Entrepreneurs for Impact (EFI) Podcast: Transcripts

#177:

Joshua Goldberg, Cofounder and CEO of Sunstone Credit — Solar Finance for Commercial and Industrial. $1B in Loan Applications. Activity in 30 States with 400+ Partners. Fintech Serial Founder.

Podcast Introduction

Chris Wedding:

My guest today is Joshua Goldberg, co-founder and CEO of Sunstone Credit. Sunstone Credit provides flexible financing solutions for commercial solar loans with activity in 30 states and 400 plus solar partners. Joshua is also a former co-founder and executive at Sunlight Financial, Astrum Solar and Legends of Learning.

In this episode we talked about their $1 billion in loan applications, their over $20 million in corporate capital raised to grow their business, why solar leases are, well, stupid, how solar is sold at the kitchen table, their focused loan activity in the $50,000 to $5 million solar size range, and the speed of their loan process averaging just one to four weeks, which they're open to get down to days. Please give Joshua and Sunstone Credit a shout out on LinkedIn, Slack or X by sharing this podcast with your people.

Finally, one last request before we hop in. Go on over to Apple or Spotify if you could, to rate, review and follow this podcast. I don't take any sponsors for the show, as you know, so this little gesture of support means a lot to me and the guests. Thanks so much. Hope you enjoy it.

Podcast Introduction

Chris Wedding:

Josh Goldberg, co-founder and CEO of Sunstone Credit. Welcome to the podcast.

Joshua Goldberg:

Thanks, Chris. Well, I appreciate the opportunity to be here and talk to you.

Chris Wedding:

Great. All right, so before press and record, you mentioned some pretty impressive stats and you're, I think, round two or round—no, this is round three. I think it is for Sunstone Credit. We'll confirm here in a few minutes. So with Sunstone Credit, a billion dollars of loan applications for what I believe is, you know, C&I Solar in the US active in 30 states and a healthy 21 million bucks of dry powder growth capital to go dominate the market. Does that sound right?

Joshua Goldberg:

Sounds right. Domination coming.

Chris Wedding:

All right, before we go to Sunstone Credit, I want to go to a LinkedIn post you made today, which starts off with a great line, which is something like it all started with a crazy idea and a phone call with a friend who you'll reference here in a second in 2012. Dot dot. We, we got a full circle story going on with this recent news. Maybe break that down for us, Josh.

Joshua Goldberg:

Yeah, so it was announced I think two days ago now that my current company, Sunstone Credit, was part of a consortium of investors along with Crossover Bank from IGS Energy and Greenbacker that bought my past company that I founded, Sunlight Financial, out of a prepackaged bankruptcy. And that deal was announced about six weeks ago and it actually closed on Tuesday.

So it's really kind of a full circle story for me. That brings me back—this is my third solar company. Sunlight was my second and actually grew out of my first solar business, which was Astrum Solar. So it's a, it's a definitely a trip back down memory lane and an opportunity, I think, to rebuild a great name to its former glory and get it even beyond that.

Chris Wedding:

There you go. There you go. And for listeners, we're recording this on December 8th, I guess it is. So just a little anchor for folks. So remind us, what was the crazy idea in 2012 you had around solar financing?

Joshua Goldberg:

Sure. So at the time I had, I co-founded a company called Astrum Solar along with Vadim Polikov and Ben Davis. It was a residential solar business. We started it in 2008 on the east coast and at the time it was really the first big residential installer base on the east coast. And for the first two or three years of that business, we were buying panels at, you know, $4 a watt when they cost, you know, 25 cents now, and selling deals for cash and $8. Those kind of fun times.

But we very quickly realized that in order for the business to go mainstream, you need financing for your customer. And the first iteration of that financing was developed by SolarCity, Sunrun—you could argue who was first. Everybody claims credit, who really cares? And it was a zero down easy BPA, right? Like you don't own the system, but you don't pay anything for it and you pay monthly.

And so when SolarCity launched on the east coast I think in 2011, and we were at Astrum and we're like, well, holy shit. Also me, this competitor who we think is actually pretty terrible at everything they do, but they have this amazing financing tool that we don't have, right? Which is the zero down system. And so what do we do? And our initial reaction was, let's have our own lease. Let's have a me too, right? And so we partnered with our investor, Constellation Energy, large utility. We launched an Astrum solar lease. And that was fun.

But if you think about it, why does a homeowner really go solar? They go solar because they want to take control of their energy destiny, right? And if you own a house and you lease your roof to somebody who then sells you power, have you really taken control of energy destiny or have you just created a second utility on your roof? Right? And so it kind of always gnawed at me that like, hey, this leasing thing is better than nothing, but it's actually quite stupid, I think. Like, you own a house, you lease your roof to somebody who then sells you power off your roof.

