a little intimidating on days when you're moving $100 million, $150 million every day- To, I mean, and when I say 150 mil, I'm not kidding.
Like, it's, it's like the average loan was $10,000. We did, um, uh, over two million loans. You can figure out how much money had to be moved- Mm-hmm ... if you do the [00:59:00] math. So, um-
Nick Beyer: Billions?
Joe Ehrhardt: B- billions.
Nick Beyer: Um-
Joe Ehrhardt: Tens of
Nick Beyer: billions?
Cameron Clark: When you say you moved it, like, was it ever go- I mean, like, was there a holding account, like a title company essentially?
I mean, or was there-
Joe Ehrhardt: No, the way- The- The way it worked is we would send the, uh, the loan number to the US Treasury. The US Treasury would then fund the bank and put it into a bank's general ledger account.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And then we would then cr- help the bank... Um, the bank would then spin up the loan, but we would then send the ACH.
So we collected your routing number and your account number.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And so we would take and say, "Okay," we'd create what's called a NACHA file, probably a lame format you don't wanna know anything about, but it's how ACHs work under the covers.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And we would create a massively large NACHA file per every bank every single day, and we would say, "Send that to your automatic ACH system."
So the bank just blindly puts the file in, and it moves all the money, and funds it. Wow. And so obviously it had to be perfect to the penny. You don't want typos.
Cameron Clark: Yep.
Joe Ehrhardt: You don't want anything. And so it's all automated, but there's always errors. Somebody mistyped their checking account number. [01:00:00] Well, where did the money go?
Oh, God, we sent it... Or worse, if you mistype a checking account number, it's actually not a big deal because it went to the right bank. When you mistype a routing number, now we went to the wrong bank, and now it's really hard to go hunt it down. So we were... Our team, most of our team's job most of the day was troubleshooting issues that occurred.
Yeah. Not usually with our tech, but just with human error.
Cameron Clark: Wow.
Joe Ehrhardt: Like a human... Uh, y- another one, somebody DocuSigned it, but somehow, we don't know how, they filled out for the wrong business 'cause they had two businesses, so now they wanna undo it. Or we had situations where they filed for PPP 1, but the person died, and so PPP 2 is the new owner, but the new owner can't file 'cause it's under...
PPP 1's under the other name. Mm. So we spent, as a processor, most of our time was helping our banks troubleshoot all these issues, resubmitting to the SBA.
Cameron Clark: Mm.
Joe Ehrhardt: Um, one of my favorite stories though is, I'm, I'm sure everybody's familiar with DocuSign.
Cameron Clark: Yep.
Joe Ehrhardt: So we would send DocuSign a e-signature file every time a loan was approved.
Well, the SBA would approve in batches, so we would get [01:01:00] 100,000 loans approved or 80,000 loans on a weekend. So the SBA would save up for two weeks, and they'd approve 80,000, 100,000 new loans on, on one day. And so we would send all 100,000 e-signs to DocuSign at once. We would pull their DocuSign servers offline, and DocuSign would call us and be like, "Stop doing it.
Invest in better tech." I'm like, "In better tech? You're the one failing." So we'd have this whole argument with DocuSign, like, "You're a publicly traded company. It's not my fault you're going offline." But we'd pull their, uh... They... If you've ever used a DocuSign, you'll see the little, little, little letters NA in front of your DocuSign, it's then what cluster you're in.
If you're in the NA4 cluster during PPP, you hated your life, 'cause we pulled that cluster offline almost every- Dang ... every weekend when we got batch approvals at least.
Nick Beyer: That's amazing. So how many loans did you pro- I know I heard 20-ish percent of all PPP. How many, like, actual loans is that?
Joe Ehrhardt: It's about two million.
Nick Beyer: Okay.
Joe Ehrhardt: So it's about two million individual loans that were funded. There were more applications outside of that.
Nick Beyer: Who would pay you for those loans, the banks-
Joe Ehrhardt: The banks do ... or the
Nick Beyer: government? Okay.
Joe Ehrhardt: So the bank got paid, and this is one of the w- weird things that [01:02:00] you could say is good or bad about PPP. In order to get a bank to want to do all this, the government has to pay an origination fee, and they made the origination fee, um, $2,500 roughly per loan.
That was to pay everything the bank... The bank wasn't gonna make any interest on these loans, so that was for all the bank's work. If it was a $10 million loan, it could be more or less, but it's roughly 2,500 bucks per loan. So the bank got paid by the government to do this, and the, and, and the reason was, hindsight, the government probably should've just done it through the IRS, in my opinion.
They could have... A- and I benefited from the program, but I mean, as a taxpayer, I'm like, we did the, the individual payments to, to personal people, uh, to people that way. Why couldn't we have done the businesses that way? Mm-hmm.
Nick Beyer: Mm.
Joe Ehrhardt: But the government needed some arm. They wanted the SBA to do it. The SBA had no way of doing it.
Mm-hmm. They needed it done fast. So who has access to all the customers was the banks.
Nick Beyer: Mm-hmm.
Joe Ehrhardt: But how are you gonna get a conservative bank to want to go take all this risk? Yeah. You better pay them a fee.
Nick Beyer: Yeah.
Joe Ehrhardt: And so that's how that all worked. Um, and so then we got a cut of that fee, and that was negotiated per [01:03:00] bank, you know.
It was... Sometimes it was low, as like, you know, $15 a loan. Sometimes it was higher. Uh, we were one of the cheaper providers, but you can... Walmart's proof this. You can be a cheap provider, but if you do a lot of volume, it works out well.
