Toby Salgado

A Humble Beginning

I come from very humble beginnings and a strange home life. I grew up with a very religious mother and an alcoholic father. Neither one of my parent's ever attended a day of college and I never got to know my grandparents. In a lot of way's I always felt like I couldn't rely on anyone. I am the oldest of 5 children. I was told to be the example. Maybe because there was 5 of us and my parents were busy but, hugs came rarely and kisses were non-existent. My parents were not the soft nurturing type and growing up like that hard-wired me for achievement.

Very early on I vowed to be the first person in my whole family line to go to and finish college. I got into UCSD. While my parent's said they were proud (my mom at least---I think?). They didn't give me any money to go to school and in reality weren't very encouraging. So, I was on my own to pay for an education. I started a house painting company. I did well; by the time I was a senior and close to graduating I was making about $50,000 dollars per year working full time in the summer and part time in the winter school year.

After graduating I got a corporate job because I thought that's what you did. My first corporate job I made a $28,000 dollar salary plus commission. I was selling equipment leases to growing companies. What? I went from making $50,000 working part time and now I was making $28,000 and working full time? I went backwards but, I thought it was what you were supposed to do. My first year I was rookie of the year financing ISP's (Internet Service Providers). At the time I financed probably 60% of all ISP's on the west coast. I quit my corporate job and started my second company--Allied Funding Group. I rented an executive suite--it was basically one room with a front desk girl with no windows. I started to do some deals but, was pretty bummed out. I realized that I couldn't imagine myself doing this same thing at 50 years old.

I had some friends getting their MBA's from Stanford. This was 1998 and the internet was blowing up. We wrote up a business plan and pitched it to Silicon Valley venture capital companies. It took about 9 months but, we raised 7 Million dollars and started We competed against Elance---we were all too early. We spent the money and couldn't raise a follow up round. This was in the year 2000 and the internet blew up----it died. Nobody was funding companies and we shuttered Workexchange. I had enough, I moved back to San Diego with my fiancé; got married, bought a fixer and started playing house. My money started to dry up after about 6 months and I knew had to do something. I started looking at some ideas and then 9/11 happens and the world looks completely different.

It was at this time when a friend told me that the city of San Diego was going to start enforcing new laws around Storm Water. I didn't want to go from finance and high-tech to low-tech but, I dedicated 2 weeks to researching the industry. Within days I knew there was a business opportunity in this low-tech world of Storm Water. I started BNT Erosion Control. Just as I started this company I found out my wife was pregnant. I now had a house, a wife and a child on the way. My back was against the wall--running out of money and now starting a company with a brand new family was scary. I had to succeed, failure was not an option. I grew that business from me in my garage to 58 people and doing a little over 4 Million in revenue.

I managed to keep our profit margins at about 30% and I was making big money. I went from making about $130,000 dollars a year to making a million dollars a year. I had a small $1,300 dollar mortgage payment and was putting tons of cash in the bank. Two years after launching that company I became a millionaire at the age of 33 and a multimillionaire by 35. Life was good until I ended up in a coma from working 100+ hours a week. I managed to survive a 4 day coma and finally put some things in place to cut back my work hours and then the 2007 crash happened. All of my business partners were no longer buying or managing land they were selling it as fast as they could. Within months my business went from 58 people to 35 to 10 and finally 4 guys working in my yard (I bought a big fancy house with all that BNT money). Finally---I shuttered BNT Erosion Control in early 2008.

I was again looking for a business to start. The housing boom of the 2000's was fueled by credit backed securities. In September of 2008 Lehman Brothers collapsed. This was the beginning of the collapse of global equity markets. After Lehman failed the world looked pretty scary. Banks were failing left and right, the stock market was falling. The bubble had popped and the equity people had in their homes had disappeared. I knew there was opportunity in this market I just didn't know exactly where to put my energy. There was lots of new "credit" type companies popping up and I didn't want to create a "Me-Too" company. We took a different angle. We wanted to provide the capital that businesses needed but, could not access from banks. During this time nobody could get a business loan---you could have assets and revenue but, it didn't matter. We set out to find a deal.

