Connected Commerce: Stop Using Debt to Fix Timing

Hai Mag 00:08

Welcome everyone for another episode of Connected Commerce Podcast. Your host, hi from San Diego, is welcoming you. And today I have a special guest, Clark. And Clark is the founder of Trilina.com. And I think he's doing a wonderful thing, first of all. So, Clark, welcome to our show.

Clark 00:31

Thank you.

Clark 00:32

Thank you for having me. I I really appreciate it and excited to to dive in.

Hai Mag 00:37

I said you're doing something wonderful for the brands or anyone. Doesn't need to be even in the e commerce space I guess, but for all the brands like there's something you do. Please tell us a bit f about the company.

Clark 00:49

Absolutely. so on our website it says never pay a big bill again. And that's really what we do for these e-com brands. We realize that folks have a whole bunch bills, inventory.

Clark 01:01

Logistics bills, 3 PLs, meta invoices, ad spend cards, et cetera. And we see that brands typically are trying to kind of like putting a hodgepodge method in place to pay all of these on time always. And you know, cash flow is a is a difficult thing. And so we try to simplify that altogether by taking all of your big bills and putting them into a single daily payment. And so we really make the business, you know, money in, money out. You know exactly what's going on every single day.

Clark 01:31

With a small daily payment instead of having to think, okay, have a bill on the 7th, I have another bill on the 12th, I have a huge bill at the end of the month. We pay for all of those, and then we give you a single daily number. And so let's say you add another bill at the end of the month, your daily payment might go from 7,000 to 8,000. Now I think the interesting part is what that allows you to do, you know, mentally, but then also from a cash flow perspective.

Clark 01:54

You know, mentally you know exactly how much capital you basically have at all times in your business. You're saying, okay, it's really easy to forecast. I got seven thousand dollars that I'm gonna be paying for the end the month. I make fourteen thousand dollars a day. You can actually use the additional seven to do whatever you'd like. Okay, I'm gonna increase ad spend. I'm going to buy more inventory, right? And I think the other piece psychologically is, you know, we've all done it where

Clark 02:19

I have a $70,000 bill coming up. I'm gonna spend less ahead of it. I'm almost gonna save up for that for that bill. And so I'm just having this capital sitting idle that I can't actually use. with us, it's you don't have to save for that $70,000 because when it actually comes, nothing happens, right? The cut the bill comes, we pay for it. and then the next day you you spend like it's like $2,000, right? If it's split over 45 days.

Clark 02:46

And so you can continue kind of to use the cash in your business, which allows you to continue to grow. yeah, that's the that's the two second on us.

Hai Mag 02:55

Yeah, like and Clark, I think that you're doing a wonderful job.

Clark 03:01

Thank you.

Hai Mag 03:01

many e commerce brands may think that, hey, you know, like I'm gonna pay that bill anyways, why should I care? What I think is, because I'm an e com like a brand owner too, look guys, if you are not having enough revenue or declining, maybe this is not the best for you. But

Hai Mag 03:22

Everybody knows that when the brand is growing, you need to spend more on inventory, more on advertising, more on the labor, a lot of cost. And the operational cash flow, like you need the operating cash, like you need more cash. But I mean, people don't realize that. Like, for example, you do 200k a month, probably you need 200k cash, and you increase your business to 300k a month.

Hai Mag 03:48

Now you need more cash. And that 100K, missing 100K, later on becomes the biggest headache for everybody. And this type of a solution is a is a great fix in a way because your operating cash requirement is also increasing gradually rather than at one point, you know, like you can you can manage it in a much better way.

Hai Mag 04:15

So enough of sales, Clark, but I think that you

Clark 04:18

Yeah.

Hai Mag 04:19

know, I'm pretty sure that there will be a lot of interest to talk to you about like how this really works. Now back to our connected commerce idea. So we connect two things together, and we always want to hear stories about the the people who are already ex having a lot of experience with the e-commerce space. So tell us.

Hai Mag 04:40

About your story, like on the connected cameras piece.