Nick Beyer: Yeah. Yeah.
Joe Ehrhardt: So, um, and so we, we did, we did that, and then we had hard costs.
Like, we, um... I can still remember this like yesterday. Uh, we were at the very start of the program where we didn't know how many loans we'd do. We had a $150,000 bill from DocuSign, and I... And DocuSign, I won't bad-mouth them too much, but they're my least favorite vendor. Um, they require you to predict what you're gonna spend for the next three years.
Remember, PPP's just starting. I'm like, "Guys, I can't predict anything. No one can predict this." And they wanted us to buy $150,000 worth of envelopes, which, remember, we just raised 800 grand, so that's, like, an insane amount- ... of our capital. And I'm like, "Guys, there's no way I can do this." And they fought back and forth and forth, and I will say at the time, the, the leadership's not there.
The leadership said, "Hey, if you pay this 150 grand, we'll then let anything you do after [01:04:00] that be on us, and you can pay us at the end And I think in their mind they thought, "Okay, this guy's gonna do 150 grand, and maybe he'll do another 10 grand, but we'll be nice." So they wrote a deal with us to say, "You pay the 150.
Everything after that, don't worry about it. We'll, we'll hold it, and you can pay us at the end." They didn't realize it was gonna be $18 million later in DocuSigns. So I stressed about that 100... We still joke about that. We still joke about that 150 grand, and then w- we ended up having to write them, I think our largest individual check we wrote them was 13, $13 million.
Um, and so it was... It's kind of funny. You just don't know, like... But I can still remember, like, losing sleep for weeks over the $150,000 payment.
Cameron Clark: Yeah.
Joe Ehrhardt: And then later on, you know, we're doing all these loans, and I looked down, I was like, "How much do we owe DocuSign?" 'Cause it was just, you know, ticking and- Yeah
we didn't pay them till near the end. But yeah, it ended up being the 18 total, but the largest individual check was, that first catch-up check was 13.
Cameron Clark: We can make them wait one more day.
Joe Ehrhardt: Yeah. Well, they started getting nervous once it started getting really large. They're like, "Hey, when can you pay us?" [01:05:00] So we did end up paying all...
We ended up paying that big check in the, in the middle- Yeah ... just to calm them down.
Cameron Clark: Yeah.
Joe Ehrhardt: So y- you know, we had... So we, we covered all expenses for processing. So when we charged per loan, we also had to cover DocuSign, anything that happened.
Cameron Clark: Mm-hmm. Um,
Joe Ehrhardt: and so it w- it was a cool, it was a cool experience. At the same time though, while we're doing that, we're still selling normal Teslar.
Mm-hmm. Yeah. So Teslar, the software is still going, producing. We're just getting a, a cash infusion from a program we're dealing inside.
Nick Beyer: So y- it was, like, profitable. It wasn't like you're burning cash trying to pay all these huge bills. Like, you were... That helped the company get-
Joe Ehrhardt: That... It was an- ... make progress
it was a very profitable solution for Teslar. Um, we... A- as we ended that program, there would've been some of my investors who's like, "We should just sell Teslar. We've done very well." A lot of the other people, a lot of the fintechs that did PPP that did well all sold. Mm. Like, almost all of them sold. They just said, "Let's cash out the business.
Let's sell." And I was like, "Man, I'm, I'm too young for that, and I think our main [01:06:00] product has a lot of legs." So what I elected to do instead is we actually went back to our investors and said, "We did really well. We would like you to leave, and we're willing to give you back 10 times your money if you leave."
Nick Beyer: Mm. So you restructured the cap table
Joe Ehrhardt: after. Yes. And essentially, most all the investors took it. Now, what they all did is, since they invested multiple times, and I appreciate it, is they all took out their early rounds that were worth 10X. Mm. And they left their last round.
Cameron Clark: Oh, that's
Joe Ehrhardt: brilliant. So they're all playing with house money, but they're all still on the cap table.
Um, but I own about 90% of Teslar. 5%'s owned by the employees, 5%'s owned by the investors that are left.
Cameron Clark: Mm.
Joe Ehrhardt: And so that was the way I thought about it, is like I'm just gonna restructure it, recapitalize Teslar, and we will raise capital again. We look at Teslar being a... In, in a SaaS business, you always measure yourself by ARR.
That's annual re- recurring revenue. We wanna be a $100 million ARR business And so that's our goal. I tell people that. It's not like bragging, it's just a goal. I like goals. Yeah. I'm a huge goal person. Now, will we get there in one year? No, there's no way we're [01:07:00] getting there in one year. Will we get there in 10 years?
Maybe, but it'll take 100 years. W- it'll be after... Maybe it will never get there. I don't know. I just like to set a hard goal.
Cameron Clark: Yeah.
Joe Ehrhardt: It's a very hard goal, um, to get to. And so what I said is if I... That's gonna be my goal. That's gonna require raising capital along the way. I can't be starting out at 55, 60%. So we re- paid out investors, brought my percentage back up, and the goal is simple: keep growing Tesla, keep helping banks, and we will raise capital along the way, and then that will dilute me again-
Cameron Clark: Sure
Joe Ehrhardt: back down. Um, and for our investors it was great. They were in Tesla for five years, walked away with 10X. I don't think anyone's complaining about that.
Cameron Clark: That's amazing. Ta- talk about the last five, six years though, but like from, you know, aft- after COVID, then 2022 to '26 here.
Joe Ehrhardt: Yeah, so first thing to know is 2021, '22, '23 were still all PPP for us.
