← The Money Mondays
The Money Mondays
From $0 to $100M: The Truth About Capital Raising w/ Hunter Thompson 📈 EP102
00:36:02
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- [00:00]
A
Like I said, went from struggling to raise my first deal and coming half a million dollars short on my first raise to raising 100 million bucks from hundreds of investors, buying hundreds of millions of dollars of deals. And I feel like I'm just getting started. A lot of my day is spent finding people that are very good at what they do and making them realize that to take it to the next level, they have to learn about marketing.
- [00:29]
B
Ladies and gentlemen, welcome to the Money Mondays. This is a special edition because right now, right this second, we are in the midst of the world's largest toy drive. 10 cities over 16 days. But luckily, we have this RV motorhome which allows us to drive around and find guests like we have for you today. We have the creator of raisingcapital.com his name is Hunter Thompson, and I'm going to deep dive with him about all things money. Now, as you guys know, our podcast runs for about 34 to 38 minutes because the average commute to work is 45 minutes. The average workout is 45 minutes. So this will be 34 to 38 minutes. For your listening pleasure, we're going to cover three core topics. How to make money, how to invest money, how to give away to charity, but with a bit of a Twist. Because Thompson, Mr. Hunter Thompson, has raised over $100 million. I want to ask him some questions about raising capital because a lot of you guys out there might be thinking about starting a company. Maybe you already have a company, you want to scale it. So I'm going to ask him all the questions around that topic. But first we're going to have Hunter do a quick two minute bio so we can get straight to the money. What's up?
- [01:34]
A
Honored to be here, first of all. Yeah. So name is Hunter Thompson. Have a background as being a slacker in college and not taking life too seriously, but getting into the world of business and entrepreneurship. I fell in love with with it and like I said, went from struggling to raise my first deal and coming half million dollars short of my first raise to raising 100 million bucks from hundreds of investors buying hundreds of millions of dollars of deals. And I feel like I'm just getting started. So stoked to talk about it.
- [02:03]
B
Awesome. Okay, so someone out there listening is considering raising capital. Is there a time that's too early? Like when they have the idea phase? Is it too early when they have the business plan? Is that when they should do it? Should they already have a little bit of sales? 10 grand, 50 grand, 100 grand sales? When is too early?
- [02:19]
A
I Mean, I think when people think about raising money, I think what comes to their mind is, like, having a really good pitch or like not taking no for an answer or something like that. And, like, the reality is the question about, like, when you should start. I'm thinking, like, when you should start generating leads to have those conversations. Because even if you know exactly what to say, it's like, who are you going to say it to? Maybe your friends and family. But then how far can that really get you? And even if you are from a family that's rich, even those families raise money, obviously. So, like, billionaires raise money all the time. So, like, there's no time that's too early to start digging the well meaning. How can I generate leads? How can I connect with people? How can I warm people up? Even if you don't have a deal yet now you should be doing that.
- [03:01]
B
You said a really good point. Just this month, Kris Jenner and Khloe Kardashian raised $4.5 million to do popcorn. Chloe decided she could do popcorn, and so they raised $4.5 million from investors. Now, as you guys can imagine, Kris Jenner and Khloe Kardashian are very rich and they have infinite capital and they make millions and millions and millions and millions of dollars per month. Why? This is my question. Why does someone with that much money, that much, reach that much social media power, still want to raise capital from strategic investors?
- [03:35]
A
Yeah, man. I mean, it's ultimately come down to leverage, right? So most people think of leverage, think of debt, borrowing money and stuff like that. But there's other mechanisms. Think about leverage. Like, what's a higher leverage activity? How can I leverage my business? How can I pursue high leverage things? And so for them, they've got money working for them, but they also want to bring in other money to grow something where they're going to profit on someone else's capital. And now that's what all capitalists do, including the investors themselves, is they want to rely on their brand, their reach to scale this business. That. I mean, does anyone think that the best popcorn producer out there. Probably not, but she's got a huge audience. So I don't know the details of that deal, but I imagine there's someone that's really good at popcorn that reached out to her, that said, yo, let's do this thing together. You go on social media, no one knows us, but we're good at popcorn. You're good at attention. That's the art and science of raising capital. Let's do this partnership together. Same thing with Connor. Right? Same thing with the Rock. Like, it's not the Rock and Kitchen cooking up that tequila, but now they got a billion dollar valuation. That's why.
