A (3:00)

Oh, interesting.

B (3:01)

They're one of the original Japanese reconstruction families. And you know, we have families that have made, you know, their money in real estate, et cetera. So it's just really helpful to be able to relate and have had experience in all those different industries because you know, families are, you know, they are so diverse. So anyway, so did that and then off the back of that I launched a hedge fund. So I ran a hedge fund for about a decade. Yeah. Once again we did direct investment, secured lending and convertible arb. That was great. And then in 2012 was sitting around a table trying to think to myself, where is the next great pool of allocation going to come from? And I thought, well, I had worked for a family office, it's probably going to be these folks. I felt that they were becoming more institutionalized so built the largest network of transaction oriented or deal seeking family offices in the U.S. you know, and essentially what we do is we try to serve the families and you know, we bring them together to share intellectual capital, best practices, you know, meet best in class service providers. But ultimately what we're doing is bringing them together in the context of co investing and developing co investment relationships. That is our calling card and being transaction oriented. So, you know, that's kind of us in a nutshell.

A (4:31)

Yeah. And you made a good point about being a generalist versus a specialist. That's something I actually mentioned last week. What are some of the pros and cons and dynamics of just being a specialist versus the generalist that you guys are?

B (4:45)

Well, look, the pros are I can kind of speak and you know, maybe a little bit of a statement of hubris. So please forgive me, but I could kind of speak almost any industry. Right, right. And you see that there are similar life cycles in industries and how they relate. For instance in biotech. Right. I've invested in over 200 healthcare companies, Med device, biotech and pharma. And it's always the same life cycle, which is, yeah, I have a client now. Right, I have a client now. They are super passionate and I'll tell you why. The CEO actually was a successful dot com entrepreneur and his wife got colorectal cancer and he became hell bent on using data and algorithms to cure colorectal cancer. And he, you know, he's at the seed stage and he's starting at biotech. And so you know, if you take a seed stage biotech and then you also look at and invest in, you know, let's say, you know, biotechs that are further along, let's say phase one, right? That means they've done their safety data or into phase two, that life cycle. Like once they're in phase two, phase one, phase two, a lot of times, if they really have something, right, if there's a signal there, human signal, and you know, you've shown early success, they're going to get bought by large pharma, okay? Now the same exact lifestyle life cycle you can find in mining, okay, where you can have someone who says, you know what, I think that there's gold, you know, in this area, I'm going to go stake it. They literally rent a helicopter, they're dropping stakes out of the helicopter and say, you know, this is my area, right? They get the rights to it, they start doing testing, they have to obviously go through all the government approvals, et cetera. They start building it up. Before you know it, you know, they have a mine and they're pulling gold out of the ground. And you know what's going to happen is the majors are going to come in and buy it. And so you see that cycle in almost every industry. I think the corollary is quite interesting. So being a generalist and being able to identify things like that, that's quite helpful. What hurts is what's not great about being a generalist is at least in my business, right? I'm trying to get people funded. There's no question in my mind. The more you know, the more detail, you know. I can't tell you how many times I thought to myself, wow, I wish I was an electronics engineer because I'm trying to close a semiconductor capital equipment deal. I wish I knew more about this, but I just don't. So we know enough to have the conversations, open the doors, but we also look. So I don't know enough to tell you what's a good semiconductor capital equipment company versus a bad one, but we know enough to bring the right people to the table and let them figure it out.

A (7:50)

Yeah, and when you guys bring the right people to the table, is it usually only founders that are looking to get capital or do you guys also help funds at all?

B (7:58)

Oh, yeah, we do so many different instruments, but real estate funds, so seed stage vc, private equity, hedge, every kind of private company you can imagine. We work with public companies. We started a public company business about a year and a half ago. And you know, what we said to ourselves was, hey, we've been successful at raising capital. And that's the hardest thing to do on Wall Street. And if we built a rigorous and repeatable process that has been successful in doing the hardest thing on Wall street, we should be able to really be able to give a public company a platform to tell their story and then let the family offices or ultra high net worths make the decision as to whether or not they want to buy the stock in the open market. But it's just kind of lower hanging fruit. So you know, another thing, we just did a deal with the largest investment bank in Israel where we are helping them essentially market larger real estate opportunities. And public private companies that have debt loads of 400 million and north can list that debt on the Tel Aviv Stock Exchange and it essentially gets equity treatment. It trades like equity.

A (9:20)

Oh, interesting. So how does it convert into equity from debt?

B (9:24)

Well, what they get is the advantage. The big advantage over there is ratings arbitrage, meaning if something has, let's say a triple B rating here because it's US based, it'll get a much higher rating over there. And therefore the debt is cheaper. And so they will, they'll be able to borrow more. So they'll have a higher LTV loan to value and they'll be able to, it'll be cheaper.

A (9:54)

Sure. Got it. And maybe you can walk through the differences with fundraising when you're an entrepreneur versus a fund manager. Right. So what are the, you know, because you're helping these people get funded, you know, what are you noticing that's just kind of the biggest hurdle or difference? Because they've got to be just two different dynamics. Right.

B (10:14)

Just to be clear, your question is the difference between raising capital as a private company versus raising capital as a fund?

A (10:20)

Yeah, like raising money as an entrepreneur. Hey, I want to start this colorectal biotech company versus hey, I'm a new hedge fund, I'm looking to raise 100 million. What are kind of in your experience, what are the kind of the different differences that you see between.

