Karl Deeter – from being crushed by the recession to a €9m payday

0:00Coming up on this episode of the Mario Rosenstock podcast.

0:03Karl Deeter:I genuinely believe I'm uniquely suited towards solving this one problem. There's someone out there who's going to like cure cancer. There's a lot of other smaller problems in the world. And I think that sometimes you're put on a path where if you embrace it and accept it, that you can be the one who solves that. And I believe this is my one. And that's why you can't compete against me in a winning sense, because I'm too driven. I'm too obsessed with this. It means too much to me to step back from it. I genuinely believe that I'm fulfilling my destiny. But I really, really believe that.

0:42Carl Dieter has been a guest on my podcast and my radio show before that many times. We always have a great chat about US politics, his take on Trump, which is always interesting and which I rarely agree with. But because Carl is such an intelligent and articulate fella, I always have time for his opinions and also some of the big ticket political and societal issues in Ireland particularly revolving around housing and finance etc but we have never really spoken about Carl's own business and to be honest I don't know a whole lot about it I know that he was a broker and that he got involved in the tech area of brokerages for some time that's it until I opened up the Irish Indo the other day and read a headline that jumped right off the page Patrick and I were on the phone to each other straight away Carl Dieter sells his company for, wait for it, 9 million euro.

1:29Yeah, you heard that correctly. 9 million euro. And to think, the last time we were out with him, we bought the stakes. I had no idea about the scale of what he was working on. And I was delighted for him because I've always known him to be a really hard worker and a really collegiate person, a person who's always talking to people, finding out about them, what they're doing, what they're up to. And a bit of a boulevardier, if you like. like somebody who's always chatting with people and seeing what the latest gossip is and all that. But a person of great integrity as well, I might add. So we had to invite Carl back onto the show straight away to tell us the full story.

2:04And it is a brilliant story because Carl was far from an overnight success. He spent years trying to figure out even what he wanted to do. And when he finally found something he was good at and started to get successful at, the 2008 recession wiped it all away and he basically had to start from scratch. But since then, he's been quietly building things back up and working 12-hour days to build a highly innovative tech platform, which has been attracting a lot of attention from both investors and potential buyers. And after just a few years, he's just hit the jackpot. It's a cracking story, and he shares it all on this episode of the Mario Rosenstock podcast.

2:38Karl Deeter:The crisis absolutely crushed us. The mortgage market shrank 95 % in two years. So there was€2.50 floating around in a market for every€100 that used to be in there. And we were all scrapping over that. It really was a survival of the fittest. Great guy, great investor. I remember meeting him and he was like, I don't think you're going to make it. But I said to him, look, if you don't like it, don't do it. It's that simple. And I think that when he actually sat down and thought about me as a person, you know, the expertise had built up over the years, he then said, OK, right, I'm in. like you're on the creative world of giving people release by giving them things to laugh about i'm in the creative world of creating a product that will hopefully improve certain aspects of financial services within the ethos of trying to create and get an outcome they're actually quite closely aligned and they have a process and it takes hard work and people don't see that they see the end result and just think this like oh this just magically happens there is a part of me that wishes i played the big game you know or played in the big league like the way a footballer say who plays in a local good team versus if they ever could have gotten into the championship.

3:44Karl Deeter:Another part of me thinks, what would I have had to give up for that? What would I have lost along the way? My full chat with Carl Dieter is coming up right after this because, listen, Taylor Swift has announced now that she's in the podcast game. She's just done her very first podcast. It's not even a music podcast. So now some of the big podcasting figures in Ireland are circling around her like moths about a candle to see if she'd come on theirs. I'm sorry, the old Taylor can't come to the phone right now. Bye. Hello, Taylor. This is David McWilliams here. And this is John as well. And John, yeah.