- [04:36]
B
Yeah. Logan Paul and Prime, Jake with W. All these brands, Jake's. The numbers on Jake Paul's W brand, I think it's like 55 million or 60 million or something the first year.
- [04:45]
A
People are only figuring it out, man.
- [04:47]
B
Like, Logan's prime is the fastest growing beverage in history. Like, people don't realize the sheer magnitude of these influencer brands. Yeah, Connor got like $650 million for that deal. For the. Anyways, okay, so someone out there is listening. They got their business plan, they got their financials prepared. I do what's called, and I recommend calling setting up shop. You need a couple core things before you raise capital. Because what if you come to someone like Hunter Thompson or myself and say, I want to raise $1 million and we actually like your idea, but you don't have a business plan, you don't have financials, you don't have the investor documents. What if we say yes and you don't have investor documents? They don't have the corporation, they don't have their bank account. Like, you literally can't even take money from us. And I've seen it happen so many times where people pitch me asking me for 100k or 250k or 50k or a bazillion billion dollars and they don't have a bank account, they don't have a corporation, and they literally don't have investor documents so that I might like your idea. You're like, oh, I'm going to sell money. Monday's pillows. That's a great idea. Can you send me the investor documents? Like, well, I don't have those yet. When you don't have the setting up shop, when you don't have everything ready for us on a silver platter, you lose momentum, right? You lose excitement. People invest. What I call momentum investing is we get excited. We see the thing. Money Mondays pillows. That sounds super cool. We want to give you 100k. Hunter wants to match me and give me you 100k. Also, we want to put in $200,000 and you don't have anything set up. So now when you come back to us three weeks from now, like, hey, my lawyers got the investor documents and then Hunter and I got to review it, and that takes a week or two. All of a sudden, we're months into it. Compared to if when you present it to us. You're like, oh, yeah, I got my investor documents. I'm gonna forward you my business plan. My accountant made my financials for me. If you already have all your ducks in a row, we are much more likely to invest with momentum. All right, Hunter, tell us the concept of raisingcapital.com. like, where did that come from? I mean, it's an amazing domain name, my man.
- [06:44]
A
And I paid. I paid a lot less than most people think, because I don't think people understand the opportunity in the space. I mean, only starting to figure it out now. Basically, the idea is what you just said is really important because, like, people make decisions based on emotional connection to the operator that they're investing in. And so in your example, maybe you think, oh, like, Dan's. Dan's stupid if he's going to invest with someone just because of the emotional connection. It's like, that's what most people do. But then they go deeper in due diligence to make sure that you're actually going to do what you say and already have your bank account. So, like, what he's saying is super important because you can get that story, you can tell that story in a compelling way, but you got to be buttoned up on the back end. But the story is the really important part. We just assume you know what you're doing, and if you don't, we're not going to give you the money.
- [07:29]
B
What Hunter's also mentioning is it's not just us. So you might get us emotionally excited, but Hunter and I have a lawyer, an accountant, and typically an executive or a CEO. I have a CEO that oversees it. I call it the Four Horsemen. I have a CEO, I have an advisor. I have a lawyer and accountant. If you can get by the Four Horsemen, I'm in. Yeah. Wire you to your pillow company. 100 grand, a million, 500k, whatever you want, I'm in. But you got to get past the Four Horsemen. So a lot of times people like, oh, yeah, I know this really rich guy, hunter, raisingcapital.com. he's going to love my deal. You pitch him. And Hunter says yes. But Hunter has his version of the Four Horsemen that are going to look at the paperwork, the documents, and you to vet the deal during the vetting process, you've got to be able to back it up, like Hunter just said, because even though we might emotionally be excited by what you present to us, maybe you pitch us at an event, you pitch us at a nightclub or restaurant or a business meeting, or you catch Us in an elevator and you give us elevator pitch and we're like, yeah, that's exciting. We like your pillow company, but you now got to back it up and prove it. Yeah.
