From Wall Street to Homelessness: How He Rebuilt Everything & Deployed $250M | Ep 308 with Frank Scarso Founder of Avanza Capital Holdings

0:04So Frank, man, I read your story and it's pretty incredible. And it even reminded me of some of the things that happened to me in my life. And I know that it seems like entrepreneurs who've really gone through the mud are the ones that persevere and become the most successful. And I know you spent two decades on Wall Street and then you lost everything. And that was a rock bottom moment for you. So what made you decide to rebuild and get up? What was that motivation? So for me, the motivation was I just wanted to go home. I had been separated from my wife and children for almost three years. And, you know, I was estranged from them.

0:47I didn't get a chance to see my kids for like 18 months. And I just, really, I just wanted to go home, whatever it took, however long it took. You know, I just wanted to fix it. That was my driving force. If I was a single guy and I didn't have kids, we would be talking about a completely different story here. But given the fact that, you know, I was responsible for three little children and then plus my wife kind of gave me no choice but to fix what I broke. The motivations, right? Like family, I think it's always a great motivator for you to want to better yourself. What made you say that entrepreneurship, being a founder, was the right path versus you getting a job?

1:27So I've always been sort of like a team leader. I've always worked for myself and I just figured that I'd have to find a new way to make a living after leaving wall street after 21 years this business kind of fell into my lap and i just didn't want to work for somebody you know and i just wanted to move forward and have my own company and started out little drips and drabs and then snowballed over you know the last nine years when you look at the industries and the problems that you can solve i think it's always fascinating to see why somebody said oh this is the problem that needs to be solved So what was the draw for you that was this whole thing with small businesses and funding?

2:12What was the draw where you said, okay, this is the problem and I want to solve this problem? You know, coming from a Wall Street background, it's been always customer service and service oriented. And in the MCA space, customer service is really not something that's out there. So I kind of like brought a little bit of a human touch to this industry and, you know, service the merchants and the brokers and, you know, hold everybody's hand when hands need to be held and give them that little extra attention. has worked phenomenal for us. You know, just be the human being and listen to people. You know, when a merchant's having a problem making payments, you know, you have to understand life happens.

2:55And, you know, walking them through situations rather than, you know, pushing them through is a lot easier to deal with. I imagine that most businesses, the funding side is the make or break, right? Like if they're not selling and making revenue or they don't have the money to buy equipment or invest in something, then the business just goes out. And I think it's like 90 % of businesses don't even last past five years or something similar to that stat. So what does every business owner do you think needs to know? What could you teach them right now around this whole funding? Because I think most people I know, they have no clue about funding.

3:39And it's very a complex situation. It's a challenge for them to the point where I think they just say, I don't even want to do it. I'm not going to do it. But then their business is hugely at risk. The piece of advice that I can give to the merchants is try to pinch your pennies where you can, because it all adds up at the end of the day. And the MCA space, it's expensive money. So I tried to, believe it or not, I tried to talk merchants out of it unless they really need the money. Then you take it and you use it. Unfortunately, a lot of people abuse the merchant cash advance space and just take multiple, multiple advances, one on top of another, and they get stuck in that gerbil wheel, which is kind of what you want to avoid.

4:23So I tried to bring that out and make them understand about the risks of dealing in the merchant cash advance space. It's important that they understand the risks as well as the benefits. There have been numerous merchants that we've funded over the years that have benefited tremendously from borrowing and have grown the business exponentially. But caution is a word of advice. Where in their business journey are people normally looking for funding? All aspects of where they're at. We don't really deal with startup companies. We like to see at least a year or two under their belt. But we have companies that have been around for 30 years.

5:05We have doctor's offices. We have businesses that have been around for 18 months. So we service all different aspects. It's not just one niche market. We try to service as many people as possible. And I know you deployed over$250 million to businesses. And many times, I'm guessing traditional banks just are not able, they're not touching these companies, which is sad. Because I think, you know, it's like half of the jobs that exist in the U.S. are for what they would consider to be a small business, which I'm guessing most of these banks are not servicing these people, but they need it probably more than these other larger corporations.

5:46So what do you see in these businesses that banks miss and why are you betting on them? Well, we see the opportunity to help a niche market. Unfortunately, like you were saying, banks are really not looking to bet on small businesses. They'd rather bet on the bigger corporations and do big servicing of bet versus servicing small businesses, which are the backbone of this country. Like you said, the statistic is pretty high out there. I think it's like 40 % of the workforce is in this small business somehow one way or another. And if they don't get the capital when the capital is needed, you know, it's just inevitable that they're all going to fail.

6:28And unfortunately, no one's out there to help them. I mean, you go to a bank, it takes, you know, three months just to get declined, where we can get your funding done within a couple of hours, having the money in your account. But, you know, we pride ourselves in speed and that's that's what differentiates us from some of the other ones out there. Hey, there's there's always different spaces and niches and markets for people. And I'm glad that you're you're helping to solve a problem for these businesses just because I know how it is. Like you put your heart and soul into something and many times you're making less than you could just go work at a like a basic job with the hopes that it grows into something.

