The Brutal Lessons Scaling to $100M, Losing Millions & Fixing Lead Quality

In this video, I'm going to be speaking to Douglas James. He is an ex Navy corpsman, successful business owner, entrepreneur, and now has a SaaS company. We've had an extremely similar kind of story arc and we're going to be going over just some of the, I guess more real elements of what it's like to try and build businesses coming out of the military and just some of the mindset shifts that you have to make, let's just say humbled us in our lives and taught us the lessons that we needed to learn to be in the places that we are now. So hope you enjoyed this content. Guys, have enjoy.

Hey guys, what's up? It's me and Douglas James today. And Douglas is a successful entrepreneur, also ex veteran, as you can see by all the accoutrement in his background, and now a fellow tech bro. Right. Running software companies and whatnot. But yeah, give the people the intro, buddy.

Yeah, Matt, it's always a pleasure to see you. Always appreciate our communications relationship and business and everything. Yeah. So I mean I was been in the digital marketing game for almost going on 12 years now. Prior to that, I was like you said, ex military. I was in the Navy for 10 years, so I was a hospital corpsman. So got to travel all over the world, dude, and see amazing things. Ended up becoming specialized as a laboratory technician. So I was the guy that analyzed your blood and all the body fluids, et cetera. And it, you know, that journey took me to a deployment to Papua New Guinea, Fiji and the Philippines back in late 2014. We were like literally building schools for kids and it was like some of the best humanitarian work I've ever done, like as a human still to date. So coming back from that deployment, I had actually made E6 on that deployment. So it takes the average person, I don't know if you're familiar with like the American military ranks, but E6. Yeah, E6 is like a high level supervisory active duty position. Like I can be in charge of hundreds of people. It takes the average person like 12 years to make E6. I did it in literally five years, so less than half the time. So that just kind of gives you an idea of like how much of a motivator I guess I was in the, in the military, but got back from that deployment and realized, you know, I don't think I want to be in the military for 20, 30 years. I've done all I can do. I could be a high ranking officer, you know, and really just started to poke around in the online space. And realized you can make a lot of money from home, you know, if you can help people solve big problems.

So you solve, you can solve rich people problems and you end up, end up making more money. Right?

Yeah, that's it.

So what was the motivator to get into the military?

Before I joined the military, my three options was to be homeless or have my family like just disown me or go to the military. Homeless or jail. So four options.

Okay.

And I can unpack that a little bit. But I was, I was a little.

Bit of a cheeky child.

18, 18 or 19 year old kid, you know, graduated high school, started bartending in New Orleans. Out till 4 or 5am Every night. Nothing good happens after midnight, especially on Bourbon Street. So yeah, I really wasn't doing anything with my life. And, and prior to that, you know, I had gotten in trouble. I was working for Target. I got caught shoplifting, went to jail for like 18 hours, you know, so I kind of had like this really troubled childhood growing up where I kind of observed my dad like, you know, you know, shoplift and you know, beat my mom. And physical verbal abuse was always in the house, even towards me and my sister. Yeah, dude, it was, it was a really rough upbringing. I saw my dad do a lot of. He's actually clinically ill. He's like a paranoid schizophrenic. So we had some weird things go down in the house, dude. So I really didn't have order or at all. You know, there was no functionality to it, you know, and the military really, you know, brought me that, you know.

And provided you a chance to like, to structure your life and also get some authority, you know, get some like, okay, go do this thing. Yeah, I think that is one great thing about the military is like. And I think the one thing that actually makes it really hard to transition out is that you're told what to do a lot, you know, and so when you get out, I think people are kind of. They flounder a lot. Yeah, I mean, and so I find a lot of people struggle with that. It was the part of the military that I, that I struggled with the most was being told what to do.

Yeah, same.

