All right. So, Isabelle is with Nathan Family Office. They've done over 300 venture
capital investments. They've done over 100 real estate transactions. They own their
own town in California.
And I wanted to have her on stage for a few reasons. Part of it is just the
interesting combination of real estate with venture capital, but also it's a trend
I'm seeing that right now the desire to invest into hard assets or profitable cash
flowing operating businesses is really high, but at the same time we've seen these
trends whether you like sports betting or cannabis or crypto these are markets that
have exploded in size and expanded so greatly they created a lot the wealth.
And so a lot of families realize that there's these big waves of change that come
and that perhaps maybe one or two percent of their portfolio should be allocated to
some of these venture type activities and investment opportunities. And so I thought
it'd be interesting just to have Isabelle here and kind of explain their mentality,
what you invest in, what you focus on. And I'll have her introduce herself further
in just a second. But if anyone who is standing in the back would like to sit and
there's about one chair available at each of the tables, so if you do prefer to
set them, feel free to come up and grab a chair just so you don't have to stand
if you don't want to be. But Isabelle, what would you add about your bio and your
background and your family office? Well, first of all, before joining the family
office, I was in real estate on the real estate brokerage side where I ran my own
business, but that was back over in Sweden. Then moving over to the US about six
years ago, now being with the family office for about five years, it's been an
amazing opportunity to both continue on the real estate side, but also learn and
grow with the venture capital side, which is something that we only got into about
five or six years ago. So to grow along with the with the family office. Right.
So going from starting getting into venture capital five or six years ago to doing
hundreds of investments, How did you get started? Who did you figure out who to
trust in that area? - That's a very, very good question. First of all, finding the
right partner because it's really important that, I mean, we're coming from real
estate or we came from real estate. And that's not where our expertise was at,
but we knew that we wanted to get into venture capital 'cause it's way different
than we wanted to diversify our investments. So First of all, find the right partner
with the domain expertise that we did not have, and first of all, you've got to
build that relationship over quite a long period of time, so this was not made in
one day. It took us quite some time to get there. Sure. I know some families that
made their money in manufacturing or industrials. When they look at tech and venture
capital, they say, "Oh, well, maybe we'll invest in manufacturing tech, and we can
try the new device at our manufacturing facility and have extra expertise in that
area. Is that the case with you? Do you do mostly real estate tech or do you look
at all types of tech? - All types of tech. And I think that we have also learned
along the way there are now industries that we tend to stay away from because after
taking a step back, looking at the portfolio, we see what we've been good at
picking and where we've been less good at picking. So we'll just double down where
we're, you know, have the main expertise. - Sure, it makes sense. For the wealth
creation of the family office, like what was the main event or the turning point,
where did the wealth kind of come from originally? - So that came from the real
estate side. So we're a single family office and it's the first time generation
money and local here in LA. So basically from real estate development,
but I would say what, You know, our pivot and our main, you know,
what has made a lot of difference for us is when we decided we were going to
supplement our own capital with outside capital from other investors. And we came to
this decision about seven years ago. Before that, our head of the family office,
Richard, always thought that it was easier and better to do all of the investments
on our own. That's also when we decided that we were gonna get into venture capital
and started our VC firm, Expert Dojo, that we have now invested in 300 companies
from. And most of these companies have raised follow on capital from outside
investors who are now our co -investors. And what that has allowed our initial
investment to do is to grow already by five or eight x. So it looks like our real
estate portfolio is not even going to be as good as our venture capital portfolio.
