Brian Ludden of Ludex: Going Pro with a Passion

Craig Castelli (00:04):

Welcome to The Close M&A Podcast with Caber Hill Advisors. Today we welcome Brian Ludden, founder of Ludex, who’s turning the trading card world on its head. And for guys my age, trading cards always have a special place in my heart. So it’s a great, greahonor and privilege to talk with Brian here today. Brian, just to get started, you quit a pretty lucrative trading career in 2021 to launch this business. Tell us about Ludex. What was the idea and what convinced you that it was worth the risk?

Brian Ludden (00:36):

Yeah, that was quite the decision. So I was 25 years down at this CBOE, Merc, Board of Trade. Had a company that I started when I was 29. It got acquired in 2017 by a big algorithmic trading company called Simplex Investments. I worked there for two or three years. I wasn’t a very good employee. I could be honest about that, and I felt like I had one more shot in me to think of something. So I’m always looking at ideas and always questioning questions and curious about a lot. I think that’s the first step is I didn’t know anything about cards. The modern cards, I stopped collecting in 1990, but what I saw is I saw an opportunity that the tech revolution did not hit this industry. So I was lucky enough as a trader to everything was pen and paper in the beginning to algorithmic trading company that anyone could do my job. So I saw the trading card industry kind of stop. So my son and I during COVID were quarantining and we bought a pack of cards. And the pack of cards nowadays are so different than what I grew up at, and I don’t know if you could see that card, but

(02:01):

There’s some designs,

Craig Castelli (02:02):

The holograms and everything,

Brian Ludden (02:05):

And I pull that out and that’s for scarcity and rarity and different patterns have different values. But anyways, I’m like, what the heck is this? So I’m googling it, looking at eBay, trying to find images. I’m like, my son’s, the fund’s going down and frustration going up. And I said, I’m going to talk to my buddies on the floor who collect and see what they got. There’s got to be an app there. And I said, dang, I think this is it. Is the industry big enough? Are there more than one way to make money? I would never start a company if it’s one shot, if it’s just subscriptions that we have now, I wouldn’t have started it, but there’s about five revenue streams that we’ll have we have at luox. So at that point, I had to get my wife convinced she did not think I was going, and that was an interesting conversation.

Craig Castelli (02:55):

Yeah, I mean, to me it’s remarkable. It’s a tech story. Obviously you guys are building a technology business. There’s a lot of AI here, but this is also a family business story, which I think a lot of people can relate to. You’re inspired by collecting cards and looking at cards with your son, your wife is your co-founder, which brings, I’m sure its own pros and cons, like any partnership dynamic. And in this case, you get to go home with your business partner as well, but it also looks like you guys are having a lot of fun along the way. What do you think has been most critical to your success up until this point?

Brian Ludden (03:34):

Failing. Failing has been the biggest gift as a trader. I’m used to failing. I mean, I probably made a million bad trades in my career. So as an entrepreneur, failing and not having such a big ego and pride that you don’t pivot. So when you fail, you learn, you pivot. And we had to make some really, really tough pivots early on that saved the company at some level. And with that comes success.

Craig Castelli (04:08):

Yeah, yeah, absolutely. Lessons learned and apply those lessons and grow from there. What would you say has been the biggest challenge? If you look at fundraising, you’ve got to attract a lot of different types of talent here from both operations to the tech side of things, and then you’ve got to go out and acquire users and really scale a business. The backs of the individual collectors, I’m sure they’re all hard, but what stands out to you thus far has been the toughest one to overcome?

Brian Ludden (04:37):

I think money the capital raised. So I was lucky enough to raise $5.3 million in my first round, and I did that in 45 days. And people are like, holy crap, you raised $5.3 million from friends and family in 45 days. I said, no, it’s been 40 years of relationships. And when you’re on the floor, people are like, Hey, Brian, if you’re leaving, I’m on. I’m on board. So the first round was pretty easy, but then after the evaluations got crushed and we need to go the second and third round, it was really rough. There’s times when there’s 10 grand left in the bank account after payroll, and I’m like, I got to raise a hundred grand in the next two weeks. And I swear that was every week for a year and a half, but we made it through. And so the money for sure. And then the other thing is just understanding tech deliverables and how vastly different timelines are than what I wanted ’em to be, which costs money. I mean, our burn keeps going and our good tech doesn’t come out for three, four or five months behind because we can’t figure out this problem. It’s a massive problem. It’s a massive piece of technology. So I’d say that’s probably the other big one.