- [08:29]
A
So, I mean, there's two sides of the equation. One, the people that just, they think their story is amazing and they think that they're going to present this deal and we're going to be super high buying and do it. Other people that are just so obsessed with the nuances and the details of their offering that that's all they really know and they can't tell story in a compelling and emotional way. For me, I was on that side of the spectrum. I got into the world of real estate at a really good time where, you know, post great recession, mobile home parks were for people that are knowledgeable in the space, trading at 10% cap rates, meaning you could buy a property in cash and it would produce 10% cash flow, like month one. So this to me, I got in this world and realized how powerful that was and just was obsessed that was torn property. As I was meeting sponsors or operators and like, I could see the writing in the wall, this niche was going to explode. And so when I get to pitch, the first time I went out to pitch, the language I was using was like, as if I was speaking to a bunch of real estate nerds. And the reality was I was speaking to like some friends and family, some dentist, some doctor, and they don't even know those terminologies. So, like, the story of raisingcapital.com is I bombed on that pitch. Even though there was $30 million in the room, I couldn't raise half a million. And earlier I said I was half a million dollars short. Yeah. On a half million dollar raise. Like, so I was trying to raise half a million. I raised zero. I'm texting this girl I'm trying to impress. Oh, yeah, like, I'm going to raise a million bucks. And then I have to be like, oh, like it didn't go exactly as planned. Like, yeah, you couldn't have done worse is what you mean. So that was my story. But then I realized, like, it's not about just like delivering this amazing pitch about the nuances of the details. It's like, how can I get people in the room that are already bought in? How can I tell a story that will connect with their true wants and needs? Not what I think, not what I want, for God's sakes. And so it was a long journey, but that's how I kind of, when I started Focusing on that. When I started focusing on if I'm talking to someone, what are their pain points, what are their problems? How can I use the vernacular that they're more comfortable with and then paint them a picture of how they can move from where they are to where they want to go using my product? And that will work for mobile home park, self storage, you know, buying existing businesses, nonprofits, like, you name it, if the money has to leave their account to go to yours, you got to paint them that story. And so that's kind of what I built my career doing.
- [10:46]
B
So how does it work? Let's say someone wants to invest through raising capital.com or wants to raise money through raisingcapital.com. how does that work?
- [10:53]
A
So we don't like, raise money for people. We kind of teach them how to raise money and they can like, we buy a deal in Phoenix, we buy multifamily properties in Phoenix. And so if you want to partner with us on a deal, we can teach you how to raise money. And it's effectively your deal that you're partnering with us on. But then other people come to us and they're like, you know, I've got this, I've got this fix and flip business that I've raised a couple million bucks or a couple hundred thousand bucks. But like, how can I take this to the next level? And so usually that next level is us teaching them how to do things like basically marketing, right? Attracting leads, nurturing leads, building a brand, attracting attention. Because you mentioned the example of the kind of Kardashian story, like, that's the most pronounced example. And they've done it across multiple niches where you just take attention, interest, buy in of clients, and direct that to, here's the bank account, right? And so that's her first popcorn initiative. She raised 4 million bucks on her first go. It has nothing to do with popcorn. Right. And Mr. Beast Burgers has nothing to do with burgers. It's all about the attention. And so to answer your question directly, a lot of my day is spent finding people that are very good at what they do and making them realize that to take it to the next level, they have to learn about marketing systems and operations of marketing. So. But it's a message that's lost on a lot of nerds. And I'm a nerd too, right? But that's great. It means you're in a good market, to be honest.