Clark 04:45

Absolutely. I think the things I want to connect is value and finance. And it all started when I was really young, actually. I was in high school and I was selling phone cases. I've always been entrepreneur, I've always loved entrepreneurship. And the phone cases broke, right? And so I was doing these charging cases, and kids are coming up to me saying, Hey, it doesn't work. And I'm like, my God. And so I had to give the money back, right?

Clark 05:08

And I think it were it was a really early lesson of hey, you can provide something. If it's valuable, people will pay for it, but it needs to actually continue to be valuable in the long run. and so that was a really pivotal lesson that I had early. And the other side was finance, right? And so basically what happened was when I would go and I would talk to folks in the very beginning when I was trying to figure out like what do I want to with my life.

Clark 05:33

All of these e-com founders would tell me cash flow is the biggest issue. And so I was like, okay, can I be valuable here? And I didn't look at it as from like a debt perspective or like a, you know, how do we make a whole bunch of money from these guys? It was more how do we actually provide value? And I also realized that if we didn't provide value in the long term, just like my phone cases, people would leave. Right. And so I think those were the big like principles that I kind of came into this with is how do we provide something that people will stay on for the long term?

Clark 06:02

Of their business, but how do we also do it in a way that actually helps and supports these businesses grow? And so those are the two the two things. It's like, can we do something that helps long term? And then also do we actually have something that folks want to stick around for? You know, and so those are those are the two ideas, but I would love your your your thoughts.

Hai Mag 06:23

Look, you know, I think you're you hit the nail on a very important topic. And before starting Eva, I was working for Oracle and

Clark 06:34

Okay.

Hai Mag 06:34

it's a very aggressive organization, like very good technology too, with databases and all that stuff. I remember like there was a senior vice president, we are all in a forecast call, in a sales forecast calls. It's about sales.

Hai Mag 06:50

His name is Alfonso, and a lot of people know him as a legend in Europe. And and I was running UK and Ireland or some other bunch of countries, and like we all give some sales forecast to him in the call. Now, this is happening like seven, eight years ago. He asks, What is the deal value? And the guy responds like one million dollars, and he's like, sorry.

Hai Mag 07:16

Is that the value? No, yeah, yeah, it's the value. And he's like, no, no, no. I'm asking you how much value you are delivering to your customer. So he's not asking

Clark 07:26

Yeah.

Hai Mag 07:27

what is the product value to me? One million. No. What is the value to the customer? Because a lot of times, either it's B2B or B2C on B2B.

Hai Mag 07:38

People sell some bunch of software or services like

Clark 07:41

Yeah.

Hai Mag 07:42

me, but they sometimes forget what are you really selling? you know, I'm selling advertising. So I can manage your advertising. Well, what is the real value? Like I am I like reduce the cost of the person or like operational efficiency, or is it like I'm gonna grow you 10% over the next three months? What is the value? If there is no value articulated clearly, hard to

Hai Mag 08:04

sell your stuff too. And on the consumer

Clark 08:06

It is, yeah.

Hai Mag 08:07

side, the e-commerce brands specifically we focus on CPG, BUT, supplement space. They always ask me how can we make money? And I tell them the only way you can make money is by having repeat customers. And hopefully on your Shopify side and not even on Amazon. Because the reason is now you know

Hai Mag 08:30

Who is that customer to if it's on your Shopify and it's a repeat customer? That is how you make money on the CPG. You need that. I didn't say subscription though. I said repeat customer because it's also different. So when it comes to a repeat customer, it means that the guy is the guy is getting this value every month. It's not just a one time, he got the the package.

Clark 08:52

Ex exactly. It's not a one time thing.

Hai Mag 08:54

And he didn't even use it and throw it away. So he's like leveraging it. So very much I understand that value conversation. maybe now, I mean, how did you end up with this idea, Clark? Like what you are doing? Like, is it because you have some level of a finance background, or what was the reason? Okay, you're an e-com founder. Tell us more about like what did you tell us more about that, please?

Clark 09:13

I was an e com founder. I was an e com founder for for for a while. Yeah. Yeah, yeah.

