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Uncharted Entrepreneurship - hosted by Brent Peterson out of the Minnesota chapter of Entrepreneurs’ Organization – brings you daring stories straight from the trailblazing entrepreneurs who are unmapping business frontiers across every industry. Settle in around our virtual campfire as Brent sits down to pick the brains of startup pioneers, visionary founders, and intrepid CEOs whose origin stories - marked by unexpected twists, lessons, and stumbles along unpaved paths - will inspire your own trek in launching a boundary-pushing venture. Trading war stories, strategies, and even warnings, these audacious guests invite fellow founders and future leaders into their confidential circles in a uniquely transparent, wise, and motivational way. So join us off the beaten business trails to light your entrepreneurial fire!
Brent Peterson (00:02.09)
Welcome to this episode of Uncharted Entrepreneurship. Today I have Jeff Campbell from Scale Bank. Jeff, go ahead, do an introduction, tell us your day -to -day role, and maybe one of your passions in life.
Jeff Campbell (00:14.307)
Sure, thank you Brent. I really appreciate the opportunity. I'm, so the viewers know I'm coming in from an office park in Edina. Brent, as you could tell by his clothing, beautiful shirt today. He's coming direct from Hawaii. So this is like not quite international, but nationwide operation here.
Brent Peterson (00:34.798)
Ha ha.
Jeff Campbell (00:44.787)
So thank you again. I'm one of the, how I describe my role here at Scale Bank and I can explain a little bit more about the bank and the new name, as of about six months ago, used to be Fidelity Bank for 50 plus years and recently rebranded to Scale Bank. I've been, really it's a relationship manager or more traditionally a loan officer with the bank. And that means,
manage accounts and try to add new ones is how I describe that. So it's really all about the owner and the small business for us. So our typical client is going to be a our definition of small business, which is usually, you know, revenues can can vary industry by industry, but, you know, 50 to 100 and 100 million in revenue and below. But.
Typically, you know, it's a one to 25 million or so is probably the median of our businesses in our portfolio. And it's lending to those companies for various needs, could be working capital, equipment, real estate, acquisition, financing, other needs, executive lending, and then the cash management solutions around that. So July of 2001, it'll be going on.
Nearly 23 years here at the bank and this was my first job out of, that started my career here at the bank.
Brent Peterson (02:16.314)
Wow, career. I did not know that that's awesome. My dad was a banker as well. He was with the Federal Reserve System for 37 years. So, yeah. Yep.
Jeff Campbell (02:24.675)
Okay. Wow. That was a good run. I've used this line. I just wanted to eat. You know, I didn't know what I was getting into, but it was really fortunate to land here at the bank with such a great group of people. Sound, you know, the same guy that interviewed me is running the bank. I mean, the continuity of the delivery and the personnel at the banks has been really the calling card and looking back, you know,
really blessed and really fortunate to land where I did, for sure.
Brent Peterson (02:58.158)
Yeah, in full disclosure, we've been a client now for five or six years. Previous company, you helped us greatly on getting us situated. And now our new company, you're also helping us out. So I very much appreciate that.
Jeff Campbell (03:09.675)
Thank you.
Brent Peterson (03:15.918)
So Jeff, before we get into content today, you have graciously volunteered for the free joke project. And all I'm going to do is tell you a joke and all you have to do is say, should this joke be free or do you think at some point we could charge for it? Or as we've talked about in the green room, is this a free checking account or is this one of those checking accounts that charges you $100 a month? So yeah, I got a doozy for you today. You're just going to love this one. Here we go.
Jeff Campbell (03:37.795)
Yep. Got it. Got it.
Brent Peterson (03:45.518)
A truck loaded with Vicks Vaporub overturned on the highway. Amazingly, there was no congestion for 8 hours.
Jeff Campbell (03:56.193)
uh... now depends on the demographic the young folks may not have any clue what you're talking about uh... i would say that might be the uh...
Brent Peterson (04:00.142)
Yeah.
Jeff Campbell (04:10.275)
not free, but low, low charge, the low rent account version. How's that? Kind of right in the middle. So that wasn't bad. That was better than that was better than the other ones I've seen. So I knew you asked jokes or had had joke. I had a joke thing. And my son, he's in fourth grade, has been telling me some good ones. So I can share one if you want. But, you know, this so this.