- [12:19]
B
So over the last three years, I raised $56 million through Elevator Syndicate. I have 970 investors that are all credit investors. And I just text them deals once a month or so. And it's optional. They can invest if they want to. If they don't want to, I always tell them, say nothing. You don't say no, just say nothing and we won't bother you again. And so we raised 4 million for this and 6 million for that. We do 3 million to $6 million per deal into companies that are doing 2 million and 20 million in sales. Okay, that's our requirement. Yeah, 2 million 20 million sales. It's mostly been food and beverage brands and consumer products. So we raise money for rice, coffee, blk, water, ever bowl cars and coffee, icon meals, creatures of habit and all the same ballpark range. But what's interesting is a lot of these investors can throw in 25k, 50k, 100k. They don't have to put in a million dollars. They can put in 50k, 100k, our average check size around 100k. And then sometimes someone will put in 250k or 500k et cetera. But for the most part it's a lot. 100ks. But however at a 970, I only need like 30 to 50 of them, right? I need 3 to 5% to jump in. So 30 to 50 of them to put in 100k average. That gets me to my 3 million to 6 million dollar range. And then what I do is called hand to hand combat. Once I raise the majority of it. So let's say I'm raising 4 million and I'm at like 3.2 million. Then I'll text Hunter like hey hunter, I got 3.2 million of my four. Do you want to jump in? Hey, Ed Mylett. Hey Andy, Hey John, Jennifer, whatever. Like I text them and say I've got 3.2 million out of my four. And that's called momentum investing. They feel much more comfortable because they don't want to be the first check. And they know that I've now got, let's call it, 27 people to put in the 3.2. Now they're in there excited. It's been very effective because for the investors it allows them to get into deals. Syndicate. What a syndicate is, guys, syndication is you could do it for real estate like Hunter's talking about. You could raise ten million dollars to, to buy like a thirty million dollar property, for example. You could raise ten million dollars through Hunter's crew. They go buy an apartment building for example, or storage, storage units, whatever. That's a syndication. What I'm talking about is a syndication for private equity for, you know, a beverage company, a food brand. You could do it for clothing. You can do it for a cell phone company, whatever you're thinking about. And syndications allow you to get a group together. I use a company called Angellist. Angelist does all the back end for me. Paperwork wise, lawyers wise, they deal with all that part of it. Because raising capital can be expensive. You got to make sure that you utilize a good platform, whether it's raisingcapital.com whether you're doing it for real estate or for your business. Make sure that you have a lawyer involved, an accountant involved, or a platform that you believe in and trust in that has a reputation like an angelist, like raisingcapital.com it's very important because you want to make sure that your paperwork is done correctly to avoid any legal headaches later. Just because someone's ready to give you 100k, you want to make sure that you can receive it properly. And then you're going to give them what's called updates, quarterly updates, preferably, and you're actually going to follow through and send them their, their paperwork along the way and hopefully distribution and hopefully next one day. But most importantly is that you're buttoned up paperwork wise. All right, next section. Someone raised the money now. Yeah, they went to raisingcapital.com hunter, helped them raise $7 million. They got the money. Now, how do they interact with their investors to keep their investors happy? Because deals take time.
- [15:40]
A
Yeah.
- [15:41]
B
You raise seven million bucks, you're not going to exit for two years, three years, four years, five years, six years, or never. Yeah. And so during that time, how should they be thinking about interacting with investors?
- [15:49]
A
So a couple things. One thing, like, Alex Hermosi's done some excellent stuff, but one thing that he's done a really great job on, that I don't think enough people have put enough thought into, is the concept of time to value. Like, the faster your clients can see results, the faster you can scale. And if you have a good product and you're getting good results, you should be able to get referrals. You should be able to get, in my case, repeat investors, things like that. But what you're talking about is that it's difficult to create those short, quick wins in the game of investing, because if someone gives you 100k, like in our deal that we're about to close, they give us 100k, and maybe for the first couple of years, they get like $4,000, 5,000. It's a, it's a low risk real estate deal, right? And then in year five, they can kind of see if they double their money, which is kind of our target, right? Not our projections, not our promise. But that's our target, right? So think about it. An investor to some degree doesn't really know if we can pull it off until five years. So we don't want to wait five years to like remonetize that client. The velocity of your client's money coming into your