7:06It's like when you say it out loud, it almost sounds crazy to be an entrepreneur. Like you almost are better off getting a job somewhere and you'll make more take home ways. So I'm glad that you're helping those people. Let's talk about, I know your father has instilled some things in you and he told you something. If you're going to go do something, do it right and treat it like it's your own. And I think that's so fascinating how you've taken what you've done with that. Tell me about these lessons that you've learned from others. Well, you know, so like lessons I learned from my father, he always taught me to have pride in everything that we do.

7:41You know, whether you're working in a bagel store as a kid or the working on Wall Street as a young adult or whether you shine shoes, whatever you do, just be proud. Just be proud. Do it correct or don't do it at all. And that's something that stuck with me, you know, throughout my lifetime. You know, my father was a big influence in my life. And still to this day, you know, I think about him every day. and what he taught me was a good-hearted person. He's missed. But his legacy is his children and his grandchildren. I still listen to those words he said to me a long time ago. When you think about mentorship, do you find that for yourself, have you used people as mentors or do people come to you for any sort of mentorship?

8:30or do you find that business is kind of like a lonely place where you just got to figure it out as you go? You know, I think I'm a big believer in mentorship. I always, over the years, have taken on sort of like a pet project, the younger guys where I've directed them and have had like sidekicks or proteges, whichever one you want to call it. I think that's important. I was always taught on Wall Street as we were growing up in the financial aspect is you want to surround yourself with people that are smarter than you so that you can learn from them. And that's a true fact. And, you know, I mentor and I help people for free.

9:10I don't want anything for it. Just it helps me give back a little bit something to the world. I'm very grateful for the position I'm in, especially after everything I've been through. And, you know, I'm a very big believer in giving back and helping out those that need the help. You know, it's wild when I talk to people and they say, I notice they hire people and they're almost afraid to have people around them that are smarter than them. It gives they might become a competitor or they might, but I'm thinking the same way like you, you only grow and learn if you have people that are around you that are smarter, knowing that, you know, the people that you lead specifically will go on to do great things.

9:49So let's talk about leadership for you. Thinking back to when you were in like Wall Street, more a corporate environment what type of leader were you then compared to the leader that you are now having over eight years of sobriety the ups and downs and downs and ups that you've gone through what's changed in your leadership style well i used to be a lot rougher uh a lot uh you know guns blazing always pushing the envelope um you know that's what you know we we were caught on Wall Street. It's a young man's game. But my style has changed. I'm a little bit more of embracing as a boss and understanding that employees do have issues and not having fear of anything because going through what I went through was probably the worst thing that someone can endure.

10:38And if I can get through that and I can get through addiction, there's nothing that I can't get through. Everything else will fall into place as long as you just push forward and work hard. But hard work is something that I believe in for my employees, and I do it firsthand. I'm a full hands-on owner. I don't just sit here and delegate. I work all aspects of this business wherever health is needed. I will always jump in and help my employees. Yeah, and thank you for sharing that, being vulnerable. It's amazing how not only time changes us, but the experiences that we have completely changed and thinking about like how I am today might've been the complete opposite as I was 20 years ago.

11:22When you're looking at the industry itself, because I know the private credit is just insane. It's projected to hit over$2 trillion in the near future. What do you think is driving this shift in your industry away from traditional banking. And do you think there's still going to be, or maybe a new opportunity will arise? Well, I think what's driving the shift is the actual banks themselves. You know, considering small businesses unbankable and leaving no choice, but for them to go to alternative financing. And that's why, you know, the growth is just, is going to be, you know, tremendous. And it's growing at a faster pace, I think, than the$2.8 trillion that's expected over the next couple of years or so, I think that that market grows.

12:10And you've seen a lot of institutional money starting to pour into this side of the business because there's money in lending and institutions know that, banks know that. Unfortunately, they don't want to take shots on these small businesses. So they'll let like the hedge funds that manage risk a lot better than a bank would. Take that roll and run with it. And that's what we've been seeing. And, you know, pretty much the banks have cannibalized themselves in the sort of speed. There's been a lot of interesting things with banks. I was just looking at Bitcoins like plummeting right now, going up.

12:47And I mean, the finance world is fascinating. And I don't understand most of it, but I'm always interested to hear what's happening. When you look at growing and scaling your company, what has been something that has been critical for you as you've grown and scaled past certain milestones? One of the most important things I think for me has been talent. You know, the talent pool up here in New York is a little bit more competitive than it is in some of the other smaller markets like down south. and I think having the office in North Carolina and Florida where we really got lucky, we were able to hire some really good talent.

13:29I think that changed the game a little bit. Up here you have five people chasing that one job where down south or out in the Midwest in some of the smallest cities, you find talent that is still looking for a job and there's still some good talent out there to hire. we're going to look to expand into the south and into the midwest hopefully in the next couple years how about when it comes to technology ai is obviously in every single thing it seems like that we're doing are you finding that there's any technology software anything that you either see that's going to be helping your industry or it's already helping you so the ai aspect of it is all fine and dandy when it comes to you know looking at bank statements and basically you know data mining the data that's on there.