So it's going to be outperformed and our real estate portfolio is what allowed us
to become a family office in the first place. Right. Yeah. Interesting. So you see
a lot of deal flow Now, if somebody is looking to approach you or another billion
-dollar -plus family office, what's the way to get your attention? One way, obviously,
being here in the room is to introduce themselves and then say something unique,
perhaps. But if they're not in the room with someone they're trying to get a hold
of, what gets through the hundreds of emails per day in your inbox and gets you to
reply to somebody? Well, first of all, I would say that surround yourself with
people who have the domain expertise. the domain expertise. If you're after the right
type of deal flow and the best type of deal flow, either have the domain expertise
yourself because then the best opportunities will come to you or surround yourself
with the people who are the best in the industry that you want to get into. But
if you want to, you know, send a cold email, it is hard. but sometimes it works,
but you really need to do your own homework at first and you cannot, it's not
always a numbers game. I think that you'll be better off maybe going after 10 or
20 people that exactly why you are approaching them rather than 200 or 2 ,000
people. - Right, yeah, interesting, okay. What would you say is the most valuable
strategy you could share with either investors or capital raisers here in the room
that we would worth a lot in terms of getting in more traction. - So for us,
I would say that elaborating on your investment vehicles has been one of the best
approaches. So for example, what we did is that we brought in a public market
instrument in the form of warrants into early stage startup to allow for the
maximize, to maximize return on our investments. So if you have a lot of value to
give in the beginning, you're at a great negotiation point, which is much harder to
do later on. So that will be, I think that will be number one. - Right,
yeah, I think one thing that most people here have heard me say before is that
I've found that investors who can see deals first exclusively at a better valuation
or at like a major advantage. And if you can add that strategic value 'cause you
have domain expertise as an investor, then people are just much more likely to want
your capital versus someone else's, right? What's a costly mistake to avoid for
investors in the room? - Don't trust anyone.
No, but seriously, you know, you speak to founders. Everyone's gonna make X amount
of revenue, you speak to a real straight broker, whatever deal is going to be worth
X, Y, and C in ten years' time, you have to do your own homework.
That's just it. It sounds depressing and sad, but honestly,
it's going to give you a lot of stress relief and a lot less headache. So, I can
give you a back story there and which is why you know so Richard who is the man
behind our office he he was a basketball player back in the days and he still
loves basketball so I'm not sure how many times I've heard this story but he was
about to buy the Clippers way way way back in the day so I think he was about to
buy it for two million dollars and he was going to do this together with a
business partner of his. So going in half -half and Richard showed up,
the seller showed up, but the one who didn't was the other business partner. So he
couldn't go through with a deal. And I think I still hear about this, you know,
once a week or so. So it took another 35 years,
honestly, before we ever made an investment together with another partner again,
so lesson learned. Yeah. Yesterday, both John Lattera manages a billion dollars said
that he just assumes everyone's line when he talks to them in real estate. And then
Larry Namer says in his book that to survive in Los Angeles, you have to assume
everybody is lying until they prove to you otherwise. So he's come up three times
now on stage from fireside chats. Yesterday, The other number one thing that came up
that investors agreed with was to create a relationship before you pitch a deal.
And it's not that you shouldn't pitch a deal. The point of an investor club is to
make connections with investors and for investors to find deals. The point is that
without the context, they don't really care about your deal 'cause they don't know
you yet and you don't know them yet or how to work together yet. And I think that
can be heard the wrong way, but how does that work with your family office in
terms of creating relationships first? How do you balance meeting a family office but
showing them what you have? So they actually want to reply to your email or get to
know you, et cetera. - Well, for example, when we decided we're gonna get into
venture capital, we didn't really know where to start. And for us, we actually got
introduced to gentlemen through our banking partner. So that was all serendipity,
but what was not serendipity was the partnership that then came from that
introduction because it took over a year to establish that partnership and well over
20 meetings. But so it's just interviewing and spending time with people who you
think that you can do great business with and then build up some kind of trust.
But again, it's not gonna be built over 24 hours. It's it's it takes time, right?