Brent Peterson (04:15.502)
All right, I got a new little... Oh, thanks.
Brent Peterson (04:34.35)
Yeah, go for it, please.
Jeff Campbell (04:38.157)
This one's been around. So if you enter the bathroom as an American and leave the bathroom as an American, what are you when you're in the bathroom?
European is the punchline. So that's like straight up actual fourth grade toilet humor right there. So thank you.
Brent Peterson (04:56.494)
That's awesome. I got a new button. There we go. Let me try this one.
Jeff Campbell (05:01.087)
Yep, we missed the snare. So thank you. That would be courtesy of Emmett Campbell, fourth grade, toilet humor right there.
Brent Peterson (05:10.574)
Thank you, Emmett. Yes. Any jokes are good jokes to be part of jokes, right? So, Jeff, today we're going to talk a little bit about entrepreneurship. We'll talk about Scale Bank. Tell us a little bit about Scale and specifically how it helps entrepreneurs.
Jeff Campbell (05:20.899)
That's right.
Jeff Campbell (05:36.451)
Sure. So I think, you know, as I was framing it earlier, the, and this comes up a lot when we're conversations like this, when we're meeting with prospective clients, you know, what's the profile of our typical client? And usually I can go through the metrics of, you know, the industries or, you know, wholesale distribution, manufacturing service companies, contractor, you know, there's, there's a, there's an industry profile that I can,
Brent Peterson (06:01.728)
you
Jeff Campbell (06:06.307)
that I can communicate. And then there may be a revenue or a lending need or a day to day cash management and banking services need and go through that profile. And years ago, one of my colleagues, much brighter than I am, came, you know, concluded as we were reviewing our our client base and our typical clients and those that we have seemingly the closest relationship with, we really
Brent Peterson (06:23.822)
you
Brent Peterson (06:30.67)
you
Jeff Campbell (06:36.289)
do well when we have an owner or a key manager or the operator of the business or typically the owner that's in a peer group. And that was the conclusion as we're going through the, you know, so I can go through all these metrics. I really want to meet owners that are in peer groups. And what I call a peer group would be a business owner or a CEO or some sort of group that allows them to share ideas, share experience.
Brent Peterson (07:01.038)
you
Jeff Campbell (07:06.217)
They don't feel like they know what they want to learn, collaborative approach. They like contact, their content, they like networking. So that's been one differentiator. We really like the peer group model and owners and operators that are in peer groups. And usually why is that? Because that's kind of what we're looking to provide. You know, it's the money's green with whomever you're going to bank with, but that what can be provided outside of the day -to -day banking is really what we
Brent Peterson (07:08.032)
you
Jeff Campbell (07:36.291)
really push to deliver. And that can be, as mentioned, the continuity and consistency of the people, creative solutions, access to a network, access to groups like various peer groups like EO. So that's really been, I think, why that has always been a good alignment for us, because they're wired in a certain way that likes kind of how we deliver our services, which is really go above and the
above and beyond, not a high volume institution that's adding, you know, hundreds of accounts a year. It's really picking our spots with really good fits and servicing the heck out of them and hanging on for the long term. So that, you know, that has been the conclusion over the years. You know, go through all these financial metrics. I want to meet owners that are in a peer group.
Brent Peterson (08:21.43)
Yeah, I mean, that's a really good point. I think that a lot of, well, I'm in EO as well, Entrepreneurs' Organization, and this year I'm the outgoing SAP chair, which is strategic partner, and Scale Bank is our banking partner, so thank you so much for that. One of the things that I want to differentiate too, from that peer group, it's...
Jeff Campbell (08:31.831)
Right.
Brent Peterson (08:46.734)
not a networking group. And I think one thing that EO gives you is it's about giving rather than taking. And a networking group, I feel, is about a sales. You're there for sales. You're there for trying to get something from somebody. Where EO is more about sharing your experience and helping others understand what you've been through as an entrepreneur. Maybe talk a little bit about that mindset of, I like what you said earlier about the peers and how those
Jeff Campbell (09:09.965)
Thank you.
Brent Peterson (09:16.596)
people will shift from helping to learn from others, right? Talk a little bit about why that's important in the banking relationship.