business is imperative. So what we try to do is shorten the time to value. We can't do it by selling the deal faster because in my niche that doesn't make sense. But like, what else can you do? Okay, well, I can call them the moment that they wire, right? I can say, congratulations, welcome to the deal, just got your wire. Like, that's an experience. I can send them a gift. I can. If we project to send the first cash flow check in three months, which is standard, we can give enough buffers so that we think we can actually send the first cash flow check in 30 days. But we project three months. So then that first check comes in. It's not a ton of money, but they're like, damn, I was expecting this to be months. So we bake stuff like that into our deals. And you know, another thing is the first couple years are when the motions are highest and that skepticism is highest. So, like, we really want to be concerned in that first couple months. So that first month we're beating projections, second month we're beating projections. That's when the referrals start coming in. So, like, as I'm saying this, like, maybe it doesn't apply necessarily to your business, but what can you do to be conservative so that you do over deliver, especially early on in experience in calling them and sending them a gift and sending a Christmas card and, you know, doing things like issuing distributions faster than you thought. Now the caveat to this is that when you start to do this stuff, you'll see that the numbers change. If you're creating buffer, the returns are going to be lower, right? So now it's in a balancing act. You don't want to make it so low you can't raise the money. But trust me, if you do the hard work on the front end of selling a deal where the returns are slightly down, that investor is going to be grateful in month two and month three and month four. And all of a sudden that dentist you got that's making a half million year, his 10 dentist friends start coming in and that's how your business scales in the five year period. Otherwise you've been having to wait. Hopefully that makes sense and it's applicable to other businesses as well. Under promise, over deliver, in short, 100%. But like, think about it, whatever your niche is, if you're watching this out there, think about what way you can shorten time to value for your business. Like the quintessential example, even if that thing isn't something you can do infinitely, even if it's just something that only works for the short term. Like an example that Alex uses is, you know, when people come into gym launch, they would maybe put them on a crash diet initially to just show them, if you do this, it will work. That doesn't mean you're gonna lose 60 pounds over the next two years. But like if we can get you down five now I've got your attention, I've got your buy in and maybe that's not infinitely scalable, but like, at least I've got that quick win. And so think about it. Whoever meditates on this the most, whoever spends their shower time thinking about this concept more will win because it's a difficult nut to crack. And no one is spending the time doing it because it's all about the customer, not about them.
- [19:33]
B
So in the real estate space, this is super important, guys. When you find a deal, you're going to be able to, as he mentioned earlier, leverage. Let's say you find a property that's $10 million, you don't have to raise the entire $10 million. You could raise 2 million or 3 million or 4 million. And you can use debt with a bank or someone, a private lender. But typically if you're out there thinking about raising money for real estate, you're not going to want to just do one deal unless it's some huge apartment complex, which is hard to get to that point. A lot of times you're going to be doing a smaller deal, it's 2 million, 4 million, 6 million, 10 million, 20 million, etc. There's not that many marquee deals outside of apartment complexes and you know, huge commercial properties that are going to be tens of millions of dollars. And from a risk factor and from a time factor, a lot of times people don't want to just invest in one deal. I'd rather give Hunter 100k, 100k, 100k, 100K, 100k in five different deals than 500k into one commercial building. I would, I'd rather have 100k of his apartment complex, 100k of the storage units, 100k of the trailer park. He's buying an RV motorhome park. I'd like to split it up because as an investor, I like to have multiple bets and I'm still deploying the same 500,000. The example. And so when you're considering getting into the real estate market, if you're thinking about raising capital in that fashion, just think about not necessarily going for the whale, like going for the, oh my God, I need the holy grail. I'm gonna go buy like a 200 unit complex right out the gate. Buy fourplex, get a 16 unit, a 32 unit, but get like two of them, then three of them, then four of them, then five of them. And when you do that, your credibility goes up and up and up. If you told me that you had 6, 16 units, I would want to invest with you way more than you said you had one apartment complex.
- [21:15]
A
I would, because it's rinse and repeat.
- [21:18]
B
Believe in you now. Yeah, I believe you should do the six different deals rather than one deal.
- [21:21]
A
Yeah.
