July 31, 2025 • 52 mins
In this episode of The Investor podcast, Gregory Kammerer joins Joel Palathinkal to explore first and second-generation family investors. Gregory shares his journey from entrepreneurship to venture capital, law, and private equity. The discussion covers educating family offices, generational investment differences, and expanding roles. Gregory highlights tax strategies, public money management, and restructuring family office investments. They also discuss "Die With Zero," focusing on wealth transfer planning. The episode concludes with advice on starting early and debunking the myth of overnight success.
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(00:00):
A lot of the first and second gen families arevery much, like, dollar in, dollar out, in at
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least what I've come across where they getsimple concepts.
They've been laser focused on a business forten to thirty five years.
They know that industry inside and out.
But if you can't explain to them in very simpleterms what you're doing your business
transaction, they get turned off pretty quicklybecause they're they they tend to think that
you're not a professional because they canexplain their industry like you would to a four
(00:29):
year old child and child would get it.
And if you can't do that where you're supposedto be an expert, well, then you're not on the
same plane.
Right?
And I think that's a big thing.
So, just throwing around IRRs and DPIs andthings like that, they don't get the lingo.
But if you know, they do get the idea of MOIC,I think, very quickly because it's just your
(00:50):
multiple on capital.
To The Investor, a podcast where I, JoelPalafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
(01:12):
So join us on this journey as we explore theseinsights.
All right, so we are live today with a goodbuddy of mine, Greg.
Got to catch up with him over dinner a fewweeks ago and really got to know about his
story.
And it was just a really interesting storyabout career pivots.
(01:32):
A lot of us get into this space one way or theother.
And it's oftentimes not one clear path.
You could become an attorney, you could go tobusiness school, you could be a rocket
scientist, and really pivot your career intoany industry that you want to get into.
(01:55):
Spend some time with Greg.
And what's really interesting about his storyis he's pivoted his career a couple times
similar to how I have.
He started in the legal industry and then kindof pivoted into private equity.
And now he's working with ultra high net worthindividuals and collaborating with them and
building communities and building networks.
(02:16):
And that's how we met.
We met through another close friend that justhas been able to curate amazing communities of
institutional investors.
So, Greg, number one, welcome to the show.
Number two, excited to see you again latertonight to talk talk more, more about this.
So I'm really, really privileged to have, aseasoned private equity professional like Greg
(02:38):
come in and share his story.
So Greg, why don't you kind of tell us a littlemore, we got plenty of time.
So tell us a little more about your career,your background.
You know, you got pretty much got a free ride,you know, to law school.
So that was a unique story as well.
But why don't we start with, you know, yourearly childhood, what you thought you wanted to
do, and how that evolved over time and how thatcomplemented, your ambition to just kinda
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continue growing in your career?
Oh, jeez.
We're going back deep, though.
Okay.
So a story that probably doesn't get shared toooften, but I think my first foray into private
equity and private finance was I was in a club.
It was called, FBLA as future business leadersof America, which oddly was the, like, you
(03:30):
know, smaller group of what was called DECA, isvery big for for marketing if some of your
people in your audience are familiar with that.
And that really kinda gave me, like, theentrepreneur bug.
I came in second actually for New Jersey's,like, mister f b l a.
I didn't really understand how, but it wascool.
I got involved.
It was kinda helping, like, do smallbusinesses, involve with the community.
(03:53):
One of the things I actually started when I was15, 16 was actually doing basically, like, you
know, computer repair work.
Right?
Back in the day when Geek Squad, for everybodywho remembers that, was just kinda starting
off.
I was kinda like a competitor for them locally.
I mean, I was just kind of, you know, helpingfriends and, you know, friends, families fix
(04:17):
their computers and stuff, their IT stuff.
Really didn't think there was much of abusiness before before.
It just kinda was helping add value, whichwould be a a theme of my my career.
But one of my friends' mothers gave me, like,$200 for, like, an hour and a half worth of
work, which, you know, when you're in highschool, it's a ton of money.
Oh, yeah.
And then I and then I went and did work forsomebody else.
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Wasn't even expecting anything.