Jeff Campbell (09:22.529)
Yeah.
Well, I think it, and I've run into other clients that are in more like industry specific groups, you know, that I don't think provide the value of what an EO or others may, which is more of a holistic, it's covering all, it's covering the holistic approach to the business, but it also has the personal element. So I think EO is really, really heavy on that as well. I think it, the,
It would be the consistent mentality of just liking that approach, I think is really a big part of it. But we've concluded, hey, the owners that are in these groups, they're better operators because they, again, they're...
open to the collaborative approach and learning and don't feel like they have all the answers and is more of an open mindedness that what they're taking other ideas and improving their business as a result. So I think, you know, something like an EO or a really, you know, a similar peer group or those that utilize an EOS model or something similar, you know, the conclusion was these are better operators, better, more well run businesses and therefore better clients for the bank with more opportunity to, to grow with them.
Brent Peterson (10:24.974)
you
Brent Peterson (10:42.286)
you
Jeff Campbell (10:45.953)
So I think that's been the conclusion. There's a correlation that those that are in these types of groups tend to be better run companies as a result.
Brent Peterson (10:59.31)
What are some of the things that you've seen over the years as being a sponsor for being a strategic partner with EO? I guess how has it helped the bank and then maybe some of the points where you feel that you can help entrepreneurs leverage their financials, their banking situation?
Jeff Campbell (11:06.755)
Yeah.
Jeff Campbell (11:22.435)
Sure. Sure. Well, I mean, so we've been an SAP since I have the plaque over there in the corner. It's since 2006. So obviously it's been a great, great relationship for the bank. We got involved. There were some existing clients of the bank that were, and this goes back, you know, again, 18 years ago, they were already in EEO. So that got us involved, got us connected. They were looking to add some additional,
strategic partners and we were fortunate to kind of right place, right time. You know, so there's regular meetings we get to attend as a result of being involved. You know, sometimes they may be certain time of the day, might be the end of the day, got a lot going on, but it's important to attend these things. One thing I will always say when you leave a meeting at one of the events,
for EO, you always end up with a hop in your step afterwards, if that makes sense. I mean, these are energizing, motivating, inspiring type events most every time. And they could be learning events, social events, whatever the case may be. That's one thing that I always feel when I think about EO is, you know,
Even if you're, oh, I got to get to this event, I'm running out of time. Can I even make it today? Well, when you go, you end up really energized as a result with a hop in your step. That's for sure. Selfishly, some great memories, some great events. There's been spousal events over the years, some really fun social activities. I mean, it's a great group of people. It's rotated over the years. The old guard has transitioned. Some of those have sold their companies, have retired. So that's also really, you know, I'm...
I guess I'm close to the old, I'm becoming the old guard now, but the, the, the, uh, refreshing new membership is always exciting as well. So the, uh, meeting new people, understanding, uh, you know, learning, learning new about their businesses and then really just wanted to be a resource. So we've always aired on the side of not attending these events to, uh, this isn't a sales, uh, mechanism.
Jeff Campbell (13:47.843)
This is to be a resource and to give the absolute, and I think we do this with any company, but we're talking ultra above board white glove treatment to anyone, certainly within EEO, and to be a resource and to shoot them straight and to be upfront with them. And they may have lending needs, they may have something we could help them out with, or maybe not. You know, and sometimes we may not be directly a solution, but we really work towards getting to a...
some sort of a solution if it isn't a yes and be a resource. And that can be outside of lending as well. So a lot of times the discussion can be, hey, I'm looking to buy a building, can you help me out? Or I need help, you know, I'm having some issues with my existing bank. You know, those things of course are more on the loan side and loan driven. But we've also helped a number of EO members that just didn't feel like they were getting the...
attention and responsiveness from their bank or there was turnover at their bank and they just wanted to have someone they could get a hold of that could get some get things done. And that seems like a low bar and frankly at it but you know to deliver and to execute and to make sure that we're living up to their expectations in terms of responsiveness and then furthermore you know more of a proactive approach as their banking partner.