B (10:36)

I will say I think the challenges are very similar.

A (10:38)

Okay.

B (10:39)

There are a huge number of differences.

A (10:41)

Okay.

B (10:41)

I mean, you know, the one glaring difference is that a fund is an LP structure. And so that if you're going to invest in an early stage fund, your capital is intertwined with other LPs.

A (10:52)

Yeah.

B (10:53)

And a lot of family offices don't like that. So what they'll do is they want to sidestep the LP structure and they'll ask the portfolio manager if they like the strategy. And can you set up an spv? Can you set up a separate vehicle for Me, I don't have to deal with possibly litigious LPs in this basket, but I can still benefit from the great work that you're doing.

A (11:20)

I'll tell you my experience and people now don't even want to do the spv. They're like, hey, if you can introduce me, we want to co invest. So I've talked to a few managers and a few family offices and they're like, you know what? Because I think that was what it was before. It's like, hey, you know what, let's just do an SPV so we don't have to invest in your seven year fund, but now the family offices, they're just hiring a couple analysts and they're like, look, we have our venture arm for our family office and they'll hire a couple analysts.

B (11:47)

They're going to do the direct investments themselves.

A (11:49)

And they want to be. The term is direct to cap table. They want to see their name on the cap table as opposed to going through another vehicle because they just don't want to pay. I mean, I think there's pros and there's benefits to an spv. If it's a very hot exclusive deal, like you're paying to play, right, you're trying to get into the deal. But it also depends on how you're collaborating with a fund manager. Sometimes I feel like the fund managers, they want to build a relationship and it's a long game. So they're like, hey, you know what, why don't we co invest for some time, see if there's some synergy. And then hey, why don't you let us do the heavy lifting? We'll just spin up SPVs and you just charge us for your hard work. But I feel like it's how you set those expectations in the beginning. I don't know. Would you agree?

B (12:32)

Yeah, I mean, you know, it's funny, I certainly find that family offices are more attracted to LP structures if they offer co investment outside of that.

A (12:44)

Okay, so the option so you could do the LP because you have access, you're just integrating into the fund. But you're saying, how would they get the optionality? It's just like an additional vehicle if they want to allocate directly.

B (12:55)

Also alongside the, I mean, essentially there's a parapassu allocation. So, you know, let's just take simple numbers. If you were to put $10 million into a fund, a lot of families won't do it unless they can get, let's say a 10% co investment right on any New deal on top of their LP investment.

A (13:12)

Okay, that's good. So it's a little bit of cherry on top of the Sunday because they're doing the fund, but they also want to kind of just independently have additional access to cherry because they may want to allocate a little more to another specific deal, especially if it's like a really hot deal.

B (13:28)

Right, right, that's right. Exactly. Yeah.

A (13:30)

Got it. And when you guys are looking at deals, you know, you kind of were giving the example of the healthcare deal and the, the, the mining company. What, do you guys also do some analysis on the potential upside or do you guys just really connect the people together or do you also, you know.

B (13:46)

We, we do basic due diligence just to make sure, you know, all the boxes are checked. But you know, the real due diligence without a doubt is done. They don't even, I mean, to be honest, they have their own staffs. They have, they will rely on outside accounting firms, they rely on outside legal, et cetera, et cetera. They frankly don't care what I think, which is fine, I get it. You know, so, you know, but so much of it depends on management too.

A (14:12)

Sure. And when you, I think one different thing to keep in mind is with the fund, you know, if you're doing a, you know, seven to 10 year fund, you have to work with a fund administrator and work with an auditor. So it's just, I feel like there's a lot more upfront cost versus like if you're, you know, an early stage startup, you work with a lawyer and get like a startup package. And I think they do these fixed fee, you know, some of the great lawyers, they do these fixed fee packages where it's like five grand and we'll set you up with like a, you know, series A package. And you know, they do all the fund formation documents, I mean the startup formation documents. And I feel like the pricing to get started is more expensive with starting a fund. And I think that's why, I don't know if you've been reading the news about like the rolling funds like Angellist, you know, now they have this thing called a rolling fund where you just pay angellist like 10 grand and then they have like this audience of accredited investors, they can just actually invest in your syndicate. So where do you think the future is heading, I guess for fund managers with all these SPVs and kind of the rolling funds and syndicates?

B (15:18)

You know, it's funny, yesterday I was on the phone with family office, like a $6 billion family and we were old friends and you know, they, long story short is they said to me, look, we want to buy. Now we're looking to buy non correlated companies with EBITDA between 5 and 50 million. Right. So you know, you stick a multiple on that and they're spending, I don't know, let's say 200 to 500 million to make these acquisitions and it's a big family, so they have the dry powder and they can do it. Yeah, I will say, look, you know, you're talking to a guy who remembers the 87 real estate crash really well. I mean I've been through some cycles, the dot com, you know, long term capital, et cetera, et cetera. I think there's a reckoning coming. I think that, you know, folks, and I don't blame them, but folks.

A (16:15)

The.

B (16:15)

Pendulum is swung too far to the point where people think they could do it themselves. And as you know, living on both sides of the table. I mean I was a fund manager and I now like work with all the allocators very closely. And you know, there's something to be said for specialization. Right. You know, if you're a family office and you're on Fifth Avenue in New York City.

A (16:53)

Hey Stephen, I think I accidentally muted you. Hey Steven, can you hear me? I think I accidentally muted you.

