Meet The Disruptors: Shaya Baum Of Wing Lake Capital On The Three Things You Need To Shake Up Your Industry
An Interview With Fotis Georgiadis
Big companies are continuing to squeeze out the small to midsize bread and butter companies across the United States. I think the advantages that the large company has are so overwhelming, particularly when it comes to the capital, to their capital structure. That it’s almost impossible for a midsize company to compete. So, when Amazon has purchasing power like they do or Walmart or Target any of the major corporations, the guy selling paper on the corner doesn’t have a prayer. It just doesn’t work.
As a part of our series about business leaders who are shaking things up in their industry, I had the pleasure of interviewing Shaya Baum.
Shaya Baum, Chief Executive Officer, Wing Lake Capital is disrupting both the Merchant Cash Advance and restructuring industries, simultaneously. He leads a team of financially savvy and caring individuals dedicated to helping small and medium size businesses keep their doors open and employees working. His team works tirelessly to find solutions for business owners who need significant help and resources. Shaya oversees the operations of many companies who employ thousands of hard working individuals.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
I was one of nine children. You learn very quickly to figure out ways to get what you need. While everyone else was playing football, I was selling drinks on the sidelines. If there was a way to make a dollar, I was out there trying to hustle. I also delivered newspapers. You name it, I did it. Yet, I wasn’t really motivated by the money because I wouldn’t even spend it. I would save it or I would buy things for other people. I was extremely motivated. Almost feel like I was accomplishing something. Anything that didn’t have an end game or a benefit, I never really did. That could be also just because I wasn’t very athletic.
Growing up with my father as a bankruptcy attorney, I grew up in the restructuring and solvency world. He was always on the debtor side, so I always saw things from the business’ perspective. I never saw the creditor side of it. I think hearing the stories of people who got into trouble sometimes due to no fault of their own, gave me a perspective from a young age. When I first came across the Merchant Cash Advance (MCA) companies, it was something that really resonated with me. Okay, how can I use my skillset, my ability to restructure businesses, working within the system that the MCAs have been taking advantage of to get people out?
When I was in college, I was in school at Wayne State in Detroit while living in New York at the same time. I opened a little tax preparation company when I was 21. I wasn’t a very good student because my attendance would knock off a quick 10% or 15% of my grades right out of the gate. I was flying back and forth for tests and working at my tax preparation company. Which I ended up selling twice in the span of a couple of years. From there, I went to work for a trucking company, which was coming out of bankruptcy. We successfully turned the company around and started buying, selling, and/or keeping businesses that were distressed. That led to us coming across our first company that had cash advances.
Can you tell our readers what it is about the work you’re doing that’s disruptive?
There really is no one else that does what we do today. The fact that we affect so many companies and so many people is really what makes us the most disruptive. There is no firm that I am aware of that restructures businesses and provides capital at a rate that’s affordable to companies. There are a lot of restructuring firms and lenders. No one in the market place does both. I don’t know of any company that deploys, writes a check in order to restructure, help your business grow, turn it around, and make it successful.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons you learned from that?
It’s not really funny, but I’ll tell you a story that we learned from. We did a deal and it wasn’t very long thereafter that unfortunately the owner of the company died in a single engine plane crash. The lesson we learned was obtain life insurance on all who could be covered by a “key man” policy. It’s critical because in our business, many, many times we’re betting on the operator. We are betting on the them to be able to turn around their business with a plan that we help them put together. But at the end of the day, they need to execute. And we’re betting millions, tens of millions of dollars on their execution. So, many times there’s no plan B, which is why the company is in the position they’re in. They don’t have a succession plan. So, while not funny, it was a valuable lesson.
We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?
I’ve been lucky enough to have many. I would say that the person who was the biggest mentor for me was Lou Glazier. Lou gave me my first job when I was very young and inexperienced and didn’t really know much about anything. I thought I did. I was pretty cocky. But in hindsight, I didn’t know much at all. But Lou really gave me the platform to build what we have today. If not for the fact that I had him when we started providing the safety net, I’m not sure I would’ve taken all the gambles. I may have, but there’s no question that he has been in both on a personal and a business level, a mentor for me.
On a personal level, I always try and find the way to help, even if it doesn’t necessarily financially benefit us as much as we would like. On the business level, Lou has a unique skillset that I’ve never seen before, and that is the ability to weed through a lot of noise. Every deal that we have is very, very hairy. There is a lot of noise. People that come to us are being sued by their vendors. Their credits cut off. They have employee complaints because they have staffing issues. There’s always issue. And his ability to cut through all the noise, isolate what is the underlying issue of the business, and then work a way out to clean up everything else, is something that I’ve attempted to learn from. We’ve worked together for 18 years now. Every day, I’m still learning from him.
