Transcript:

We're here for our second strategy session of the day. We have Michael and Samantha with me here. They spent over 28 years building one of the top five largest ATM networks. They're both founders, entrepreneurs, probably much like yourself. They grew it up to an eight -figure valuation, had their exit last year, went through the negotiation of that exit, the process of deciding should we sell, should we not sell, etc. And now they're focused on investing their own wealth, reducing tax liabilities where possible, helping others achieve financial independence, and exploring how to do both passive investing while using their entrepreneurial driven brains, just like a lot of us here in the room. So I think a lot of you are going to connect with the comments they share here today. And would either of you like to add something for introduction on who you are. You did a pretty good job there Richard.

I definitely want to thank you and even thinking about what we did with our ATM
company. I think about what you've done here with Family Office Club and it's about
getting the best of the best together and finding ways to work together and that's
what we did. I think that was a big key for us as I've seen it for you as well.
Sure. Great. Michael? I think she covered it. We'd just like to partner with people
that are doing a great job in their specific niche and see if we can help grow
that by pouring a little gas on it. Sure, and I know it wasn't one of the planned
questions, but I remember when we went golfing last year in a 97 -degree nice
weather in Scottsdale for four hours, you mentioned Samantha that one of the things
that helped you guys grow faster is thinking differently about the ATM business. I
think you structured your acquisition of deals differently, or you thought about it
more of a wholesale and mass distribution model, if I remember right. Can you
comment on that and just how that played into your success? Yeah, you have to
remember we started in the ATM industry when it started. So as soon as it didn't
have to be bank -owned. So we actually watched the entire bell curve of the
industry. But when we first started, everybody was really doing retail sales,
even for people that wanted to own their own portfolio of ATM machines. So we were
looking for a wholesale environment for ourselves and figured somebody else was
probably looking for the same thing. And I really came up with, Mike and I were
talking about, is this something we want to do? It was our side hustle. And I
said, look, if we can come up with a program where we're not consistently
renegotiating somebody else's portion, like they always know what they're going to
make. And it's when, when, when, when for us, when for the client and when for the
client's client, that's a company or an industry I could get behind. And I said,
if we can do that, I'm in. If we can't do that, I'm out. And we always stayed
true to that. Got it. Okay. Great. Thank you. And, um, so Michael, what made the
difference in your mind being able to scale to eight figures, while many people in
that business maybe failed to scale to seven figures, what would you say was a
difference maker? I think the difference maker for me was it was a brand new
industry and we wanted to serve everybody as many people as we can. So the more
people we served and I let me back up a second. If we serve our client,
which is the ATM owner and then serve the hard holder, we will get served later.
And I think in that business, continuing to serve others actually helped us grow a
lot faster, where there are so many people that are always looking to be served
rather than serving. - Right, right. And Samantha, what else would you say you guys
did besides thinking about it differently from a wholesale perspective, et cetera,
that got you to the eight figures? - Oh, the actual purchase? - Yeah, or like what
led to you being able to scale to that level which was different maybe. I think we
looked at what other people might have considered our competitors in the industry we
looked at them as potential partners so there were really ways hey why don't we all
combine together and we kind of created a buying group and then we could go to
somebody else and negotiate harder and then it was everybody won and we just always
figured there was enough of the pie to go around if you try to keep it all to
yourself to yourself and think of it as you're the only one that this is going to
serve or this is the only way to do it or this is the way it's always been done,
which there was no road map for us, so maybe that helped. But if you really think
about the pie is big, the world is abundant, there's plenty for everybody, just find
ways to work together that work well with the right partners, then it works. >>
Awesome. Yeah, Brenton from Walt's Construction was just saying they look for co -GP
deals, and tomorrow we have a exponential investor panel, which is the heads of
other investor clubs at our investor club event, and it's the exact same thinking
that we see that in some of the most successful people we've ever met. They think
differently about how to get mass distribution, how to do partnerships, and not see
people as competitors, you know, like a scarcity mindset, so that's great. And then
Samantha, for the exit, I know you led a lot of the negotiation and helped
structure it, what did you learn the hard way, what was amazing, and you would do
it the exact same again if you had to go through it again, because I'm sure
there's some people here in the room that are trying to figure out, like we heard
on the last panel, should I exit now, should I wait until interest rates go down a
little bit more, etc. What did you learn during the exit? >> One of them is you
need to know your own outcome. Like, what is it you're looking for? Every few
years, we would think, like, oh, do we want to sell? Do we want to sell part? Do
we want to sell all? And really, it came down to, like, what's the outcome you're
looking for and how can you do it? I keep joking that I want to write a book,
negotiate like a girl, because the ATM industry is full of men.