Even if they don't have any lending needs, they have day -to -day banking and they have cash management needs and they have other things like I mentioned, they may want to just have a sounding board or a resource or access to other introductions. And then, you know, in recent years in particular, there's been a major focus, not just providing the cash management solutions, but really a strategic approach to their cash management and day -to -day banking, mainly with regard to...
making it as efficient as possible but moreover now is this securely as possible and utilizing whatever banking products or services that could be implemented as well to really button up the day -to -day banking because that's very important with a lot of you know attempted fraud and other security issues going on so holistic approach where we're just hey I want to be a solution provider and if it's something I can help with great directly if not I want to be a conduit
Jeff Campbell (16:04.307)
to get them some sort of solution, whatever that may be. Yeah. You know, it...
Brent Peterson (16:08.526)
Do you, so for my group, in my EO group, we have the feeling that the economy is coming back or coming around. What sort of deals are you seeing now from a loan standpoint for, even compared to a couple years ago, are you seeing it coming back now?
Jeff Campbell (16:30.179)
You could ask me maybe on every given day there might be a different answer. I mean, I think the activity can be in fits and starts a lot of times and we're just starting here late in the first quarter of the year. There can be a flurry at the end of a calendar year or perhaps at the very beginning part of the calendar year. So that can skew things.
You know, bank wide, it's been okay in terms of activity, I would say. We've been fortunate enough to run into some deals, I think, and capitalize on some other issues in the banking system in general. So not every bank is feeling great with regard to their liquidity position these days. And this carries over from a year ago when there was a systematic
banking issues going on and bank failures, if you recall, Silicon Valley Bank and others. And there's been a little bit of turmoil since then in the banking system with regard to liquidity and then likewise margins for banks because if a bank really led heavy into specifically commercial real estate with low fixed rate loans from years ago, well, their cost of money has increased and therefore their margins have been
So you would add earnings issues, liquidity issues, and then now you may hear in the news, it seems like commercial real estate in general, there may be some concerns that are really probably just starting and may get worse before they get better. Those things add up. Therefore, not every bank has the openness to lend money or seek new clients or aggressively price something that they really want. So...
We have been, knock on wood, very fortunate with a really nice diversified commercial base of deposits and a strong liquidity position. Again, these things change and we're very fortunate and again, knock on wood to, we're extremely fortunate to be in that position. We're looking at some deals that maybe we wouldn't have looked at previously is my point. So there's some real estate transactions that are more transactional driven that might be usually driven by a broker network.
Jeff Campbell (18:55.491)
Some banks may not necessarily be as open to those right now given their own issues. So it's been more of a diversified set of opportunities. And I think it's kind of the standard. It might be, given the interest rate environment, not everyone is there. There is some holding back where folks wanted to see where interest rates go. So that might be.
that might be delaying or preventing those from making some big moves or acquiring a company or making that acquisition of a building or a big improvement to their equipment or their facility. The election is always another reason to not do things. So there are some headwinds in terms of just cautious, let's wait and see. But generally speaking, I think it's although it may be somewhat spotty that
the portfolio has performed well. We really work with scrappy entrepreneurs, is how I would describe it. So we've got really good operators that find a way to withstand whatever the environment may be. And we've got a really good group of clients that are, again, I would use the word scrappy. So they're able to kind of get through even if the economy feels a little softer.
Brent Peterson (20:16.942)
You mentioned the problems with Silicon Bank and some of the other banking a year ago. What has Scaled done to kind of protect themselves and of course the clients against what has happened to some of those other banks?
Jeff Campbell (20:27.619)
Yeah. Well, I think there's a couple of things. The one thing I would encourage anyone is know who you're, hey, get educated on who you're banking with, whether that's with Scale Bank or whomever it is, understand their ownership, understand their customer profile. I mean, this is public information and there are even third party services that do bank quality reports, et cetera. So,
Understand the balance sheet and the profile and the target and kind of the long term strategic plan for a bank. That's important to know because that may be contradictory to what the business owner may be looking for long term. So that would be item number one. I think we're well positioned as a stable, local, Minnesota -based, Minnesota -owned bank that's owned by
A family that has a number of investments were not their sole investment. So we're really a component of their investment portfolio. And it's maybe a better position than others as a result. There are tools, that went down a month ago and I was getting calls all over that weekend when things really started getting active with those other banks.