4:23Shut up, John. Just inviting you on to my podcast to discuss your phenomenal earning power and how your wealth is the equivalent of Ireland's GDP at the moment. Brilliant. You know, I was lucky enough to get tickets to your last concert in Dublin. I was in Croke Park as well But unfortunately I got into a row Over two pints of Heineken With some fucking scope Oh Jesus We bumped into him And knocked his pint all over me Oh Jesus I kicked the bleeding bollocks out From my dead Taylor Sorry about this Taylor Listen have you been on the van Have you been fucking Had these scams done about you On the net as well have you Taylor don't mind them My voice Jesus Christ Have I sued the bollocks off them Get off the phone will you David Will I talk now or you Go on go on talk Hi Taylor This is Vogue Williams here This Joanne McMalley.

5:06Yeah. Do you want to come on our podcast? It's massive. My therapist goes to me. You're a fucking ride, Taylor. Yeah, you have an unbelievable... Everything. ...body, like, and face. Have you had work done? Have you seen her arse? It's like a fucking peanut at this stage. How did you do it, girlfriend? Get on here. Hello, Taylor. This is Matt Cooper here. And I'm Ivan Yates. Who's that? Taylor Swift. I never heard of her. I had 50 quid on a course called Trailer Swift. Oh, what a fella's doing. Anyway, do you want to come on the Pats to Power podcast? We've so much in common, Taylor. Like what, Matt?

5:40Well, like we both hate Trump, for starters. You hate Trump? Ivan loves Trump. I don't love Trump. You have Trump derangement syndrome, Matt. Oh, anyway, Taylor or trailer, whatever your name is, see you on the podcast. I wonder if Taylor Swift is in the market for a fancy new bathroom because she would do worse than go to Deluxe Bathrooms. Deluxe Bathrooms, getting 70 % off Europe's biggest bathroom brands. DeluxeBathrooms.ie online. They're at Little Island Retail Park in Eastgate in Cork. And they're in Dundalk Retail Park as well. Unbelievable company. Upgrading your bathroom doesn't have to be expensive.

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7:02And you'd often appear on the radio discussing financial matters and indeed housing matters and sometimes mortgage matters and brokering matters because that's what you were, a broker. Just take me back to the history before, let's say, maybe before the crash and what you were doing and then through the crash.

7:20Karl Deeter:So I got back from the USA. I moved home in the year 2000 from Chicago where I was living at the time. I started working kind of door-to-door life insurance sales and premium collection. I wasn't too fond of that. I tried to start a home renovation company, rapidly failed there. So I was unemployed. I got a job working in a mortgage brokerage and I kind of found what I was good for. I've done a million jobs. I used to train dogs, play music, whatever. I literally think I tried everything to eventually narrow it down to this. I liked it. I pulled together with two friends. We all put in about five grand each and started Irish Mortgage Brokers in 2000 and early 2003.

8:07And then we

8:09Karl Deeter:started to grow kind of, you know, exponentially. We had a team of almost 40 people going into the financial crisis. I did actually think there was going to be a crisis. And that's actually what got me started in commentary because I had written about that in the Sunday Tribune, which is gone now. And I got a bit of flack for it. And then I went down with George Hook and spoke about some issues. He's out of circulation now too in radio. And then Eamon Keane, those were the guys who kind of were saying, you know, you should listen to this guy. He's from industry. Instantly, you may as well have crapped in the milk because like everyone was like, who's this guy?

8:45Karl Deeter:How dare you? I think I was in part of that cohort that Bertie Hearn said should off themselves. I remember that. Yeah. Yeah. Well, he wasn't talking about me specifically, but I was just in kind of that general group. but then those things started to happen and that was a tortuous process around 2006 though I also bumped into a friend named Damon Leonard on a street corner I was like I haven't seen you forever what are you doing he's like oh I'm actually I'm out of work I make computer systems I was like wow I've always wanted to do that so would you start working with me and we did and we made something that was cool where clients could log in and you could load your documents on the cloud he introduced me to another guy called Owen McCabe who was saying, yeah, you should try this, try that.