- [21:22]
B
To me, as an investor, I would feel more comfortable. The sole reason why on the private equity side, I raise money for companies doing 2 million to 20 million. It's not that I don't like a startup company or I don't believe in, you know, someone that's just getting going or just did their first million sales instead. If you're already doing 9 million sales, well, going from 9 million to 20 million is not hard. Going from 0 to 1 million, super hard. Like, super hard. Very rare. Going from 9 million, 20 million, that's just gassing on the fire. It's been fixing your systems, fixing your processes, adding more leads and ads, hiring more sales team. Like, if you got to 9 million, there's literally, I can blink my eye and get you to 20, literally. But going from zero to 1 million, I can't say that easy. Zero to 1 million is really hard. And so going out there and buying your first duplex and four plex and 16 units and things like that. Practice and getting through the paperwork and dealing with banks and building relationships instead of just skipping to what people see online, like, oh, I want to be like grant and go buy a bazillion dollar complex. No, you don't. You don't go. Literally go look at duplexes, fourplexes, and 16 units before you decide to go for the, you know, try to take down the whale anyways. Okay, someone raised $7 million and they did scale their business. They went from 9 million to 20 million like we just talked about. Yeah, boom. Things are going great, but now they need more money. Sometimes that's confusing to people. They go see these huge companies like why does fanatics need to raise hundreds of millions of dollars? Why does this company need to raise tens of millions of dollars? Why is Uber and Airbnb and all these big brands that are doing billions in revenue raising more money? Well, scale is expensive and cash flow is hard. Let me give you a quick example. I had my energy drink back in the days. We were in 55,000 retail stores and I was in Costco. I was really excited for Costco. But their order, the first one was only for a couple stores, which is still six figures because their stores are big and they buy it by the truckload. Their next order was $2.2 million. That means I need to come up with a million dollars. So let me give you guys a real example. Let's say they ordered $2.2 million on January 1st. That order is for March 1st or April 1st delivery. It's always going to be 90 to 120 days out. I still have to pay 1 million ish out of the 2.2 million to make the drinks and another 50k to 100k in shipping, in storage to get the drinks delivered. There it goes there, March 1 or April 1? Let's just say March 1 to make it even easier. It gets there and now they have net 30 or net 60 terms to pay me. And so now let's say I get their March 1st. They don't actually have to pay me until May 1st. But wait, there's more. What if my drinks do well and I sell through at like an 18% rate and they're like, oh, we're going to give you a nationwide order. We're going to expand to a 7 million dollar order. Sounds cool, right Hunter? Except they haven't paid me for the first one. So now I'm not due payment till May 1st. Right. Five months from the order was January 1st. So I've been out this million dollars for five months. I've been spending money on marketing to help it sell well. There another 6 figures. I spent 50k to 100k on the trucking, all my staff, the travel people, setting up the displays and merchandising in all the stores. May 1st isn't even here yet. Now they want $7 million. That means I need to come up with $3 million more capital to manufacture for the $7 million dollar order. What am I Gonna tell Costco no. If I say no, they're like, okay, well we'll just buy Monster or Rockstar. Forget you. This is a real life example, by the way. I went through this. And so if you have a brand or business and it's going well, you need more money for cash flow because you are going to go through this real life. You have a clothing brand, a product brand, a food brand, a beverage brand, whatever. That's a physical product. Your cash flow will be very, very tight because you're always going to get paid on net 30, net 60 or God forbid, net 90 terms. And that is very hard, especially if you do well. So Hunter, that the person that raised $7 million took their business from 9 million 20 million. How do they go back to their old investors? Or should they be looking for new investors for their second round for their Series B round?
- [25:25]
A
Yeah, good question. I'll tell a quick story. So I was an investor in a company called Thrive Market.
- [25:31]
B
I turned them down. I shouldn't have.
- [25:33]
A
Damn.
- [25:34]
B
I was supposed to put in 25K in the very, very first round, you know.
- [25:37]
A
Well, yeah, that would have been really good, but billion dollar. Yeah, exactly. So my story with them, I actually knew the founder. I know that Nick, Nick Green and co founder with Ganar. And the reason that they gave us the opportunity to invest is that they got said. They were told no from basically everyone, right? They went in there like, we're going into the grocery niche, we're going to take over. And all the VCs were like, whatever, margins are thin, like get out of here. Like Amazon's going to eat you. You know what I'm saying? And I just knew Nick, he's a smart guy. He got a perfect score on the sat. I like the niche and I was like, whatever, here's the money. And I feel very fortunate about that. Now I'm not going to go into the details of like how the deal was structured, but the point is it was struct structured by a convertible note. That is a discount to the next round, right? So I write this check and I'm like, let's go baby. They launch it. This is my first time investing in a startup. You're going to start laughing where this is going as soon as I send the check. They had this like soft launch and start taking off like a wildfire. But my round hasn't been established yet. So like they're ripping in revenue and I'm like, oh, like they're going to have to be the next like GoPro. For me to make any money. Now, they ended up doing very well, but the point is they ended up doing a very large Series A, one of the most largest in California, and then a very large Series B. Now is it that they blew all the money and didn't do well? No, they were taking off like a rocket ship. And so because of that, you've got this little fire. You're like this little seed fire. This is when I invest. And now it's turning into a freaking raging thing and you're sitting there with gas and the gas is cash and you just how much can we pour on this thing?