And so ultimately when it came down to it, I will tell you what I really did that
changed the price is We kind of talked about selling over the years.
I'd reached out to some people in the industry. It would just sort of a soft
float. And then eventually we said, okay, now we're ready to sell. So I walked up
to one potential buyer and I said, "Hey, look, I know we've kind of talked about
it "in the past, we're ready, we want to sell "and I want to give you first
look." And the guy was like, "Thank you, that's totally awesome. "I It that went a
long way to you know creating a good relationship and then I walked over to the
other guy and said the same thing
And it took a while for everybody to kind of come to the table So I was like hey
How's that going where we out with that and you know eventually oh well here and
they're floating out low numbers And I was like yeah Well you kind of waited so
you know between then and now you know if I floated it out to a couple other
people and then I kept them them both in play. And that was the huge strategy. You
know, if you have one buyer, you really don't have one. Maybe people would lie and
say they had one if they didn't. That's not a game I wanted to play. I feel like
that's bad karma. But keeping them both in play and knowing how to sell my company
to each one of them when the outcome for each of them was different. If they
purchased me, there's a lot of different insights there. So one is to plant seeds
early, so by the time you actually do want to sell, they already know you trust
you, hopefully like you, maybe you've even started some light due diligence on who
you are and seen you at some events, and you can follow up with them when you're
in town. But then also, if you go to someone first, use that, and tell them, hey,
we're coming to you first, when you go to the next person, say, you're one of the
first two people we're coming to out of 50 that we could have, and I guess play
those cards, and when you're an investor acquiring something, you want to be the
only one at the table, when you're selling something, you want an auction and get
maximum price is generally right. So Michael, I've heard a saying that all of my
wealthy friends sold too early. Basically, the only way you get wealthy is have some
sort of exit, and you can always hold on to something longer. So for you, what
made you confident that it was the time to sell? We had operated the business for
over 25 years. We had had 401ks. We had cash benefit plan. We had a ton of money
in savings. So we could actually retire just based on the money that we had put
away over the years. So we figured at that point in time when we were going to
sell, whatever we sold for would be icing on the cake. So for me,
actually, I sort of didn't want to sell at the time, but it actually ended up
being the exact right time to sell. But I think what made it easier for me to
swallow is we had already put enough money away in investments and the investments
were creating enough passive income to cover our lifestyle so we didn't have to
worry about what the company actually sold for. So I think that even helped in the
negotiations is we just really didn't care.
Well, Ed, can I add to that? Because we saw the entire bell curve of the industry,
it had actually gone through mergers and acquisitions about three times. It was on
really its fourth round. There were like three huge ATM companies, several mid -size.
We We were at the top of the midsize and all these little guys which most of them
were our clients And I was like if we missed this next round of M &A We might not
have a buyer and now is the time to go because of it now We're selling to our
strengths, so I played you know if we were the sixth largest I played number four
and five against each other and sure let them battle it out. Sure. Yeah, it makes
sense Michael and Samantha have both spoken at a couple of our mastermind events
that we host about a dozen times a year. And one of them, Michael, I remember you
saying that one of your strategies is that when you think of someone who might be
a good JV partner or to work with them, you say, "Hey, Sarah, I thought about you.