Um, one of the biggest negatives no one ever told me about PPP that I could have never have guessed, and I think I'm legally allowed to say [01:08:00] without getting arrested, is, uh, you would never... I have never had a subpoena a day in my life, but now we got one like every other week. So when you house all of the data and there is a ton of fraud, the government has to go get that data.
Cameron Clark: Oh, man.
Joe Ehrhardt: But it's not allowed to get it without a grand jury and a subpoena. And they have to subpoena us, which the first one we got, like I, I, I might have had to change my pants 'cause I didn't understand it. Now I wouldn't even think twice about it. "
Cameron Clark: Hey guys, we got another one."
Joe Ehrhardt: Yeah. We just kept getting
Cameron Clark: them.
Grand
Joe Ehrhardt: jury. All right. And, you know, and I have to... Every time I send the data I have to sign a thing under perjury of law, yada, yada, yada, I agree this is correct and there's nothing wrong here. Um, and, and the reason is simple. The government... And, and you, you name a government investigation agency from the criminal investigation unit of the IRS to the Secret Service to the FBI, I mean, we have been hit by all of them.
But it's just because of our volume. Yeah. So every time they're investigating something, they would hit us up and say, "We need this data for this person," but they can't request it from us without notifying the [01:09:00] person without a, a warrant or subpoena. Mm-hmm. And that's literally what would happen. They would hit us.
So we spent the next three years just servicing that junk while still running our core business, but very little growth. So-
Nick Beyer: Did you build that into the mo- like your P&L model of what you were charging customers- Oh,
Joe Ehrhardt: absolutely not ... or was this- We had no clue. Okay. I didn't know till the first one arrived, and I got a, I got a weird email.
I got a... This is the kind of email you don't want. You get the Department of Justice with the IRS Criminal Investigation Unit and they're like, "Hey, do you guys have a contact for your attorney so we can subpen- send a subpoena to?" Mm. I was like, "What? What?" You know, and I'm panicking. I'm sweating. I don't even know.
But I didn't realize they're so used to talking to vendors that vendors usually have an attorney contact- Yeah ... that takes them all in. Mm-hmm. But I didn't know it, and I'm, like, crying almost to myself, not understanding what's happening, and then, you know, the documents are huge. They're 100, 200 pages long, and you gotta read it.
I mean, like, what's this do? So we ended up getting a great attorney, um, uh, h- that essentially got them all, would read through them all, tell us, "Here's what we need," [01:10:00] and, and almost every time all it was was go find Person X that committed fraud, get all their data, all the dates, when they signed, what IP were they at, and ship this over, and then say, "Under perjury of law, it's correct."
Cameron Clark: Mm-hmm.
Joe Ehrhardt: That's all it was.
Cameron Clark: Yeah.
Joe Ehrhardt: But they had to do it. But like I said, it was... That took, that lasted for years. We still, we... Even six weeks ago, we got a, um... To hit somebody with wire fraud, they need to commit a, a, a crime in two states is- Mm ... the rule. Well, if you live in Alabama and you apply for PPP, they count the state you applied to where the server is.
Okay. So we would, we'll get a request all the time from an FBI unit or something. They'll be like, "Where are your servers at?" And so we'll just send them an official letterhead. Our servers were located in Springdale, Arkansas, and Lenexa, Kansas, so don't worry. We already got two states for you. Your- Yeah.
your wire fraud is already approved.
Cameron Clark: Yeah.
Joe Ehrhardt: But they'll have to get that from us, and of course that's not even a subpoena. That's just a- Yeah ... a server request. But- Yeah ... those are things I never, ever dreamed about. Never crossed my mind that we would be the system of record [01:11:00] that... And, and rightfully so. I mean, fraudulent peop- people that commit fraud need to be investigated and-
Cameron Clark: Yeah
Joe Ehrhardt: and stuff. But, so that was about, I would say, three years. So that takes us to 2023. There was a, a Silicon Valley Bank collapse occurred, and a couple others slowed down the industry. No one's buying.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So then the last three years, we have been investing a ton in, uh... Like I said, we had four new products coming out.
So one of them is, if you, you probably have noticed this yourself, I love community banks. They do not do enough consumer lending. They have kind of abandoned that to the Rocket Mortgages of the world, the big banks. If you go buy a car, you probably get six offers. It's never your local community bank down the street.
Mm-hmm. Um, so I'm a big believer in, hey, community banks, you offer a better product, AKA it's not a credit card. It's a lower rate.
Cameron Clark: Yep.
Joe Ehrhardt: You h- they're in your backyard. They're your community, take care of your community. And so we're pushing really hard on what we call a consumer LOS product. So it's a product where the reason community banks don't do a lot of consumer lending is it's expensive, it takes a lot of time, and there's a lot of [01:12:00] regulations you can get wrong.
You could, you know, break a fair lending standard. So we've got tech that's just rolled out, um, it's in production now at some of our banks, that is, "Hey, bank, we guarantee you it's like PPP. They fill it out online. They come through it. You cannot f- have a fair lending violation. You'll not have a Reg Z violation, the usury cap issue.
Um, we'll make it seamless. We'll book it all back. Get back in consumer lending."
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And so we've taken a lot of our PPP tech, and we've invested it heavily into consumer lending to get community banks. There's about 4,000 community banks in the country.
Nick Beyer: And did they ask you for that, or is that like, "Hey, you see an issue here, and you think they should go chase this issue?"
Like, who-- where is the, where's the idea coming from there?