People were calling and concerned about their FDIC coverage and really wanted to know what was going on with the bank. So we had data points and, you know, it's transparency about here's what we're doing, here's what our liquidity position is. You kind of heard that from every bank, our capital's strong, you know, so the proof's in the pudding. You really got to understand what you're looking at. And there is, you know, again, this is public information, but transparency with our portfolio and our liquidity and our capital position. There are other tools for those that are really, that were really concerned.
that to have increased or improved coverage to their deposit accounts. And there are tools to do that, which is essentially banks can enter into a program. You know, if the deposit limits 250 ,000 for the FDIC insurance, there are ways to get additional insurance by entering into a program where those funds are essentially swept overnight and shared in $250 ,000 increments amongst other.
Jeff Campbell (22:46.955)
FDIC insured banks. And then the scale would have a reciprocal arrangement in which we would obtain deposits. This is all kind of down in the back end from other banks that are doing the same thing. So it would be a neutral position for us in terms of our liquidity. But the account holder and the business owner itself would get additional coverage. And that could be up to tens of millions of dollars in terms of FDIC coverage. So we had to dust that product off because it really wasn't popular.
or really wasn't even a thing since the financial crisis. So that was more prevalent. Otherwise, a lot of folks asked some good questions, and then it was business as usual. And it was just understand, again, what's the bank got going on and know who you're working with.
Brent Peterson (23:33.906)
You mentioned the managing risk. How do you help your clients manage that fraud risk? Obviously, if a client has a risk, you have a risk, right?
Jeff Campbell (23:43.199)
Yeah, the.
I'll tell you that it's a huge hot button. Yeah, the. There are tool so there would be two different paths there. I would say. First off, there's just the general. Mechanics of how you run your business and the diversification of segregation of duties and have good internal systems within your own particular business.
and then utilize the bank and find a bank that takes this seriously and has options and is proactively attending, you know, that's proactively discussing these things with you. There are tools and services within a bank that can help further button things up. And it could be additional levels of approval for certain transactions. Frankly, the human element is the first and foremost key.
So, have a bank that knows you and can call you and hear a human voice if there is ever a question or an issue. There's products like Positive Pay, which is essentially a upload of every time you cut checks, you would issue a file to the bank and identify which checks that have been issued. And if a check hit the account that wasn't on that list, it would be flagged as an exception. And it may be bad, it may be good, but you'd have the ability to approve that particular item.
Same thing with ACH. There's an ACH filter that effectively does the same thing. A lot of the fraud attempts have been through checks, kind of the old fashioned way. Someone would get a check. These, you know, you think about it, your checks are emailed all over. It could be going to lock boxes or other payment processing facilities. A bad actor gets that check, alters it, washes it, puts their name as the payee, could do a lot of different things, tries to represent it at another bank and deposit it.
Jeff Campbell (25:41.643)
We've had that a couple times within the last week and these were caught not thankfully. Thank goodness And it was a client that was not utilizing positive pay although they will now Our folks found it and saw it was forty five thousand plus dollars But it something looked off and it was it was caught by the human element like I said And then another quick one quick story, you know, you the technology and the IT security is huge, you know you hear about
It could be ransomware, it could be other things, social engineering in which they actually intercept an email and say, the CFO sends an email to somebody, hey, I'm traveling, can you wire funds out to the following to buy this? So pick up the phone and confirm these things. We had a loan closing on the first business day of the year, big dollars, nearly $2 million. We were in court.
Brent Peterson (26:16.718)
you
Jeff Campbell (26:40.527)
correspondence with the recipient of those funds before this transaction was to occur and confirmed the account information for the receipt of the funds that we were going to wire out. And then the Friday, this is right before New Year's, so Friday the 30th or whatever it was of December, you get an email from the client say, hey, the seller is changing their account information. Here's where that wire should go, which right there is a red flag. We review the attachment. Something looks off.
Brent Peterson (26:43.008)
you
Brent Peterson (26:54.766)
you
Brent Peterson (27:07.47)
. . . .
Jeff Campbell (27:10.115)
we call the seller, the one to receive the funds. And sure enough, this was totally bogus. Someone was in his email, watching this correspondence back and forth, created a letterhead on another bank letterhead with new wiring instructions, sent it to our new client who then sent it to us. And if we were running a hundred miles an hour, not paying attention, not knowing who we're working with, the height of the end of the year and just the frenzy going on.