Here's a little personalized video. You record on your iPhone while walking, shoot it
over to them. It's like a one to two minute video, and that works super well for
engaging people that maybe haven't talked to for a while." Any other strategies like
that? Because I know both of you network a lot and have a powerful network. Any
other tips for networking with other family offices? I think creating the relationship
and going deep with that person so then you actually know who they are, what
they're looking for, what their investment strategy is, so then I know what to bring
to them when I have an investment and I'm looking to raise capital. So many times
you will be in a room like this and everybody shoving their deal at you. I call
it and pitch slapped. And if that didn't happen 20 times last night, it happened
30. And nobody even knew what my name was. And I'm wondering why they feel they
can't raise capital. I know why they can't raise the capital, but they don't want
to listen to why what works works. And I think getting to know somebody, we have a
room here of like 200 or 300 people. And if I meet five people and we get to go
deep, that's five people that are on my bench that when I need something I can
reach out and they may or may not come alongside me because we actually had a real
conversation. Right, right. Yeah, I think everyone's been pitch slapped a few times
when I went to any event and that's the opposite of what I recommended during my
opening statement today and I know one thing that Samantha and Michael both really
get at at most events. I see them up front being attentive, paying attention, making
eye contact to the speaker, maybe asking a smart question and there's some of the
more successful people in the whole room and that stands out to me just after
hosting the events over the years but Samantha what do you think is about your your
mindset mental models that led to you being successful in the business maybe how you
think about challenges problems about growth etc.
Yeah we always tried to set up we always we just called it the win -win -win
strategy so everybody in the chain has to to win. And everybody is motivated by
something. So learning how to properly motivate somebody and set it up. So if you
negotiate so hard with a vendor that they don't make anything, when you call them,
they will not pick up the phone. So that's not a good strategy. Everybody needs
something out of the deal and we're all business people trying to employ people and
make things work. So that was a big one. Another one is I employed the PETA
principle, the pain in the ass principle, and that is if something was a total
pain, Mike might actually fix the immediate problem, and then I was like, what
created the problem? How do I fix the thing that created the problem to begin with?
And when we sold, so we ended up selling to a company almost our size, so they
effectively doubled, they had 75 people on staff and we had four.
I four. So by taking the PETA principle, you're like one little microscopic thing,
changing that, it's not really going to change anything. Well, you know, over X
amount of years and X amount of processes, it really does change things dramatically.
So don't overlook the small things and think that they don't matter. If you have a
broken chip and you pour gas on it with a bunch of clients, now you have a bunch
of clients on a broken ship, and you don't want that. So fixing it along the way
was definitely key. And that is really the whole constant and never -ending
improvement principle that we used with everything. It was like, how can we do it
better? This sucks. If it sucks for us, it sucks for somebody else. What can we do
to fix it? I mean, there are things that are complete industry standards now that
came out of my head. And you're just like, this is such not not you know not do
that and like calling people and saying hey do you have the same problem what can
we do about it what do you how do you handle it and that created a lot of our
efficiencies as well awesome yeah that's really interesting I mean for employees
versus 75 I mean any founder can relate to the difference that would make right
there's a saying that Joe polish taught me that instead of the squeaky wheel gets
the oil maybe the squeaky wheel gets replaced and then there's no longer that
squeaky wheel in your with AI. Yeah, exactly. So Michael,
if somebody is growing right now and they're in the audience and they're making
progress, but, you know, they're moving slowly, they feel like they're not, they're
not growing enough, and it's going to take them forever to meet their goals. What
would you encourage them to do or coach them to do as a entrepreneur that's had an
exit? I'd, I'd coach them to find somebody that's been there, done that, that can
go faster and help them scale better. Because it's not what it costs to bring that
person in it's the lost opportunity cost for not getting there faster because you
may miss the boat and miss some of the the upside that you can actually create by
actually putting the right people in the right seats at the right time. Got it and
then quick question for both of you and I'll get to my final question is just
being in this environment after having an exit I know you like real estate for part
of where your energy is going any two to three upcoming midterm trends that you're
back in real closely and you're not sure about your play in that area yet, but
it's a little sub -niche that you're excited about and keeping an eye on.