Joe Ehrhardt: So originally, we do a lot of commercial lending- Mm-hmm ... which is what most of our banks do. And so we started building a commercial LOS. And as we were building it, we're like, "What do you guys do for consumer?" "Oh, we don't do any. Oh, we don't do it.
Oh, we'd like to, but we don't, and we don't like to do it." So we kind of pivoted. We're like, "Everybody says they want to do this, but nobody is doing it." And so, um, you transfer over to the credit union side, [01:13:00] that's all they
Nick Beyer: do. Mm-hmm.
Joe Ehrhardt: So you get a billion-dollar bank here in Arkansas, they maybe do, if they're lucky, eight hundred consumer loans a year, a billion dollars in assets.
A billion-dollar in asset credit union might do thirty thousand consumer loans a year.
Cameron Clark: Wow.
Joe Ehrhardt: The discrepancy is massive. So we did it, and, and we've had good success. We, we think, um, we think we'll have... We just launched it out of beta a month ago. Uh, we're expecting to have twenty, thirty banks on it by end of year, which is, by the way, is a great progress for, for, for us.
And so we, we see that as the future. And then the other i- major item we have coming out, of course, is AI related.
Nick Beyer: We'll talk about that. So, uh, but the consumer side, like, is there a reason monetarily they don't do it? Like, if I'm gonna go buy a forty thousand dollar car, are they gonna make any money doing a consumer loan on it?
I mean, is, is that part of it? Or truly it's, it's there's so many regulations, they're like, "It's not... We're gonna make money. It's not that much, so it's not worth the risk for us to interfere."
Joe Ehrhardt: It, it's all of the above. So let's just walk through the scenario. You're a commercial bank, okay? [01:14:00] I can go book a ten million dollar building loan.
That's gonna take me three hours, four hours of, of staff, three weeks of prep, maybe five hours in the back end operations to verify it, all that. Ten million dollar loan, I'm gonna charge, let's say seven percent, eight percent, nine percent. You do the math, that's how much money they make. They charge an origination fee.
Maybe the origination fee is half a percent, so they're gonna start out with a large origination fee. Maybe it's even less. Um, you do a consumer loan, takes the same amount of time. It's for four thousand dollars. You can't charge a very big origination fee because you break reg APR rules, which we, we call Reg Z, but it's really usury.
It's like you just can't charge over... Arkansas, while we have no payday lenders, has a cap on how much interest rate you're allowed to charge.
Nick Beyer: Mm-hmm.
Joe Ehrhardt: Well, the origination fee counts in that cap.
Nick Beyer: Mm.
Joe Ehrhardt: So that, that's the difference. That's why an APR is different than interest rate. All the fees go into the APR.
So as a bank, you're gonna do all the same amount of work. Okay, commercial loan. If you came in here today, and you said, "Joe, I'm a banker. [01:15:00] I want a ten million dollar loan," I'd say, "Get lost." I don't have to document a thing. There's not a rule on it. I could deny you for any reason. I come in for that consumer loan, that's called fair lending.
I need to say why I denied you, what is different, what I did different. There's, there's very strict rules in consumer lending, and those are the biggest fines for any banks is breaking fair lending. It could even be like, "I didn't mean to." Like, I gave you eight percent, a, a, a, a loan, and I gave somebody else six percent Same credit score, same everything.
That's not allowed. You get hit with a heavy fair lending violation.
Nick Beyer: Hmm.
Joe Ehrhardt: So from a bank standpoint, it makes very little money. It's very high risk. Why would I do it? Well, technology, you can eliminate both of those. With technology, we can take the risk away because we cap all the user rates. We make sure it's fair.
We, we don't make it auto decision where the lender doesn't have any input, but we auto decision the pricing to say, "Lender, you can't choose what they give... what you'd give them. You have to give them this rate unless you have these exemptions that allow us to [01:16:00] lower the rate, and we're gonna document those."
Nick Beyer: Mm-hmm.
Joe Ehrhardt: So all of a sudden, our expense base goes near to zero because we can automate so much of it, and now the risk goes to zero. Well, yeah, now I wanna do that loan. That's the difference. Credit unions have been functioning this way for a while, so this isn't new tech that's unproven. Banks just haven't done it.
We mainly service banks. So that's, that's the, that's, that's the logic we have. And, and banks used to do a ton of consumer lending. Mm-hmm. They just got slower at it. Um, the, the risk was too high. But if you can mitigate the risk and speed it up, then they're very interested in it. So
Nick Beyer: how's, how's... Like how efficient is that?
I go, I walk down the street to Legacy and I wanna buy a car, and I walk in. Do they send me a link to Tesla or I fill out a questionnaire or something and it does all that stuff in the back end? I mean, how much faster is-
Joe Ehrhardt: Yeah, so w-we'll give you an example. The average bank that we walk into will spend 30 minutes taking your data from you if they don't have an online platform.
They'll spend two hours in the back end typically getting all the docs ready, getting ready to sign it. They're then gonna send you to [01:17:00] eSign. Usually, they go to eSign. They pick every little field. They're gonna ask you to sign it, and they're gonna do all that, and so they might have it done... If you come in in the morning, it's done by the afternoon.
We can do the entire loan in 30 minutes start to finish. So we go from an eight-hour process to 30 minutes. And ours is digital, so we... you could go online and you could start it. You could fill it all out. You could sign the application. We can send you back the offer. You could get a text message. You could sign it.
We could fund it. It's all tech that we created during PPP that we're just carrying over to consumer lending. Now, can this be done? It's already done lots of places.
Nick Beyer: Mm.