9:26Karl Deeter:Well, Owen then started a company years later called Intercom that is now actually a tech unicorn. It's like a billion euro company. So all those guys were influencing me. We made this cloud system way before anyone else in the industry had thought about it. We were way ahead of what the banks had at the time. What was it? Exactly. Simplify it for me. So it was an online mortgage system. And banks weren't doing it? Not in those days, no. No, it was still entirely paper driven. In fact, when you wanted to send loans to AIB back at that point as a broker, you were using faxes which is like mad stuff anyway we laugh at it now because we've come so far but that was the norm anyway so the crisis absolutely crushed us got through those years it was all we could do now it crushed you well I stayed trading through it and I didn't lose like my house or anything else but you know I didn't miss any mortgage payments but the business was absolutely decimated because hilariously in a time where our crash you know killed people with mortgages and killed banks.

10:26You were into mortgages with banks.

10:27Karl Deeter:Yeah, yeah, I know. Actually, I was working it out before. So basically, the mortgage market shrank 95 % in two years. And then the procurement fees, what a broker gets paid, was cut in half by the banks, almost all simultaneously and yet independently, of course. So there was€2.50 floating around in a market for every€100 that used to be in there. And we were all grappling and scrapping over that. So it really was a survival of the fittest. But we did survive. Great business partners who helped see the business through. I think if I was on my own, I wouldn't have done it. I wouldn't have made it, I should say.

11:01Karl Deeter:So that was that. Around 2017, I thought, you know, I'm still into these systems. I want to get going on that again. Yeah. And I really feel it'll be a theme in what I talk about, the hand of fate in my life. Because in the same way that I bumped into a school friend on a street corner, I got chatting to a buddy who was a classmate. He was in the bright class. I was in the tick class, but we were friends. and I said yeah I want to build this new thing he's like we should do it on phones because I'm doing everything on phones and I specialize in accelerated mobile pages AMP pages it's an internet thing for like news and his name is Ruan O'Donoghue in fact he actually wrote the book on them if you're into that kind of thing and so we started building that out I play music in a bar and while I was working in bars playing in this one pub in particular there was a kid that I always loved his work ethic Adam O'Donoghue the two aren't related just the same last name I was like, what are you doing with yourself?

11:50Karl Deeter:I'm studying computer science, you know. I was like, wow, well, you know, when you're done, I might have some work for you, you know, and he's actually a co-founder. So I just, like I said, this kind of position of fate has been coming into my life. We started building it again. I realized that instead of doing it for myself, it would be better if I did it for the good of the market in general. So I spoke to some brokers, and on basically the backing of my word and a promise, they said, yeah, you know, if you build something like that, we'll join you. Tell me about your backers and who are they?

12:22Karl Deeter:So I was running out of money coming into 2020 because I was self-funding and so I said, okay, look, I'm going to actually go and raise finance for this. And so I started going around, talked to all the venture capital firms. They were all kind of interested enough that they wanted to meet me and then mull over the business plan. And then literally when I really hit the road for the road show, So it was the week before COVID. And then like that Paddy's Day weekend in 2020, suddenly we were in lockdowns. All the VC firms or venture capital firms, sorry, I hate using abbreviations, they all said, look, we're saying no to everything until we know where this is going.

13:00Karl Deeter:Too much uncertainty. I found a few people who in that still had faith. They were all diehard entrepreneurs themselves. So you had Patrick Joy. He runs a company called Sure Tank. He was Ernst Young Entrepreneur of the Year in, I think, 2012. So in the bad years, he was doing amazing things. Sold his company for loads. Great guy, great investor. I remember meeting him and he was like, I don't think you're going to make it. But I said to him, you know, I said, look, if you don't like it, don't do it. It's that simple. And I think that when he actually sat down and thought about me as a person, you know, the expertise I'd built up over the years, he then said, okay, right, I'm in, you know.