B (17:02)

How's that?

A (17:03)

Yeah, that's good. Yeah, apologies.

B (17:05)

No worries. Look, what I was saying, I don't know where I lost you, but what I was basically saying is there's something to be said for being an expert in your area. And what I was saying is, look, if you're a real estate family in Fifth Avenue, you are never going to get the benefit of late night discussions that go on on Sand Hill Road where they really, you know, people talk about, oh, I'm allocating to, you know, this tech company or that dot com or whatever be. But you know, really at the end of the day you get the true knowledge. You know, late, late at night when someone's like, oh and by the way, I really love this.

A (17:41)

Sure. Or it's kind of like, hey, you know, I know this, this private company there. I really understand their, this is a real example I'm not going to name, but this is, this is a really interesting company and we know about this tech platform that they're going to be launching that's going to transform financial services, you know, but you only know that if you kind of talk to the developer team. I know some people that have like gone to school at Stanford with like some founders of some specific company. So, you know, because they spend time in the dorm room together, you know, they, they'll be texting each other other things. And that's some insight that you're not going to have as a, as a family all the time. Maybe you do, because I think, you know, this is another thing to talk about where what is the demographic of the families are. You start. Because now we're looking at like the generations of the families, you know, the fourth, you know, the third and fourth generations. So you starting to see more of the Silicon Valley people now start their own single family offices and have them start thinking about it. Or is it. Are you still seeing kind of the older generation?

B (18:45)

You're already still the older. It's the, let's just say one. The first generation. Yeah, but, you know, we see G2 and G3. I look. You see G2 and G3, especially around ESG impact investing. So one thing that I think is great, and I'm just so happy to hear is how well ESG has done through this downturn through Covid. And it's really proved out a bunch of those models. I couldn't be happier to hear that.

A (19:18)

Yeah, in our platform, we've actually opened up a new vertical just focusing on impact. We're learning more about esg. So there was actually someone in my platform earlier that actually worked in public markets for esg. And now we're looking at ESG that can possibly provide some type of private equity type of returns. But we're looking at, we're learning about ESG doing clean tech and impact. And you're right, I think I've been just getting a lot of demand for that specialization. So that's why we kind of started, you know, having more of an open mind. And I'll say, like the last set of people that we worked with in our platform, we had a really good, you know, source of deal flow. And one thing that I'm learning now is, you know, the sector specifically, which is clean tech, there's like a clean tech 1.0 and then there's like a clean tech 2.0 where you can do impact and there's no return. But now I feel like there's a little more of a demand for, for financial return as well, along with ESG and impact. And I don't know if you're seeing that as well. Are you starting to see people try to do both where they have the social impact, plus they're trying to get financial returns?

B (20:27)

Oh, definitely. I feel like that's what the space is all about. Right. And the other thing we're seeing, and I don't know, this is a new trend for me. I don't know if it's a new trend for you. We're seeing charities launch their own funds. Right. They're basically saying, like, look, we kill ourselves every year to raise money to, you know, once again, let's, let's say it's the American Cancer Society to help promising drugs get FDA approval and save people's lives. It's a shrinking ice cube. Right. And if we keep giving the money way away without any benefit, we're not helping anyone at the end of the day. So I think a really interesting trend is we're seeing a lot of, you know, well respected national charities launch their own funds.

A (21:14)

Yeah.

B (21:15)

You know, either getting royalty streams where so therefore they can, you know, have ongoing income from it, or they're getting coupons. And you know, once again, I think that's a very positive thing.

A (21:28)

Is that kind of, is that kind of what Bill Gates is doing with the Gates Foundation? Because that's also kind of like a profitable business. Right. Or is that different?

B (21:34)

I don't know. I don't. Yeah. I don't know if he's doing it or not. You know, I know that there's a bunch of, like, charities around sids, around Alzheimer's, around cancer, all launching these funds, basically saying, you know, because, you know, I spent, I've been in Atlanta, I've spent a lot of time with the American Cancer Society.

A (21:53)

Yeah.

B (21:53)

And they have been responsible, I think, for over 450 approved drugs throughout their, you know, and that's. You're not, you're the best, most prestigious universities in the world don't have a track record like that.

A (22:08)

Wow.

B (22:09)

And, you know, they should benefit off that.

A (22:11)

Sure. Well, I feel like they should. You know, if they're going to raise a fund, hopefully that capital can accelerate some of those drugs. Right. Because I mean, if you're saying. Yeah, I mean, if they're able to do that much. Because what you're saying now is, are you saying that the way that they're operating now, these charities. And I'm still learning this stuff. Right. But it's, it's a 501C. And then with the 501C, it's like donor, it's like donor capital, I guess. Right. And then they use the money to really just give it away through the foundation.

B (22:37)

They give it away and they never see it again. At least, like, if you take the. Once again, I'M sorry to keep going back to this one charity, but if you take American Cancer Society and they're responsible for 450 drugs that have been approved, I mean, can you imagine back in the day if they would have just said, hey, look, just give us a 1% royalty. Right. If you don't get approved, fine, we don't get anything. But if you do that, they would probably be 30 times as large as they are now based on the revenue off those royalties.

A (23:04)

And what are these? So these. Chair. So the American Cancer Society, how much of a fund are they looking to raise? And you don't have to tell me about American Cancer Society, but if that's private, but in general, how much capital do they need and what are they using that money for? Is it for more research or is it technology? What are they deploying capital?