You know, I was, I was not a fan of it. I knew that I wasn't going to be a lifer. It's kind of funny actually. We have like totally different reasons for joining. Like, I had the opposite. I had a fantastic upbringing, great parents, you know, and I was actually like kind of terrified that I was just a massive pussy and I was like, I wonder what happens if something bad happens to me? And I was like, I don't. I didn't feel like I had the, the mechanisms to be able to, like, handle it, you know, and. Or at least I just didn't know.

Yeah.

So I wanted to do, like, what's the hardest thing I could do? And so I was like, I don't know, join the military.

And it was kind of like. You were like a high level sniper, like, right. Like, I mean, yeah, Well, I sort.

Of saw, like, for me, I saw like a. I saw this magazine photo or whatever it was, right? And it was a guy like on top of a building wearing all black with an MP5 that kind of broke me off a building. And I was like, oh. And I like went into the recruitment, I was like, who's this guy? And they go, that's a tag sniper. And I was like, I'll be that.

Yeah.

And they're like, wow. Like, there's a bit of things in between. I was like, all right, well. And the guy laid it out and he goes, you gotta do this and this and this and this and this. And I was like, okay, I'll do that. He was like, all right, sign here. You know, he's got, he's got quotas, right? He was like, whatever, idiot.

Yeah.

Yeah. And so. But he laid it out for me and I was like, okay. And I just kind of had that written down and I was like, okay, I do this, then I do this, then I do this. And I just kind of like went through and ticked the boxes. Yeah. Like, sweet. So, but yeah, and then, you know, special operations, all that kind of stuff. But it was, it was fun and I got to learn who I was, and I think that was the goal for me.

Yeah.

And I was never going to be a lifer, but I think the military teaches you a lot of good stuff. I think that especially these days, a lot of these floundering young men and women would do very well having someone tell them what to do and have a regimented life for a couple years. I think it would tremendously benefit them because a lot of these kids are floundering.

Yeah. It's crazy where life takes you. Like. So real quick, similar story. When I joined the military, I joined to actually be an information system technician. I actually knew, like, what I wanted to do. Like, you saw the guy rappelling down the building, you're like, that looks cool.

Yeah.

I grew up kind of home bodied, and I've escaped through video games and computers Right. And movies and tv, like that was kind of my thing. I was sheltered in a sense. So when I joined, I was like, I want to do computer stuff. So information system technician is what I signed up for. But when I got to like the moment of truth, it's like eight, nine days in a boot camp. And they're like, there's this big chief that's like, dude, if you ever stole, smoked pot, did drugs, we're going to find out went to jail. You might as well just tell us now. And back then, you know, I told you I went to jail for like 18 hours when I was 17 because I stole. My recruiter was like, hey, we've expunged this from your record. If anyone asks, just don't bring it up. It's cool, it's. You don't need to bring it up. But dude, I was so scared. I'm like this 18 year old kid. I'm like, dang, this big buff chief is gonna kick me out the military. And so I'm like, you know what, it's expunged. It's off my record. I'm just gonna mention it. So you go into the. In order to be it, I had to have like a top secret security clearance, right? Cause I'm looking at, you know, data. And the first question in the interview with the, with the interviewer, he's like, have you ever went to jail? I'm like, damn. Right out the gate. I'm like, yeah, stole from Target. 18 years old, got expunged. My recruiter taking care of it. He like slams the file. Sorry, you're gonna have to pick a different job. You don't qualify for the security clearance. I'm like, damn. So like, what do I do? So I called my mom and dad. I'm crying. Call my grandma. My mom's like, stay there. Granny's like, come home. So I have like doctors, you know, and a lot of pharmacists on my mom's side. So I end up going the medical route. That's why I chose Corman. And I'm so glad I did.

Dude.

Literally brought me to where I'm at now.

