The following interview is a conversation we had with Brian King, CEO of LODAS Markets, on our podcast Category Visionaries. You can view the full episode here: $8.5 Million Raised to Power the Future of Alternative Investments
Brian King
Great, thank you so much for having me.
Brett
Yeah, no problem. So, before we begin talking about what you’re building there, could we just start with a quick summary of who you are and a bit more about your background?
Brian King
Sure.
Brett
Again.
Brian King
My name is Brian King. I am the CEO of LODAS Markets. My background has mostly been in the exchange world, so I was one of the original members of the startup team for Bats Markets Today. It was acquired by CBOE, and so now it has a lot of success in the markets. As an exchange, I also had the opportunity to move over to London and was the first person on the ground to start building Bats Europe. Today, that is the largest exchange in Europe. And then I spent time at the New York Stock Exchange about almost five years there, overseeing trading, market structure, and ETF. So I spent most of my career building marketplaces, and then today we are a marketplace, as you mentioned, for alternative investments.
Brett
Nice. Very cool. Now, before we dive deeper into the company, we like to start with just a few questions to better understand what makes you tick. So, first one is what CEO do you admire the most and what do you admire about them?
Brian King
I really like this question. When it comes to inspirational founders, there are plenty to choose from, but personally, I would have to go with Dave Cummings. He’s the founder of Tradebot, which is a high frequency trading firm based in the Kansas City area that completely transformed the market making industry. And his success with Tradebot also allowed him to launch Bats, which, again, I had the ability to be part of back in 2005. And what’s fantastic about him is not only did I have the chance to work side by side with him, but he is a character. But his role helped to transform two distinct aspects of the public markets, and that’s why, to me, it would definitely make him my pick.
Brett
Nice. That’s amazing. What about books? Is there a specific book that’s had a major impact on you? And this can be a business book or just a book that’s really influenced how you view the world personally?
Brian King
Yeah, this one’s pretty easy for me. Start with why by Simon SENEC was a game changer for me a while back. It really helped me shift my mindset and my focus on the why behind everything I do. And the book makes a great point. Instead of starting with how or what you do, start with your why. And that’s a powerful way to inspire loyalty and make a lasting impact.
Brett
I read that book from Barry’s first book. I read it years ago after I saw his famous YouTube video on the Ted Talk. And just this week, I was watching a podcast or a YouTube show called Diary of a CEO. That’s really good. And it had Simon on. So it was like an hour and a half long interview with Simon, and he’s so cool and so smart and just a fascinating person. Interesting.
Brian King
I haven’t had a chance to check that out, but that sounds very interesting.
Brett
Yeah. I’ll drop you a link afterwards to check it out. Now let’s hear and let’s dive into the company. So can you take us to day one or day zero or in the days leading up to the company’s launch?
Brian King
Yeah, so for me, I had a lot of family members and friends that were trapped in illiquid investments. And in some cases, the outcome was a total nightmare. They wanted to sell, but there just was no way out. And then when the markets get stressed and they start to turn south, that actually can further impact kind of that need for liquidity. And sometimes, again, the ultimate result can be disastrous. And as I mentioned earlier, I’ve spent most of my career building marketplaces and making already liquid markets even more liquid. And so when I left the NYSC, I knew I wanted to focus my attention on making traditionally illiquid markets more liquid. And that’s exactly what I’ve been able to do here at LODAS Markets.
Brett
Nice. That’s amazing. And can you talk to us about traction and any growth numbers that you can share?
Brian King
Yeah, so what’s been great for us is that we’ve been able to really attract a lot of buyside interest. And that’s kind of a surprising thing initially for us at first was that we had so much buyside interest, and that ranges anywhere from institutional investors, such as an insurance company all the way to a hedge fund or a PE equity firm. And so I would say right now, represented on our marketplace, it’s somewhere between one and $2 billion. That’s with a B. So the appetite for this particular asset class of alternatives is significant. It’s growing. And then for us, I think the biggest initial hurdle that we had was being able to get supply. That means the people that are looking to sell, largely that hurdle for us was just getting people to know that we exist and that’s any startup’s initial struggle is going to be getting people to know that you exist.
Brian King
But we’ve had some fantastic momentum and we’re really trying to capitalize on that.
Brett
And I feel like that’s always the challenge with the marketplace business, right, is you have the chicken and the egg situation. So, for you, how did you get around that with trying to find equal focus with the buyers and sellers of the marketplace?
Brian King
It’s a great question. Anytime you’re building a marketplace, it’s balancing each side of the equation. You need to have buyers and you need to have sellers. The good news for us is that the institutional buyers that we have, they have a very specific appetite, meaning that in many cases, they have reserved or earmarked several million dollars for a specific product or asset class. Most of the institutions don’t just want to have a couple of $1,000 investment in a specific investment. So they have an appetite for something that’s usually a little bit larger. And so that has helped us be able to attract that sell side interest. But again, it’s being able to leverage relationships, work with financial advisors that have clients that own these particular assets and just kind of build that. And then also, we’ve been fortunate to have several people kind of write about us and talk about us.
Brett
Nice. That’s always helpful. And what’s the competitive landscape look like today? Who are those primary competitors?