B (23:23)

They're using it to fund promising, promising drugs, this case, and take them through FDA approval.

A (23:29)

Got it. So kind of like a life science fund.

B (23:31)

It's exactly like, yeah, got it.

A (23:33)

Yeah. Because a lot of universities already doing that. One of the, one of the mentors in my program, he's, he used to be a medical doctor and now he's at Oklahoma State's Life Science Fund. And that's all they do. They kind of, I mean, I don't, I'm not the expert in it because I feel for me it's just a long tail. It could be, you know, by the time you discover the drug, the fund is, you know, the fund is kind of completed its cycle. Right. So I feel like you need, you need a lot of capital. So I mean, these guys are probably, you know, raising a couple hundred million dollars, probably at least. Right. To kind of get it through.

B (24:04)

I don't think it would be that big. It's all a matter of ratio. Right. Let's say they only raised 25 million. But, you know, they put a half a million dollars into 50 different drugs.

A (24:14)

Sure.

B (24:15)

You know, hopefully the old model is invest in these companies, invest in these drugs, and the money's gone. It seems logical to me that the new model is if they're successful, we get a return on it and then hopefully keep doing it.

A (24:32)

And what's the instrument? Is it equity or is it debt? What are they actually deploying as far.

B (24:37)

As it's just straight equity.

A (24:38)

Generally it's just straight equity. Okay. And it's mostly seed stage, seed state. If it's 500k, it's probably seed to Series A, probably as a co investment.

B (24:48)

I also think it's interesting Because I think these charities, first of all, they have such history and they're also, like, they're really part of these, you know, research and development fabrics. I think that they have, like, I think that they can get allocations where a regular person or even a regular family office couldn't, because they're just like, so interwoven into the whole fabric of research and development.

A (25:16)

And who are the typical LPs for like a, like a charity's fund? Is it using institutions or is it just a syndicate of other family offices?

B (25:25)

I'm not that much of an expert on it, but I believe. I believe that they're just carving off capital or, you know, donations raised.

A (25:34)

Yeah.

B (25:37)

And, you know, and putting a portion into these funds to see if they, you know, hopefully can extend the lives of these funds.

A (25:42)

Got it. Okay, that's great. Well, you know, I think a fun topic to talk about as well, which you're alluding to is tell me what can, you know, some examples of some difficult clients and how that difficulty can be managed.

B (25:57)

You know, right now I have a client that can't get out of their own way, meaning they have a good business, they're good at presenting, but for whatever reason, they think that it benefits them to play games. And so, you know, we do zoom calls, right. So we might have people on a zoom call where they're telling their story. And at the end of the zoom call, they say, oh, and by the way, we're full up on this round. You can't get in this round. And they think that they are creating some amount of, you know, fomo.

A (26:31)

Sorry, some type of fomo, like saying that it's. The round's completely full.

B (26:35)

Yeah. And then they think people are going to call them and beg and it's just like. And I keep telling the client, listen, you're wasting your time. Like, no one's falling for this. And it's a great little company, too. They just can't get out of their own way. So I think the biggest mistake we make when working with clients is letting the clients run the process.

A (26:54)

Sure.

B (26:55)

We've been doing this since 2012. We have made every mistake possible in the book, and it's far from perfect. But I think we are constantly trying to polish this diamond. And so that's one mistake we make. And I think a lot of times clients make is they just get too cute for their own good.

A (27:19)

And what are some things that you guys help them with so we can. Because there's actually some people here that might be eventually interested in either raising money for a company or a fund. But I guess with them, what, did they take over or overstep that maybe you should have handled? Is it like the presentation? Is it just kind of the pitch? And do you guys coach them as well and give them feedback on how to pitch before they actually talk to a fund, to LPs or investors?

B (27:49)

So what happens is in this age of zoom, because zoom is still a new technology for everyone, and we're still getting used to it as the standard bearer, we usually have to go through two rehearsals just on the technical front. Hey, this is how you share your screen. You know, this is where you'll see the questions, et cetera. And when you do that, they run through their presentation. And by doing that, we give them feedback. And, you know, a lot of times what we find. Here's another thing. Is that especially the larger, more established funds, Right. Like, if you. We probably both know the most blue chip fund in Boston. Okay. Was a client of ours.

A (28:32)

Yeah.

B (28:33)

And they were so used to talking to, I don't know, the state of Wisconsin, the state of California, the Norwegian sovereign wealth fund.

A (28:43)

Yeah.

B (28:44)

They had no idea how to speak the language of family offices.

A (28:48)

And what's the biggest difference?

B (28:50)

Qualitative. So much more qualitative and emotional with family offices than it is, you know, with these state pension funds. And. And the other thing is, if you're talking to the state pension funds, okay, you can put together one presentation and give it 50 times, and you don't. They all generally have the same asset allocation, thought process, and need. Right. It's not the same with family offices. And you need to know their. You know, you need to know their. Their. Their hot buttons and their wants and desires, things of that nature.

A (29:23)

What's going on. I mean, I totally agree that I've had, like, literally three discussions with. With three families about this, and there's one guy that's at a family office, and him and I have just been. Because I'm not raising money, right. So I'm just. I really just love building friendships and, you know, catching up with people. So I texted him and he's like, hey, we should go for a walk in Central Park. Like, nobody's ever asked me to go for a walk. You know, I mean, normally it's kind of like, hey, let's do a zoom. Let's kind of go through your deck, right? Send me your financial model. But, you know, you're right. I think with families you're really building, you know, they don't really invest in funds, they just invest in who they trust. That's my experience.