Craig Castelli (06:03):

I like to tell people my version of this story of your fundraising. So Brian is a Caber Hill client. We helped them with that initial raise. I personally invested two different points along the way in the early going, as did one of my partners over here at Caber Hill, and my version is you were oversubscribed on your first round in about five minutes, but it is a testament to your history. The other story I like to tell is I was wearing a Ludex T-shirt at a church school, Octoberfest type event, and someone came up to me and spotted it and asked how I knew about it. And it was somebody you had traded with for years, and he said the same thing. He said, if Brian’s behind this business, I’m in. So it’s a testament to you that you were able to build those relationships. I won’t even say leverage those relationships, just build those relationships, do right by people along the way. And they had your back when you launched this.

Brian Ludden (07:02):

Yeah, exactly. Exactly. Our community is getting bigger. I mean, we have 3 million downloads and our brand’s getting out there, which is pretty exciting too. I was on the plane coming back from New York two weeks ago, and I had a Ludex hat on, and some lady’s like, Hey, Ludex, my kids love this thing, and do you work there? And I’m like, yeah, I’m a founder. And she’s like, thank you. This is so cool. My kids love it because think about for me, my son, when we started, this was 10.

Craig Castelli (07:34):

And

Brian Ludden (07:35):

So Ludex would have a card show and there were a hundred tables or whatever. I would give him 20 bucks. He would go around for five, six hours and he’d come back with $250. And he did it all the time. And he’s like, dad, I wish there was a card show every day. So what he’s learning, he’s learning the value of the dollar, he’s communicating with adults, he’s making deals, he’s walking away from deals, he’s making mistakes. A couple of times he had tears in his eyes and I’m like, man, you’re talking to a guy who failed and made some really bad trades. Just get back on it. And if you can scratch today, you win. And so having her talking about her kids and really the interesting part of this industry, it’s really, really awesome.

Craig Castelli (08:25):

It’s awesome. And I don’t think it’s something that is as appreciated as it should be, the lesson that you can learn through a hobby like this.

Brian Ludden (08:33):

Yeah, I’m never not learning something. It’s amazing. Which at 50 years old, getting up in the morning and learning new stuff is exciting. It gets me going. I love managing people. I love selling this dream. I love talking to corporations. Heather, my co-founder and wife, she does everything I don’t want to do. And that’s organization structure. It drives me crazy. And she’s amazing.

Craig Castelli (09:02):

There’s a joke in there, I’m sure.

Brian Ludden (09:03):

Yeah. Yeah. So it gives me the ability to get out there and do some things.

Craig Castelli (09:09):

Absolutely. Absolutely. So I mean, with all the fun you’re having with the way this is really taking off, are you starting to think at all about an exit at some point down the line?

Brian Ludden (09:19):

Yeah, I mean, I think there’s three ways we can go on this. We get to a point where we could IPO not my first choice, but if the private market is significantly lower than the public market, it’s an option. I would definitely hire a CEO that has done it before I’d be out of here. And the other thing is just getting the cash going, getting our marketplace going, getting our data late, going, getting our B2B platform going and just really just generate cash. And one of the big companies in this industry are Steve Cohen, Point72 owns PSA grading. You got Fanatics, you got eBay, you got TikTok coming in, you got Walmart in. So there’s big players. And what I want to do is we took so much risk to get here, and I don’t have a number in my head or a time in my head because I’m just going to play this out.

(10:23):

And the risk we took to get to where we are and be the market leader and the penetration we’ve gotten into this industry, I have to ride this thing for a bit. And going back to trading, there were times I lost quarter of million dollars in 15 minutes, and it was just bad timing, whatever, it hurt. But I got back onto it. What sat with me was the winning trades, right? Price, right time, figured something out, and I think it’s going to be a 10x, I sell it for two and watch someone else make eight x. And so I tell my investors, I’m just going to go with the flow, keep getting data, always look for threats out there, and then just doing what we’re doing. But yeah, an exit would be a full or partial buyout, I guess, acquisition.