Yeah, we had a pleasure of introducing Robert Scheldini recently and I always
emphasize it He's shown it scientifically proven is 16 times as effective to meet in
person And if she has to build trust over like one zoom call or one phone call
It's like almost impossible if you're investing any significant amount of money,
right? So when you're vetting somebody and conducting due diligence? Are there any
kind of like litmus tests or, you know, things you do to see how they respond or
any specific things you do? Or is it more just kind of a osmosis process where
over time you learn to either trust them or not? And it's not like a super
specific question or four step process you put them through? No, I think it's the
latter where you're just, you know, you're spending time, you're getting to know each
other and you also, you know, trusting your gut is a big part of it all. - Right,
yeah, for sure. What unique strategies and exciting things are you focused on in the
venture capital space? Is there some sub -niche that you're most excited about that
you wanna source from here in the room? - You know, the fun thing about this is I
think it's a really like 50 /50 combination of real estate and venture capital that
we are the most excited about right now, which is data centers.
And we are, we have a project right now which we believe that our family can make
another two to three billion dollars off from. So we are building out data centers
with some of the best people in AI at the moment. So we're partnered up with a
former department head from OpenAI. So we're building out data centers together with
this gentleman and some of his team members up in Northern California, so we have a
town there that's called Copper Valley that we bought from the Meridoc family back
in 2018, and it just has a lot of land that we are now turning into a big data
center hub, and we're starting with 50 acres. And so just to,
you know, most of you have probably heard about the Stargate project at this point,
which is the project between OpenAI, Oracle, and SoftBank, where they're going to
invest $500 billion into AI infrastructure over the next couple of years.
And AI is everywhere today, but the facilities needed for this is not. But so,
their project is actually only going to cover 20 % of OpenAI's need.
And I repeat that again, 20 % and it's $500 billion. So that speaks to how big the
playing field is for the rest of us. And this just makes great sense for us to do
this. And we have a huge lake up on our land as well. So we're building out a
hydrogen plant. Awesome. Yeah, that's exactly what I was talking about with the
second order inevitability thinking in my opening talk. It was like It's inevitable
if we go from 1 % to 2 % power usage for AI, and then it's going to go to 30 %
to 40 % in the future. No matter what that timeline looks like, then eventually
you're going to be positioned super well with that rising tide. Warren Buffett says
that sometimes the direction of the tide matters more than the swimmer. If you're
swimming upstream, you're in trouble, maybe. So what about on the real estate side?
I know we have some real estate folks here. What if they also own a town and
don't know what to do with it or what if they have solar or abilities and data
centers or other real estate assets and they want to co -GP or work with you in a
creative way, what are you open to, not open to, what are you looking for
specifically? I mean we're always very, very open to first of all building the
relationship and that's where that's where we start. I think our family office has
always, all the doors open because we're curious and we're always down to to learn
or to share and to learn about opportunities and to now also include other investors
in the opportunities that we're doing. I mean right now with our with the data
centers that's a huge play so we are obviously number one talking with the
relationships that we have built for many years and again And again, going back to
where do you get your deal flow from? That's something that you build over time.
So we go back to, number one, the relationships that we already have, and number
two, we go to the leading investors or partners in the industry because they also
have the domain expertise. So those are the two things that I keep coming back to.
But no one is interested in talking about your real estate projects or learning more
about our data centers. I'll be here all day. I'm happy to connect. Great. Awesome.
And then what does a due diligence timeline look like for working with a billion
dollar plus family offices at nine months on average? Is it 18 months or three
years to get to know someone on average? I'm sure sometimes it's faster and slower,
but what does that look like internally for you guys? Definitely depending on the
check. So we can do on the on the venture
it meant something very specific. Nowadays, people don't want to go public and deal
with all that annoyance. And so venture capital sometimes includes like, oh, we're
gonna invest into SpaceX and secondary shares. We're gonna invest in this other
company that could have gone public, you know, but doesn't want to and they would
have 20 years ago. So for you, how early will you start? Do you help seed ideas?
Are you going into super late stage stuff that should have been public if it wasn't
so burdensome these days? We have in the past only been going super super early and
then again going back to what I was saying in the beginning if you come in early
that's when you can be playful around your investment vehicle and kind of have a
very very good negotiation standpoint so that's what that's also the reason why our
venture capital portfolio is looking to outperform my real estate portfolio in such a
short period of time as well because we did something that I haven't seen any other
venture capitalists do before is to bring in warrants in early stage startups.