B (30:04)

1,000%. I couldn't agree with you more. You know what? When I ran my fund, that was a hard lesson for me, because I remember in the beginning, we would have better numbers than people. We would have better terms, everything. And I would always say to myself, like, why are those guys getting the outcation? We're not. Like, we have better everything. But you know what? They just like them better.

A (30:26)

I mean, I heard. I heard some news about Bridgewater. I mean, I. And don't quote me, because I don't have the numbers, but they're not performing that well. But they, you know, like, I think in their lowest amount of performance, I think last year, the year before, they raised, like, a $5 billion fund. You know, so because it's Bridgewater, you know, part of it is really the way you portray your brand and how you, you know, kind of position yourself in the community. But I feel like their IR person really invested deeply in the relationships and getting to know people. And it's not like in sales where you're, like, schmoozing people, because I feel like some of these families, too. What I've learned is some of them are past entrepreneurs. Right. So they can kind of, without doubt, they can tell the poker face if you're kind of trying to BS them or trying to really oversell. But I think if you really just invest in just, like, built like, this is what I've learned. My big takeaway in the last few months just from talking to so many people is, you know, friendships first and, you know, not even having any transactions, because I think if you have a friendship, you'll just kind of work with people that you enjoy working with.

B (31:28)

Something else about that, and you make a great point. You know, we just got a referral from a client. It's a public company, and this is, you know, a guy that we've really had to put our back into to do a good job for him. We've worked hard for him. And the thing. Not even making the introductions, the thing that ended up being so important to him was just our honest feedback.

A (31:51)

Yeah.

B (31:51)

Like, he asked me, he said, hey, we're thinking about getting this celebrity to advertise our product.

A (31:59)

And.

B (32:00)

And then he said to me, oh, and we're also thinking about changing our name. And because, you know, the company's grown, so the name does. It's so niche. It doesn't represent everything that they do.

A (32:10)

Sure.

B (32:11)

And I just gave my honest feedback, and I think he's surrounded by folks that are just yes men, so to speak. And I just said I would not do this. I think it's a mistake. And I think that's what got us the referral. People want honesty.

A (32:24)

Yeah, no, that's a good point. So when you say, going back to that example of the families and the pension funds, so usually when you talk to the pension funds and endowments, what are they looking for? And then with the families, your experience, how should. Because some of the people in this channel are emerging managers. So what is some of the etiquette that they should think about? Right. They're gonna. But they're about to talk to like the New York State's teachers pension fund. What are some things that they should think about? And then with a family, how do they kind of go about that?

B (32:56)

So if you're gonna talk to New York State or any of these states, the thing you have to get to is the guy that's running the emerging, the emerging manager book.

A (33:04)

Okay.

B (33:04)

If you're talking to New York State, they're going to rely on Mercer, they're going to rely on any of those consultants out there and they're essentially never going to look at your stuff unless Mercer gives it the thumbs up.

A (33:13)

So when you say Mercer, is that a, is that a gatekeeper?

B (33:16)

Yeah, it's a consultant.

A (33:19)

That's what I've heard of. Yeah. So, yeah, that's, that's good education for the group here. So usually when you're looking to raise money for fund, there's usually some type of middle person that comes in as the gatekeeper that says yes or no. Right. And from what I've learned, that person is paid to say no. Right. If they, if they keep saying no, they keep their job. Right. That's what I've learned.

B (33:39)

Well, it's general. I mean, you know, really, I thousand percent agree with you. You know, they're just paid not to make mistakes, but they're not paid to really make returns.

A (33:49)

Sure.

B (33:50)

So, but here's what I would say to folks that are emerging managers out there.

A (33:53)

Yeah.

B (33:54)

Every state has an emerging manager book. You need to find that person. And I think that that person has a. There's much smaller books, like I don't know what New York State's pension is, but let's say it's 80 billion. It's probably bigger than. I have no idea what it is. Right. There's a guy that's literally running like of the 80 billion, he's running 250 million to allocate Managers, that's the person looking for.

A (34:17)

Yeah.

B (34:18)

I think you can make a relate, have a one on one relationship with and sidestep the mercers of the world.

A (34:24)

And then so you're saying to kind of treat the pension fund, the relation, try to kind of build the family office type of relationship with a pension fund with that person. And I guess with the, with the emerging managers, how often do they run? Are they usually like once every year and there's like a formal application process too. Oh, yeah, right.

B (34:43)

Yeah.

A (34:43)

And you got to apply. And what are they, you know, in your, in your experience, what are they looking for with an emerging manager? Like what, what stands out? Because there's tons of emerging managers now.

B (34:54)

Sure. And you know, I also think that like for instance, three, four, five years ago, I would say you were crazy if you were an ESG fund that you think you're going to get an allocation from state of Rhode island or whatever it is. You know, I think now that they are, they're open to much more niche strategies.

A (35:16)

So.

B (35:18)

You know, I think those are certainly opportunities that weren't available.

A (35:22)

Yeah.

B (35:23)

What are they looking for? You know, it's funny, I have a family office, one of the biggest in New York City, and they come out of a huge fund. They start, the guy started a huge fund and it's like a $12 billion family. But there's three people who are in charge of allocating the money. There's the cio, the guy who started the fund, and his wife. And they all, they make all the decisions for the family office allocations.