So, yeah, I actually went down the medical line as well. So they have like a thing called a. It's a patrol Advanced Crusader. So like, it's a. It's like the highest non medic qualification that like, that like non, like core medic that you can get. And like snipers brought that in when I was there because, like, obviously we were out by ourselves a lot, you know. I mean and so we did like, we got to work in hospitals. Like it was all life saving. So arterial tie offs, you know, like amputations and like surgical airways and like all that kind of like really like the seven or eight core life saving, severe trauma type stuff. And then we could prescribe medications, deliver babies, all the kind of like weird stuff that you would have to do like in random situations. But it was a great course. It went for a few months and then we got to work in hospitals and I got to do tons of cool medical stuff. I worked in the hospitals. Like in between gigs I would go and then work in the hospital and like in Taran Cow in Afghanistan and like you know, assist in like all the trauma surgeries. And I loved it, man, because my, I was in university to be a doctor when I, when I left. So and then when I got out I thought about actually going back to that. But then I was like, I don't know if I want to be like 40 years old finishing university. Yeah, I mean I was, I was like, I don't want to do 12, 12 years of university to be a doctor. Like that doesn't sound very fun. So I went, I went, I went and sold stuff. Yep. But yeah, so, but run us through. Like so now you've got, now you've got, you've gone through the high ticket space and now you've got Lead Fi. So break us down. Like what's, what's Lead Fi?

Yeah, so thanks for asking. Lead fi is a SaaS product that we created over a year ago. Now it basically, you know, so imagine, you know, someone opts into your funnel, your website, they give you their name, email, phone number, right? Which if they're registering for webinar or VSL or DMing on Instagram to your lead magnet, whatever the case is, you collect that data. So we have patented and proprietary technology that basically takes the name, email phone, identifies their true identity and then we extract and identify their address, their current address, their date of birth, even their Social Security number, as well as a lot of other data. But we do that because we want to figure out what their true financial capability is. So we have direct integrations with the top credit bureaus like Experian, TransUnion, Equifax, and we just do a soft credit pull in real time. And now we pull their credit report. And what a lot of people don't know is like obviously self pulling is not new, right? You go buy a house, a car, apply for a credit card, they're going to Soft pull your credit, you're going to need to supply your address in date of birth. We don't need that because of our patent technology that acquires that data. So. And for us to do the soft poll, you have to meet a 98 grammar plus validation to prove that that person exists. And then we do the soft poll, right? So yeah, and then we just deliver that data back to our clients in real time to their CRM. And it includes like, you know, all their, their credit, their income, how much money can spend on their cards, their debt tank ratio. We even underwrite for pre approvals for funding and financing as well. So that's, that's what we do. And we just inject it into the marketing sales process to create more efficiency in roas.

That's pretty, that's a good spiel, man. You nailed that a few times.

Probably 12,000 times at this point.

Yeah, yeah, I was gonna say you absolutely nailed it. So why, why did you start it?

Yeah. So going back to my story a little bit, right? Get a. Get out the military. Well, five years before I get out the military, I started a Legion agency. So now I'm working with brick and mortar businesses, helping them get customers from Facebook ads, making my annual salary on the monthly basis after like six months, right? A lot of veterans are like, dude, how do you. Active duty dude, how are you making money? How are you showing up in a $200,000 Mercedes? I wasn't quiet about it either. I was active duty making at one point multiple six figures a month because I had five years, four, about four and a half years before I could get out the military because I had my contract, right? So that got me into coaching and consulting, right? So I started to teach active duty and veterans how to do lead generation for local businesses and charge a fee for it. And that was wildly successful. Fast forward to many years later. It served over 15,000 customers. We did with my consulting agency as well. Did over, combined over 100 million in revenue and we spent 30 million on ads, right? And then in a short period of time in there, about two year time bracket in there, I ran a YouTube ads agency for, for some of the top people you probably know in the industry. Not going to name names, but that was short lived Covid. They all shifted their budget. So I went all in on the coaching and consulting. But about the last six months of running that, you know, business, we're spending like a million a month on ads, doing top line. Three million a month, right? Everything's cruising, making a lot of money. Got over 100 people on payroll. Um, but in the last six months, something happened, man, like conversion. It stopped converting. You know, that whole time I couldn't look that look at my p. L Month to month because I knew two months were going to be in the red and we would always have that third month where it's explosive in the green. And it made the quarter look good. We didn't know if it was going to be the first month of the quarter or the last month. We were just like fingers, right? Because with high ticket, right, we were selling 5k up to 55k. So you know, the buying cycle is sometimes up to two or even three months at times, right? Because people gotta go talk to their fucking everyone they know before they move forward or go raise the capital, right? Or whatever the reason. So yeah, but the last six months, I experienced two quarters in the red. And mind you, I have payroll ad cost a million a month, right? All the things personal expenses, my rent, taking care of my family, end up losing almost eight figures in total cash. It sucked. And then in that process, you know, we were mark, we were optimizing campaigns, ad campaigns based off applications. So, you know, you have an application for before the book of call, hey, what do you do for a living? What's your income? What's your available, you know, capital right now, dude. So we found out that people. How many people lie on that stuff, you know, either.