Clark 09:20

It's it's actually it's funny, so I was I was in high school. Like everything I do is in high school. No. Exactly. I know.

Hai Mag 09:24

Everything happened in the high school, I got it.

Clark 09:28

I was in I was in high school

Clark 09:30

looking into like Shopify at the time and I was like, my God

Clark 09:33

And I was an athlete as well. And I wanted to play at the next level, but I was a super skinny kid. I'm still pretty skinny. But I was like, okay, how I need to eat better. and so when I was going online, I would see all these like, you know, bodybuilders and things like this. And all the content was around like, you know, eat chicken and eat rice. And I was like, okay, that's helpful, but I want like a dietitian telling me this, not like someone that's not trying to play sports at the next level. and so I was like, maybe I'll start a company aro around this.

Clark 10:00

And so it was a meal plan company, actually.

Hai Mag 10:02

Right.

Clark 10:03

And so I partnered with the head nutritionist of the LA Kinks. She was she was my co-founder. and how I even sold her was I went into her office one day and I booked like a she had a side practice. And so I booked a meeting, like I was gonna be a a customer. And then I got in there and I just pitched her the business instead. And I said, Hey, I've already built this website. I would love to work with you. are you in?

Clark 10:25

And she said, let me think about it. And then after maybe another month of convincing, she was like, Yeah, let's let's do it. And so I think that was the first time that I spent money on ads and I was using my own personal dollars to figure that out. Right. And I realized, this ecosystem is so rich and there's so many different players and there's so many different people that are building on Shopify. And I fell in love with the space. and then I went to Venture Capital and I did that for for three years. And so understood like how companies use capital, things like that.

Clark 10:52

And then wanted to get back to the roots, which was which was e-com. And so how I even got started going back to the value conversation was I asked folks what's the biggest problem? And I kept hearing cash flow every single day, all day long. and I also want to talk if we have time about debt a little bit, because I think that whether you decide to look at us or not, I think there's some really powerful tips that I can give on debt and how how you should be thinking about it and more importantly when you should be using it. but

Hai Mag 11:17

So Clark,

Hai Mag 11:18

like connect the debt

Clark 11:19

Yeah. Mm-hmm.

Hai Mag 11:19

to value. Like let's do some connection here. Like with e commerce and debt.

Clark 11:23

I'm happy to.

Clark 11:25

Yes. So I think the most important thing is when are you going to use debt? Right. And and from what we see, we underwrite tons and tons of brands, right? And so we see all the math behind exactly when do they use debt, when do they take debt. Now you should never really use debt just to solve a timing problem. And I'll tell you why. Right. And by timing, I mean, okay, Amazon takes two weeks to give you your payouts, you have a big bill in the middle of those two weeks.

Clark 11:51

you need capital today. How do you handle that? Right. And so if you take on debt, what tends to typically happen is your business doesn't get significantly better because you took on the debt. Right. So you take on debt to fix the timing problem, the revenue was coming, it's just not there right now. And so what happens is your business needs to operate significantly better than it is today, because not only are you paying for all the other costs that you currently have, but now you also have a debt bill on your on your business.

Clark 12:18

Right. And what we typically see is the next time there's a timing problem after the debt has, you know, dwindled or run out, you do the exact same thing, and now you take on more debt. And so what we call this on our side is a debt spiral. And we see it happening all the time. It's really, really strong businesses that look great, phenomenal unit economics, but they have a timing issue, so they take on debt, they have another timing issue, and they take on more debt, and they're also growing, and so that complicates things as well. And then all of a sudden, before you know it.

Clark 12:46

You know, 17% of your revenue, every single sale is going towards a debt payment. And now your unit economics are underwater a little bit, right? But you still have to keep up with the debt payments. And so you have to increase spend some more. And so all of a sudden now you're kind of not in control of your destiny. And so what I would say is on the debt side, the most important thing that you can do is say, What am I using this for? Is it for timing? If it's for timing, you got to figure out a different way, right? If it's for growth.

