What's the biggest mistake that you, like, what's an immediate mistake that comes to
mind that you could help solve and say, this is the obvious answer that I missed
at the time or this is how I would approach it differently? That'd be very helpful
to our community. Go ahead, Gideon. - Well, I mean, for me as a real estate guy,
don't trust the forward curve.
- Yeah, that's Good. For a lot of real estate people in here, because that usually
gets a better laugh.
Go ahead. For us, it's been about the biggest mistake that we have made. Sometimes
as value investors, we tend to put too much emphasis on math. What an asset's
worth, what a cash flow is, what we think it's going to be worth. And it's easy
to overlook people in the importance they roll. And when you're acquiring an asset
that involves people, the people are more important than the physical asset itself,
right? Because if you inherit a bad team or a disruptive team, the asset's never
going to perform as well as it should. So I think one of the biggest mistakes-- I
know for a fact that we've made, and other people have made in the past, and is
underestimating the importance of the people you're inheriting when you make an
acquisition or an investment. Absolutely. Absolutely.
So, as a startup company in a product space, so the stereotype is that venture
capital is where you're going to find your funding and the mistake that I made was
believing that actually was true. Venture capital tends to want investments that are
completely de -risked, very short time to a liquidity event and a major discount. As
a hardware startup company, we don't fit any of those scenarios,
so I beat my head against the wall chasing after money that just wasn't there, and
rather than looking at the people who really cared about our product existing and
going there for money, and that ended up resulting in quite a few family offices
joining our cap table. That's great.
So I would say, you know, My last answer was all about, hey, you got to educate,
you got to teach people how we do underwriting, numbers, numbers, numbers. But then
you kind of sometimes, and in my experience, you miss a little bit of the bigger
picture and how actual, where does oil and gas fit within both an alternative
investment, from portfolio diversification, from a tax perspective, but then also just
where it fits in with an individual potential investor's actual needs.
And so trying to not go too too far maybe down that numbers, numbers, numbers. You
know, I come, my background's in finance, so, you know, spreadsheet jockey myself.
So, you know, getting, while that is great to have, and one thing we found is
education is critical. It's kind of layering it in and really creating a story out
of what this investment will be able to do. - That's great. That was kind of what
today's fireside chat was kind of referencing. - We'll finish with Michael and Dan.
- My, after 59 years of marriage, my biggest mistake was not listening to my wife
more.
The hardest lesson I think that I've learned through the years was because I am
worthy of other's people's trust in me, I assumed that I could trust them.
- That's very profound, yeah.
- The lesson that I learned as well, I think in the business arena was that it's
not always right to be
>> Great. And yeah, please finish it with us, Dan, you can close it out.
>> Okay, mine was actually similar in regards to not listening to the cautions of
my wife. >> Ah. >> She had, when our oldest was about 17,
we have nine kids. And so from a family office standpoint, we're,
if we're developing a family office, we should be including the family. And at 17,
we had not included any of the nine kids. And my wife, Catherine, said, "So why is
that?" I mean, we believe that God is embedded in it with every single one of you,
a unique ability, gifts and talents. And we were looking to see what those were,
but we weren't applying it to our business. And so that was are at 17 and so then
we said okay well let's let's apply it and and now we've got half of our kids the
nine work for us and and we've got our oldest who at 17 we didn't we thought he
might be a veterinarian he just had created and our full time in our research side,
our top performing portfolio. And so you never know what gifts might be there that
you need to be uncovering. - Fantastic. Well, hey, let's give a round of applause,
please. What a great panel. Thank you all.
Because a lot of the people attending are capital raisers, a few of the questions
we were going to ask kind of relate to some of the best tools you've used to help
raise capital, some particular strategies that you used as well. So maybe we just go
down the line, if you don't mind starting. What, is there a particular new
technology or what has been very effective for you recently in raising capital from
a tool or just strategy standpoint? - I mean, there's CRM tools that everyone uses
and things like that, but I've found, and it's not just family office conferences,
but I've found in -person events are the best way to talk to investors and have
them, and I think email has a what, two, three percent open rate, text messages are
slightly better, but if someone's texting you to raise money, they don't want to
talk to you, right? Right. It's, you just got to be in front of people and talk
to people, and when you're, when you're talking to them about the prospects of what
their capital can do, don't, do, don't overdo it. Just be honest and tell them what
the deal is. We've done that. We've been very conservative in our estimates with
people and several other investors, our largest investor just made a $2 million
additional investment because he started small, he's watched us grow, he's watched us
do what we're doing and we over -accomplish what we say we would.
that's the number one thing, is be honest with them and talk to them. - Develop
that trust. - Yeah, it's the only way to do it. - So just building upon that, and
I agree with everything you've said, we have an advantage that I didn't expect to
have, and that we're weird. I mean, how many people here have ever heard of a
cute, furry, adorable medical device before?