And so I spent 2012 calling banks and saying, hey, guys, we have this new solar thing. These customers are high FICO. Solar actually adds liquidity to their personal balance sheet, meaning that they're saving money. You should finance it. Every bank said, no, send them for a HELOC—home equity line. Home equity line, home equity.

But that doesn't actually work for solar because, as you know, solar is sold at the kitchen table, right? And if you have to go to a bank, the whole thing falls apart. And so one day I was talking to a friend named Wilson Chang. This is the phone call reference to my LinkedIn post. And he was at a private equity firm called Hudson Clean Energy. And they had an infrastructure fund. And he was looking at new things to do. And I said, hey, Wilson, why don't you finance our customers getting loans for 20 years instead of leases? And you said, oh, that's interesting. Is anyone doing this? And the answer was no one really is.

And so spent a bunch of time working on it. And if you dig back in time to like late 2013, early 2014, there's a press release where Hudson did a $100 million investment in Astrum Solar to fund loans. And so we saw very quickly at Astrum was our book went from like 80% leases, 20% cash to 40% lease, 40% loan, 20% cash, almost overnight. And if there loans kept eating into both cash and leases, it was a clear acknowledgment that the market out there wants loans, people want to own their own solar system.

And so if you fast forward a few months, we sold Astrum Solar to Direct Energy, which is the US subsidiary of British Gas. And I had no desire to work for a large multinational conglomerate. It was a great deal for me and everyone financially, but it's not. I'm an entrepreneur, I'm not a big company guy.

And so Wilson and I connected and he had some of his colleagues at Hudson and we sat down and said, hey, like this program is working, you financing Astrum's loans. What if we spun out a business that financed loans for all the installers? Right? And so that was the origin of Sunlight Financial. So that business spun out. I joined as a co-founder with some other folks, Wilson Chang, Daniel Vander Schulenberg, Neil Auerbach and a few others, Michael Ruhlman. And we got that business going and that business grew for a long time and went public in a SPAC deal two years ago. I haven't been part of it for a few years and recently it got into trouble with interest rates, like a lot of loan providers out there.

And it was opportunity again to go full circle and to buy that business back. And we're looking forward to revitalizing, working with the current team to do that. So that's kind of a long winded way of giving you the background there. But it all started the phone call in 2012. Like most good ideas, they start off crazy and then they end up being reality.

Chris Wedding:

Yeah, well, and probably 90% of the crazy ideas and phone calls we have don't show up on LinkedIn posts.

Joshua Goldberg:

Absolutely.

Chris Wedding:

But they all count as crazy to begin with. What made you think, like others were not thinking, which is to say, man, a PPA lease was like the huge unlock right, for solar to go from, you know, whatever, 60, $70,000 up front to nothing up front. Cash flow positive, month one. What was it about? Maybe, I don't know, your prior roles, your training as a lawyer, other things. What make you that? Which made you think, okay, this looks good, but dot, dot, here's why.

Joshua Goldberg:

It's not so it's a great, actually a great question. And so when we first started Astrum, I was our first salesperson. So those three of us, and I was driving around in a Prius selling solar. I had no prior solar experience at all. And so I spent a year and a half selling solar at the kitchen table. And I think it's that being in front of actual customers and knowing what they really want, they kind of led me that way.

And so I sold leases for a time and you could kind of tell it was like, I don't really want this, but like it's the best option that I have, you know, but it was never like the option that I wanted. Right. And so I, I think it's like one of the things where like it worked, it just didn't work well enough.

And I can see that in customers faces and in their interactions and listening to our sales team. And so it was like one of my things. I always want like the right solution, not just like to me that's better than the worst solution. And you could just kind of tell that like the market to go big, it had to happen.

And the other thing too is if you go back in time, the solar lease was usually a captive product. Meaning like solar had their own lease, Sunrun had its own lease, Astrum had its own lease, NRG had its own lease. Right. And so a lot of small companies out there had no access to this finance.

And so if you thought about it from like, just like a market perspective, these lease funds are incredibly complicated. They're hard to explain to the homeowner.

I can't tell you how many I had conversations I had about like fair market value, buyout options. Right. So it was just like mind boggling. And you don't, nobody needs solar, right? Like there's this expression, solar is sold, not bought. Like it doesn't solve a problem for you, an opportunity. And so if you add friction to it, like what is this lease? What happens if I move? What happens at the end of the lease term? All these confusing things, homeowners just like their minds are boggled a little bit.