13:39Karl Deeter:And he did what's called leading the round, which means that he was in first in front of everyone to help get all the legal stuff, et cetera. Hand in hand with him was a guy called Harry Largie who's done great work in kind of information, technology, comms, et cetera. The two of those guys do a lot of work together. And then Tom Kennedy from Hostelworld came in. Wonderful guy. I consider all these people wonderful. They backed me when no one would, but I am just particularly fond of Tom as well. So we're into a lot of the same things. And Paul McKeown, who had Propylon, which was another business that sold a few years ago for I think around 30 million.

14:19Karl Deeter:They do like drafting of legislation for state legislators or something like that in the USA. And they became the backers. And so with that, we went to Enterprise Ireland, who then put in some more. And the early days - Were they helpful, Enterprise Ireland? Enterprise Ireland are definitely helpful for getting your matched funding. I'm a fan. I think it could be done slightly better. But they are taking risks and a lot of the businesses don't actually work out. So, I mean, in that sense, I can understand the process. But it's a numbers game, isn't it, Carl? Business is a numbers game. It is. You know, there's a large operational part of it, which is the actual thing that you're doing.

14:58Karl Deeter:But after that, there's a lot of numbers involved. And that's why I'd always tell people, by the way, if you want to do business, make sure you get numerically literate. No, I didn't mean that. I meant an odds game. I mean, for every business, for every good idea that makes it, five good ideas won't. Yeah, no, in every 10, you know, three will do okay. And seven, some may fail, some may just trundle along and never really make a return. So that was really helpful. We did that. We did the raise. We had early clients, like I said, you know, all these different companies. We had like, you know, Park Financial Brokers.

15:28Karl Deeter:We had, you know, Mortgage ABC, all these different firms that put their faith in me. And I'm hugely, hugely appreciative to them because they were the reason why we were able to say that we have proof of the market here. My own brokerage was using the software at the time as well. Then AIB came in and built an integration with us. So just to explain what we do, actually, we build a system so that customers can basically apply for mortgages over their mobile phone. It'll have the broker's branding on there and give them a system that is every bit as good as the best that the banks have. and then once that stuff is on there they can do their communications, get all their compliance done, IDs, various things like this and then our system will spit it into the bank system and that's called a bank integration so we got an integration with Haven going, that kind of gave us further validation in the market, after that Avant Money had just entered the market they wanted a partner for doing something new and exciting, we convinced them to work with us very innovative team very forward thinking people we built an integration with them That was, you know, these weren't successful financially, but as an actual product development, they were big moves for us.

16:33Karl Deeter:And then others started to follow. So Finance Ireland rode in, and now they've since shut down, but they rode in to do it. We got Bank of Ireland came in, which is, you know, the country's biggest lender. And we have an integration with them across basically all the products now. Another lender called Newer Money, who were a new entrant to the market, came in in 2024. but we've been talking to them since 2021 because remember we had to meet them in London during the travel ban and I was just remarking walking around how even London was so quiet. So it takes time for this stuff to build. New is an example of best in class like you press a button, everything is done.

17:09Karl Deeter:And then we're also helping other lenders enter the market such as Capital Flow which is owned by a huge institution called Bunk over in the Netherlands and they're going to roll out to the market this September. Yeah, we've heard their ads on the radio. Bunk, yeah. Yeah, yeah. Well, it's capital flow specifically though, and they're starting off doing investment property loans, which is super exciting. Some of the banks haven't sadly engaged with us like permanent TSB, but they'll get there one day because we're just representing more and more of the intermediary market. So we started getting along, getting further and further.

17:40Karl Deeter:And then the opportunity is I started to realize that brokers, about a third of their income on the mortgage people is from being a financial broker. And that means advising people on pensions, insurance, investments. And I said, you know what? We're going to need something in that space. So naturally, me, being me, I was like, we're going to build it. Started building. And I was like, you know what? We are never going to get anywhere because the other solutions out there had like a 15-year head start. In this space, I really only had one competitor, and they had an 18-month head start in us. In that space, they were like decades.