Joe Ehrhardt: But it's not done... The difference is, like Bank of America can do this right now, but Bank of America is not your community bank that's worth...
you know, that has three branches. What we are trying to do is make the technology to give it to the bank with three branches, 30 branches, 100 branches.
Nick Beyer: Mm-hmm. So one of your goals is allowing small banks to compete on scale with big banks.
Joe Ehrhardt: Correct.
Nick Beyer: Okay.
Joe Ehrhardt: And the biggest difference is most small banks, when they go to buy this kind of technology, they gotta pay a huge upfront cost.
Tesla is typically that way. It's an annual fee. [01:18:00] In consumer lending, we went back to PPP. We only make money when you make money, so the only fee you pay us bank is when the loan closes.
Cameron Clark: Hmm.
Joe Ehrhardt: And so why wouldn't you sign up? What do you have to lose? Yeah. It's gonna be exactly PPP. If, if, if you charge $100 origination fee, you're gonna give part of that back to us.
Cameron Clark: Mm-hmm. That's amazing.
Joe Ehrhardt: And so that's our new tech. It's rolling out. We'll see where it goes. But that's, that's what... People are like, "What have you been doing for the last two years?" We've been working really hard.
Cameron Clark: Yeah.
Joe Ehrhardt: And w- and we've been growing, our core business has been growing, too. Mm-hmm. Like Teslar has a lot of technology already.
We do, in the commercial side, stuff you'll never see. But if you book a commercial loan and there's a single covenant on it, we- almost every bank in the state of Arkansas, not all of them, most of them will use us. We're in 36 states across the country. Mm. We do everything commercial side. So if you have a covenant for debt service coverage ratio, or you even start to the commercial application process, or they do an annual loan review to see if you could have cash flow, that's what Teslar does core.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So that's what... That's our core business that we've grown a ton. That business is still growing. Yeah. We're just adding on top of it. So we could, we could health- A- and the [01:19:00] core business grows about 20, 25% every year. So we could just, we could as a company just say-
Cameron Clark: We're just gonna stick with core business
Joe Ehrhardt: and like- We're just gonna stick with core.
Keep growing. But, uh, but we've been... Instead, we've been using some dollars to say, let's add on to the core business. Mm. Let's, let's add new stuff that Teslar can do. So when I talk about this LOS, I don't want you to think that that is all Teslar does. That's, that's just an add-on- Mm-hmm ... to our actual core business-
Cameron Clark: Mm-hmm
Joe Ehrhardt: that, that every, most of these employee, you know, most of the team here supports every day.
Cameron Clark: So i- in the, in the future, uh, if y'all go to raise again, it's probably to add on something in add- in addition to the core business. It's probably what that functions for.
Joe Ehrhardt: Yeah. Most likely, if you want to grow, and I'm just being pragmatic.
Cameron Clark: Mm.
Joe Ehrhardt: So we don't ever want to be... All of our competitors are very large, um, and, like, uh, one of our competitors is backed by Carlyle Group. If you know nothing about them- Mm ... they're a $500 billion PE firm. Like, we're never gonna outspend that. The, the PE firm could just drop a check tomorrow and outspend us.
Uh, another one of our com- competitors is public, and they're a $3 billion publicly traded company. Like, we just, [01:20:00] we, we know that we're never gonna outspend them.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And so what we look at for growth is we say, "Okay, we wanna keep organically growing, but to grow efficiently, we are probably gonna need to acquire some other things that are tangential or complementary to Teslar-
Cameron Clark: In the space, yeah
Joe Ehrhardt: in the space that can help us grow." And so if we raise, we're raising for that.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So we've positioned ourselves to say, "We're going out to raise... We're gonna... Our, our core product, our product market fit, we're gonna cash flow that just on our own." Mm-hmm. "But we're gonna go raise capital to go acquire a company to bring in and to grow quicker," which you see in every major company around here, right?
Yeah. Tyson's done a ton of acquisitions, J.B. Hunt, Walmart. I mean, we're not those size of anyways, but, but to, to grow at, at, at a good speed, it's gonna require some acquisitions, and you need to do it intelligently.
Cameron Clark: Yeah.
Joe Ehrhardt: So that's what, that's what we'd raise for.
Cameron Clark: So where y'all are sitting today, you just built this 50,000 square foot building in, in- Yeah
uh, West Springdale, and I mean, just beautiful Staying opportu-opportunistic for new th- new things that may [01:21:00] come. What's the... How many employees are here today? Kind of as far as just where sc- where scale's at and, and, uh, and where you see kind of that moving on into the future too.
Joe Ehrhardt: Yeah, in this building, uh, about 70 folks, a little less, depends on the day, uh, stuff in here.
We also... The bottom floor does have some leasable space, so we only took the top two floors. Um, our goal for this, this building is set up for 100. Um, one of the rules I tell people, anytime I have a new employee buying their first house, I'm like, "One of your rules is do not fill your house up immediately.
That's craziness." I was like, "Buy a house and then build. D-don't go bankrupt trying to fill it up." So I use the same approach when we built the building. I wanna build it to, to have enough staff, and we can grow the staff here to easily 200 if you squish stuff in, remodel stuff. But our goal was we built it for 100 out of the gate knowing we're gonna grow into it.
We weren't gonna come in day one 'cause it takes a long time to build a building.
Cameron Clark: Yeah.
Joe Ehrhardt: And so you wanna have scale there. Um, so that's where we're at today. Long-term vision, I mean, our goal is very simple, is we want to be a great partner for community [01:22:00] banks. We wanna keep challenging the space. And, and most important to me, every opportunity I've had in life, I've had to borrow money.