And so is there a simpler way to do this? And it turns out there is. And I think the market has shown, I think even today loans are three quarters of the market, maybe 80%. So like there's resounding. We prefer to own this asset ourselves. There's still a place for leases.

Like if you don't have, if you're retired and you can't use a tax credit, lease is a great option for you. Right? But the V for the vast majority of the market, I think loans make the most sense.

And so it's constantly thinking like, is there a better way to do this and maybe there's even a better way to do it than there is now, I don't know what that is, but I'm kind of very impatient in that regard.

And so the same thing for my current company, Sunstone, people have been pitching commercial property owners on, hey, you have a roof and you have tenants, I'll pay you some rent, I'll put solar on your roof and also power to your nets. But if you own property, why don't you buy the system yourself as a power to your own heads?

And that's kind of what Sunstone enables.

Chris Wedding:

So just to kind of put a bow on, you know, your realization there, I think a takeaway is, yeah, you weren't sitting behind the desk or a spreadsheet or whatnot. You were again, actually at the kitchen table with hundreds of folks reading body language, reading facial expression and tone of voice and so forth, seeing the friction firsthand versus, again, what the spreadsheet says in a air-conditioned office.

Joshua Goldberg:

Yeah, and it's all about, I think too many folks in the finance side of solar think about what's right for their financial structure and not what's right for the customer. And at the end of the day, you might make a little bit less per unit in a loan than you do in a lease, but you sell a lot more units. You have a product that actually works and makes your customer happy.

Like people used to ask us, like at Astrum Solar, do you make anything? And I say like, no, we make customers happy. Right. And that because we provided them with a high quality installation, it was on time. We had financing options that made it an easy decision for them. We had the options for that. Right. You can pay cash, you can do a lease or you can do a loan.

What's best for you, the homeowner. Right. Not what's best for me, the installation company.

And then the other nice thing with loans is it's allowed all kinds of installers that basically have the same product, so there's no like financing advantage anymore. And so, you know, as a customer, everyone's basically offering the same kind of loan. So you can actually pick which installation company you think will do the best job for you, not just the one out of the five that has the financing product.

Do a better customer experience too, which is why the market's growing a lot. And the growth in the market, 2014, 15, when loans started taking over the market, just took off. Right.

Chris Wedding:

Well, I think you also illustrate a good point, which is we need to obsess with the customer and the problem, not with the solution. Right. The solution can change based on the nature of the problem or the customer versus being again, wed to like our tech. Our belly button is so magnetic. I can't look at anything else.

Joshua Goldberg:

Yeah, absolutely. And I think as the organization grows, whether it was my first company, second or third as a founder, you get further away from your customer. Just naturally your company grows. You're the first salesperson, then you hire a sales team, then you hire. So then you just move further away. You're doing other stuff.

And I think it's important to not get out of touch with the reality. And markets change a lot, and they change. One thing I love about solar is it's constantly changing. There's the solar coast to reference like that to me, is intellectually interesting. There's constant room for innovation.

And so, like, if you're out on the streets for a year or two, that's. That's an eternity. And so, you know, but there's the opportunity. Right?

So, yeah, whoever that sales guy is out there in the home right now, you know, think about, like, what could make this a better experience for a customer, and that could be a business.

Chris Wedding:

Well, let's. Let's go back to Sunstone Credit. So you. I think you. You alluded to how it's similar to. To what are both of your prior. Your prior companies, but let's kind of start from the top. What is the pitch for Sunstone Credit? Who exactly is your customer that you're helping? Your ideal customer. Josh.

Joshua Goldberg:

All right, so. So Sunstone Credit, we are a loan provider for businesses to go solar.

So if you own commercial property, you should absolutely put solar on it. The economics are fantastic. Rather than having someone put a system on your roof and sell you power, you should buy power yourself using our finance.

And so the origin of Sunstone actually is a very similar origin to Sunlight. Back at Astrum, it all goes back to Astrum Solar. For me, that's like the mother of all my ideas.

So I would be out selling solar to a homeowner. I'll use you, Chris, you went solar for your house and say, Josh, this is fantastic. I'm saving money on my bill. I have this tax credit. It's good for the world. All these great things. I'm so happy. And people are legitimately happy when they go solar for everything.

I'm telling my neighbors about it.

You know, I also own a medical office building, so I'm a dentist or I own a hotel or I'm the CFO of a manufacturing facility, whatever it is. Right. Everybody has a. Has a home and they have a job. Right. You know, can I do this for my business? I'd be like, absolutely, you can.