You know, it could have been a disaster and maybe a larger bank may not have been able to catch that. Again, the human element, taking time, knowing who you're working with, picking up the phone and calling and confirming these things is huge. You know, that would have been a $1 .9 million major, major issue. And thankfully we were able to, to take that one or figure that one out before any damage was done.
Brent Peterson (27:53.198)
you
Brent Peterson (28:00.206)
you
Yeah, I just wanted to comment on what you said about paper checks to our younger entrepreneurs. Paper checks are something that people used to have to fill out, right, and send to somebody and...
Jeff Campbell (28:13.219)
There are fewer checks in the system, but there's still plenty, you know, so there is a push for less checks for sure through ACH, mainly through ACH or there's other third party payment solutions out there as well. Those can get, there could be costs related to that, but it's inevitable. There may be a check floating around regardless of how efficient you're running your operation.
Brent Peterson (28:27.566)
you
Brent Peterson (28:43.534)
Yeah, Jeff, so we've managed to get through our 20 minutes pretty quickly here. And thank you so much, but I feel like there's so much more we could talk about. As I close out the podcast, I give everybody a chance to do a shameless plug. Plug anything you'd like. What would you like to plug today?
Jeff Campbell (29:03.939)
I would plug, and this is shameless, I guess, absolutely. Well, Entrepreneurs Organization of Minnesota would be my plug. And I know this, you know, your podcast is certainly directed at that, but back to the comments about, we found our clients and the folks that we've worked with over the years that are in a peer group ultimately are better.
well run, better run businesses as a result. And, you know, certainly have a lot of respect for how EO has run the personalities in there, the fun group and the effectiveness, you know, and I've heard stories, just absolutely passionate stories from the members about how EO has gotten them through family crisis.
death in the family, divorce, other, I mean, this is going beyond business where you really need that additional layer of support you may not be able to get at the office or at home. And any business owner out there, consider a peer group. EO would be certainly on the top of the list and Brent can attest.
Brent Peterson (30:22.35)
Alright, one last point and I know that we're not in EO, we don't give advice, we share experience, but if you were to have some advice, one thing that I hear a lot is they say, I don't have time for this. What would you say to somebody that says, I don't have the four hours a month or whatever it is to join EO because I don't have time for this group and meeting with people. What do you tell somebody like that?
Jeff Campbell (30:48.419)
Yeah, that would be, if that is the response, that would be the, that response alone would be the indication that they need to find a group like EO. I mean, if you, if you're, if you feel like thing, that would be an indication that things are out of control for that business owner and they need additional support. That's, that's how I would describe it. And that same goes with those when they consider EOS. So I don't have the time. I don't have the money. Well,
There you go. You just explained why you may need this. So I think the effects and the improvements in one's company through a group like EO would definitely afford any owner the time. And there's no better use of their time to be working on themselves and their business. Like four hours a month with EO, it's a small.
small investment of time with a major upside.
Brent Peterson (31:50.126)
Yeah, and you mentioned EOS earlier. I do want to just comment on that's Entrepreneurs Operating System. We implemented EOS at my previous company and it was a game changer. I hate the used word game changer, but I've just done it. It set us on a course to be successful and then to have a successful exit because it gives you those processes without having to try to reinvent a bunch of processes.
And maybe we, yeah, and I think we have a topic for a follow -up on just specifically how EOS would help any business person in a banking relationship.
Jeff Campbell (32:18.915)
The simplicity is beautiful in the EOS, no doubt about it.
Jeff Campbell (32:34.051)
That's one of my, when I ask for information from a prospect, usually I add the EOS VTO to the list so I can see what their short -term and long -term goals are and their vision traction organizer is part of my checklist for my requested financial information.
Brent Peterson (32:57.71)
That's awesome. Jeff, we're going to have to end. We could keep going, I think, for the next 90 minutes. Thank you so much. Jeff Campbell with Scale Bank. Thank you so much for being here. And I would say tune in for some more exciting topics in the future.
Jeff Campbell (33:04.195)
Yep.
Jeff Campbell (33:13.507)
Brent, I really appreciate all your support and your service in doing this podcast and your support of EO. And thanks for having me on.
Brent Peterson (33:25.774)
Thank you.