Ep. 17: Steel Bridge Labs and NuMoola

Transcription:

So today we're having a little too much fun possibly, as we bring you our next installment of our Summer of 50 Pittsburgh Tech stories with Comcast and I got someone here who I hardly even recognized when I tuned in on zoom here. And that we have Jim Haluszczak who was check from steel bridge labs. Jim, thanks for hanging out with us today. Always great to catch up to you. Especially after you've just been freshly shaved.

Yeah.

Thank you for having me and thank you to the Pittsburgh Technology Council. You are correct. I am fresh off the the barber's chair and took care of this. I don't know what we call it. It was chopped and then I think for this one, but I feel what it is. But you know what we were doing is we were shaving off my quarantine beard for a charity event of Western PA.

I love it.

Yeah, one Our company's new moolah who I'm the interim CEO have put on a charity event. And the objective was to get people to vote and donate for how I changed, but I'm sorry I shaved my quarantine beard down to the I guess as dainty as possible. And I think they nailed it. So, here I am. And, and here we are. So thanks for videotaping me today. I'm so happy to be videotaping you today and talking with you. As always, I would say you know, in case things don't work out with new moolah.

You could be a stunt double for Derek smalls. So over the years, some change in a cucumber. There you go, ready to go.

I've already got a few of those options. apparently one of the guys in the barber shop was calling me a What do they call it an ice truck trucker or whatever? Ice road trucker trucker. Yes.

That that vocation as well if you so your horizons are wide open by No, you won't need that. That's for sure. And what I just love that what you guys do at steel bridge Labs is the fact that like you guys are Tech incubator in Pittsburgh.

FinTech and that is your jam.

NuMoola is one of your companies in there. But before we start talking about NuMoola and why you have this crazy beard on stuff, what is going on with with Steel Bridge Labs?

Yeah, absolutely look like I said, I appreciate you guys having us on and, and I guess picking up from where we left off in our last interview a lot happened. We're you know, first and foremost, as you mentioned, we're a Pittsburgh based early stage FinTech investor, venture capital firm. You know, we founded the business just over four years ago. And it was born out of the steel bridge consulting business that I found it almost, well, 11 plus years ago. That's crazy. It's been that long since you found it. Yeah. Cool. I love it. Well, and that's the thing. I mean, the consulting business that that as I said, I found that many years ago was all focused in private equity and venture capital and that's been my my entire career since I started my career. Frankly, my partner As an IT consulting business decided that we needed to get into FinTech investments. So here we are in 2020. And, you know, we're really excited about where we're going and, and what we've learned to be quite honest with you over the last year. Right, right.

Right.

Yeah, it's been it's been really exciting. You know, and I just, I guess, maybe a couple of updates as to where things are since we last spoke. You know, one of the things that we're really proud of is we're now invested in nine companies. I know. It's so cool.

But I saw you had nine under your belt. I was like, Oh, my God. We had like two or three. Yeah, that's exactly right, man.

Yeah, yeah. It's been super exciting. And, you know, we we found that we'll talk about this a little bit, we found ourselves creating a bit of a niche and financial wellness. And so, you know, if you look across our portfolio, we're excited about that. So we're in nine companies. Actually, I should say we're at eight because about a month ago, we exited one of our companies. It's a company you may have heard of equity net based on a paper. Okay, yeah, they cycle is working. So you go

out and then he comes back in you deploy back into the marketplace I love exactly

right. I mean, we are We absolutely are nailing our investment thesis, which is invest in these FinTech companies, you know, allow them to get to that next level, and then exit the business and see what we can do next. So yeah, we're validating our theory, and we're really excited about working. I love it.

So tell us about new moolah. This is such a cool company. I remember I got a little taste of them early on. I know there's been some changes. I know you're now interim CEO as well, too, which I think is pretty cool. Yeah, was up in New Zealand. And it's all about education, which I think is just so cool. That's so important these days. Absolutely. We're super excited about NuMoola. And look, you know, as an early stage investor, we we take the approach at the lab where half the companies are homegrown half the companies are external founders, really as a homegrown company, Eric redlines, one of our co founders, he was CEO in the beginning, he got us to that first inflection point, right, I'm now stepping in to help us get us to that second inflection point. And then eventually we think we'll have a different management team take the business over entirely and grow it but right now we're really, really excited about what numa is and where we sit. If you look at the business, we're sitting squarely within a center of what I like to call young family, consumer finance companies like acorns, they created acorn acorns early company called revolt, which is based in the UK created Revolt Jr. You know, we as a society are getting used to Venmo and Zelle to transfer money. We're really seeing this transformation in the way that young families bank and and work with their money. So new moolah sits squarely within the center of that world and we're, you know, we're pretty excited about it. The one thing I want to mention about new move that that we do, which we think is different from our competition is we truly put financial literacy within the center of what we do, and I'll talk about the Junior Achievement partnership here in a minute, of course, but financial literacy at New moolah is the core to who we are in that not only, not only Are we consumer banking, helping young families, meaning both children and adults understand financial services better and, and work with their money more fluidly. We're also educating them along the way. So we actually in the child instance of the app, have the product that literally sits on the phone, right? We split it between the real money, and then gamification. And so we've gamified that education. So we keep kids and families involved through using real money, and making learning fun. And I think that's what differentiates us from our competitors are plenty use focus, debit cards out there, there are plenty of virtual Ledger's out there, but bringing real money and true education gamifying that education in an age appropriate manner, by the way, so it grows with absolutely that's key for us. Yeah.