Almost all of them. I've never ever my entire sales career taken, looked at the applications because I never saw any relevance between what they wrote down and what reality was.

Yeah. So I knew that in my gut. But my marketing and sales team at the time, like the marketing team took that as gold. And so if people made five grand or more a month per the application they optimizes, optimize our ad campaigns for it. Which worked for a little bit, but it really started to show up because the sales team continuously complained that, yo, these leads are broke. And the people that said they made less than 2,500amonth end up being like 30% of our high ticket volume on people that bought a $10,000 or more package.

How's that possible?

These people are broke. Where are they getting 25, 10, 25 50k from? It just made no sense. So I knew we knew something was up. We just couldn't prove it. So I like had it. I was done. I started to shut it down, tailback ad spend, let people go. And I was kind of dude at the breaking point, to be honest. In my professional life. But also in my personal life, you know, because I was so in depth on trying to fix this. And I'm also like traveling. A lot's being asked of me at the time and you know, meanwhile I have a daughter and a wife at home that, that I neglected. Unfortunately I wasn't there for them, you know, as much as I would like to be. So the business really took a priority unfortunately. And dude, I literally, you know, kind of like dropped to my knees one day because I was at the breaking point of like almost losing everything. And that's when I like basically turned my life over to my faith a hundred percent. And literally everything has went a 180, dude. And this is about a year and maybe seven months ago at this point.

Where are we?

October. Yeah, year seven months ish ago. The very next day that happened, I got thrown into a three way text with my partner Eric. And Eric's been underwriting for banks for like 20 years, working with the bureau's and anything. And I expressed my concerns of what I wanted to do. I was like, I was like, I simply just want to know what's in people's wallet before we talk to them because people are lying. The marketing team's optimizing on bad data like sales teams just we're having a freaking hire new salespeople almost every day because they're dropping like flies. Yeah. And we basically put our heads down for about five, six months, created a product, proved it out in the coaching industry for my offer, saved it, turned it around and then I told one buddy and dude, it's basically gone kind of viral in the industry. We have almost 306 to nine figure brands that use LeadFi now and, and I haven't paid a dollar, not one dollar on ads which we're about to start soon.

So. Yeah. That's awesome, dude. Shockingly similar story to, to what I'm doing.

Yeah.

So which is, which is funny, dude. I mean, yeah, very, very similar. I, I sort of didn't really. We didn't have. I didn't experience the same, you know, kind of struggle with the, with the business side because. But like I had to leave like 7th or I had to leave, you know, sort of similar thing. I just sort of stepped in probably a year ago, did the same thing. It was like what the is happening?

Yeah.

Myself over to the faith and then like, you know, it's, it's been a much better journey ever since.

Yeah.

It's funny that, isn't it? So. But yeah, good, good stuff man. Well, like you Know, it's, it's been, it's been cool to watch because you know, software is a weird thing and it, it's so much different. You know, having both of us experience these super high growth coaching companies that rely so heavily on ads. And I haven't done an, I haven't done any advertising for lead by, for, for dialer. You haven't done any advertising for lead fi. I think we've been going for, it's not about nine months now, 10 months with dialer. Right. And we have 180 businesses or whatever it is on, you know, 700 users.