It was more of a favor, and she gave me, like,another 150, $200.
And I'm like, I think I've got, like, abusiness here.
Like, it was just very weird.
And, you know, I asked two of my friends tohelp me because I was basically was getting a
little bit of a following within the localcommunity.
(04:59):
And one of my friends who was a really goodprogrammer was almost laughing at it because he
was like, there's no way people are paying usfor this because he was very advanced, far
beyond me.
Didn't have a lot of great human social skills.
But he's like, there's no way somebody's payingus a couple $100 an hour just to get this stuff
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done.
And I'm like, well, that's the going rate.
I mean, I never really set the price.
This is what they offer, and we're solving aneed, and they don't know how to fix it.
So that kind of really stuck with me.
You know?
I probably didn't know how prescient thatcomment was back in the day, but that really
got me into focusing on that.
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I tried to do a couple tech ventures, which Iwasn't so great at.
But, I mean, I think that was kind of the firststep in entrepreneurship.
I went to Monmouth University and got anundergraduate degree in business and finance.
Didn't really know a whole heck of a lot aboutfinance but was able to sync up with an
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individual who took a number of companiespublic for a couple billion dollars back in the
early 90s, really true venture capitalist.
Other runner at MAMA, the sports injury kind ofgot me into this weird world of private equity
and venture capital.
But I was fortunate to just really kind oflearn through osmosis through some really big
guys who made a lot of money back in the 80sand 90s and created a lot of value for their
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shareholders.
And that kind of really started me into thatventure capital space working with some medical
device, software technology, telecombusinesses, you know, just kind of really
learning the industry, getting very fortunatethat I got to work on some projects that
probably at the time a 27, 28 year old who'sgone to business school should have been
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working on.
And then I mentioned to you when I was workingon a couple of larger transactions and we're
looking for some institutional capital for someventure capital funds, I started to realize
that a lot of the matching partners had lawdegrees.
They weren't lawyers but they had law degrees.
And thinking I was already working on some highfinance business, I didn't really think an MBA
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would be the most prudent use of my time.
I didn't really come from a financial familyper se.
My mom was an aide for special needs kids.
My dad was military.
And I was just kind of like, I had to figureout what more of this is about.
And, you know, long story short, I applied toabout 30 different law schools.
I figured, you know, getting a law degree wouldreally help me evaluate deals and know how to
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structure transactions.
I was also working with a number of familyoffices at the time who were allocating and
they were asking me very technical questions.
So much like how curating this community thatwe're talking about, I would ask my friends who
are CPAs and attorneys and say, hey, can yougive me some advice here and make me look good
and then maybe you can get a new client for foryour practice.
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Sometimes it works, sometimes it didn't but youknow, just trying to build the the ecosystem
But, yeah, went to I ended up going to lawschool, really focusing on taxation and
partnerships, entity structuring, things thatwere kinda near and dear to the ultra high net
worth and deal making community.
And that kinda really put me on a differenttrajectory so to speak where I just became a
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little bit more than a deal raiser or a dealmaker and a capital raiser, but also just
trying to help, you know, deal guys and familyoffices can make sense of their life and you
know, that's kinda what I've been doing forlack of a better word for the last five to six
years.
I can kinda get some other iterations.
But that, I guess, it took me from 16 to to 24,so to speak.
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I'm happy to drill down into anything there.
Sure.
I mean, one thing that I would maybe hammerdown on is just the mistakes that connectors
make.
So when you're trying to connect deal makers toallocators, A big mistake I see and I always
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like this phrase, but you don't want to feed asteak to a vegan, right?
If somebody likes climate, they may not belooking at AI deals.
So kind of curating and personalizingopportunities to appropriate people that are
looking for those opportunities.
I feel like that's a common mistake thatcommunity builders are making where they're
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just not kind of appropriately connectingpeople to what they're really interested in.
Then people just actually drop off becausethey're not interested.
But I don't know if you have any other examplesof just kinda
I would say, though, the worst would be andthis is gonna be a little bit of a a terrorist
analogy, but feeding a filet mignon to astarving hyena.
(09:45):
Sure.