Clark 13:14

that's when you can use debt. If it's, okay, I've modeled out that if I bring on this specific debt at this specific rate, my business is gonna grow XYZ. And if it grows XYZ and it's way over the debt payment, good to go. You can take that money because you know you'll be able to pay it back. I'll stop, but I would love your love your take on this topic. Yeah.

Hai Mag 13:32

So Clark, but I mean that's like a very,

Hai Mag 13:34

very interesting topic because

Clark 13:37

Mm-hmm.

Hai Mag 13:38

I also have a friend right now

Clark 13:41

Yeah.

Hai Mag 13:41

and he has a business and he's going exactly with this that spiral. And I helped them at some point,

Clark 13:49

You did.

Hai Mag 13:50

but I mean the spiral is a spiral, you know, it's getting bigger and bigger, and and I think exactly as you said.

Hai Mag 13:59

It's more about fixing a timing issue ends up exactly as you said, because I looked into his PL and I figure out that now almost like twelve percent of his business is paying interest. So

Clark 14:13

Yeah.

Hai Mag 14:13

unit economics is not not really where it used to be. So back to your what you said. Now you said if you want to grow your business

Hai Mag 14:23

get that. Okay, but now there is the other situation, right? Which is there's a timing issue. Now if they are not going to get that, what are they going to how are they going to fix that problem?

Clark 14:35

Yeah. I mean, of of course we fix that we fix the problem, right? Because we we help with with moving it moving the payments, right? But is also why, you know, I committed my life to building this thing, right? Is because I think that we are actually solving a real a real problem. And which is really interesting is like what we tend to do, especially with really large companies.

Clark 14:54

I hop in the phone with them, I share what what we do, and they say, you know, it sounds really good, but does this actually help my business? And so we developed this thing where we replay the entire business as if you were already using us. And so you can see like the cash flow balance goes from fifty thousand dollars minimum to two hundred thousand dollars minimum, right? And so I can

Clark 15:13

Talk confidently about this because I know that we actually are helping these companies, which kind of brings it back to the the value side a little bit, right? Like there is actual, you know, tangible mathematic value here, which I think is is interesting. and on the debt side, another piece to kind of even let's say you don't want to use us, there's another way that you can actually help yourself not take as much debt. And it's actually weirdly enough, paying bills early, right? So let's say you have a

Clark 15:40

which no one wants to do, and it I wouldn't want to do it either. But a lot of our brands, the really, really sophisticated ones, actually do were doing that before us. So what would happen is they have a hundred thousand dollar bill and they would start making small payments towards it. Right. And we also are used to doing this as consumers, right? I don't know. layaway used to be a thing a long time ago. You paid towards you paid towards a product before you actually got it. and so if you have a massive hundred thousand dollar bill, break that up.

Clark 16:06

Right. It lets your current cash flow pay for the bill. And then when it finally comes, you don't have a big balance and you don't need to take out a hundred fifty thousand dollars to pay for the hundred thousand dollar bill that's coming up. Right. So you're just paying towards it. so that's a way that you can kind of deal with this problem without having all those lump sum bills kind of stack up on you, and then now it's like I need two hundred grand, but can your business take two hundred grand worth of debt all at once? Right. If you're doing

Clark 16:32

You know, three hundred grand worth of sales. You you can see how it gets tricky.

Hai Mag 16:36

I like the idea very much though. Like, you know, so basically you you split all these payments to forty five days.

Clark 16:42

Yeah, we do. We have a couple of different products, but w one of our big

Hai Mag 16:45

Okay.

Clark 16:45

ones is like the if you have a meta invoice, everyone hates those, right? At the end of the month,

Hai Mag 16:50

Right.

Clark 16:50

especially if you're scaling, right? Black Friday is coming up and folks are gonna be spending that were spending a hundred grand might be spending three hundred grand, right?

Hai Mag 16:58

Right.

Clark 16:58

And it's all finding games during the month and you're like I'm making all this revenue, but you know as a founder, I have a three hundred thousand dollar bill due all at once that I need to pay, or they shut off my ads, right?