The media loves covering us. We've been covered over 400 times by major media,
so television, all the major online print publications, and that we were a time
magazine, including their best inventions a few years ago. That has driven a lot of
investor traffic. So for those of you who are raising money out there, trying to
figure out how to get the media to get interested in what you're covering, and
spread your sports story far and wide and get people that you won't come in contact
with at conferences like this or through pitch book or Crunch Base or all those
other tools.
- So I think for us being in the oil and gas space, the biggest thing that we
focus on with the people that we raise money from is education. People,
especially a lot of our investors, come from real estate, and they want an idea of,
okay, how does actually this work? You're gonna go get oil out of the ground,
you're gonna sell it, who are you selling it to, and kind of all the stuff that
goes into kind of a traditional underwriting. So we focus really heavy on education.
In -person events, I definitely piggyback off that are great, 'cause you can kind of
look that person in the eye and see them. And really what we do is actually is
for every deal that we help co -sponsor, we actually go ahead and release kind of a
webinar style video where we actually walk each, walk everybody through the
underwriting process so they can kind of see the soup in Nutsberg. - Oh, that's
great. - How we actually go about the underwriting process and kind of weave that in
with the education, so. - Because you're kind of newer as it sounds like, did you
start just through the family office and the connections there and local, or did the
education kind of start quickly after the kind of the decision to start raising
capital? Well, I think we stumbled like everything. It's not the first strategy. You
stumble across because you meet with investors, you learn what they're interested in,
you learn, you know, you figure out the questions that they have, and then all of
a sudden it's like, well, we're getting the same question over and over as, well,
how do you know there's oil here? Well, okay, let's maybe we should tell people how
we go about analyzing that, and that's kind of the genesis of it from that
standpoint, but it's really been what I would say is kind of network focused, like
use it getting in front of people, one person introduces you to one person. The
other benefit with oil and gas is the massive tax benefits you get with investing,
and so one of the biggest target markets for us is CPAs. We get a lot of CPAs
who we partner with who need something in their tool belt to be able to give to
their clients who at the end of the year do need a tax write -off and it may not
be quick, It may not be a real estate portfolio they can get into. It may not be
other tax havens they can get into and with oil and gas. It's extremely tax
advantage. We were meeting with one of our largest investors this week, actually,
before we flew out here. And one of the comments he had was, yeah, when I first
got your pitch deck and I saw your tax slide, I was sure you were lying to me.
And then I went and talked to my CPA and you weren't. It was, it's crazy. So
Stuff to hear like that's cool, but I would say education for us is critical. - And
if you don't mind me asking again, with those webinars is it something that is kind
of one -offs or is it now that you've kind of developed a network, is it something
where it's like once a week we have a webinar and it's to 20 people or is it
once a month or is it once for one person and then continue that way? - So we do
them evergreen, so basically we record one and then any time a a new contact or
somebody interested, we kinda just send them there, collect their information, and
they can kinda watch it at their own leisure. - Fantastic, that's great. Michael.
- Well, we started, first, we now have five profit centers, and we started with the
charitable foundations, and if we could help enough people, they then decided that
they wanted to come back and come back. And then our second profit center was trade
shows because I've been doing them for 50 years, and that to me was by far and
away the best face -to -face conversations that we could have.
And if we could help them charitably, that was great. And then it just naturally,
organically evolved into how could we invest?
How can we do more? And in the trade shows, just like this show, it was,
we just got into the family offices about a year ago and Fort Lauderdale was our
first show and Beverly Hills in this now as well. And I personally,
though not an employee of the company, a partner and investor these last six years,
take care of personally each and every communication. So it's not just from a
corporate point of view. It's a true trust -building bonding. Or since I was a
certified senior financial planner, I don't think this is for you, basically. Or if
you're gonna get into it, no more than five to 10 % of your portfolio. And once
you build that trust, we, if we look at our investments that are coming in year by
year over the last six years, it's about 80 % of investors coming back to reinvest
because they couldn't believe how really good it was going to be for them.
And then we developed a concept which I hadn't heard of prior, and that was,
since there is a little bit of risk to precious metals, the volatility, and to fine
art which a lot of people have not previously been blessed to invest in and are
not sure of the liquidity or the exit strategy, we said, "Look, what if we can
secure your entire investment, let's say $50 ,000, with your choosing fine art that
you particularly like?" So, in the worst case scenario, World War III does happen.