I just like gamification so amazing, because man, that is the key to learning these days. It's just amazing. When you make things fun, you start learning because you don't even know that You're learning.

Yeah, exactly. And that's the goal. I mean, you look at Duolingo has done in our backyard. But you know, they make learning a foreign language fun. And that's the goal. And, you know, even if you only interact with their product a couple times a day, you're still learning. And we, you know, we're taking a page out of their book in that we don't need our children and our families looking at the app all day long. This is not going to be a game where they're glued to the screen, they're not playing for five hours a day. And that's not what we want. But what we do want is when they interact with their money, we want them say, oh, let me go play this game. And they play for five minutes and they learn something about whereas money made, you know, it's it's, it's it's an interesting concept that we think is working well based on the the families that we have using the app so far.

Very cool. Can you maybe walk us through scenario as to how people kind of use it in their day to day life?

Yeah, absolutely. Well, day to day, it's, as I said, an app that you download, and as a parent, you set up an account for your family. You then say up each one of your children, and when you set up each of your children, they have their own login. So what you do then is have that hub for connecting with your entire family network to again not only give money and earn money, but also learn about finances. So apparently logs in connects it to an external bank account transfer, say $100 over into the new moolah, that is then sitting that hundred dollars is sitting in the parent account, which allows them to allocate it down to the children whenever the child maybe makes their bed or earns their weekly allowance or whatever the case may be. Right, right. So it's this two way street where missions as we call them were assigned. And when the child completes the mission, the parent gives money for that. I like that that makes it more fun to empty the dishwasher. Your mission is to empty the dishwasher, John.

Absolutely. If you choose to accept this mission, you could earn 50 cents or whatever. So at the very highest level, that's what we do, but we take it further and You know, one of the things that we do with the app to make it fun is we've integrated with Amazon Alexa, we come along very love that part man. Yeah, it's a huge sort of, you know, chip in our pocket, if you will, none of our competitors are integrated with Alexa. We are and and so you know, we allow the family to immerse themselves in this education where maybe you have a child who learns differently and and perhaps can't see the screen and can't interact with the screen. Well, you can still use new moolah with them, using your your voice enabled Alexa device to interact and still educate that child in the financial literacy cops topics we're looking to teach them. So Oh, yeah, that's an exciting point. As I said, a second thing that we do is real gaming. So you've got the money side of the app for the child and then you've got the gaming side, the kids get to earn points. They then get to use those points to buy virtual things. Like for example, we have an avatar game where they can buy components of their own avatar that they create. So they have their own new moola avatar, avatar. And they, you know, earn points for taking quizzes and so forth. And then they draw those points down to use, you know, to to create their avatar. So we're trying to make it really fun and really exciting.  And weget to the point in the conversation as to why you look like Derek Smalls, right? Yeah, we do have this really cool thing you have going on with Junior Achievement and I love the fact that you are like shaving in order to get some attention towards new moolah and make this thing happen. Tell us What's going on here with Junior Achievement and you Andy with the razor?

Yeah, you know, we'll do anything to to get the attention of the community and in our families that use the app. So, you know, even if I have to go and wear this for a couple days, which I've committed to it's just just keep it.

Well, yeah, who knows? I'm not worried about my look, I'm actually worried about the others that look at me like they're gonna find me while they have no idea that I'm a FinTech, venture capitalist, you know, and tell them you have roadies, okay. That's all I'm saying. You just tell them you have roadies.