Whatever it is amazing.

You guys have got 300 and you haven't done any ads. How different is it having something that's product led?

Oh dude, way less headache. Margins are better. You know, I, it's cool because we have such an innovative like one of a kind technology. It's like I don't really have to, we don't have to really sell it. It's like as soon as you hear, you're like holy crap. This is, this is just the first time stuff that's using mortgage and auto is available in mainstream Internet marketing. Right. So that's why it's like so new. But yeah, dude, it's recurring, right. It's got all the things for a great acquisition, you know, high, higher margin, recurring AI component software. Right. Book of business. So yeah, dude, I absolutely love it with the coaching. We had to always go find a new client. Now we just get a client, we keep them happy and they keep paying long term. And then the more clients we get, it just builds that book of business higher and higher and higher. Right. Whereas it was completely opposite before. We just had to keep finding more and more customers month after month. That's how we scaled our, you know, our revenue. Unless we could bolt on like media buying services or like events and masterminds, which is all great to have but dude, time consuming. Lots of risk too in the coaching space as you know, like I don't even want to say any letter agencies right now, but you know, I'm talking about it sucks, you know. And so even if you're like pristine, I know the best marketers in the world right now that are, that are running the cleanest businesses and they still get in trouble and it still cost a million dollars. Right?

You can't do it, right? It's impossible. Yeah, it's just you cannot tick all the boxes, you know and then you bring into. Yeah, it's, it's a, it's a, it's a chaotic industry and I think like it's obviously being witch hunted a bit at the moment and I think like all these huge actors that are, you know, like done some pretty raucous things, just drew so much attention to it and now it's like you just can't hide on social media, you know. And it's crazy.

But yeah.

And so like what's the best? Like what's a client avatar for you? Like who's someone who should reach out to Lipa?

Yeah, I mean I would probably say 70, 80% of our customer base right now are all like coaches or info product owners or even marketing and sales agencies as well, you know, consultants, they all, they all use our product. And I've actually very, you know, well communicated to that audience because I came from that world like started an agency, started the coaching info because I was actually successful in the agency and then started to consult. Right. So but due to other, you know, 30ish percent are people that are credit card stacking, doing funding, SBA loans, you know, tax and revenue based loans, stuff like that, they sell life insurance. So one, one thing I didn't mention is we can also pull someone's assets. So if you want to know for the first time ever, you can know their actual net worth. So like if you want. Yeah, right.

Let's say you have a real estate, stuff like that.

Yeah. Say if you have a real estate fund or syndication or a crypto fund or whatever and you can only work with, you know, legally accredited investors or whatever the setup might be like, we will know that. So we can pull their 401k, their IRA, stocks, bonds, CDs, ETFs, deposits, brokerage accounts, even their real estate asset portfolio. So that's been a useful product also for life insurance because if they know their net worth prior, they can sell them higher life insurance policy, you know, and basically get a bigger fee up front. And I'll just, and I'll just say too, it's like, I mean when you think about what lead FI does, like if you generate leads and you sell high ticket products or service or you know, collect a lot of money from your, your client lead five will basically give you their real time purchasing power and what their net worth and asset portfolio might look like. So if you are, if you, if either of those are useful to you and this is all prior to calling, email and texting them, then I'm sure it's a fit.

Right.

It just doesn't have to be coaching, doesn't have to be Insurance, et cetera.

I love it, dude. It's so good to see as well, like the transition. We've had such similar career arcs. It's so. It's kind of crazy, like military. I had an agency down into coaching military when agency went to coaching now in software. So, like, it's good to see. You seem like, you know, we've spoken a lot over the years and you seem in a much better kind of like, calmer place.