That's just really working for us. But then again, you cannot expect to do this
with just writing a check and expect that you can get any type of terms that you
want. You need to be able to to give a lot for that as well.
So we have been doing mostly in the very early stages. I would say that nine out
of 10 companies are at least in revenue. Now though, we are doing one -offs here
and there, there are in slightly later stages as well. - Okay,
great. And what do you think people would find surprising if They came to your
offices, met with your team, saw the investment discussions you're having. What would
they be really surprised by, you think, that maybe most people that you meet with
just don't meet with family offices this big and aren't aware of how you operate or
how you make decisions? - How much you can do with only five people around? (laughs)
We're a small team, but I think that that is also like one of the benefits that
we can all be so involved in all the projects that we are doing,
I think that that would be what is most true. - Sure, okay. And from the
presentation I gave before this, I was talking about different mindsets, mental
models. What else would you add to that presentation that is really key, you know,
to Richard's success and to the scaling of the family office and why you're
successful now in this next stage, are there any other mental models or strategies
or ways you operate that should be in there as well?
Just to -- I mean, Richard is now -- he's in his 80s. Last week,
I'm not sure how much time he spent on TikTok.
So just always continue to be curious and interested and open to learning.
But he used TikTok for research and it's just like, it's fantastic like how
someone's mindset continues and to grow and that's just like how I think that what
defines a billionaire. And going back to the Clippers story, a couple of years ago,
probably two or three years ago now, he came across an opportunity in the gaming
space. And it's like esports. So what does Richard know about esports?
Absolutely nothing. But he sees a great opportunity when he comes across one.
So like he knows what's happening in sports right now, what's happening with,
you know, audience and everything. And he's also comparing that with what's happening
on the eSports side and where are the kids going today and not just the kids and
what's that going to look like in a couple of years from now. So funny enough,
on the venture capital side, one of his favorite investments that we have done is
this eSports company because he saw his chance again to buy the Clippers.
Right. Got it, great. Yeah, it's interesting. That goes with like the passion idea
we were talking about before, like obviously enjoys what he's doing, doesn't have to
work at all if he didn't want to, right? What's one last question that maybe I
could have asked you, you'd like to share on about what you're up to, what you're
most excited about? What else before we close it out? Again, I would see the data
centers, but other than that, what's really exciting is that our venture Capital
brand is really growing a lot and we're actually opening up our first international
offices. So our one and only office existing right now is down here in Santa
Monica. But in a month from now, we are opening our first international office which
will be in Bangalore, India. 'Cause we believe a lot in the Indian market for early
stage startup. And we are eventually also starting to franchise our VC model to
different places around the world, which we are very excited about. - Right, when I
went to India, I saw there was a ton of tech startups and tech talent there.
Obviously, Singapore presents itself as kind of a Switzerland of Asia type capital
hub, but you saw like much more strategic connections with the amount of programming
talent and just startups in India and the size of that market. I guess India was a
smarter choice for you guys. That and also looking where the economy is going. I
think like just look but also yeah where the money is. I think last year was like
60 new billionaires in India with a B. But then also like just so many smart
people there even looking at the companies. Many of the companies that we're
investing in, they are based in the US. It's Indian founders. So it was just, we
have done probably 40 investments in India, so it's not a new market to us. It was
just a, it made a lot of sense to go there. Right. Awesome. Yeah. That's one of
the reasons why we're based out in Hawaii is that we're going to start doing events
in Singapore and Sydney, but we just see so much in new wealth being created in
Asia. And when it went to London, every wealthy person you met had 15 bankers
surrounding them. It was just so overbanked and lack of new wealth and it was like
not furnished first generation entrepreneurial wealth We're like, I don't think this
is for us like go to go to Asians did so interesting great Well, I appreciate you
sharing your time here today. Let's give a spell big round of applause. Thank you