Clark 17:09

And so with us for this specific product, we pay for it, right? We pay the hundred the 300 to the three 300 grand, then we split it over the next 45 days. And then by the way, you're gonna get another bill the next 30 days, and we pay for that as well, but you haven't finished paying off the first one because it's 45 days, and then the next one comes at the end of the month. And so what happens is you always have 15 days outstanding with us.

Clark 17:33

Which is great, right? So you're you're that's increasing the cash balance because forevermore as long as you use the product, you have fifteen days worth of capital that you haven't quite paid back. That's just sitting with sitting with us. And so that also helps increase the the cash, the average cash balance.

Hai Mag 17:50

No, I like that very much. And then you are getting paid every day.

Clark 17:55

Yeah, yeah. I I

Clark 17:57

guess the question on your side is like, what are you seeing and how are you helping, I guess, brands on the growth side? 'Cause I think it's a two way street. Like, you know, we help on the cash machine, but it's also really important to have demand and good operations and things like that. So I'm curious on your side, you know, how do you guys view that? 'Cause we can't help with that. You know, if if if if

Hai Mag 18:17

Yeah, like

Clark 18:18

we I you know, yeah.

Hai Mag 18:19

I mean it's it's a really interesting puzzle, right? Like it's like a poker game, I s I say. And the reason why I say it's a poker game, I'm a computer engineer myself. I love AI and I'm working with

Clark 18:32

Yeah.

Hai Mag 18:33

AI for decade plus now, even before anybody

Clark 18:36

Mm-hmm.

Hai Mag 18:36

know what AI is. The

Clark 18:38

Yeah.

Hai Mag 18:39

thing is, when I say it's a poker game, you don't know exactly

Hai Mag 18:43

what is your competitors are holding in their hands too. So most of these AI tools, meta ads, Google Ads, Amazon Ads, they all kind of work based on your own data. Now what we try to do is we try to create that one sided or one sided game which just looks into your data and we

Hai Mag 19:06

make sure that like when we do meta Google Amazon ads, there are two things we do different. The first one is where should we really put the money? Because I mean back to the meta thing. Most of the time, a portion of that meta should go to Amazon, will create a better ROI. But I cannot

Clark 19:24

Yeah.

Hai Mag 19:24

say all the time.

Hai Mag 19:25

But most of the time. And it depends on the search term or an audience that you are looking after. But at the end of the day, if you have a holistic strategy on where to spend the money, and in you know, based on the search terms and audiences, you can have a better strategy. That's what we do. The first thing. Second thing is what are the others doing? Like I very much believe you need to know your competitors more than.

Hai Mag 19:50

Even themselves. And that's possible because sometimes when

Clark 19:52

Yeah. Yeah.

Hai Mag 19:53

somebody's inside a company, they don't understand everything. They don't know their company. Then an outsider, which is looking, it's like a you bring a consultant to check everything in your company because nobody inside really sees it from outside. Now, when we understand,

Clark 20:10

Xana agree, yeah.

Hai Mag 20:11

you know, the competitors and their strategy, what is their inventory level?

Hai Mag 20:17

What is their pricing? Then we can build a better advertising strategy on our side. Maybe we attack

Clark 20:23

Yeah.

Hai Mag 20:24

them. Maybe we defend the position. Maybe we

Clark 20:26

Yeah.

Hai Mag 20:27

target a specific audience. So these are the kind of the two things that we do very differently compared to other agencies or any type of software company, so that we play that poker game, like you know, like to win the game. Because you win.

Hai Mag 20:42

not only the consumer but you also win against the others you know because like now the consumers they already know like they already know your competitor better than you so when we help with that the key point is as you said like sometimes we hit a kind of a roadblock a great brand great product and we tell them hey we need to spend now this

Hai Mag 21:05

$25,000 next month. And he's like, my God, like, hey, I cannot do that. I cannot do it. Why? Because my my ROI is this, and I'm gonna get that money next month. Like, you know, it's like you invest now into advertising, you pay the bill, now

Clark 21:22

Yeah.