A (35:54)

Interesting.

B (35:56)

But what I say to the cio because I'm friendly with her, I say, yeah, but isn't this guy like, doesn't he have sympathy for an emerging manager because he was an emerging manager 25 years ago. And she says, yeah, he does. She says he gets it. As a matter of fact, she said to me, he struggled for a decade, for 10 years before he got traction. He never gave up. And that's why he got traction. And you know, that's why he's a $12 billion family office.

A (36:24)

Yeah.

B (36:25)

So, you know, people are people, they're just putting their, their pants on one leg at a time. You got to keep that in mind. So I just want to get back to one point on the emerging manager. The person who's in charge of allocating state pension fund, Find that person, try to make a relationship with them, get them on LinkedIn, try to grab coffee with them. I absolutely would do that.

A (36:42)

Yeah.

B (36:43)

I think you have to take that thought process, not only through that, but to sovereign wealth funds.

A (36:47)

Yeah.

B (36:48)

I'll tell you, another great pool of allocation is fire and police. Fire and police are much more. Those pension funds are much more flexible, you know, than certainly than state pension funds.

A (36:57)

Have you heard of. Have you heard. Do you know who Anthony Pompliano is?

B (37:01)

No. I may have named.

A (37:03)

So this guy was like a bitcoin, like, expert. And what he would do is, like, literally every day he would write this newsletter about, like, bitcoin and crypto and the news. And it just. He did that and then he had the podcast and he just created so much content and such an audience. I think in like, five months, he got like. Like 200,000 followers on Twitter. And then you would just start seeing him on CNBC and like, all over the news. But, like, he did that, like, literally organically. And, like, I actually got a little inspired by him and that's what actually pushed me to start doing podcasts. But. But he. He was one of the first managers, I think, that raised, I think, like, $25 million institutional from like, the police pension fund. And like, if you any really convince them to look into crypto as like, a small allocation.

B (37:52)

And I say this because I have a company that's a gold mine. They're a gold mine in, you know, the western US And I just. We did a zoom call for them yesterday, and I just found out that their head of IR has built a community of 300,000 followers all dedicated to gold mining. And I. And I'm super impressed. And I completely agree with you. I think you are spot on. And, you know, you gotta do things like that. To be honest, I'm scratching my head saying, well, how do I do that?

A (38:25)

Yeah.

B (38:26)

Because we have 170,000 investors and allocators in our database. I don't have a community like that.

A (38:31)

Yeah, no. I mean, I think you definitely need a social strategy at some point. The only problem is it's not. There's no shortcut. It's a lot of work. And this guy would get up. I mean, Anthony, he would get up at like 5am in the morning and write up, like, a post. And nobody's gonna. Everybody's not gonna do that. They're not gonna get up and, you know, write a post. Right. Obviously it's tougher when you're like, you know, married and you got kids. Right. Cause you have to, like, block time, box your day. I know, me personally, it's like after like, 5pm it's like, I have to kind of like have a family time time box, you know, so it's. But you just look, if you wanna get it done, you still get it done. You just work around it. Right. And you just kind of change your, change your, change your schedule around that. Let's talk about IR. We got about 15 minutes. So what are some of the characteristics of a good investor relations person and for the audience? Like I said, some of these people are emerging managers want to raise a fund at some point, so could reach out to you later. But I think if you're raising a fund, you're doing your own IR in the beginning. Right. So what makes a good emerging managers, the ones that you've seen that have raised these hundred million dollar funds, $50 million funds, what are they doing that's kind of a pattern that you're seeing that's successful beyond just like, hey, I'm making, I'm building a relationship. Any other attributes that you think are helpful to be aware of?

B (39:48)

Yeah. So it's funny, I go back to when I ran my hedge fund, I go back to public companies and you know, if I would interview management teams all the time and I can't tell you how often I would see the exact same public company doing the exact same thing, same industry, and one stock was $10 and one stock was $1.50. And there's no question in my mind the difference was that the CEO bothered to get on the phone, get on the road and talk to prospective investors whether they had good news or bad news. Okay. And so my what I would say a good IARC strategy is build your Rolodex. And you know, the best thing you could do is set expectations and exceed those expectations.

A (40:35)

Yeah.

B (40:35)

If you screw up and if you even have a bad quarter or something doesn't go right, that's fine. That's the best time to get on the phone and tell that person, this is what happened, this is what went wrong and this is how we're going to fix it. You will get, you get so much more credit for doing that during the bad times than you do when you're just coasting during the good times.

A (40:56)

That parallel is very similar to venture as well. So with COVID I've had some portfolio companies reach out to me and just tell me the bad news. And I really like that and I really appreciated that they wanted to talk to me about that and I kind of did some coaching with them and gave them some of my thoughts. But I think you're right. I think LPs and GPs both who are allocating capital, right. They want to hear the bad news because they want to. They want to help at the end of the day. Right? Kind of like what you said with the matriarch and the patriarch of that one family, right? The guy was an emerging manager, so he feels for these people. So I think you're right. You know, you want to hear the bad news as well. If you don't. I mean, I would be kind of a little turned off.