18:11Karl Deeter:So I went talking to some of the competition in that space, and I tried to strike a deal. we succeeded with one that was called Money Advice based out of Ennis good guy there Philip O 'Reilly he you know quite visionary you know and very very tenacious you know drove his business all he could he's getting on in years wanted to get out so we struck a deal with him in 23 that closed in January 2024 and now we were the first and still are the only solution that is across all financial broker products of mortgages pensions investments savings you know retirement and we started to modernize the products, integrate them together and that created a very exciting story.

18:53Karl Deeter:Suddenly there was a lot of calls coming through saying we'd like to chat to you. Of course, everyone wants to chat to you. And when do you say chat to you? Those are people circling you, are they? Yeah, yeah. But circling you in a good way. It's not like the vultures around a corpse. It's more like, what's the opposite of that? Like a good version. I'm usually not short of analogy. Flies around honey. Moths about a candle. Yeah, yeah. Mots around a light. That's it, yeah. And the mots in this case are, you know, private equity firms. Some got chatting to us last August. I was going to say flies around shit.

19:27Karl Deeter:That's what it goes for. When you say flies around anything. I meant losks around honey or whatever. Bees around honey, I don't know. Flies around shit would not be a good analogy. Well, it is actually a great analogy. I just hope it's not one that applies to me. Although, you know, depending on how you feel about me, it could work too. So I had one or two guys that I was like, well, I feel like a good kind of alignment with them. Because whoever you end up doing a transaction with, it is a marriage of sorts. You're now tied into their world, their way of thinking, their vision. So I was playing two of them off each other, which is what you should do ethically as a promoter of the business.

20:06Karl Deeter:The more competition, the better. And then kind of get a little bit cold feet from one. And I didn't like the way the other one was going. and another company came in and started talking to us and that was Software Circle, who were a PLC listed on the alternative investment market in London. They were like, look, if you're not in a period of exclusivity, we'd like to chat. I was like, yeah, look, I'll chat to anyone. It's always like anyone who wants to chat, I'll chat to anyone. And they seemed like not only were they a good fit, the way they were talking about what they thought we could do was good.

20:38I was trying to orchestrate a couple of things

20:42Karl Deeter:concurrently and they saw the same vision I have. And then you started the proctology process, which is referred to as due diligence. And that's where everyone crawls right up your arse to find everything out about your business to the nth degree. We got through that in kind of June, July. You do a whole load of diligence on legals, on financials. I see, I see. Like it's actually a pretty intensive process, which I can't I can't adequately describe to someone but if anyone listening has actually done it they'll know what I'm talking about and if you haven't It's like a Premier League player being brought from Argentina and he's getting a fitness test in Old Trafford and he's put on the slab and he's having things inserted all over his orifices Yeah, yeah So it's Are you sure you have no injuries?

21:26No senor

21:27Karl Deeter:my injury free I want to play in England Yeah, you'll find all metal in his spine Yeah But well that's what they're kind of doing in a legal and financial sense but you've got to get right down into the weeds of like, you know, every single customer, every single penny, every one of it justified, what's recurring, blah, blah. So that deal was done. I'd always said I wanted to get out by the time I was 50. I haven't actually done that. I'm definitely going to be working with Software Circle for at least another three years. And I am excited about it. But so, yeah, I turned 50 on, what day is it, 13th?

21:59Karl Deeter:Two days ago. Oh, you look great, Carl. Same birthday as Clare Byrne. Yeah. Yeah, me and her are actually birth twins. I don't know if I'm giving away her age, but same year, same day. And the reason, as long as you don't say anything about Miriam's age, it's fine here. I'm 65, by the way. Sorry, no, Miriam. I don't talk like that, Carl. Okay, it is flies around shit. Can I be the shit? So basically, Patrick emailed me the other day and he said, what about Carl on the podcast again? I'm lucky. And I went, why? And he went, this article. And what did the article say? Oh, yeah. Because this is this news story.

22:35Yeah, yeah. So what, to give us the headline.