And there's great news. The system costs are lower per watt because there's more scale. Your power prices for commercial users are basically the same as residential, different for industrial, commercial, roughly the same. And you get to depreciate the asset, which is a huge benefit that you don't get as a homeowner. This is even better deal than what I sold you for your house.

They'd be like great, like what's the catch?

The catch was always, well, that financing I had for you over here where you were zero down out of pocket, I don't have that for your business. So you have to go to your local bank, your regional bank, whatever it is.

And that's like where every. Or pay cash, right? And even if the economics are fantastic, for business to pay cash for solar doesn't really make any sense. You want to use your cash for your business.

And so, and if you have to go to your bank, they're going to try to put you to like a five year equipment lease, you're going to be upside down. Cash flow didn't really make any sense.

And so if you look at the solar market broadly, residential solar has grown very quickly because there's financing. Utility-scale solar is a lumpy episodic business, but owned by banks, utilities.

In the middle is commercial solar. I put into two buckets like mush municipalities, universities, rated entities like Walmart. People are putting PPAs and selling them power. But the vast majority of property out there is actually held by private individuals, non rated entities, family offices, owner operated businesses. It's all over the place, right?

And that's the market where solar has never really taken off because it's an all cash business, it doesn't have good financing.

And I said hey, this is unfortunate. This was a problem 10 years ago. It was a problem when I started Sunlight eight or nine years ago and it was a problem two plus years ago when I was sitting in my office on a whiteboard again on a crazy call with Wilson talking about, and so today, now the time is right to solve this problem.

And so that's what we do at Sunstone. At Sunstone, we partner with banks and financial institutions to craft unique products, underwriting methodologies for commercial solar loans.

We partner with solar installers and developers all over the country. We have about 425 partners today covering all 50 states who offer our product to business borrowers.

So whether you're in Toledo, Ohio, Phoenix, Arizona, Tallahassee, Florida, Baltimore, Maryland, where I am, and you own a property, an installer may reach out to you and say, hey Chris, you have this beautiful roof. You should go solar. You can send money on your utility bill. Utility costs are rising. I can hedge your rates.

And you can say, great, how do I get financing? I don't feel like going to my bank. It takes too long, it's too cumbersome. Don't worry, I have financing for you through my partner at Sunstone.

I'll trigger an application and then we can get you approved. And we are designed to approve non rated credit. We'll take rated credit too. But we approve small and midsize property owners.

Our loans go from $50,000 to $5 million. Again, I'm kind of solving a problem that I actually experienced as an installer myself. I saw this huge market opportunity out there and I just didn't have the tools to address. And we're giving installers those tools.

And I'd like to think that we're building a business sort of for installers by installers, like I used to be an installer. So I think we're trying to build something that actually helps them grow their business.

And I think with a slowdown of residential solar, a lot of people are saying, hey, how can I grow my business?

They see this big commercial opportunity and a frequent thing we get from installers is, oh, this is the product I've been waiting for 10 years. Right. Because they all see the same opportunity. Like they have these leads. Everyone's tried to close that commercial deal. It just spins around the rim forever and ever. And hopefully financing is what helps them get it closed.

Chris Wedding:

And you mentioned that finally now was the right time. Do you mean something in the market, whether it's finance or maturity of C&I Solar or with you, what does that mean, now is the right time?

Joshua Goldberg:

It's a great question. So I think it had a little bit to do with the asset class. And so I think residential loans have been out there for, there's some vintages that are now like 7 or 8 years old. And while it's a different borrower, it's, they performed very well.

And so if you think about banks that then they would partner with, like they have lots of money, but they're not necessarily, like, they don't necessarily do new things because they're very risk averse. Right.

And so I think there were some banks that partnered with Wilson and I residential and took a flyer, said, hey, I'll trust this to see if it works. It did work. Right.

And so it having worked and kind of having it played out that, hey, now it's time to go to those same banks and say, hey, you trusted us with this new residential idea. We have a commercial idea. Here's why they're similar. Here's the analogies. Either they're very different kinds of underwriting and borrowers, but here are, we think, what's analogous to them, how this will a commercial perform? Well, take a flyer here.

And thankfully all these programs started before 2022 because this is obviously a terrible banking environment. And to extend, it's hard to get banks to do anything new. It is almost impossible today.

And so we're blessed at Sunstone to have three amazing bank partners, Cross River Bank, Forefront Bank and mBank, who all partner with us and help us fund our loans.

And they're just, you know, they believe in the asset class. They believe it's a good product for the borrowers and they believe in the ESG merits of it. And it's kind of win for everybody. And we're thankful to have them.