I think I need to head over to the the Harley dealer and pick up one. I mean, I think they rent them, you know. Anyhow, your achievement, Junior Achievement. It's look Junior Achievement is a very exciting opportunity for us at New moolah. You know, we officially announced a partnership with Junior Achievement of Western Pennsylvania. It's a partnership that Eric redline and I have been pursuing with with their leadership team. And we're, we're happy to say that it's official now and great. We're their partner in a way to get your app in front of these these kids that needs to the perfect age, the perfect time and those kids have been engaged in Junior Achievement. Let's get some financial literacy and do it have some fun with it through NuMoola. Yeah, absolutely. I mean, and for those of the for those of you who don't know what Junior Achievement is, it's it's a charitable organization that really tries to help children focus on things that aren't taught in school. So things like work, preparedness, things like entrepreneurship, things like financial literacy, those type things with their colors. And you know, it's it's it's actually funny, Jonathan, my older brother Tim and I both went through the Junior Achievement program 25 years ago now. Yeah.

That's exactly right. And we're excited about it. So, you know, Junior Achievement and and their biztown program, which you may not have heard of, is a great way for kids to go into the real world, if you will, meaning go into the Junior Achievement biz town facility in Bridgeville and see how businesses work. You know, Junior Achievement has a number of other partners and they built this little village within the warehouse about that. They said it's really cool. So the kids go in through this classroom program, and they immerse themselves in real world business, which is exciting. We're excited about new moolah to become a partner of Junior Achievement because for the financial literacy thread, we become the digital platform for j Western pa to offer up that financial literacy learning method. I'm using a device that every one of our kids out there are actively involved with. So this partnership for us is is massive. And, you know, we obviously are interested in partnering with other Junior achievements around the country. And we're going to actively pursue that opportunity and, and hopefully create a broader relationship.

Oh, that's awesome, man. And what a fun way to kick it off.

So what actually happened here? What was the whole thing going on?

Yeah, well, that's, that's, uh, yeah, it's it's the topic of the day, that's for sure. I've been all morning running around making sure all the right pieces are in place. And I've got a great team around me that has pulled the whole shave event together. But how it came about is, you know, obviously being in quarantine like we all are, you know, I took it as an opportunity to let my beard grow. And my beard, as you can probably imagine, grows pretty quickly and it started getting a little unwieldy and like quarantine has been this long, man.

If madness really is, but um, you know, the idea came to me where I'm like, Look, let's let's shave this for a good cause. So, Lucas up, who is one of the senior executives at j of Western pa and I said, Bill, would you be willing to have a sponsor a fundraising event where I shaved my beard, and he was completely off floor. Bill's an amazing guy. If you don't know him, you should get him on your show. He's really only will make that happen. Yeah, please do, please do. So he was all for it. And he got his team organized. I got my team organized. And they brought this event together. So I went to the local barber shop. They were within the biz town facility within the J building. Okay. We tried Unfortunately, it didn't work out we had some technical challenges. But we in by the way, we test this like three times or no, that's it.

Yeah. It is to be expected in this day and age when overloaded with a million zoom calls. So yeah, it was such a bummer. We were Facebook Live in the event where they were on screen and then we're We're gonna have a split screen. And I was going to be sitting there with my barber. Yeah Miss cut. Well, unfortunately that whole interaction didn't work but clearly the shave occurred and, and my videographer who happens to also be my girlfriend and I have to call her out because she put up with this for months and months and months.

Stuff happened, she could wait for this day, let's just say that but she videoed it and and, you know, was able to to send our team some of the videos and pictures. So we'll get some good clips out there for everybody. Some of those to us. We will post some cool stuff to go along with we will Yeah, we will learn afters man before and afters. Absolutely. I guess the last thing I'll comment on this is the most exciting part is we raised about 30 $500 right it's just very Yeah, two short weeks. Yeah, you know, with everything that's going on in the world. And again, we're gonna talk about that in a minute. But with everything that's going on in the world, we had a compress our our fundraising time to two weeks and we're still still able to raise $3,500. So we're really excited.

I like it. That's it. I think that's an awesome start to get new Moodle out there, man. I can't think of a better way. We appreciate it. We appreciate it.

Hairy situation. Hey, you made it through. So it's all good.

Through flying colors. And look, we had a great time doing it. It was so much fun it really, man. That's awesome. That sounds super cool. So tell us about COVID I mean, obviously it's like my gosh, man, it's a it's impacted people so differently. But I've been enjoying telling you stories because everyone I'm talking to is like, yeah, it's happened to guess what? We're still kicking some butt. We've actually done things we're going to be doing and actually did some of your portfolio companies like honeycomb credit. They've, I've done. I've done a couple interviews with them about all these new programs they've been kicking out and they keep thinking of new ways to be helpful in this day and age, right, like, man, I don't sweat it anymore, because I know we're gonna kick some butt.