My first car, I worked at a bank, I borrowed $2,000 to get a car. Um, I'm a big believer in community banking.
Cameron Clark: Mm.
Joe Ehrhardt: And so I, I want community banks to succeed, and, um, they need great technology. 'Cause why would you wanna go get a consumer loan from a bank that makes you fill out a piece of paper-
Cameron Clark: Yeah ...
Joe Ehrhardt: when you can go to Bank of America and fill it out?
Cameron Clark: Mm.
Joe Ehrhardt: So to me, it's like there's a vision of how can we help community banks survive? And community banks are far superior than your large big four, right? I mean, when I say community banks, Arvest is a big bank, but it's still a community bank in my mind. Mm-hmm. Yep. Like, a-and you would say, "Well, Arvest is a top 60 bank," but the size difference, Arvest is $28 billion in assets.
JP Morgan's over $2 trillion. You can't say that they're in the same ballpark. So when I say community banks, I'm talking about the ones that don't have a trillion in their name.
Nick Beyer: Mm-hmm. Yeah. And then I know we talked a little bit about [01:23:00] application of AI. Is... Are any of the future products that you have AI related?
A-- Like, how do you, how do you see that really f- next two years as an integration into, into Tesla? I'm sure it's already integrated, but just-
Joe Ehrhardt: Yeah. Well, no, we haven't launched our AI yet. It'll launch in two, uh, in two weeks or three weeks roughly. But it's gonna be revolutionary for banks in some operations.
So you may think this is crazy, but I'm sure you've all filled out a signature card. You've all given a bank your tax return if you've ever gotten a loan.
Nick Beyer: Mm-hmm.
Joe Ehrhardt: Well, what did the bank do with... What do they do with these? Well, they have to look at it and say, "Is that a real signature card? Do we get a real signature?
Okay, file it. Oh, that tax return, is the numbers look correct? Is this really a rent roll that's correct? Um, you know, is this pi- PFS filled out?" And they gotta put it in the right file They have to do this for every customer. If you have insurance required by your bank, they gotta get the insurance binder, the insurance card.
They gotta file
Cameron Clark: it. Mm-hmm.
Joe Ehrhardt: Um, what we're releasing in V1 is all that's done by hand. So today, even in Tesla, a very [01:24:00] automated software, if you give your, your lender a, a tax return, they drag it into Tesla, they drop it on top of your name. We take it, we file it. Someone in the back end, though, real quickly just says, "Okay, I'm gonna look at the lender's work.
Yeah, that was Nick's tax return. It does look good. Okay, I approve it to go to the file."
Cameron Clark: Mm-hmm.
Joe Ehrhardt: With Tesla, uh, the AI part, the lender still drops it, or you drop it online if you use a portal, 'cause we have portals. Then AI says, "Is it right?" That entire back-end operation side, which for banks can be tons of, tons and tons of hours, for a billion-dollar bank, it's at least one, if not two people full-time.
Um, so you, you take that up to a bank that's thirty billion, you're talking about sixty people potentially. Probably not because they're more efficient. Probably more like fourteen, fifteen.
Cameron Clark: Still, though. Yeah.
Joe Ehrhardt: But still, and that's gone. I tell people all the time, any task, and this is the rule I use on AI, is three things.
I stole it from another presenter, so I won't take credit, but I love it. Any task that you do the same every day, any task that if you hired two [01:25:00] people, they would do the same way every day, and any task that has less than five seconds of cognizant thought, if it's computer-related, AI, AI can do it. Use those three rules.
So if it's computer... Now, obviously, it doesn't apply to a physical item at all. But for a computer item, if two people do it the same way, you do it the same way every day, and it takes less than five seconds of cognizant thought, there's no reason AI can do it. So the example I give of is this, uh, r- is this, is this insurance card yours, and where does it go fits that perfectly.
Cameron Clark: Yeah. Mm-hmm. And
Joe Ehrhardt: so any task like that is ripe for AI, and that's where we tell our banks to start. There's all kinds of people that talk about AI should decide if you should get a loan. That, that is a horrible place to start because of just fair lending issues and other things. Mm-hmm. It's what people talk about.
AI will be smarter, it'll be better. It'll be worse, in my opinion, right now. You talk about AI and also these basic task and operations, could be any business, that's, that is the... that is where you start right now. Now, if you're a co- a coding shop, obviously, use coding. Like, we, we use Claude to help us code.
Nick Beyer: Mm-hmm
Joe Ehrhardt: That, [01:26:00] that's a, that's a rule as a business owner. That's where we're putting stuff out for our banks in AI
Nick Beyer: So is that one of the four products that's rolling out or that's- It is ... like kind of future?
Joe Ehrhardt: No, that's one of the four. Okay. So we have four rolling out. The first one is the consumer LOS. The second one is, uh, software.
I won't get too nerdy, but it's called spreading. Commercial people should know it real well. It's how we spread financial statements. We have a new version coming out. So if you've got... People that aren't in this world probably don't know it, but typically, when someone's going to build a building or something, they don't have just one piece of property.
They got like 50 of them, and figuring out what 30 are actually making or what 10 are making money to pay for the other 30 is called spreading. Mm-hmm. It's trying to figure out who's actually cash flowing this deal. So we've got a version of that rolling out. Um, the third one is just a, um, a major API language.