But I think the time I got, I don't think I could have done this business in 2014 when I did some land, I think the market just wasn't ready.

Like, one thing I've learned as an entrepreneur is you get, sometimes it's nice to be first, but you can be too soon. And there's definitely an assembly to the expression of, you know, pioneers get arrows and settlers get rich. So you have to figure out like, am I too far ahead of my time?

And I think had I tried to do this in 2014, even 2018, I would have been too far ahead of my, like, the market wouldn't have been ready yet.

Chris Wedding:

Well, yes to all that. And also if you try to start it today. Right. Be much harder than two years ago. Timing, Timing is everything. Whether it's in your control or whether it's outside of our control.

Joshua Goldberg:

Absolutely. I mean, you know, it's better to be lucky than to be good, but it's better to be both.

Chris Wedding:

Right. You mentioned activity in 30 states. Is there, is there a reason why it's 30, not 50? Are there, you know, certain regions or states that are much better for your installers and others? Any kind of thoughts on regionality?

Joshua Goldberg:

So the commercial solar markets sort of overlap with resi. You tend to have high power prices in both.

So, you know, California is our biggest state. It's the biggest solar market. Been a little bit of dip recently with them 3.0, but still a good state.

The Northeast is quite strong. New Jersey, New York, just very high power prices.

Southeast, southwest are strong.

A bunch in the middle of the country like Illinois, Missouri, Wisconsin, we do a fair amount.

So commercial solar probably is viable in 40 plus states.

But the states where it's most viable, you tend to have the most installers. Right? Because there's opportunity.

And obviously we have the most installed, we tend to have more partners.

So we haven't done a deal available yet. Not because it doesn't make sense, just I think we have like one partner there.

There's so much and there isn't as much activity there.

So you know, we're constantly doing our first loan in a new state. I suspect we'll get to 50 states sometime soon.

Even in Alaska makes sense. You just need to pair with storage because you don't always have power lines. So with depreciation, the tax credit, some of these IRA adders, it can make a lot of sense.

And power prices are rising across the board.

I was talking to one of our borrowers the other day and they made the point, I'm not going solar necessarily to save money today. I see rising power prices as a threat to my business. I'm going solar to save my, to hedge my power costs for the next 20 years. Right.

So if you think about a business owner, they're focused on their core business and it's really frustrating to them when they have a good year otherwise. And because power prices go 20%, their profitability is down, they have no control over it. Right.

And so for the same thing, why airlines hedge fuel costs, farmers business owners want to hedge electric costs. And the best way to do that is to go solar.

Because you're paying today for power for 20 plus years and you're fixing your payment. And that's a very powerful message.

And until recently when power prices did rise, you didn't have that fear. But that fear is real and I think it's here to stay.

And it can be very frustrating to a farmer when they have a great year and they lose money because their power prices are off. Irrigation, that's really aggravating.

And how do they stop that? Right.

Chris Wedding:

You mentioned an example, percentage increase in power of 20%. Do you have any numbers about the top of your head around? I don't know, average power price increases year over year or last five years, or maybe it's more anecdotal. How would you describe the kind of most magnitude of that hedging you're talking about?

Joshua Goldberg:

I mean, we've seen in some markets like 10 to 30% increases in the past year or two.

If you look at it historically, they tend to increase like 3 to 4% per year. Kind of track inflation.

There's a bit of a lag because a lot of the cost of power is in the distribution and transmission and utilities kind of recover those costs retroactively.

So I think a lot of the inflation of the past few years hasn't been priced into rates yet because utilities are now going through their commissions and saying, hey, I lost a lot of money. I spent a lot of money last year operating this grid, more than I thought. I need to get my cost recovery on that. And those cases are playing out and you can kind of see why every day there's a new utility rate increase.

I think PG&E has raised their rates tremendously.

And the other trend too is the grid is getting very old. And so as the grid gets old and it breaks more, it's a fix it.

And fixing the grid is incredibly expensive. And so you're going to see ratios keep rising and rising kind of regardless of the underlying cost of the commodity panel.

That's kind of a fascinating trend.

So I don't know whether they'll increase at 5% a year or 3% a year, but they will keep increasing and they'll probably keep increasing at an ever increasing rate.

Chris Wedding:

You also talked about the fact that most of your borrowers don't have a credit rating. Right? You alluded to FICO scores, credit scores for individuals, for homeowners. With your prior two businesses. How do you all arrive at an estimation for risk of the borrower in these cases?

Joshua Goldberg:

We started with the coin flip and we've gotten more sophisticated since then.

It's funny.