Hai Mag 21:22

you see the return of that advertising dollars maybe another 30 to 60 days later, right? So

Clark 21:29

Yeah.

Hai Mag 21:30

That creates the hesitation. Like, I mean, the only way you don't you don't hesitate is if you have already the money in your bank account. You have the 50K, and I'm telling you, give me 20, and I'm gonna get you the 3X ROAS and you have the money, you have no problem. If you don't have the money, then you're gonna think about that and you're gonna keep yourself short, right? Like, I mean, instead of 20, let's do it with five. But it doesn't work like that.

Clark 21:56

Two with five.

Clark 21:57

Yeah, it doesn't.

Hai Mag 21:57

Which is more important,

Hai Mag 21:58

speed or perfectionism? You're like perfect, it's speed. We are

Clark 22:02

Yeah.

Hai Mag 22:02

in a speed, like it's a fast. If you don't do it, somebody else will do it anyways. Again, back to the competitors, right? Like somebody else will spend the money. Then we are not going to be in that first page or ranking first or something like that. So that's kind of like what we do. But thanks for asking, Clark. So so that I can I

Clark 22:18

No, of course.

Hai Mag 22:20

always like to talk about like this.

Hai Mag 22:22

some of these advertising basics fundamentals as well.

Clark 22:25

It's so important. It it reminds me of what my

Clark 22:27

Which is, you know, you can't, I'm gonna, I'm gonna butcher this, but he said, you can't wait for all the lights to turn green before heading downtown, you know? And I think it's exactly what you're saying, right? You you you're never gonna know exactly how it's gonna end up, right? And you can't wait for the the path to be clear. Oftentimes, you know, you need to push forward into the unknown, and and sometimes that's by making, you know,

Clark 22:50

a research to bet about where to allocate your capital. Right. And I think the I was I was doing a talk a little while ago and I was talking about, you know, there's two types of people that we see running these businesses. We have your your cowboys.

Clark 23:03

Right. And those are the guys that are just like caution to the wind and they're constantly iterating and just trying things with capital, making mistakes, et cetera. And we also see your highly analytical founders as well. And those are the guys that are like looking at everything so you know specifically and they understand the numbers and things like that. I from what I've seen, I think you have to be in the middle, like a a gutsy analytical person, you know, because you're never gonna have perfect information and you are in a battle, right? And and battles are

Clark 23:31

So one by making calculated risks, you know, making decisions worth information that you don't have 100% of, and then ultimately seeing where the where the where the chips fall and then iterating from those chips, right? And so you can't analyze it to death. You also can't throw caution to the wind all the time. I think it's in the middle. You know, get the data that you need.

Clark 23:51

And exactly like you were saying, allocate the twenty thousand if you have it, you know, and if not, we gotta figure out a way to make the business more efficient from a cash flow perspective to to do that, right? But you know, don't halt your own growth, which is I think is exactly what you're saying, which is what we see. A lot of brands like they're clawing up. You know, it's like, ooh, we grew 8%.

Clark 24:11

But it's only because they were so constrained by all these other bottlenecks, you know. And if they were if they were not constrained, they'd grow significantly quicker and grow out of ultimately some of the bottlenecks, you know.

Hai Mag 24:22

Absolutely cluck. So thank you very much for being our guest. I really enjoyed this conversation. I'm gonna recommend,

Clark 24:28

Me too.

Hai Mag 24:30

you know, like using your services to some of the brands that we work with too. So it was like really enlightening for me that like this type of a service exists. And thanks for joining our call.

Clark 24:42

Thanks, thanks for having me. And and and likewise, I mean, I think the piece that you hit on the nail on the head on is like you need you need both. You need the cash flow, but you also need the strategy, right? And you also need the allocation. and so you know, I'll definitely recommend you guys, and I do recommend you guys a hundred percent.

Hai Mag 24:57

Cash flow, like

Hai Mag 24:59

I don't know, cash flow this way and strategy that way. Come to us guys, we'll figure it out. Thank you very much.

Clark 25:02

Exactly. We will.

Hai Mag 25:07

Thank you.