B (41:39)

Bad news, that really builds the relationship. Yeah, it's. I mean, if anyone's on this phone and they want to raise a fund, you have to say to yourself, this is a marathon, not a sprint. I'm in this for 10 years, okay? And I'm gonna. You know, and that, you know, that's what it takes. I mean, I'm sure you'll be successful before then, but that's gotta be your mindset. And, you know, 10 years, there's gonna be a hell of a lot of bad news. And it's just a matter of, you know, the folks that treat people with respect and are transparent are the folks that are gonna carry the day.

A (42:09)

Yeah. I met a guy that has a $250 million fund. It's a venture fund. And he's never done venture before for. And I was like, well, do you have any feed. Do you have any advice? And he's like, yeah, just, you know, build relationships with the same few people for, like, 17 years. So he's like. They just. They're just like his buddies. And I guess his friends did really well, and they're like, they all just gave him a couple million dollars and added up to 250. But he has no experience. Like, he. I don't think he's deployed the capital yet. I think he has his big fund, but he's like, yeah, you know, I might maybe take the classes.

B (42:46)

Really trustworthy guy.

A (42:48)

I think it's just. It's friendships. You could be a really horrible manager. And, you know, still, there's a lot of people that raise a lot of money, you know, and. But I think. But I think if you're smart, I feel like if you don't know how to allocate the capital, hire the right people to help you, right? Maybe hire, like, someone right out of Warburg Pincus and help you do some financial modeling. Do the diligence and get people. I feel like that's what some of the athletes do, right? Because they don't. I feel. I'm not. I'm not imagining some of these basketball Players, you know, sitting in front of Excel doing waterfall modeling. Right. They're probably going to hire a private equity person to kind of model out the returns. And that's another question too. Have you worked with any other people outside of the normal template, like any athletes, any celebrities? Have you seen. Do you see that emerging too? Just people wanting like different types of Persona is now wanting to start their own fund that you didn't see maybe 10 years ago?

B (43:42)

I don't know. I. Well, I don't know about that. I guess I wasn't. I'll tell you where I was gonna go with it. I apologize. It's not answering your question, but yeah, families own major league sports franchises and a lot of them, and a lot of those folks are our families.

A (43:58)

Yeah.

B (43:58)

So like I just got a call the other day saying, hey, you know, we want to sell our 20 million dollar piece of XYZ NBA team. Do you know anyone that wants to buy it? We get a lot of that. I'm sorry to answer your question, but that's.

A (44:09)

And is that usually in the structure of that, is that usually like an spv or is it like actually these shares that they issue, how do they actually issue the ownership? Like is it just.

B (44:19)

You know what, I just put people together. I don't get involved because our model, just to be clear, we don't get a performance fee.

A (44:25)

Yeah, sure.

B (44:26)

We're only on a consulting fee. So you know how their sausage is made, so to speak. I don't. I. All my job is to put the right people together and then I walk away.

A (44:38)

And I guess. Yeah, well, I guess my question was, to answer my question, I guess if you can, is are you seeing the people that need to raise money change? I think you answered it earlier though when I was talking about like next gens. Right. Because you were just saying like you're not seeing, you're not seeing a growth in like the next gens. But like just to take, to take that a little further, I was like, oh, I wonder if you're seeing any more like athletes or celebrities now wanting to raise money or, or funds. But it sounds like not. But it's about the same.

B (45:08)

I talk to their handlers to be okay, got it. You know, I, Well, I will say there's a couple of NBA players that had impact strategies that I, that I actually think probably they're killing it right now during COVID Like they were non correlated strategies.

A (45:22)

Sure.

B (45:23)

And I'm just really happy for them because that's awesome. You know, those strategies. Absolutely. Were all about social justice.

A (45:31)

And.

B (45:33)

They were in the right place at the right time, but generally not really. I don't know.

A (45:38)

And you were in the hedge fund space for some time. We got a couple minutes left. But I was just curious about this. What are you seeing with just the technology as far as the quant hedge funds? Are you seeing a lot of those emerge more versus just the traditional hedge funds or. Yeah, I'm curious about that. Like, kind of like the Bridgewaters or the quant funds.

B (46:03)

Listen, I'm not, but maybe I don't, you know, maybe I don't troll in those waters. It's funny, when it comes to tech, I'm seeing very highly qualified AI funds.

A (46:14)

Okay.

B (46:15)

With really, really strong management teams. I'm seeing the few, you know, funds that are focused on the future of business, things of that nature. I don't really, for whatever reason, we don't really get that many quant funds. I will say one thing, which is, once again, family offices are qualitative, not quantitative.

A (46:37)

Sure. And when you, what's the best way for you to engage, you know, to make that connection? Is it, is it email or do you do like a zoom call or, you know, if you're a fund manager. Right. Like, how would you, what's the best way for you to kind of coach an emerging manager? Do you kind of Repeatable process. Got it.

B (46:56)

And you know, so our process is relationship driven and data driven. Okay. So our team, you know, we have about 500 close relationships with family offices where we're talking to them all the time and we know what they want.

A (47:10)

Yeah.

B (47:10)

You know, we're only team 10 people. We can't know that many families intimately. It's pretty much tops out at 500. Then from there I have a full time data scientist on staff. We have a data gathering team. We are constantly building our database, cleaning it, protecting it and leveraging it and marketing to it. That's how we do it.

A (47:35)

Yeah. No, that's really great data. That's awesome. Yeah, this was really amazing. I really loved how we talked about emerging. I really appreciate it. I really love talking about emerging managers and fundraising. It's very relative because there's people in my community that are looking to raise. So I'll open it up. It looks like we got a pretty nice group of people here. I guess. Anybody have any questions about just raising capital.