So if you think about most solar development commercially has been on rated entities, but if you think about lending in general, take M&T Bank for example. Super sophisticated large, mega regional bank. They do small business lending all day long all across the world and they're very good at it. And so are other banks.

And so we said, hey, how can we kind of marry or put together the best of SMB real estate lending, which is a proven field with solar project finance, and come up with a rubric that actually makes sense and then automated to make it more efficient.

So I think, you know, we're kind of coming at it from both angles.

And so a lot of what we do looks like what you might look like if you were buying a commercial property with a little bit of solar analysis built into it as well.

And then we're doing a bunch of AI and other automation to make it a much more efficient process because nobody wants to go through the three or four months or five months bank loan process, which is just tedious and painful.

And so we're constantly looking at new metrics to evaluate and new ways to make that decision, make the underlying decision faster while we're kind of maintaining rigor.

So I actually think it's on the front end of our business. It's more complicated.

Right. Because like FICO is a wonderful tool. It has lots of data in it and it performs very well over time. It doesn't really exist for businesses.

There are some scores that are very good.

So if we figure out, or rather when we figure out, improve our methodology works, it'll be a huge barrier to entry for other participants because you can't.

Like I could launch a resi loan provider today and say FICO 720. Right.

And you know, I might tweak it a little bit here or there, but like that's largely a redid box and you can look at other ready to securitize pools and kind of just mirror what they do.

You can't do that at commercial lending.

Chris Wedding:

And you alluded to the time between, you know, some installer getting a customer to say, yes, let's start the loan application process to when that loan is fully underwritten provided to begin the installation of that project. How do you talk about the time from start to finish of the loan today and where do you maybe wanted to go with some of these improvements you alluded to just now?

Joshua Goldberg:

Yeah, I mean we're probably today like one to four weeks. Some of that is on the borrower for getting us documents. I would love to be at, you know, 24 hours, if not even faster for the automate basically instantly for the simplest deals and maybe up to like 5 business days for the more complex deals.

I think that's somewhere that we can get to over time.

Chris Wedding:

And how would you compare that? I mean I have a very strong sense but how would you compare that to what business as usual would be, you know, business going to a bank to start this process for a loan.

Joshua Goldberg:

I would say like for your average bank, they wouldn't even hear back anything within five days. Things just take forever. It can take to get a commercial real estate mortgage. Months at least. It's just a much more cumbersome process.

So where the rubber meets the road is how can you be much faster without losing any rigor and maybe even increasing rigor. And a lot of that has to do with AI automation. How can you pull in more data points than having a human being having to do all the work?

But at the end of the day a lot of these businesses are stories.

And so I don't know that you want to automate 100% of all your decisions because you might end up with really good borrower that you know, Covid was a tough year for them and their financials look, 2022 looks terrible and so it's 2021 and 2023 looks pretty good.

And you know, if you just, if you're an automated lender you might decline that deal, but it might actually be a fantastic credit.

And so it's. If you talk to people who've been in entrepreneurs underwriting for a while, they say it's like story based underwriting.

And so how can you automate a lot of it and but still hear.

Chris Wedding:

The story and how would you. Well, maybe give us examples of early days of Sunstone. You and your partners, you had a theory, you had a hypothesis. I felt pretty good about it, but the data showed it was wrong. Maybe some kind of pivots along the way in growing Sunstone.

Joshua Goldberg:

Yeah, so a great one that I'll take blame for is you know, we originally launched with theory that like we didn't want to have personal guarantees for our loans and we thought that the businesses should stand on their own and we can get enough data and the businesses to make a smart decision without it.

And a personal guarantee would add a lot of friction to the market position.

And I think for smaller deals it just isn't the case because really small businesses that are basically owned by an individual, they tend to aggregate their business and their personal lives a lot and it can be very hard.

That's been a ton of time make a good, to make a good credit decision without a personal guarantee.

And so I think that by trying to make it easier on the borrower we actually made it more complicated.

And so we've now launched a personal guarantee product that I think is a pretty fair deal for the borrower and much, much more efficient for us to underwrite.

So in hindsight have we done that out of the gate that probably would have made everyone's lives a little bit easier. I mean our underwriting times faster.

That being said for larger deals, I still believe that having that personal guarantee product is not that useful from a credit perspective and actually kind of adds too much friction to the process and such.

As an example of like were data driven like we try things, we look at the data. If they work right.

If they don't work, we treat them and like you know, I don't really have any pride of authorship. Like I want the best solution for the customer.

Yeah. Like I believe if we have a product that makes our banks happy, that performs well, makes our installers happy because they can sell more, makes the borrowers happy because they can save money, we'll make a lot of money ourselves.