- [27:11]
B
For sure.
- [27:11]
A
And so that's what they were doing. And so when they went back to their investors, you know, there's an important distinction between like the people that invest in seed deals, like you just mentioned, you don't typically do that. There's people that's. That's all they do, right? Then there's other people maybe closer to you, where they want to see multi seven figures in revenue. Then there's other people that are like, I only want to see 100 million or more. Right? So like, sometimes it's a profile thing, but usually you would want to go back to the people that made that early investment for a lot of reasons. Sometimes it's contractual, sometimes it's just relationship. Hey, listen, you're the one that gave us our first 25k. And so that typically happens. But in the world of like private equity, usually there will be lead investors and those lead investors usually have like a profile based on revenue or ebitda, which is kind of like net profit. And so that's the story of Thrive Market. And now they're on a tear. I mean, I wouldn't be surprised if they IPO'd eventually, you know, at a multibillion dollar valuation, they did a really good job. But the, the margins are thin, so it's not like they didn't do well. They can turn it off at any time. But that's kind of like the story of any business when you're trying to offset taxes, when you're trying to buy employees, you're trying to hire an onboard for the next year's growth. Now sometimes what can happen is you implement an aggressive strategy like that and that growth doesn't happen. So you're going up, up, up, up, up, and you bring a bunch of people on, take a bunch of software risk, and then that growth stops. You can bk a company and be net neutral in revenue by trying to be aggressive like that. And you Know, I've learned some lessons like that where I'm just like, let's go for it, let's take over the industry. And you know, there's a reason I own raising capital.com, right? That's the initiative. We're going to take over the industry. Right. So I've take, I take risks like that. And we know though, that balance sheet is an indication of health, right? So you got to use that thing appropriately and then raise money when you have to.
- [28:59]
B
All right, so the final chapter. They raised the 7 million, they did the 9 million sales, they scaled to 20 million, they did another round for another $12 million. They've got real money. Why should company founders have their employee, staff or brand have some sort of philanthropy attached to their brand?
- [29:16]
A
There's a million reasons. I'll start with one that's like super basic. Even if you're 100% self centered, money in the bank account kind of guy, you'll find you'll make more money just purely economically. You will make more money if you have a philanthropic element of your business. Also, if you don't have that element and all the people that are more successful than you that you look up to are telling you to have that element, freaking just trust them. You know what I mean? If you don't want to trust me, you don't want to trust him, like, whatever. But like there is a reason that people that crush at the highest level do it. And it's because it's not just the money, it's also like the fulfillment element. And we talked in the beginning about how my background is kind of getting a lot of real estate nerds to like tell their story and make it more compelling. There's nothing more compelling than helping people, especially if you can tie it into in some way something that's really deeply meaningful for you. Whether it's your background, your situation, your family, your community that helped you out, it just really resonates with people. And I see it not being like a multiple. Like it's. So many great people have talked about this, but like you give away a dollar, you make 10 back. Now that's not why you want to give away the dollar. But like I've just found that that's what the economics are. And I'll give you a perfect example. Like we have an event, it's called Raise Fest, it's in Phoenix in a couple of months and we are going to give away some money to a charity. And it's like a family based charity. The charities for people like Pediatric cancer. I can't even freaking say it because I have a very young son, but that's why I'm doing that. Right. And so during the event, you know, we're going to write a check in front of everyone. Now, is that like, do I want to do that? 100%. But also, I mean, I know that if I write that check in front of everyone, number one, they're going to be way more likely to write that check as well. And also, like, we have a program. Right. We want people to buy the program. And one way to get that is to o. To have them understand that they are investing in someone else, and that gives them confidence to invest in themselves. Now, just real quick, I want to talk, like, behind the scenes. Like, think about it. If you're thinking about, okay, there's these people in the audience. They only have so much money. Are they going to run out of money on the charity thing? They're not going to want to. It's the opposite. It's like they're making that commitment. Like, I want to do this for someone else. That's way more powerful to most people than even doing it for themselves. So that's my view on the whole charity thing. Like, I view it as both a fulfillment thing, but, you know, from a business standpoint, I've just seen it work miracles. And so, you know, that's. I know it's a big part of your business, and you're a business guy as well, but I'm sure you kind of feel similar to what I just outlined.