So it's been set up here a number of times today to be the lender, and we've been
lending money in the Arizona area for the last year and a half, and we're raising
the fund around that right now to get more money out on the streets, because at
the end of the day, people got into the, in my space, they got into the
multifamily, they got into some of the triple net and some of the cap rates have
compressed, distributions have gone down. So now they're looking for cash flow. I
actually did a talk about it a year ago at another event, instead of who moved my
cheese, it's who moved my capital and where did the capital go? The capital went to
cash flowing assets, so me being a cash guy raising capital, I had to figure out
how to get my investors into cash flowing assets. Got it. Okay. And then for each
of you, maybe starting with Samantha, what's a big insight we could leave the
audience with today? They'd be really powerful for investors to hear or somebody on
the founder capital raising side.
Well, I think when it comes down to an exit, it goes back to knowing your outcome.
So a lot of people ask, you know, like, did we sell the OPE firm? No, we sold
within the industry because I wanted to be done. and so getting out was the goal
and so keeping your eye on that people will try to move you off your marker. The
last part was make sure you get paid. So there are a lot of people that will
you'll sell your company or you're supposed to stay on as a consultant and then
they fire you or you don't get the next payment so work it out so that you're
getting paid. Right the last comment so important because nowadays with PE agreements
being so complex someone might say oh we'll give you 11X not 11X, not 7XE, but
half of that return is in stock in this third -party company that you may be held
hostage to when they get recapped, or it may never happen, and it wasn't really
11X. You actually would have been much better off selling to someone in the industry
and then planting those seeds really early, like you said. If you're an investor,
you should be planting seeds with CEOs like Samantha and Michael or five, ten years
before they want to exit, so they're comfortable with you as the buyer, and they
come to you first because you're a strategic buyer, and then they'll trust your
expertise, you know, get a deal at a better valuation because they trust you, not
the private equity firm with a army of lawyers and a 300 -page legal agreement. My
experience. Michael, any last insights from you? >> Understand what the person sitting
across from the table from you actually needs. Like, you could actually sell an
investment for tax purposes, you could sell an investment for cash flow, you can
sell an investment for upside equity, but if you don't understand what the person on
the other side of the table needs from you, they're not actually going to listen to
what you have to say. And that goes back to like last night, everybody's got a
great deal, everybody's trying to get somebody's money, and I'm not even looking for
a deal, but clearly I had that look, the sign on my forehead, pitch me your deal.
And that's not what was going on. It would be much nicer to get to know you,
figure out who you are, what you're looking for, and then we can have another
conversation later, 'cause then you'll know what I want, and I know what you want,
and maybe we each have something each other needs. - Right, right. Figure out exactly
what the other person wants. I know that Sam Zell had a famous story in his book
called Am I Being Too Subtle, where he was trying to buy a whole block of real
estate, and one lady was holding out as a 85 -year -old who would not sell her
house. Nobody could get it done, and Sam Zell said, "I'm gonna go there in my
Harley, get it done myself. He went there, knocked on the door, had a cup of tea,
and the lady said, well, my dog is buried in the backyard. That's why I won't
sell. So they exhumed the dog, bought her a new house, moved the dog, buried her
in the new backyard, and got the deal done just by listening, getting to know her
and having a cup of tea versus just making offers that were higher and higher. So
it's related to that comment. Yeah, awesome. Well, if anyone wants to connect with
Michael and Samantha, I think you're going to be here the rest of the evening and
during the until hours after this, we're rolling forward with some more content, so
Charlie's going to welcome up the next speaker, but let's give him up a round of
applause. Thank you. >> Thank you. >> Thank you.