We found a company named Nehemiah. It was a down payment assistance company. For a fee, Nehemiah would provide a home buyer with the 3% down payment needed for an FHA loan. There were writing deals at a crazy rate but, they had a problem. Congress didn't like that they were helping people essentially buy houses with no money down. Congress was concerned that it was these kinds of companies that helped create the bubble that was killing the markets and economy. There were going to shut them down and Nehemiah knew it. They had a small window of time to do as many deals as they could. They asked us for a 10 Million dollar loan. They were willing to let us control their bank account, pledge a parcel of land they owned (appraised at 33M) and were willing to pay us back in full at the end of each 30 day period. I put in a million dollars and we went and raised the rest from family and friends.

We pulled the trigger and loaned them 10 Million dollars at 6% each month. At the end of the first month they paid us back our initial 10 Million and paid us $600,000 dollars in interest. They did this in succession for 3 months and then for the fourth, fifth and sixth month they asked for 12 Million dollars. At this point lots of our friends knew what we were doing and everybody wanted a piece. It was easy to raise another 2 Million. I was making $100,000 dollars a month and kept reinvesting it. By the fifth month I was put in 1.5 Million dollars. Congress passed legislation and killed Nehemiah's business model. For the next year we were looking for good deals/companies to help them grow.

In late 2009 banks started to come back online and it was harder and harder to find any good companies that were willing to pay 6% interest per month. It was at this time we found another kind of deal. During this time both homeowners and builders were walking away from their properties. We found a small bank that had made a big loan to a builder. The FDIC insures people that its safe to give them money to banks. In 2007 the FDIC would insure each bank account up to $125,000. In 2008 they changed that amount to $250,000 per person. The fed also had strict limits of how much cash they had to carry on their balance sheet in proportion to the loans they had written. This bank was way overleveraged and the fed stepped to normalize their balance sheet.

The bank had made a 73 Million dollar loan to a builder. The builder couldn't get any money to finish the build out of his project and the fed auctioned off the project. The project had 66 houses, 525 fully developed lots and 420 paper lots. Nobody was interested in buying the deal as nobody knew how much of the project was up to code. Through our network we found the superintendent that had done all of the work and we became convinced everything was properly done. We threw a lowball all cash bid to the FDIC of 3.2 Million for the project. We won the project for pennies on the dollar. We knew it was going to be a potentially long hold for this so I only bought in at $500,000 dollars. I thought that if we can buy portfolios cheap I could probably buy single homes cheap as well.

I dedicated a million dollars to go find out if I could create a predictable model for buying and flipping homes. I figured that if I could create a model we could deploy the remaining money in our fund and do it on a large scale. I bought one house, then another and all of the sudden I have 13 houses. I never could create the model and over the next three years bought and sold a variety of properties. I bought commercial, residential and equestrian property. From 2009 to late 2012 I was fixing and flipping. By 2012 I couldn't find good deals and knew I needed to find another business opportunity.

I started a consumer facing company called Taskhero. It was basically ebay for odd jobs around your house. It failed. It was mid 2013 when I saw that media and broadcasting was changing. Cars were to become hotspots in 2015 and it was the beginning of podcasting. The basis for my thought process is that any time a new method of content delivery developed there is lots of white space to capitalize on---in the mid 90's it was the internet--early 2000's blogs--2012 podcasting. Everyone is looking for highly tailored content.

I put some thought into choosing an industry. I thought of both industries (Human Resources) as well as, topical (Sales). I landed on Real Estate. We built the show and it's been very well received and we have listeners around the globe. As I got deeper into real estate I landed on an area that showed considerable promise. The area's of real estate like coaching are extremely crowded. While I saw some technology plays that could be promising it was radio advertising that kept rising to the surface. Everyone wanted to advertise on radio but, nobody knew how to do it effectively. There was only one company currently putting people on the radio and because he was first to market he was making all the classical mistakes of a market leader. He was over- confident, providing a poor customer experience and trying to break into other markets (TV). This space and competitor were ripe for disruption. Since our launch in late December 2014 we have been signing up at least one client per week. Our goal is to cover 50 markets by December 2015.