You will still have that fine art instantly, or as quickly as we can create it.
And that was more of an innovative way to truly build the trust and make the risk
-reward ratio much more in their favor. And by not being an employee,
and by being an advocate, or an ombudsman, if you will.
It's really refreshing to hear you take it back from an initial as a certified
financial planner, like how does this fit in to the overall asset class, I mean, to
the overall allocation. - That's good. And we just, three years ago, out of the six,
we started doing IRAs and 401Ks. - That's great. - Previously that wasn't even thought
of. And then two years ago, people would come in and they would say, "Now that
you're into precious metals, the fourth profit center,
I have, and this just happened three days ago, dental practice,
which you know very well, your cousin, John, said I've got 900 ounces of silver.
Could you guarantee teamie that since you're gonna create Michelangelo's David and
Pierce Silver, could I come and see you actually take my silver and convert it so
I can become part of history in the making? And they're fed,
I set 'em a FedEx account yesterday. - Ah, that's funny. That's great.
- How cool is that? - That's really cool, thank you. Dan. - Yeah, Daniel. Capital
raising for us has been focusing on the basics. Had dinner last night with Joe and
Jeanine Williams, with Keller Williams, and similar strategy. They're 37 years now of
raising capital. The first part, we just focus on having an extraordinary product and
service, and then make sure that we've got an extraordinary team. And then, Expans,
we've got a national, an international client base, and then the fourth stage we're
at now is then expanding locations around the country,
particularly in places which our family like to enjoy, like Park City, Utah,
where we like to ski, or that was last month, this month is Honolulu, where we
like to vacation. - Yeah.
- When you think of the, you know, like I said, it was interesting to, as someone
who was in finance, to watch what you had posted yesterday, when you look at those
different strategies, like if you take a minute and just, if you don't mind,
kind of, maybe say, how does the hedging, you know, work, or what is it,
what do you do from a hedging perspective? I guess it would be great. - Sure, so
the niche that we're in is looking at trends quite differently than the typical
portfolio is structured where as the analogy goes, who would buy a Ferrari or any
car for that matter that just has an accelerator pedal, but no brakes or skid
control or reverse gear or turbo boost. So an answer to a question as it relates
to when all three of Our primary trends are negative, then that's an indicator for
us to invest in inverse ETFs. And so in 2022,
for example, when the market was moving down the S &P 500 lost 18 % that year,
our trends for most of the year were negative in all three of those short -term,
medium -term, long -term categories. So we moved into leveraged ETFs, where then you
can 18 % to 36 % depending on its 1X or 2X when the market's plummeting.
And then also with the skid control, moving into investments like we're excited about
energy as well, energy was up 30 to 60 % in 2022 and our portfolios automatically
move where the trends are when energy is a great time to be investing and as well
as in gold. - Do you ever use overlays? I mean, do you option overlays at all or?
- We're pretty straightforward with public securities. Invested at the ETS and stocks.
That way investors are always 100 % liquid. - Yeah, nice. Great, get in. What
strategies have been helpful from both raising capital and maybe new technology?
Anything new that has helped that way for getting investors into your fund.
And granted, it's a new tech, I mean, I know the technology has been around for a
while, but it's really advanced recently, is my understanding. - Yeah, and I think
that, you know, as it relates to helping find new investors, you know, raising
capital, I'll
keep it simple, right? Like on one But regardless of where you are, kind of in the
value chain, whether you're a new sponsor looking to raise a couple hundred thousand
dollars or an experienced sponsor looking for multi -millions of dollars from
individual LPs or institutional capital, I think that it's a relationship -driven-- it
is relationship -driven, right? So I've let's talk about,
you know, speaking to investors and communicating with investors directly, like that
is the case. I might not write every piece of content that goes out, but I
probably take a quick look at it and it goes out in my name. I don't, I would
say like, I can't play the guitar and I can't break dance, you know, but I, for
some reason people like and trust me pretty quickly, and so that can be a
superpower, it can also be, you know, a power used by an evil villain, right? So I
have to stand behind that and really perform
and when things aren't going as planned, communicate as much as you can. We over
communicate in all of our platforms. And look, real estate hasn't had the best 18
months, right? So the more you can be out in front of your investors and letting
them know that if business plans aren't going according to plan, like what is the
strategy? What is the pivot? What is the plan? You maintain trust, right? You don't
pick a sponsor really, I mean you do pick a sponsor when times are good, but you
really end up learning if your choice was a good one when times aren't so good,
right? How are they gonna stand behind that? From a technology perspective, look,
it's simple, right? ChatGBT for me has been a and a game changer for time,
right? ChatGPT doesn't write my articles, but if I tell it what I want to convey,
it gets me started on marketing materials. It creates platform after platform and
structure. I did an explainer video for Charge Capital Partners. I needed to write a
script. Like how easy is it to sit down and write a script? But I can tell
ChatGPT what I need. - It's so helpful to organize your thoughts, it helps from a
time perspective that way. - It gives a huge jumping off point, right? So it's just
a saving a ton of time across the entire portfolio. - Would you remind me, from a
standpoint of footprint, I mean, where is your footprint,
so to speak?