Right. Put all those folks first and then if all it works for all three of those our ecosystem, then we'll do very well too.

And I think we had too much friction in underwriting with that. No, PJ is in practice it was impossible to execute. So that was a prime example.

Yeah, I think I also thought it'd be much easier to get bank capital without of course the banking world's froze.

So you know, you just muddle your way through.

Chris Wedding:

Well, I think you said it well. Like we'll let the data speak. Right. You can't be so wed to Ethereum. You ignore that market feedback.

Joshua Goldberg:

Yep, absolutely.

Chris Wedding:

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Today let's switch from Sunstone to Josh.

So maybe give us a belief or two that's important to you, that's influenced either maybe the culture perhaps or the, I don't know, origins or vision for Sunstone.

Joshua Goldberg:

I'm a big believer in always doing right by your partners. So it's, I'm a Ted Lasso fan so it's like never here but like never wrong to do the right thing. Like I think like when it comes to our installer partners and our borrowers and our bank partners, like we're very focused on doing what's right for them. Even if it's at our own expense. Because in the long term, that's how I view partnerships. Like marriages, not like vendor vendee relationships. So if we have an installer who loves us, they will keep coming back, giving us more and more borrowers. If we treat their borrowers well, that borrower will give them more referrals. Right. If we treat our bank partners well, they will do more business for us. And so that's like really big to me. Some people are like, oh, like, what's better for me? More Sunstone. Right. I'm always thinking, like, is that really the right solution for our partner? And if it's not, then it probably isn't the right solution for us either. It might better in the short term, maybe a little extra margin in the short term or whatever it is, but in the long term, it probably isn't the right solution. So that's a big thing. And I'm a big believer in just hiring awesome people. I want to have fewer, better, higher paid people that are just really good, that really believe in what we're doing. Give them equity in the business and give them an opportunity to kind of shine themselves. Those are kind of my two big things that I've learned along the way. Well, I've learned a lot of other awful lessons as well. But, you know, hire good people and treat your partners right. And if you do that, like, that covers a lot of ground.

Chris Wedding:

We'll stick with these kind of PG versions of what you've learned from these prior ventures. How about if you're given. Giving advice, Josh, to either, you know, emerging professional or maybe a younger Josh, what kind of advice might you share? To be happier, more productive, more effective on this path?

Joshua Goldberg:

Yeah, I mean, keep work life balance in mind. I've not been very successful at that, but that's probably something that I could do better. I will say that, like, when I work out more, I'm definitely happier. Definitely go through fits and phases of that where I'm in good shape and then I get really busy and I don't work out. And I find that always comes back to kind of. To kind of bite me in the end. And I think it's important to take time. So I'm a big fan of TV. People always joke. I actually write TV recommendations on LinkedIn. People just like, how do you have time for that? And I think I. I do work a lot, but I think it is important to take time for yourself to do whatever you like to do for yourself. Kind of stay sane. And sometimes at the end of the night, it's like putting on an hour or two of mindless TV. I'm. I'm rewatching Seinfeld right now. Oh, yeah, Hilarious. And it just kind of clears my mind and it actually makes me more productive the next day. So I would say I actually gain productivity, like working a little bit less and taking time to do whatever I like to do, whether it's hang out with my family or I plan actually gathering some. Whatever I do, I just, I want some time for myself to use.

Chris Wedding:

A partner and on the work life balance, maybe give some examples. What is an ideal kind of set of work life balance practices, perhaps that you haven't done but. But are working on or. I don't know, I see you smiling.

Joshua Goldberg:

I'm biologically attached to my phone, so if there was. There was some way to be on my phone last, that would be fantastic. And I figured out what it is. People joke that I sometimes respond to their emails before they've sent them. That's definitely a tough one.

Chris Wedding:

Right. So a habit in the making, let's say.

Joshua Goldberg:

I'm constantly striving to improve.

Chris Wedding:

Yeah.

Joshua Goldberg:

Areas that need improvement.

Chris Wedding:

An honest assessment is a great place to start, for sure.

Joshua Goldberg:

Yes.

Chris Wedding:

You mentioned the Seinfeld. My wife and I tried to encourage our younger two kids. Well, younger. I mean, they're 12 and 15 to watch Seinfeld. I thought, man, if they like this, we'll have so many shows to watch and laugh with together. At night when we relax, we get through about half and they're both like, is this funny? What is this stuff? Anyway, So I, I have to say.