There's lots of cores. I won't get into it, but they're the o- the operating systems of banks. Uh, we just... We've changed it so that if you go in our portal and you change your address, we'll go change it for the bank. So again, it removes the person.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So what we're doing is short-circuiting. A lot of times as a customer, you fill something out, and you don't realize it, but someone rekeys it all.[01:27:00]
So our third one's really just removing all the rekeying. Mm-hmm. You, the customer, fill it out. We'll key it straight in the core.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: And the last one's AI. We think these are all impactful. Um, in a bank, we always joke a bank only buys a product for one of three reasons: make money, save money, or to prevent a compliance or fraud issue.
Nick Beyer: If you're a betting man, which one do you think is a big segment of your business five years from now?
Joe Ehrhardt: Oh, man, that's hard. I would say I, I have two opinions. I- In my heart, I want it to be consumer LOS- Mm-hmm ... 'cause I'm bought into that. I think that's what com- community banks could do, but it could also fail.
Um, realistically, our core business, the AI supports our core business.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: So our core business we know works, and the AI takes it up a notch because that AI is all based on our core business. Sure.
Cameron Clark: Yeah.
Joe Ehrhardt: So if I'm a betting man, I'm going there because that core business absolutely works. We're in banks across the country, and this is gonna make that core business better.
In my heart, I really want community banks to be in consumer lending.
Cameron Clark: Wow. Well, it's... Y'all have a lot [01:28:00] of exciting things going on- Mm-hmm for the future here. Um, I'm gonna get us- Sure ... kind of wrapped up here. Um, so a couple... last couple questions we ask every guest. Yeah. One, um, you grew up in Northwest Arkansas, University of Arkansas, still here, build a building in Springdale.
What would you tell someone why build a business here in Northwest Arkansas?
Joe Ehrhardt: Well, I think there's a, a few reasons. One, I was born and raised here, so I'm biased, but quality of life is great Now, yes, things have gotten more expensive, and no, I'm not, uh, I'm probably the... I c- the Northwest Arkansas Council might hate my guts for some of this.
Like, I'm not a huge fan of the dense, dense building, and I know that's needed to support the growth. I understand it. But for a lot of folks, it's the American dream if you're raising a family here, right? You've got good activities. You've got great schools. You've got, uh, you can have a yard. That's why I talk about the dense part where I don't usually agree 'cause I think that yard is important for a growing family and for kids.
Um, you know, I think those things are just amazing [01:29:00] amenities. It's a safe, um, good schools that if you're gonna build a business, you're gonna need teammates that ha- You know, you want people to have families. As a country, we want our population to keep going up. To me, it's just an all-around winner.
Cameron Clark: Mm-hmm.
Joe Ehrhardt: You, y- you need great people. Well, great people wanna live in a great place.
Cameron Clark: Yeah.
Joe Ehrhardt: I mean, that's, that's the formula. Mm-hmm. Now, we could... Now, if you're in a CPG world, it's Walmart. It's a no-brainer. Yeah. But a bank tech company, I mean, there's not a lot of other bank tech vendors up here I can support.
But I just couldn't look personally, and I'm biased 'cause I was born and raised here. It's hard... I've traveled through... We have banks in 36 states. I've traveled all the time. I rarely... There are a few, but I rarely find a place where I'm like, "Man, this is as cool as Northwest Arkansas." Mm-hmm. Just a great place, and if you love outdoors, and I love outdoors, you don't have to go very far to, to be outdoors.
Cameron Clark: Mm.
Joe Ehrhardt: And I'm an avid cyclist now, so I, I, I, uh, I, I blame the Waltons for that, but they built all this cool stuff. I gotta use it. And so I love cycling. It's, it's just, it's a great place.
Cameron Clark: It is. I love it, too. Um, how do you define [01:30:00] success?
Joe Ehrhardt: Uh, so first off, one of the rules I've been taught early on, comparison is the stealer of all joy- Mm
and the stealer of your success. So I think you as a person have to define success 'cause somebody will look at you and say you're successful and, or you're not successful, but that may not be the truth. Um, to me, I define success, uh, for myself of I'm a huge goal setter. Um, I set goals. I always have goals set.
Cameron Clark: Is that how you stay driven?
Joe Ehrhardt: Yes. It's very much, and, a- and it has to be of an attainable goal. Setting a goal you cannot obtain is the opposite of what you want. That will actually discourage you. That'll hurt you.
Cameron Clark: Mm. And
Joe Ehrhardt: so you gotta set yourself realistic goals. Yes, I have grand goals, and we... I, I put those out there, but I even set little goals, and I alw- look at success like, did I achieve that?
Um, and so I am a spiritual person. One of the things that I, I believe God, um, has said is, like, be a blessing to others. And so I look to say, okay, what is success to me? Well, [01:31:00] if, if God is the most important thing to me and He wants me to be a blessing to others, am I blessing others? Now, how do you bless others?
I'm not a missionary guy. I'd be the worst missionary person on the planet. I couldn't handle it. Um, I'm not a great teacher. I don't have a lot of patience. Um- I look at it as, um, God's pr- letting me provide for seventy-five families or so, um, sixty-five, seventy-five families. Here at Teslar as we ebb and flow, um, and continue to grow, grow the area, um, that's successful to me.
But I... Honestly, if I worked a job and I never started Teslar and I was still helping and blessing others and raising a family, I'd still say it's successful. I don't, I don't think you-- I do not look at success with money. I think that is a, a, a very poor way to look at success, 'cause you can be the most, the richest and happiest person on the planet.
Uh, I look at success of like, what is y-you want to obtain? I've always wanted... Me and my wife always wanted to have kids. We have four beautiful daughters. Um, they are, uh, we managed to get [01:32:00] one of them to college, and so I look at that as a huge win, huge success. Um, and then from a business standpoint, I wanted to own a business.