- On the-- - The energy side. - On the energy side, we're focused mainly in New
York, New Jersey, and the Tri -State area, to begin with, because we find that blue
states seem to have a little bit of a more of a limited risk. You know, risk
profile, as well as the arbitrage margins are strong here. - That's great. Good,
we've got a few minutes left, and what I was just gonna say, throw out a quick
question on what's the number, if if you can answer, we'll just, again, if someone
wants to hop in and we can kind of go from there, what's the biggest mistake that
you, like what's an immediate mistake that comes to mind that you could help solve
and say, this is the obvious answer that I missed at the time or this is how I
would approach it differently? That'd be very helpful to our community. Go ahead,
Gideon. - Well, I mean, for me as a real the guides, don't trust the forward curve.
- Yeah, that's good. - For a lot of real estate people in here, 'cause that usually
gets a better laugh.
- Go ahead. - For us, it's been about the biggest mistake that we have made,
sometimes as value investors, we tend to put too much emphasis on math, what an
asset's worth, what a cash flow is what we think is going to be worth. And it's
easy to overlook people and the importance they roll. When you're acquiring an asset
that involves people, the people are more important than the physical asset itself,
right? Because if you inherit a bad team or a disruptive team, the asset's never
going to perform as well as it should. So I think one of the biggest mistakes-- I
know for a fact that we've made and other people have made in the past and is in
the importance of the people you're inheriting when you make an acquisition or an
investment. - Absolutely.
- So as a startup company in a product space, so the stereotype is that venture
capital is where you're gonna find your funding and the mistake that I made was
believing that actually was true. Venture capital tends to want investments that are
completely de risks, very short time to a liquidity event and a major discount. As
a hardware startup company, we don't fit any of those scenarios.
So I beat my head against the wall chasing after money that just wasn't there,
rather than looking at the people who really cared about our product existing and
going there for money. And that ended up resulting in quite a few family offices
showing our cap table. - That's great.
- So I would say, you know, my last answer was all about, hey, gotta educate, gotta
teach people how we do underwriting numbers, numbers, numbers. But then you kind of
sometimes, and in my experience, you miss a little bit of the bigger picture and
how actual, where does oil and gas fit within both an alternative investment, from
portfolio diversification, from a tax perspective, but then also just where it fits
in with an individual potential investors actual needs. And so trying to not go too
far maybe down that numbers, numbers, numbers, you know, I come to my backgrounds in
finance, so, you know, spreadsheet jockey myself. So, you know, while that is great
to have, and one thing we found is education is critical. It's kind of layering it
in and really creating a story out of what this investment will be able to do.
- That's great. It was kind of what today's fireside chat was kind of referencing.
We'll finish with Michael and Dan. - My, after 59 years of marriage,
my biggest mistake was not listening to my wife more.
The hardest lesson, I think that I've learned through the years was because I am
worthy of others' people's trust in me, I assumed that I could trust them.
That's very profound, yeah.
The lesson that I learned as well, I think in the business arena,
was that it's not always right to be right.
- Great. And yeah, if please finish it with us, Dan, you can close it out. - Okay,
mine was actually similar in regards to not listening to the cautions of my wife.
She had, when our oldest was about 17, we have nine kids. And so from a family
office standpoint we're, if we're developing a family office, we should be including
the family. And at 17, we had not included any of the nine kids. And my wife,
Catherine, said, so why is that? I mean, we believe that God has embedded, and with
every single one of you, a unique ability, gifts and talents. And we were looking
to see what those were but we weren't applying it to our business and so that was
our 17 and so then we said okay well let's let's apply it and and now we've got
half of our kids the nine work for us and and we've got our oldest who at 17 we
didn't we thought he might be a veterinarian. He just had created,
in our full time in our research side, our top performing portfolio. And so you
never know what gifts might be there that you need to be uncovering.
Fantastic. Well, hey, let's give a round of applause, please. What a great panel.
Thank you all.