This content was created by Tim Draper. This content was uploaded by Tim Draper. This is a YouTube talk titled "Flipping a Company to Success | President of Prosper Marketplace, Ron Suber" (posted Jan 11, 2016). It features Ron Suber speaking to an audience of entrepreneurs about his career path, failures and recoveries (Wall Street, entrepreneurial bankruptcy, Merlin Securities, sale to Wells Fargo), and the turnaround of Prosper Marketplace—including lessons on intention, five core themes investors care about (TAM, unit economics, team, timing/wave, exit), fundraising experiences with Sequoia, and practical entrepreneurial advice.
Chapters
So my kids are older than most of the people in this room here. This is your meeting. There can be questions anytime. I'm gonna try to share with you things I wish that someone had shared with me earlier in my career. You all look very relaxed here in the front. Public speaking is all about breathing and it's about structure. So let's all just take a deep breath this morning and relax. And think about the questions you want to ask over the next 40 minutes. So how many people here with a show of hands want to be an entrepreneur? You people need help. Why? It's hard. It takes a lot of money. It takes twice as long as you think it does. You sure you want to do this? All right. Yes. So let's talk about what it's going to take. So as an entrepreneur, you need a lot of things. The first thing is you got to stop being mad at your parents. You got to take what your parents did or didn't do for you and turn that into incentive and passion to achieve what you want to achieve. And that starts by doing one thing every morning as an entrepreneur before you get out of bed. What is that? Before you have a cup of coffee, before you leave that vertical or horizontal position, as an entrepreneur, you must understand your intention for the day. So the first takeaway is that moment of intention before you get out of bed. I'm not kidding. So I knew my intention before I got out of bed this morning. I went to the gym, had coffee, talked to my wife, walked the dog. That's great. Started to walk to work and someone cut in front of me, but my intention was not to be upset before I got to the office. And I reminded myself all day long, as entrepreneurs, people will try to ruin your intention. Tell you to go left, tell you to go right, tell you to go up. You must be clear in the morning and all day long stop people from changing your intention. Anybody have a reaction to that word? No. Yes. Yeah. So be very clear on your intention. At the end of today, I want to leave you with the 5 things, the 5 most important things that your venture capitalist wants to hear, the secrets of running a successful, growing, profitable, quality business. And so we'll end with those 5 words. So what's my own story? And this relates to each of you. I'm 51, married for 25 years, one daughter who's a senior at Tulane and one son who graduated from Colorado College last year, and he's traveling the world making movies. I started to be a doctor. I went to UC San Diego, failed. Left, went to Berkeley. Finished with an economics degree and had no idea what to do. Couldn't get a job, so my uncle got me a job at Wall Street. I worked for 5 years, got married in my 6th year of working. My wife got pregnant in our 7th year. I changed jobs. So here I was 7 years into my career on my 2nd job, worked there for 14 years. Got to midlife, let's call it 38, had a crisis. I decided I wanted to be an entrepreneur. So I moved my family, left my secure job on Wall Street, and went to an entrepreneurial company with 2 guys. Who I thought I knew. And I thought they had enough money. And I thought they had a TAM, a total addressable market. I thought they had the unit economics. I thought that the business they brought in, and when they were finished with the business, there was enough money in it. And I thought there was a wave there. So TAM, units, people, wave, like I thought it was the time when it would go. And I thought there was an exit. Everybody got those 5 things? They were the wrong guys, didn't have enough money, 2008 happened, didn't take the exit, and we went bankrupt. So there I am now in 2007, early 2008, on my 3rd career, 2 on Wall Street, 1 as an entrepreneur, zero. So what do I do? I try to regroup as now a 39-year-old person. Bless you. How do I find the right people? How do I find a business with the right capital where the unit economics work, where the wave is there and we can get out? So I go around and talk to a bunch of friends and I go back to these 2 guys, Aaron and Steve, and I love the business, love the guys, but we didn't have enough money. So went to Sequoia, told our story, and they were lucky enough to put up $20 million into this company. For 4 years, we rode the wave. We rode the opportunity of 2008 to 2012. And there is opportunity in chaos. That was Merlin Securities, my 4th job. And what Merlin did is it took every hedge fund under $500 million and helped it operate and trade and finance and talk. like a big hedge fund, trading and risk and technology. It cut their expenses. But we found this group of 1,000 hedge funds who all needed what we did, and we grew like crazy even though everyone was going lower, lower, lower. And then we were able to sell Merlin to Wells Fargo for a lot of money in July of 2012. So there I was at this big, big bank. Nobody liked me. Nobody listened to me. I was miserable. My wife said, either you gotta change jobs or we're getting divorced. So, what was my hobby at this point of my life? What I liked to do was lend money on Lending Club and Prosper. How many people have heard of Lending Club or Prosper? So, my hobby was finding these people who you could lend money to and you'd get your money back with a little interest. And we saw Lending Club do amazing, like really, really well. And we saw Prosper not do well. So Prosper was first, Lending Club was second. Lending Club was winning by miles. 12 times bigger than Prosper, better brand, better management, better money. And I said to my partners, Aaron and Steve, let's do it again. Let's buy Prosper and see if we can't catch Lending Club. There's a big total addressable market. The unit economics are there. We're the right team. We've done it once. It's on a wave. You get the idea. It's these 5 themes of entrepreneurship. It's about execution. And so we went back to Sequoia and we had 1 hour and we told our story. We said, hey, you guys bet on us once. Bet on us again. And we explained our 100-day plan, the big rocks, the little rocks. what we would do and why. Were we gonna be a fast follower or were we gonna be an innovator? And in 1 hour, they gave us $10 million. We went back to Wells Fargo and quit our jobs, took 2 days off, and went to Prosper. And so here we get to this place, Prosper, really good brand, really good bones, but wrong direction, wrong culture, wrong product, wrong cost. Wrong investors. And we've now been fixing Prosper. It's been 2 and a half years. We bought Prosper for $40 million, and we just refinanced it for $1.9 billion. This is the opportunity of entrepreneurship. And I'm gonna try to share with you some of the things we did. And as you create your own businesses, try to think about the things we're trying to do, the mistakes, the observations, the lessons, and what you're trying to accomplish.