B (48:01)

Or raising kids?

A (48:02)

Yeah, raising kids. I don't think they have questions about that.

B (48:05)

Anything.

A (48:07)

Looks, I guess not. Most people kind of like to listen in, but feel free to Chime in. I could I. Oh, Deji. There we go. Awesome, awesome. Hey Stephen, thank you so much for the insights and the experience shared. I'm actually based in the uk, so I've got two questions. My heritage is from Nigeria. So two questions. What appetite is there for investments in emerging emerging countries? Africa. Yeah. One. And secondly, is your network of family offices also including networks in the uk, Europe, and if so, how do you then manage coordination for your operations?

B (49:02)

So yeah, you know, we're about 2/3 US, 1/3 International and you know, that's Europe, Asia, Middle East, Africa. Look, there's no question if you have a good strategy, no matter where it's based in the world, you can attract capital and get allocation. There's a ton of emerging geography allocators out there. And the other thing I would say to you is if you're from Nigeria originally, they have a massive sovereign wealth fund. And I would absolutely. That's the first door I would knock on if I were you. Last thing I'll say is in London there's a guy named Bill Johnston. Bill Johnson or Bill Johnston. He has a firm called Family Office Counsel. I haven't spoken to him in a couple of years. He runs a good group that pre Covid they would always like come to the US and do. He would arrange like museum tours at MoMA and places like this. And there were a ton of art buyers. He's got about 120 families. I'd reach out to him too. You can use my name.

A (50:03)

And you guys have, you know, when things settle down a little bit. You guys also have a community and events and stuff too, right?

B (50:09)

Yeah. Oh yeah. So those last year we did 82 events.

A (50:13)

That's amazing. And you guys are all over pretty much, right? Yeah, yeah. So those are great. I think one thing that you'd probably agree with me on is just be selective which events you go to because probably those massive 2,000 people conferences. It could be a lot of service service providers. So I guess you want to make sure that it's curated.

B (50:31)

I'll say one thing about service providers.

A (50:33)

Yeah.

B (50:34)

Because I will tell you, when I was a fund manager, you know, look, I would find my deal flow the normal way, but every once in a while I'd meet like an accountant in Oklahoma and he would say to me like, you ever hear of this company called Uber? Like, you know, I just, you know, it's funny, I actually, I try to keep my events 70, 30 meaning 70% allocators, 30% service providers. Because if you are truly in the mode of finding deal flow, you could find amazing deal flow from service providers. Anybody that says different doesn't really know about trying to find good deal.

A (51:15)

That's a good point, too, because you never know who you can meet. And if you are a service provider, you're super connected. Right. Because that's your whole bread and butter. Right. Building those relationships. So I think that's a good point.

B (51:25)

In the family office space, a lot of families are sneaky, and they don't want you to know who they really are.

A (51:30)

Yeah.

B (51:31)

So you'll literally get a family. Oh, I'm a janitorial company. Meanwhile, the guy's got, like, you know, every contract in Chicago.

A (51:37)

Yeah.

B (51:38)

And he's worth, like, 500 million. So, you know, I would say never. I don't. My mother would use the term poo poo. Never poo poo anybody. So.

A (51:47)

Yeah, no, that's a good point. Yeah, I think. I think, you know, you always have to treat everybody the same, and if you go to conferences, you never know who they know. You know, I mean, I've actually ran into some weird situations in my life where it was good, though, but I met somebody and they randomly knew somebody that I grew up with. So imagine if you, like, screwed somebody over when you grew up and then, you know, they met this person, you know? So I think you're right. I mean, just treat everybody, no matter who they are, with respect and. But yeah, I think that's a good point. Yeah. I think if you do have a good mix of service providers, it's helpful because you're gonna need a lawyer or an accountant. Right. And it's. If you can find somebody that's a recommendation, you know, that'd be helpful.

B (52:26)

So.

A (52:27)

Yeah, Lisa. I think I see Lisa with her hand up, I guess. Lisa, do you have a question or is that an accident? Yes, I do. No, I raised my hand. Hi, Joel.

B (52:35)

Nice to hear you again, Stephen. Nice to meet you. Stephen, I do appreciate you talking about relationships with your. With your clients. And I have a very simple question. What would you say is the. The average amount of time that you've maintained relationships with your clients, if that's not too general a question, meaning, like, number of years. Number of years. Yes. You know what, Lisa? I pride myself on. My grandfather used to say, never burn a bridge. And no matter what happens, and I'm sure I have 20 and 30 year relationships. I'm old, so. But yeah, and it helps me. It helps me. You know, there's no question that if I continue to maintain those relationships. One day it will come back to me in business.

A (53:26)

Yeah, no, I agree. I totally agree that I think, hopefully you can have a lot of great lifelong relationships. Sometimes they don't work out, but. Yeah.

B (53:34)

By the way, Lisa, that's a great question.

A (53:36)

That's a good one. Cool. Anybody else? Don't be shy. Dead silence. Okay. All right. Well, hey, it's a pleasure. Yeah, this was a lot of fun.

B (53:50)

Thank you.

A (53:50)

Happy Friday, Stephen. And enjoy the holiday with your family.

B (53:53)

Yeah, Happy Friday.

A (53:54)

Take care. Bye, guys. See you.