And what I mean by that is I had a situationwhere very wealthy family had a very certain
look for what they wanted, got introduced to asponsor through a friend, didn't particularly
like the vertical that they were in, but heactually had something that this one family
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wanted.
I gave the sponsor ample time to tell them howto address the family, what their pain points
were, how this could, you know, in more waysthan one be a really good rifle shop slam dunk.
I mean, it was just kinda they had what thefamily was was looking for.
Right?
Sure.
Sponsor couldn't get out of their own way bysimple deal structures.
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Family despite amassing a significant amount ofwealth not very up and up on the typical
private equity lingo.
Which common theme is if families don'tunderstand things, they won't tell you that.
They're just going to get shy and just loseinterest.
So Sure.
You have the sponsor coming in with these hightechnical terms.
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It wasn't that the family was unsophisticated.
They just didn't know the lingo.
It's not their world.
Yeah.
So that kinda turned them off.
And then when the sponsor realized that theyweren't gonna get this particular deal done
with them, which in all intents and purposes,they really should've been able to do so.
They pivoted to four other deals that had zerointerest to the family.
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The sponsor just thinking, well, the family hada lot of money and clearly, they'll just take a
look at anything they wanna do.
Sponsor not really recognizing that they, one,couldn't deliver on the first thing that they
wanted and then two, you know, really never hadthe trust built up with the family.
Sure.
So that the family comes back to me and isbasically a known certain words like, what's up
with this guy?
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You know, why why is he still contacting me?
Which in turn, as a connector, as somebodywho's trying to be a facilitator, somebody
who's already gained the trust, it tends tomake you look not so valuable.
Now.
Yeah.
In this situation, I did things for the familythat provided tremendous value.
So, I wasn't too aware of it but if it was afamily who I had, not a solid foundation with,
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you can quickly burn a bridge there too, right?
Because then all a sudden, you become, youknow, unreliable or.
Yeah.
Just not valuable to them anymore.
So, that's something I think everybody needs tobe cognizant of even people with the best
intentions and listen, the sponsors are a greatindividual but at the same point, wasn't very
coachable.
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I think it's ultimately what it came down to orfor whatever reason didn't think what I was
telling them which was true.
And you'll see a common theme when you'reworking on family offices.
Some people tell you they work with familyoffices.
Oh, you know, done deals with this family, thatfamily.
We look at this stuff together and then thetalk track, you kind of realize that they've
(12:39):
never actually done a deal with the familyoffice because they don't know how to approach
them.
They don't know how to make the alignmentproperly and quite candidly, they don't know
when to say, listen, this this deal isn't a fitfor you, Right?
Like, I'm working on this.
It's a great opportunity but it doesn't alignwith anything that you want and you pick that
up.
Right?
And then I think you wanna make sure you'reworking with individuals who who get that too
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when you're making those introductions.
I would say too, you know, a big tool that I'veseen sponsors and managers use is just just the
concept of education.
So if there's these very sophisticated terms,you know, just kind of integrate in some of
that education around those terms within thepresentation.
That way the family kind of gets that knowledgeor that knowledge transfer, you know,
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throughout the process.
So do you feel like that?
I mean, obviously this person wasn't coachableat all, but have you seen managers and sponsors
kind of use that to kind of break the ice and,you know, help help LPs and allocators just
kinda learn about sectors?
The good ones.
Yeah.
I mean, right?
I mean, good ones really I mean but it's funny.
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So when I see different, you know,presentations or pitches or however you wanna
look at it, there's such an institutionalizedprocess around what what information is out
there.
So, how you have to show, you know, what theIRR is and sensitivity analysis and I do think
if you're talking about specifically going tofamily office capital and allocators, there's a
much different approach to a fifth or sixth genfamily versus a first or second gen family.
(14:12):
Sure.
A lot of the first and second gen families arevery much like dollar in dollar out.
And at least what I've come across where theyget simple concepts.
They've been laser focused on a business forten to thirty five years.
They know that industry inside and out.
But if you can't explain to them in very simpleterms what you're doing your business
transaction, they get turned off pretty quicklybecause they're they they tend to think that
(14:36):
you're not a professional because they canexplain their industry like you would to a four
year old child and child would get it.