Joshua Goldberg:

Like, I hadn't rewatched it in a while. It still holds up really well. I mean, maybe. I think you probably have to be old enough to like, understand, like dating a little bit because that's like a big batch. I'm doing like a little bit of dating and work that basically kind of all about. But like, I think it's just as funny in 2023. I mean, it hasn't aired since 1998. I think it's just as funny today as it is as it was when I was a teenager watching with my parents. It's phenomenal. But there's. We're kind of in the golden era of television. And there's actually a lot of great shows about business too, that you can kind of watch. Like, there's a. Probably my favorite show ever is a show called Halt and Catch Fire. It was, it was on AMC. There was four seasons. You can get on like an Amazon Prime now. Just a phenomenal show about like business in the 80s and people and.

Chris Wedding:

Yeah, well normally I'd ask folks about recommendations for, you know, books or podcast, etc. You may have some of those, maybe some non boring business books or maybe there's a TV show or two as an expert here that listeners should tune into. What would you recommend, Josh?

Joshua Goldberg:

Of course I'll give you a few that I talked about recently. So I generally don't like business books but if you do anything related to sales, I read the Challenger Sale again recently and that is just a phenomenal book that if you're in sales or managing a sales team or a CEO of a company like absolutely. The Challenger Sale. It's terrific. I'm on the TV front. One of my good friends from college named Matt Schwartz is the co-executive producer of Legacy of Monsters on Apple TV. So always take care of your friends, never feeling the network and build up friendships. So Matt's a dear friend of mine and this is his first big show. It's like a Godzilla show on Apple TV. It's really good.

Chris Wedding:

Oh nice. Okay.

Joshua Goldberg:

Also someone asked me about a fun comedy recently. I'm kind of known as the TV show guy. So there's a hidden gem on Amazon Prime called Red Oaks. There was three seasons of it. It's about an 80s country club and so if you're. I'm 42, so if you're somewhere around my age or older, it's a great period piece of the 80s, just absolutely phenomenal. And it's just really fun to watch. Follow me on LinkedIn. I post recommendations on occasion. I like a wide variety of things. I hate reality television, but anything else is by pretty much.

Chris Wedding:

Yeah, you're like, wait, reality television? That's an oxymoron.

Joshua Goldberg:

I, I hate it.

Chris Wedding:

Happy in reality.

Joshua Goldberg:

Yeah.

Chris Wedding:

Nice.

Joshua Goldberg:

The world is really not for me as it is. I don't need to watch it on TV.

Chris Wedding:

Yeah, there you go. Josh, what kind of message? Call to action, you know, invitations, et cetera. Would you like to leave listeners with before we wrap here?

Joshua Goldberg:

Sure, if you're two things, one selfish and one hopefully helpful. If you're in solar and looking to sell more commercial solar, please talk to Sunstone Credit. My email is just josh.goldberg@sunstonecredit.com. Go to our website. We'd love to talk to you. If you were interested in residential solar or Solar Financial, it'd be great to help you out as well too. If you're building a business in the clean tech space, solar specifically. You want to talk, you want advice? Find me on LinkedIn. Always happy to help a fellow entrepreneur. That actually is one thing that I benefited from. I found that in the entrepreneurship space, especially clean tech, when I was getting started, many people were helpful to me. I've tried to pay that forward. So happy to be as helpful as I can. Ping me and would love to talk. There's plenty of room for innovation. One thing I think when you're in this space, it feels like this is game seven of the World Series and everything's kind of already baked in. But I think we all take one step back. We're at the very we're still in spring training of what's going to be a 10, 20, 30, 50 year long cycle intact. And so I'll be longer retired and this will be innovation coming out. And so I'm excited to be part of the next wave of innovation as well.

Chris Wedding:

Yeah, I like that. And there's also a connection here. Josh, you just gave your email and you mentioned you're tied to your phone. You'll need to be right with thousands of folks saying, oh great, I can call Josh for advice or I want to go work for Josh.

Joshua Goldberg:

If I don't respond, nag me please.

Chris Wedding:

Okay. Okay, there we go.

Joshua Goldberg:

Personalized messages always get more responses.

Chris Wedding:

Good advice broadly and good advice specifically for you. I agree with that. Hey Josh, rooting for your all success set of stone credit. Thrilled this is your third go round. Thrilled there is a little full circle here with you all bringing Sunlight Financial and Residential back to its former glory.

Joshua Goldberg:

Chris, thanks so much for having me. It was a real pleasure and definitely appreciate your time and hope everyone enjoyed this podcast.

Chris Wedding:

Thanks for listening. And if you want more intel on climate tech, better habits and deep work, then join the thousands of others who subscribe to our substack newsletter at entrepreneursforimpact.com or drop me a note on LinkedIn. All right, that's all y'all. Take care.