Brian King
Fortunately for us, there aren’t a lot of competitors in what we’re doing. There have certainly been a lot of people that have kind of been frontrunners in the industry of alternatives and creating secondary markets. In fact, my chief operating officer is Jeremy Smith, and he was the head of strategy for Second Market and kind of looked to them as saying, hey, these guys were like industry leaders being able to kind of set the tone for secondary markets, for private investments. And so we’ve seen a lot of growth in people creating secondary markets for private companies. But what we haven’t seen is a lot of people creating a secondary market for private real estate and private funds. And so, again, we’re fortunate in a spot where there aren’t many competitors in that arena, and then certainly the way in which we’re going about doing it. So we are actually an ATS, which means we function a lot like a stock exchange.
Brian King
It’s just a stock exchange for real estate.
Brett
Interesting. And you mentioned Second Market there. Is that Barry Silbert’s old company?
Brian King
It is, yes.
Brett
Okay, nice. I remember following them years ago when he was first making his move into Bitcoin. I believe they sold did he sell Second Market, or did someone else take that over?
Brian King
Yeah, so it was sold to Nasdaq. Nasdaq bought it and rebranded it Nasdaq private markets. And then, coincidentally, last year, they actually spun out Nasdaq Private Markets to a conglomerate of different bold bracket firms. And what was left behind at Nasdaq is Nasdaq Private Funds.
Brett
Got it. This show is brought to you by Frontlines Media podcast production studio that helps b two b founders launch, manage, and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast, I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines IO podcast. Now back today’s episode. Now, when you left the New York Stock Exchange for LODAS Markets, or what is LODAS Markets today, what was that like for you? Is that a scary shift and was that a scary jump to make?
Brian King
It wasn’t necessarily scary. Again, I knew I wanted to do something. In the private markets, you surround yourself with a lot of great people, and again, that’s the core of any successful organization is surrounding yourself with the right people. And so that takes a lot of that fear away from it. Amazingly, it was relatively easy for us to raise our first round of capital. I think a lot of people bought into the idea. I think my background probably helped of being able to be exposed to having built successful marketplaces from the ground up in the past. And so I think that really created that opportunity for us to be successful. The crazy part, though, is the timing in which we raised our first round was literally right when COVID happened. So there were very few people that I actually met in person while were raising our first round.
Brian King
And one of those people I just met for the first time in person about six months ago.
Brett
Wow, that’s amazing. And what about challenges? I’m sure that in your journey so far, you’ve encountered a couple of challenges. If we had to pick one challenge that you experienced and overcame, what is that challenge and how did you overcome it?
Brian King
Yeah, I kind of already alluded to it a little bit, but the greatest challenge that we had was really being able to get supply. Again, I mentioned were very surprised that we had so many people wanting to be buyers, but really being able to find the sellers, because in many cases they’re individual investors, right, that own these. And so how do you get in front of those? And so it’s really coming up with a strategy of figuring out top of funnel ideas. And so a lot of that is getting people to talk about you because it is an interesting segment of the market to be able to enter into. But beyond that, it’s also being able to partner with financial advisors who, again, have many of these people that they can introduce you to and say, and we’ve even created technology that allows that AIDS a financial advisor to be able to help onboard their clients to be able to sell it.
Brian King
If so, if they’re looking for it. We’ve made the process incredibly simple. Literally, somebody can set up an account in less than five minutes. But it’s all done through technology, which I think if you look back, even just three years, nothing was done with technology in this space. Wow.
Brett
So it’s come a long way. It sounds like it has. Now, what would you say excites you most about the work you get to do every day?
Brian King
That’s pretty easy for me to answer. I think there’s three things. The first, it’s always team. It starts with the people that you get to surround yourself with every day. That makes it incredibly exciting to show up to work every day. I’d say the second thing is the challenge and the opportunity of doing something that’s never been done before. I love a good challenge and so that makes it exciting. And then thirdly goes back to what I said earlier. It’s my why. It’s the opportunity to help people that feel stuck. Give them an opportunity to have financial freedom that hasn’t existed before. And with that, we’ll see alternative investment marketplace. Soar I truly believe that unlocking that liquidity is going to help this marketplace.
Brett
Grow and let’s talk about what that will look like when that happens. So let’s zoom out three to five years from today. What’s the vision for the company and what do you think the impact is going to be overall on the industry?
Brian King
Yeah, this one is probably the hardest question. There’s a lot of things that can happen, a lot of different potential outcomes to consider. But I think what I’m most excited about is just the vision that I see of this world of alternative investments, interconnecting and being able to thrive through technology. Right now, everything works kind of in a silo and so to be able to connect to other institutions through technology and we’re just on the cusp of doing that now. But this part of the industry has been lagging behind significantly when it comes to technology advancements that other parts of the financial markets have seen and experienced. But we’re starting to see that change. So that, again, as we catch up, it’ll be easier than ever for investors of all kinds to be able to be invested in alternative investments.
Brett
Nice. Well, that’s certainly exciting.
Brian King
Brian, unfortunately, we’re up on time.
Brett
I’d love to keep you here and ask you another 20 or 30 questions, but we’re going to have to wrap. So before we wrap up, if people want to follow along with your journey as you continue to build, where’s the best place for them to go?
Brian King
They can go to lodasmarkets.com and of course they can follow us at LODAS Markets on any of the social handles, whether it be Facebook, LinkedIn or Twitter.
Brett
Awesome. Brian, thank you so much for taking the time to come on, share your story and talk about this vision. This is all super exciting and look forward to seeing you execute on the vision.
Brian King
Awesome. Thank you so much.
Brett
All right. Take care.
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