We've had calls. I appreciate you saying that because you. We've definitely had calls. When I was in the thick of. And I'm asking you for like, bro, like. And same with you. You were going on. I remember it was going down for you around the same time, you know?

Yeah.

So.

Yeah, man. Yeah. Well, dude, it's just, honestly, it's good to see good, good things happen to good people. Like, you know, you're one of the few people that when they call that pickup, it's like, oh, Douglas is cool, you know, so yeah, everyone go check out LeadFi. It's everyone that I know that using it is like loving it. I've recommended it to people. So yeah, go, go check it out. I think it's fucking awesome. It's a cool thing. It just allows you to actually get some real data because, you know, like, I knew it. I used to scream about it with the application thing. Cause I was a sales rep. I was a full time sales rep and I knew the applications were bullshit. And I used to say to all the marketers, the applications mean nothing. Don't listen to them. Like, just go off the sales data. Don't go off the application. See what happens. And everyone was like, nah, man. Like, I was like, man, like, I remember even in fitness, right when I was like studying fitness, people would like, if, like, the longer the application that the more involved in, like, they would like type their life story out. I knew they were never buying. I knew it. And they're like, look at this person. I'd be like, they would never pick up the phone. And they'll like, if they do. Like, I'm like, you just. You told this to me like a day ago. What's happening? And it's because, like, they're just emotionally spitting out, you know, and it was like a dump for them. And it just wasn't real. I could also tell like what time of day in their time it was. It was submitted and I knew it was real by 2:00am Nah, I'm in. Yeah, like, that's.

They're not in the Right mind, they're scrolling it. It's, it's. Yeah, yeah, not the.

Right. The guy just puts the name, phone number, email. It's like, yeah, I'll pay 50k. All right. So it's like just have the conversation and see what happens. You know what I mean? But if I can, if you can have like the genuine numbers and then. Because if you have a lot of opportunity, like that's actually a difficult thing is to like triage that, you know, like, because you're, you're gonna leave something on the table regardless. And so like, why do that if you don't have to? And you guys are just like, like on a per lead basis, right?

Yeah, we just charge per lead. You know, obviously in the beginning you, you have to get a license set up. And we set it up in your, in your CRM and everything. But yeah, it's just a per lead. You, you know, you just pay for what you use, right?

Beautiful model, man. Yeah, I love it.

And what is it?

You're gonna stick around? You can exit. What are you gonna do?

Dude, I. Every time I think I'm gonna exit, two months, three months goes by and our valuation doubles. So, you know, like, we'll see. You know, right now I just love what I do. I love servicing this community. You know, it'll. You know, before I would do consulting, right? I mentioned at a consulting agency and we were doing what a lot of people do, you know, to improve lead quality, to get more qualified people booked. Dude, I see so many ads from people. They're like, if you want more qualified leads, dude, if you're not using lead fi and you're promoting that, you're basically lying to people. Like, what are you talking about? More qualified leads? Like, what are you using, dude? And so I mean, that, that goes into like another thing. I'll just explain, like, data providing isn't new. Like you can go scrape people's IP address, you can go pull public records, there's websites you can use that gives you survey data and, and you could punch those in the algorithms and try to estimate and guess what someone's credit and income is. It's not what we do at all, right? Like we do an actual soft credit poll. So it's super unique when you just have name, email, phone. And then one of the common things that we see too is like, we've actually had to spend a lot of time educating people around credit score because people don't know that there's different type of scores, right? You open up your experian account, your Chase or American Express, and you'll see your credit score be like, oh, my credit score is, you know, 7:80. Okay, great. What kind of score is that? There's two. There's vantage and Fico.

We'll do another one of these, I think, because I think we can go pretty deep into it. I think it's super interesting. Yeah, awesome, man. Well, we'll catch up again soon. Go check out Douglas. We'll link all of his stuff in the details in the. In the comments below, and we'll have a link to go and get leads by and. Yeah, it's good stuff, man. I'm seriously glad that you're doing well, dude. It's good to see.

Likewise, bro.

All right, bye.