Yeah, you know, it's it's an interesting point. I think in the beginning, we were all in a situation of we don't know. And while it has been extremely impactful globally in terms of people's well being and in, frankly, people's lives, right, I think we are starting to adjust to what the new normal looks like. And and look, I don't think anybody would disagree that perhaps maybe we move back into society, it sort of a normal society too quickly. And, you know, we've we've cut a little bit of a road bump that we're going to overcome. But the bottom line is even with that, I think we're all figuring out how to move on. And definitely, you know, to your point, you know, businesses have been impacted tremendously. And businesses have been impacted differently based on COVID. Some actually are doing really well some of benefit from this. I would say probably the vast majority have been impacted negatively. And, and so we need to make adjustments to to what we do in order to work through situations like this going forward. You know, look a year ago, none of us we're thinking about this. I mean, yeah, we may have had business continuity plans, which we make sure every one of our company Do we may have had disaster recovery plans which we made? Sure I hope no one's thinking pandemic though man, so prevalent pandemic and literally global economy SOPs. Right. Yeah, nobody's making that. So I think what I, yeah, what I would say is, first and foremost, the lab, you know, the health and safety of our, our teams, our families, our partners, our clients. That's, that's is of utmost importance for us to agree there. But secondly, I think it's something that, that while we preach it to ourselves and to our companies, we need to make sure that we are equipped to weather storms like these. And for our business, it's making sure that companies are funded well enough to last through like, yeah, period of, of who knows what it could be.

I'm glad you brought that up, because I've seen so many startups with not even 30 days of cash. And it's just like, I get it your startup and it's just like, Oh, you know what, it's it's the truth in it. Unfortunately, it's the word you live in as a startup. I mean, being a startup entrepreneur. You know, founder or management team member, it's it's a tough job. And it's a gut check. Because sometimes you're living on 30 days of cash. Your goal in this will be a guess a second of wisdom that I impart on my companies and other founders out there is your goal is to make sure that you do everything in your power, whether it's raising more money or being prepared to cut your operating expenses, to be able to weather the storm no matter what sort, right. And so this, this is the precisely the lesson that we've learned in during COVID-19, which is, it can happen, like we're not just saying that it can happen. So we need to make sure that we have months and months of funding available, so that when this does happen, you're able to weather the storm and equally important it important is you work with investors like sturbridge Labs, who are willing to support you through times like these, and that's the point I wanted to bring up and ask you about because I feel like With the model that you have in storage, where you have nine companies under under your roof I feel like there's there's an economy of scale. And there's like this sense of families, I feel like you guys can kind of come together and kind of share resources be able to scale down and up a little more quickly than if you're just starting out there by yourself. I feel like there's this cool thing about being in like, in like an accelerator. Yeah, kind of with what steel bridge is all about these, my mind the right mindset, they're thinking that you are, I mean, you know, some of our companies are at varying degrees of maturity and are more mature and they've sort of graduated from from our lab, but, you know, for the earlier companies, absolutely. Those CEOs and those founders, you know, talk periodically, they talk with us daily. We've created a sense of family because gonna remember we're investing at at such an early stage where we're going through the throes of building, right. Yep. And so we don't see ourselves as an investor on the outside looking in. We see ourselves On the inside rolling up our sleeves to say how are we going to make this thing work? So there is absolutely a sense of family. You know one thing that that we believe we bring to our companies in the middle is a perfect example. One thing we bring to new moolah is looking to moolah has been impacted by COVID. We were about to raise a million dollars externally. Wow, we had a couple of angel investors inside we're supporting them. Well, look, we couldn't go out during the last few months and raise that million dollars a month. Exactly. So you know, we've got a great group of high net worth individuals as well as the institutional investor in sturbridge Labs, who has pulled new moolah through and we've had absolutely no impact. When it comes to capital, we've been able to continue full steam ahead. You know, other companies who may not have a partner like Stonebridge labs or have amazing high net worth individuals supporting them may not be able to survive. So you know, numa is a classic case of having the right investors backing you will allow you to weather storms like this. So we're excited Yeah, I'd love hearing that. Because it's like, see, once again, Pittsburgh story shows are kicking some butt.

No, no. That's a great point. I mean, we like to say that we're a different breed in Pittsburgh, we are very much family driven. You know, we were all in here to make money. And we're all here to, you know, do business. But we also feel based on how we grew up in our in our city, that we're in this together, and definitely no matter what you throw our way we're going to make it happen. And so all of us living saw that living through the 70s and the 80s. We saw that living through the early 90s. And now you look at us, you know, 20 years past that, and I feel like our city is flying high and growing. And, you know, with our hospital system, I think we're doing a great job of being a meaningful participant and contributor to the COVID-19 fight. And that's something we should all really be proud of. I agree with you 100% Jim, that For sure.