I’ve worked with a lot of different people from all different walks of life. I have never seen anyone who has the skill that he has. I impress upon a lot of our younger staff here to take advantage to learn from people like him. I would say, in our company, every account, both during underwriting and during active, has a junior analyst and a senior analyst. The reason for that is simply because in order for the junior analyst to become a senior analyst, they need to learn from someone with a lot more experience. Having that knowledge, having those skills being taught to our younger associates, has really been very valuable.
In today’s parlance, being disruptive is usually a positive adjective, but is disrupting always good? Do you say the converse that a system or structure has withstood the test of time? Can you articulate to the readers when disrupting an industry is positive and when disrupting an industry is not so positive? And are there any examples you can share?
I think disruption when people are getting hurt is always a positive. I think so, in our case, saying that what we bring is a positive is really quite simple. The people that we’re helping are people otherwise would go out of business. Their employees would lose their health insurance. None of them would bring home paychecks that week and the companies that have been built for generations would go under. So, it’s easy in my space to say disruptive is clearly a positive.
Where I see it could be a negative is particularly where the technology may replace the human workload. And you see people who have developed skills over a long period of time and the attempt to replace them with technology, whereas in the short term is extremely efficient, in the long term can be a negative to the people who are being affected. I fully support implementing technology as often as possible, but I just don’t know that people in certain age groups who have done something a certain way for such a long time will have an easy time making the adjustment. We see it in a lot of the businesses that we get involved with where we implement various operational changes to find deficiencies and many times that will cause redundancy in the workforce. In our space, we attempt to always try, we try and either provide training for people to shift to another role or try and find them a job within one of the other companies in our portfolio. But being the size we are, we have the ability to do that. Many people don’t.
Can you share three of the best words of advice you’ve gotten along your journey? Please give a story or example for each.
I saw this sign in the very simple office of a wealthy man, “Do it now.” I think, that’s the best piece of advice that I’ve ever received. Never procrastinate. In my mind, I’ve always been the type of person where if there’s something that needs to get done, I need to do it. I can’t push it off. There are pros and cons to that because I don’t sleep very much because there’s constantly things do, but I can’t function knowing that something has to get completed.
The other piece of advice, and this is one that really applies a lot in our line of work and to life in general, is the thinnest pancake has two sides. I have learned that no matter how sure you are about something, there’s another side to this story. If a car blindsides you, getting the perspective of the person is essential. Maybe they just found out a loved one has an incurable disease? Always hear the other side of the story before coming to a conclusion, no matter what. The thinnest pancake has two sides, no matter what the scenario.
The cemetery is full of “irreplaceable” people. Everyone is replaceable, no matter how much value they bring to a company.
Every day we have scenarios where people come to us and we hear, say, the vendor side of the story, “This guy hasn’t paid me in six months,” then you go to the underlying borrower, you say, “Okay, why haven’t you paid your payables?” To find out, “Well, the MCA has had my bank accounts frozen. They attached my personal account. My wife is leaving me. They’re going after my kids’ livelihoods. They tried to take my retirement. I’m being sued in seven different states. I can’t keep my business afloat because I’m spending all my money on legal fees.” You’ll never get the full picture unless you hear both sides of the story.
We are sure you aren’t done. How are you going to shake things up next?
For small and midsize companies to succeed in America they will have to access the right capital structure. We have created a fund to do that. Companies come to us that are distressed. Many are drowning from MCAs being used to keep them afloat. We restructure, stabilize and get them into a position where they can take advantage of growth opportunities. At this stage, they still are not going to qualify for bank financing. What happens to them now? Our goal is to provide them with capital and advice so they can continue and thrive in their industry sector. Banks are always going to have a very hard credit box. The vast majority of small and midsize companies in America will not qualify for bank financing. In order for businesses to compete, they need to have access to capital. They don’t.
Big companies are continuing to squeeze out the small to midsize bread and butter companies across the United States. I think the advantages that the large company has are so overwhelming, particularly when it comes to the capital, to their capital structure. That it’s almost impossible for a midsize company to compete. So, when Amazon has purchasing power like they do or Walmart or Target any of the major corporations, the guy selling paper on the corner doesn’t have a prayer. It just doesn’t work.