Craig Castelli (11:13):

Yeah, that makes a lot of sense. A lot of options, a lot of strategic angles that can be played, but it’s nice to have that level of control. You, I know it was very different when you sold the trading business, but other than your ability to be a good employee, is there anything you learned from that experience that you can apply here to make this potential exit even better or even more efficient, even however you want to look at it?

Brian Ludden (11:41):

Yeah, I learned a lot. You learn that if you have value—stick, stay. If you have value, stay where you’re at. And companies will come and they pay. I was racing myself down like, Hey, I just want to be wanted. I can’t believe this company wants us. And they just kept pounding, pounding, pounding, and next thing you know, I’m working for ’em. And I’m like, that was handled terribly. So I think really just holding your ground and just being confident in your brand and where you’re at in the specific industry that you’re in,

Craig Castelli (12:16):

Do what you do well, focus on what you can control.

Brian Ludden (12:19):

That’s it.

Craig Castelli (12:20):

Yeah. Yeah, a hundred percent. Absolutely. Absolutely. So I guess let’s conclude here. Give me a piece of advice for business owners who are watching this. Tell them something that they’re not going to just see every time they open LinkedIn or read in every business book that’s out there.

Brian Ludden (12:37):

I think the most important thing is keep going, keep grinding. And it’s going to be, I mean, fear, failure are your shadows. I mean, when you’re going to start a company and you’re an entrepreneur, you better get used to failure and fear. Once you can embrace that, I feel like then you can look at things in a clear way. I would say that’s probably the best thing is get comfortable being uncomfortable and knowing that it’s not the end of the world, figure it out. But just quickly. Those are the big things.

Craig Castelli (13:11):

Well, that’s a reason why not everybody does it, right. If it was easy and comfortable, we’d all be doing it. Instead. It’s only the crazy few who step out on this journey.

Brian Ludden (13:21):

And even if it was a failure, I followed what I thought was the right thing. So like you said, control, we can control. And this has been a great journey, but not without its trials and tribulations.

Craig Castelli (13:37):

Yeah, one of my first bosses gave me a piece of advice that has always stuck with me. It’s like, you can make any mistake once. The message was, take risks, make mistakes, learn from ’em. If you find out it’s a mistake, don’t do it again. And that gives you a lot of runway, I think, in any part of your career.

Brian Ludden (13:56):

Yeah, I mean, you’re an entrepreneur, right? You had to take that leap and you had to talk to your wife about it, and you had to look at the checks that were coming in and not. So I mean, it’s always great to talk to other people who have done it. The value of that is everyone pays a tuition. The more people who have already done it, I just watch them. I watch ’em talk to ’em because they’ve made the mistakes that maybe I won’t make and it’ll save time and money. So I always say the tuition is very, very expensive. If you don’t listen to other people and have too much pride and ego, it’s listen to other people, get the advice and then move forward from that.

Craig Castelli (14:38):

And that never ends. There’s always something to learn. I wish I could tell you that 12 years in, all of a sudden, all the sleepless nights are gone, all the anxiety is gone. It’s just easy going. I don’t know that there’s ever a point where that is completely off the table, but that’s also what keeps things interesting and keeps you motivated, keeps you moving forward.

Brian Ludden (14:58):

Yeah. And you built a great company. I mean, Caber Hill, the work you did for us in the beginning was awesome. We’ve been friends ever since. But really the professionalism that you guys showed and walking me through the journey that I’ve never been on helped immensely.

Craig Castelli (15:17):

Well, thank you. It’s been a pleasure getting to know you. It’s been a pleasure watching Ludex grow. It is a very exciting times for you guys and for the card industry as a whole. And I think you guys are going to crush it. So with that, Brian Ludden from Ludex, thank you so much for joining us here on The Close.

Brian Ludden (15:38):

Well, thanks for having me. And then if you want to check out Ludex in the app stores in Apple or Google Play, just put in Ludex card scanning app, download it. It’s free to download. Free to use. So yeah, anyone who wants to jump on, that’d be great.

Craig Castelli (15:57):

Download the app. It is a great piece of technology, and I can tell you it’s also a great way to entertain your kids if you’re looking for something to do.

Brian Ludden (16:05):

Yeah, that’s true.

Craig Castelli (16:07):

All right. Thanks, Brian.

Brian Ludden (16:08):

All right. Thanks.