Now, I'd never had an idea of the scale. I would even told you ten years ago we were successful. Mm. Now, financially as successful? No. Mm. But again, I do not, I would not grade that on financial success. Um, a-again, that's what's important in your life is, is being married important? S-spiritual life? So I think, I think, I think the worst thing to judge success on is the kind of car you drive or the, the money you have in your bank account.
Nick Beyer: That's good. Uh, before we wrap up, the last thing I feel like we missed, why, why the name Teslar?
Joe Ehrhardt: Uh, so it's, it's a, that's a great question. It's pure accident. I did not know... Remember, Teslar the product was created in two thousand and eight.
Nick Beyer: Mm-hmm.
Joe Ehrhardt: Tesla Motors, I'd never even heard of. So people think we're related to Tesla.
It was no clue. Now, what we are related to, and I always say his name wrong, I say Nikolai or Nikola. I'm an engineer [01:33:00] nerd. My wife, my wife will tell you, she doesn't like to watch movies with me 'cause I'm like, "That's not scientifically possible." Uh. Uh, I am an, I am such a nerd. I love space. And so I, you know, when you're looking at electricity, there's two guys that you could pick from, and I was like, "Well, we'll go with Tesla."
So I made a product, just add an R to it. One of our clients said it stood, it stood for Technical Exception System Loan Asset Reporting, which is actually, if you know nothing about banking, but those are things we do. Um, but we just... It stuck. Now, originally, the name of the company was always 3E. As Teslar became our only product, we had to make a decision.
Do we stick with the name of 3E and kill Teslar, or do we stick with Teslar? Sadly, there was a software business already named 3E in the banking space And so we couldn't stick with that name, and so that's how we ended up with Teslar. But no, there's no affiliation, there's no, um, with Tesla Motors. No clue.
We haven't got a cease and desist from them yet, so that's good. Um, probably in the wrong space, but yeah, that's... There's... It's just random.
Cameron Clark: Yeah.
Joe Ehrhardt: And no, orange is not my favorite color. It's probably one of my least favorite [01:34:00] colors. It was just a random color we picked to start the company. Blue is my favorite color.
And so people are like, "Why is it orange?" I'm like, "Uh, that's just how it happened. I mean, I didn't go to Texas."
Nick Beyer: That's awesome. Uh, well, one of the things we do at the e- end of every episode is we try to summarize and highlight what we learned today, what we think our listeners will learn. Um, just kind of the big themes about you.
If you're growing a business, if you work in a business, if you wanna start something, like what are those big things that we'll learn from? And I think the first word that kind of summarizes who you are, Joe, is just pragmatic. And you look at some of the great founders here in Northwest Arkansas all solving problems, all of them.
And if you want to grow a business, if you want to scale a business, you have to solve problems. Um, and so I just... The, the story, the Jack Henry story when you, when you were in college, like working through what your boss tasks you to, you're just trying to solve a problem you didn't even know if it could be solved, but you're trying to figure it out.
And, uh, going into the PPP [01:35:00] stuff and then ending with consumer loans, like that does feel like a big problem, and you are... W- we'll see if it works out, but it does s- it does seem like a really big opportunity and problem that, you know, you go to these big banks, get a car loan. It's harder for a community bank- Yeah
to do that. So I think pragmatic would be the first word that, that we would use. Um, the second one is just this gut, this instinct. Uh, I think hearing you talk about starting the business in 2008, like that's... It was thoughtful, it was thought out, but that was like a gut decision. Like, "Hey, let's do this.
Let's try it." Um, and obviously you were aligned with your wife, but it was a gut decision. And then the PPP thing, kind of surveying the field and looking at what was happening, saying like, "Hey, we need to do this." Um, moving... I, I think the other story, uh, when you talked about just shifting what y'all were doing in the, I don't know, 2012, '13 era, shifting from 13 team members to one and one core [01:36:00] product offering, like that was a gut decision.
And it, it seems like you have to have conviction. If you're building something, you've gotta have conviction. You've gotta make some gut decisions, and I think you've modeled that really well. Um, and then obviously AI and the integration of that, I think you've got a really good gut, um, and pulse on that as Tesla c- Tes- Teslar continues to grow.
And then the last one I think you highlighted really well, I think, um, if I asked you after this interview, you'd say that's probably my strength, is like just this, this persistence. Like every strong, good entrepreneur, persistent. Just- Brutally persistent. I think I-- the one thing that you highlighted, I'm kinda in this, is like this decade of sacrifice from a financial perspective with your family.
Like just living very minimally, trying to put everything back into the business and grow it, and that takes a ton of persistence. Like I'm sure in that 10-year period, there were multiple, [01:37:00] multiple times, probably every year, you're like, "Should I shut this down?" You even said it. Oh, yeah. If you would've given me 100 grand, I would've shut it down.
So, um, and then even just continuing to be persistent through the PPP stuff. You could've sold it, moved to Florida, but no, there's like this persistence of like, "No, I believe in what we're doing. We have a product that's working and serving banks and serving our community, serving people, consumers. Like, let's keep going."
Um, it takes persistence. So I think we learned a ton from you, Joe. I think our listeners are gonna learn a ton from you, so thank you so much for your time.
Joe Ehrhardt: Absolutely, and I greatly appreciate it.
Nick Beyer: Yeah.
Joe Ehrhardt: Thanks, Joe. Sure.
Nick Beyer: Thank
Cameron Clark: you for listening to this episode of NWA Founders, where we sit down with founders, owners, and builders driving growth here in Northwest Arkansas.
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