- [31:50]
B
Yeah. So when someone out there is considering the next steps we're going to 2025, you can feel the economy shifting. You can feel the new energy. You can see stock markets, cryptocurrency through the roof. Like, you see money is flowing in the right direction and people are excited.
- [32:08]
A
Yeah.
- [32:08]
B
They're making this decision to finally go out there and raise money. What would you tell them before they actually approach their first investor?
- [32:18]
A
You know, in the beginning, you mentioned, like, what's going to happen if you go tell a really compelling story to Dan and you got this pillow company and now you've got it, and you got the meeting, and it's amazing. And he wants to give you the 100k. To me, that sounds like someone that didn't have good mentors, you know, because a good mentor would never let that meeting happen without you being prepared. So, like, from my perspective, now is a great time to lean into the mentor side of things, and there's a whole world of, like, how to get good mentors and how to get them to give you your time and all that stuff. But at the end of the day, it's like if you can show someone that you've got insane momentum and that you're going to accomplish amazing things with or without them, that's when your mentors will show up. The moment that you're dming Dan being like, hey, my pillow company, my pillow company. Can I get 10 minutes your time? I'll take you out to coffee, bro. Dan doesn't need coffee. Like I don't need coffee. Like we, we. But we are thirsty for killers and momentum and like that's our freaking. What's the opposite of kryptonite? Like that's what we want to see in our DMs, like this kid or this, this guy, this girl, they're freaking racing their motorcycle as fast as they can. They're going 150. And I bet if I just give them this little secret sauce, they're going to be able to go 180. Because in the back of our mind, like we're competitive people I want to compete over. When that person writes a book, I want to be asked to do the forward right. You know I'm saying? And so like you inspire that by creating your own momentum. I'm crushing it. I'm crushing it. And I listened to all your shows and I picked up on these nuances about it. When you have good mentors, you're getting buttoned up and they're going to help you with all the nuances like legal documents, pitch deck, how to talk to investors. That'll just, that'll just be part of that journey. So that's my, that's my goal, man. And don't start to, don't start too late. You can never start too soon.
- [34:01]
B
Where can people find you? Check out everything about you and your world.
- [34:04]
A
RaisingCapital.com is the company, Raise Fest.com is the conference. If you want to check out my book Raising Capital for real estate.com, that's great.
- [34:13]
B
And your personal social.
- [34:14]
A
Yeah. Hunter l. Thompson_IG and then the Hunter Thompson King of Capital on YouTube, which is brand new. So go over there.
- [34:23]
B
Alright guys. So it's really important as you know for you to talk with your friends, family and followers about money. We all grew up thinking it's rude to talk about money. And I think, and I'm sure Hunter thinks the same thing. That's rude and almost ridiculous to not talk about it. It's reality. You have bills, you have debt, you have credit cards, you have insurance, you have car payments, you have mortgages. And so many things that go on that are all financially related that you need to know about. And we grew up thinking that's rude to ask about rent or should I lease or should I buy or how much should I ask for in salary, what is a normal salary and what are benefits like? We need to talk about these things. So that's why the podcast has been doing so well, is because you guys are out there sharing, you're commenting, you're subscribing, you're forwarding the clips to your friends. It's really important to have these discussions with the people around you consistently. Money is going to be around forever and during that time, you do not want your friend, your employee, your daughter, like the people in your circle, to have these situations or mistakes that happen because you just didn't tell them, oh, don't get that credit card. That's a 29% APR. Or if you are going to get it, make sure you're making your payments. Don't rack up debt. Oh, that college you're going to is 46,000 a year for four years. How are you going to plan to pay for that? Like, have real discussions to prevent people from having these problems rather than trying to talk to them about it later. So check us out@themoney Mondays.com we will be with you every single Monday. We have not missed it for well over a hundred episodes in a row now. I'm super excited to keep going with you guys on this mission. But commenting, subscribing, following, check out everything that Hunter just mentioned of all his different domains. Check out his social. We will see you guys next Monday.