David Haber is one of the up and coming entrepreneurs who’s shaking things up in the fintech world. Haber has a unique background in finance and entrepreneurship: he was a founding member of Locus Analytics, a startup asset management business, and was most recently an investor at Spark Capital, before founding Bond Street, a platform for small business owners to apply for, qualify for, and receive loans online. Haber was included in Business Insider’s Silicon Valley 100 in 2014 and 2015, LinkedIn’s Next Wave Top 35 Professions in Finance from 2015, and Forbes’ 30 under 30 class of 2016. We caught up with Haber to get some insight on how his unique experience has helped him build his company, what advice he’s taken, and how to build business momentum along the way.

Q. From financing startups to building your own, that must’ve been a very interesting transition. With both perspectives, what do you wish you had known as a founder getting started? What was helpful knowledge from your VC background?

When you work in venture, everyday you’re sitting in on pitches and watching entrepreneurs try to get investors to believe in their vision. You’re seeing the 10,000 foot view and learning what questions investors will ask and how they want them answered: How did the founder articulate the idea? Does she/he understand the broader market and think thoughtfully about positioning? Are they capable of compiling the most sophisticated team in the category? What you don’t learn is the tackling of building an actual business—when it comes to hiring and firing, developing a product, marketing that product, or building a finance or legal infrastructure. All of these tactical skills I’ve really only learned on the job, being an entrepreneur.

Q. Your company has promoted that debt can be a tool for growing business. Can you explain a bit more about this?

There’s a stigma that exists around debt. Many entrepreneurs have either struggled with or carefully avoided maxed-out credit cards, crippling student loans, and sketchy mortgages. In addition, as stories of “unicorn” startups overshadow the success of companies valued at less than $100 million (i.e. the vast majority of successful companies), equity has become the “sexier” financing option. It’s hard for debt to compete with equity on the strength of connotation. 

That said, debt doesn’t have to be a dirty four-letter word. Since 99.95% of businesses will never get venture capital, debt financing is actually the tool that is used most by entrepreneurs to unlock growth. If you understand your business and the cost of capital, debt is very manageable and really an asset. And what makes debt most appealing, is the fact that ownership stays with you. Selling equity is, at its core, selling a percentage of your business to an investor in exchange for capital.

Q. One of biggest challenges that growing companies face is gaining momentum — whether it’s funding, sales, news — and then keeping it. What is your advice for keeping up the momentum in a business?

I think one of the most important parts of keeping up momentum for growing companies—and any business, for that matter—is building the right team. You’re betting on the people you’ve brought together to build your vision into a reality. Be deliberate about who you hire, and don’t compromise. It pays huge dividends over time. 

Additionally, while you always want to make your business feel as big as possible, it's important to understand what momentum is—and what it's not. Sometimes businesses get wrapped up in vanity metrics that might feel great at the moment, but don't indicate longevity.

I think a great example of a business that understood the right metrics to focus on, and thus has maintained momentum, is one of our customers, Tuft & Needle. In 2012, Daehee Park and JT Marino each contributed $3,000 in seed capital to start the company. It was all they had. Every dollar was used carefully and put towards something that contributed to sustainable growth.

While many businesses invest sizably in marketing, PR, and advertising, Park and Marino opted to put their dollars into improving their product, service, and overall experience. Their focus was and is about investing in what matters most in the long term—getting customers to buy into what Tuft & Needle stands for as a company: transparency, honesty, and quality. I’m not saying businesses shouldn’t invest in marketing, but it’s crucial to establish a healthy foundation. Tuft & Needle’s infrastructure is not built upon money, but upon a superior product, service, and experience. This has allowed them to bootstrap Tuft & Needle into a company generating more than $100 million in revenue. Companies can gain momentum by staying focused, working extremely hard, and growing smart.

Q. What are the challenges that still keep you up at night in growing the business?

Staying focused. We’re a young business with a relatively lean team. There’s always the desire to chase every opportunity, but spreading ourselves a mile-wide and inch-deep can lead to serious ramifications. Ultimately, capital itself is a commodity (our dollars are just as green as everyone else’s) and the future is one where capital will be available online. As we look ahead, there’s a lot of opportunity within our space and a lot we want to accomplish. In order for us to be the best financial partner to small business owners, we have to prioritize initiatives that allow our customers to build more successful businesses.

We are only going to be successful if our customers are successful. It requires constantly revisiting our mission, and knowing when to say, “no.”

Q. What is your top advice for entrepreneurs and small businesses on how to grow their businesses?

I have a few different pieces of advice for entrepreneurs and small businesses who are in the process of growing their businesses.

#1: Stay on top of your finances: It’s easy for a small business owner to only think about money reactively—either when things are good or when you’re having problems. Mastering your money requires less effort, but more consistency than you may expect. You should build a daily habit of what LearnVest CEO Alexa von Tobel calls a “Money Minute”—a 60-second check-in on your finances. Take a look at your bank statement and think about your account balances, recent transactions, and any upcoming bills, tax deadlines, or payroll needs. Keeping your finger on the pulse of your business will help you identify minor issues before they become major problems.

#2: Budget for more than you think: Starting and growing your own company will always require more capital than you initially think—it’s an undisputed entrepreneurial truth. A rule I’ve adopted, which I think is wise for anyone building a business, is to always increase your budget by 30 to 50 percent. It’s always better to be over-prepared and have extra funds, rather than running out of money, and finding yourself in a cash flow crunch.

#3: Make sure you’re deeply passionate about whatever you are pursuing: Regardless of how successful a company is, it’s incredibly difficult. You want to make sure you have the grit to overcome obstacles and see it through. A good litmus test is asking yourself whether you would raise capital from someone you care about; so, for example, would you go to your parents or in-laws and ask them to invest? I’m not suggesting you actually do this (even though I did), but the point is that if you’re willing to accept money from the people you care about most in the world, you probably have a better chance of persevering when the going gets (inevitably) tough.

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