So last question of the day because, you know, as we're trying to raise some money for the digital divide here through neighborhood allies and beyond laptops, I mean, we're so pumped that when this whole thing broke out, I mean, we were like, Oh my gosh, like it just just really exacerbate just how awful and how wide our digital divide is. And so we helped, you know, begin the seeds of raising almost $400,000 for beyond the laptop, get labs, amazing kids hands for Pittsburgh public school, they're trying to do more of that. But these stories we're doing right now is asking everybody like, Jim, what can we be doing in Pittsburgh or what but in order to make sure that everybody has access to technology, everybody's access to opportunities in the tech industry, people have the right equipment and the bandwidth, all this stuff. So we can all rise together as we come out of this with Pittsburgh.

Yeah, absolutely. And look, this is a sensitive topic, especially now with where we are, I mean, with COVID and all of us being quarantined, you know, and separated and, and frankly, people seeing quarantine differently from their Vantage a Oh, absolutely. So that's sensitive things that are going on. With, with the unfortunate event events that we saw with George Floyd in the inequalities and racism that, you know, in 2020 still exists. It's just such a sensitive and unfortunate situation, you know, the way we look at it the way let me speak for myself, the way I look at it is, you know, I'm a big believer in what I call the greater good. And you can ask any one of my partners or team members, I've used that word so many times over the 11 years of being a CEO and what I do as the managing partner of stillbirth labs, I'm a big believer in the greater good. And, you know, we and me personally how we can help in the digital divide challenge is through putting the money that we have to work in areas of what we like to call financial wellness, what I mentioned a little bit ago, if you were to look at our portfolio, you would see that we like to make investments that are Hoping society in a in a positive way you look at our latest investment which the the press release hasn't gone out yet it's called give some actually give some was the platform that drove the the Save and shave event that I just did. Aha very learn more about this, love to have you back on Jim I like Yeah. Okay so when people donate it they want to give some calm that's one of our portfolio companies give some is is creating a mechanism for people to give to charities. You look at new moolah, it's all about financial literacy for young families. You look at IRA logics, it's all about individual retirement accounts and making them accessible. No matter how small of an IRA account you have, meaning grandma with a $5,000 account, Merrill Lynch, perhaps as an example, run that account. Well, we're able to let grandma have that have access to that $5,000 account. It's her money but she now can can see that and touch that through the web. You know, you look at, as you mentioned honeycomb credit, using the community and and you know, the the local consumers that walk into these stores to provide loans to these small businesses. I mean, those four examples alone are financial wellness. And for us, that's the way we see ourselves impacting the digital. You know, it goes way beyond that, though, it's to what you guys are doing providing computers for the disadvantaged, it's making sure everybody's cell phone bills is paid. It's educating people on how to use technology. It just goes so much further. And, you know, the way I look at it for for us in the city of Pittsburgh, and I talk about that about this topic. You know, in a couple of different areas. I talked about it with regards to the digital divide, and I talked about it with regards to how our city needs to grow. I call it a 10,000 factor. We just need more people to come into our city, a magnet tribute a positive way to what we're trying to accomplish well, as we're having 10,000 more working individuals in the city, they're going to be able to help you raise more money to get more computers they're going to be interested in, in startups and early stage technology, they're going to be interested in, you know, all of the engineering and robotics and healthcare that that our city is putting out there. So I think we just need more people in the city to contribute and to want to give back and I think that's how we can do it locally. And then you take that out further, getting people focused on, you know, really using technology as a basis to to proliferate, you know, our lifestyles, and that's across every gender, race, age, everything.

Gotcha, man, I tell you what, what a great conversation Jim, I just I get fired up talking because I think you guys are just kicking it on so many awesome levels. And to have this conversation more and more about new moolah, the fact that you guys have nine companies under your belt, and also also I knew you had the money copied by now does learn how these are all really community focused and education focused. And that is just so important. And that's why I'm so glad you're part of our 50 stories here with Comcast great stuff, man.

I love it. Well, we appreciate being part of it. We feel like we're, we're fabric of our city and we love Pittsburgh. And, you know, we want to keep doing what we can to help move the city forward. So we appreciate this and, and look forward to doing more of it. That's for sure. Absolutely. I'm just glad steel bridge and you guys are all in town. Good stuff all the way. Awesome. Thanks, Jonathan.

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