14:18But I think that when it comes to underwriting, you're always going to need that final human touch to bring you across the goal line because sometimes you have to look beyond the numbers. You have to look beyond the company. You have to do a quick mental analyzation of what you see and make decisions and pivot when necessary And unfortunately, some of these softwares aren't there yet. They might get there one day. So we just use AI just to help break down some of the bank statements. But most of the rest of the underwriting process is done manually. When you're thinking about future goals and you've already achieved things I'm sure you never thought you would achieve, especially going back to certain moments in your life, and seems like you're very grateful and you work very hard and you've really put the systems and processes and people in place, which is amazing.

15:18So when you look at goals and milestones, forward thinking, how do you structure them and how far out do you normally, how far out do you have to look in terms of like, okay, I want to hit these milestones at this time because this is success to me? Well, what's important about setting goals and milestones is really setting goals and milestones that are attainable, right? Anybody can say, I want to make a billion dollars, right? That's just not going to happen. But if you set attainable goals, stuff that is reachable, and I try to set short-term goals, and I also have longer-term goals, right?

15:56But it's the short-term goals. Those are the ones that get you to the longer-term goals that help you push forward from there. So it's important that you're realistic in your numbers and in your goals. And hard work, pretty much remedy anything. And I mean, you need a little bit of luck as well in business. Hard work and a little bit of luck and you'll have a good recipe for success. Yeah. Thanks for sharing that, Frank. So I know you have something really special out. By the way, I just launched a book and then you just launched a book, The Hard Way Home. And And the amount of time and energy and effort that went into my book was insane.

16:35And I can imagine it's the same for you. But it feels so good when the book comes out. But I'm having a hard time even thinking about people reading a book. I don't know. I feel like I'm going to get judged. But how was the process of writing this the hard way home? And what was the inspiration behind this book? So the inspiration was trying to get someone to benefit, even if it's just one person to benefit from my story and bring that hope across that, you know, you're never really truly alone, even when you feel like you are alone. When I was living on the street and I was alone, you know, at that point, I really thought I was alone, but I wasn't.

17:16I had my whole family behind me, even though I was estranged from everybody. They were still behind me, supporting me. So if my story can help one person overcome, some troubles in their lives, whether it's addiction or whether it's just employment or whatever the case may be, or some sort of mental health disorders. My story can help just one person. It was well worth it for me. And writing the book was hopefully more so for myself than for anybody else to give me a little bit of closure because I do carry a lot of regrets on some of the things that I did and said over the years. so hopefully it'll put to rest some of those demons.

18:00Sounds like it was almost therapeutic for you. To tell my story and to say it out loud to myself and putting it down in words and paper was absolutely amazing. And I didn't realize for a while what I went through until I wrote the book. sort of in a kind of weird way kind of like inspired myself again uh if that makes sense you know we forget you know when uh we take things for granted and then uh you jog down memory lane it opens up some good memories some hard words also but a lot of good memories but thinking back what's a moment for you that was like a great memory when you're like oh my gosh, when I wrote that in this book and it's in the book, this was something that made me really smile compared to, like you're saying, all the memories that were obviously very tough.

18:59For me, it was the one pivotal moment that happened in my life where it was almost like I had a moment of enlightenment. It happened to be on the phone with my brother. And he said to me, he said, don't you want your children to have good memories of their childhood like we did? and that just blew me away like it was just something so profound to me and I can't explain it but like it changed me as a person and then from that moment on it was just all you know it was all downhill from there you know every day that went by that I you know was sober and then I you know pushed forward just a little bit more was closer to home than I got even though I didn't know it in time you know I was estranged from my family for three years I never thought that I would go back.

19:44And it was that one pivotal moment, which was important for me. Just remember that was what kind of like helped me come back. I love that, man. So it's always amazing how one sentence, one phrase, one or two words can completely change the trajectory of not only your life, but obviously your family's life, your kid's life, and then whatever generations to come later on just from that one sentence. But thank you for being vulnerable to even write this book. Again, I've just went through the same process. And there were so many times where I wanted to tell them that I don't even want to put it in the book.

20:23I sent it in, delete it, because I don't want that in there. But like you said, if one person can be inspired, but the hard way home and Avanza Capital Holdings. So if people want to get in touch with you, Frank, they want to get the book, they want to find out more information about you, how can they do so? Well, they can find the book on Amazon and some of the other bigger book retailers. And if they want to get in touch with us, they can just go to our website. It's www.abanza.nyc. And they can reach us through there. Well, Frank, again, I can appreciate you being here. I can relate so much to your story.

21:00I think there's a lot of other people that are either in the moment or they're out of the moment And hopefully that they'll become entrepreneurs. And if they ever need anything as a small business, they can contact you. So thank you so much for, hey, changing the world, changing the world, being vulnerable enough to write it down and change the world, which a lot of people are not. A lot of people will not do that. So I appreciate you for for being here on Founder's Story. My pleasure. Thanks for having me.