This scenario exists across all the different industry sectors that we’re dealing with. How can they compete? The government does have some ability to steer them business. There are minority contracts. Without the ability to obtain the right capital structure it’s very hard to compete in today’s marketplace.
We haven’t spent dollar one on advertising. Word has gotten out. Companies that are in trouble have been knocking on our door seeking our assistance.
Do you have a book podcast or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so? Why it resonated with you so?
I’ve given out probably a hundred copies of this book as gifts to people and every person I’ve given it to has told me the same thing. It’s the greatest book they ever read. The book is a story. The name of the book is “Out of The Depths.” I have about 10 copies sitting on the shelf here next to me. It’s a story about a boy who was in Auschwitz from when he was six years old and went on to become the Chief Rabbi of Israel — Rabbi Lao. I actually met him in person a few years ago. My grandparents are both Holocaust survivors so it’s something I relate to personally.
It’s a story of perseverance. The book explains what he went through. I don’t think words will ever explain just the extent of the trauma that he must have experienced. But to go from where he was to where he is and maintain that positive attitude every single day, see the best in everything, I think it’s something that, and I took from the book. I give to everybody else to read so they can understand the Rabbi’s message.
In our line of business, every single day is a stressful day. We don’t have companies that are, “Hey, today’s great. Great news. We’re just going to be distributing cash to our owners.” Every day it’s, if we can’t fix this problem, this company’s going out of business, and hundreds, if not, thousands of people’s livelihoods are going to be affected. It’s on us to figure out a solution and many times that solution takes a lot of creativity and many hours. The people here work an absurd number of hours. Our staff here averages 80 to 100 hours a week. They do it not because we compensate more than other firms, not because of the benefits, and not because they love me so much. They know that their work is very, very important and there are many, many people relying on them. I think that story of perseverance has always resonated with me. No matter how far down you go, there’s always a way up.
I hope my message gets passed down, but I guess I’ve seen that it has and I try and only hire people who feel the same way. Our work environment is very different than I would say any other firm. If you ask anyone who works here, how would you describe the culture? The culture here is one where it’s all about getting the job done. No one cares if you’re here till midnight, if you show up at 4:00 A.M., or if you take the day off and work from a beach in Barbados. It makes no difference. It’s all about results. We’re 100% results driven. It’s a sense of obligation. If we don’t help these people, no one will. Everyone from the new hires to people who have been here forever, have that sense of urgency. The window of opportunity for us to help a distressed company is very, very small. So, our attitude is, it’s all hands on deck to get a deal to the finish line. We have a real personal connection with every one of our borrowers because when they come to us we alleviate a significant amount of pressure that’s on them.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
So, on the business side, I think having the ability to continue to help sustain, grow, fund, provide the consulting services and business expertise to companies that need it, it’s very rewarding and I’d like to scale that. On a personal side, something that’s been near and dear to me that I’m working on launching in Q1 of ’22 is a program that will allow us to take anyone who’s been convicted of a misdemeanor or a nonviolent felony and place them in one of our companies. We have so many companies now with so many job opportunities where we would pay for them to come to and from work. We would give them a job at the company for 30 days. Assuming they complete that 30-day program where they’re working and getting paid and we’re paying for the transition, we would pay whatever for fines in the court system. I’ve signed up, I think I’m at 54–55 attorneys who will each provide five hours a month of pro bono work to help with the paperwork. Then, I’ve signed, I think I’m at over 70 people who would volunteer to help them obtain a GED or student aid.
If we can affect one father, one mother, one son, one daughter, and you have a generational effect on those kids stopping the circle. Once you go into the system, you don’t easily come out of it. You surround yourself with those type people. So, it’s how do you put people in an environment where they have the opportunity to succeed, give them the opportunities to succeed. I think that with now being able to leverage our various companies, we’re able to give them the opportunities and that’s something we’re going to focus on doing.
If they fit in the role and they like the job and we like them, then they’re going to stay full time. If they don’t, then we would, in addition to paying them for the period of time, helping them get on the path that they want to go on. Do they want to go to school? Do they want to find a job? Do they want to obtain financial assistance to health insurance? Whatever they need, we’re going to provide all of that on the backend while they’re working for us during the period of time, during that 30-day period.
This was very inspiring. Thank you so much for joining us!
Meet The Disruptors: Shaya Baum Of Wing Lake Capital On The Three Things You Need To Shake Up Your… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