And if you can't do that where you're supposedto be an expert, well, then you're not on the
same playing field.
Right?
And I think that's a big thing.
So, just throwing around IRRs and DPIs andthings like that, They don't get the lingo.
(14:58):
But if, you know, they do get the idea of Moic,I think, very quickly because it's just your
multiple in capital.
You put a dollar in, get three out.
But I do think when you're getting into thingsthat are more nuanced, I mean, I have a I've
been work I've been working with a friendshipwith a gentleman who's a music royalty expert
and he's done a tremendous amount of work thereas an operator and sponsor.
(15:19):
But I constantly have had to stress to him.
They don't know what you know.
So, educate the families on what they need toknow and why this makes a lot of sense.
Otherwise, they're just taking a look at whateverything like BlackRock and, you know,
Blackstone, KKR, and the larger institutionsare in the headlines too.
(15:42):
You know, show them that you know what you knowreally well by walking them through case
studies or you know giving a good anecdote ormaking a comparison to something that they're
comfortable with.
Make it real and tangible.
The sponsors and operators who take the time toreally lay that out in a clear and concise way.
(16:04):
They forge long lasting relationships thatmaybe won't result into an allocation in the
first month.
Never does that quickly but it will over time,right?
And again, I think it's just a a paramountpoint.
Most family offices want to invest with verysharp people.
Sure.
And you need to show that, right?
You can't just say, hey, here's my teaser.
(16:25):
You know, show me why you're sharp.
You know, that that's the whole idea.
Yeah, well love to double click on what you'veseen with sixth gen, you know, maybe even third
to sixth gens in terms of how that's differed.
There's been a pretty large real estate familyoffice that came on our podcast a few, you
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know, think maybe a month ago and they hiredsomebody specifically to build a venture and
alternatives portfolio.
So that person was tasked with building out aprogram.
That person was, I think, just kind of hiredexternally,
but
essentially an extension of the family.
(17:06):
And maybe the family or the principals were100% focused on just the real estate and the
family business.
But they have interest in getting into othersectors because there's just other interesting
opportunities.
And sometimes you have to do that to kind ofmitigate risk of the markets when it comes to
your family's business.
(17:26):
So, you know, what I've seen is managers, ifyou're a manager focused on AI or if you're
focused on cybersecurity, you know, that familymay not have any understanding of that
industry, they may not even be interested init.
But if it's interesting, you might peak theinterest of that family.
Maybe the family will eventually allocate, notonly because they have a slight interest in the
(17:49):
industry, but they might just like you as aperson, And they may just see that
entrepreneurial spirit in you kind of similarto how they were right when they were building
their business or their enterprise.
So maybe they just may take a chance and backyou.
So I've seen that a few times where peoplehave, you know, built master classes or they've
had webinars or people come in and they seeinteresting people sign up.
(18:11):
And then I've also seen some MFOs do somepretty interesting webinars to kind of gain the
interest of families through some type of taxstrategy web.
I've signed up for a few of those too.
Thought it was pretty interesting.
How do you think about tax efficient holdingcompanies and structures?
So there's been things that I've nerded outabout that I typically don't allocate my time
(18:34):
to.
I'm like, hey, I saw this in my feed.
And then now we're, you know, we haveprogramming and podcasts and short form content
that can stay on the top of people's newsfeeds.
So how is kind of maybe Gen two to Gen six kindof reacting to that differently versus the, you
know, the Gen ones?
Yeah, there's a lot to unpack there, a coupleof things that you said.
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So I would say on the pure investing side, andgetting into new asset classes, I mean, listen,
I probably, you know, in our Adrian, probablyidentify more fundamentally with, you know, a
gen three or a gen four, you know, what I wouldcall the the rising family office members where
(19:19):
Sure.
They've grown up around this technology.
They've seen things like Bitcoin and crypto andall these different new wave, you know, asset
classes or quasi asset classes, and they thinkthat's exciting.
You know, the gen two, the gen ones who havemade the money have shepherded the the capital
through different storms, so to speak, theytend to have a realization that if they still
(19:43):
have the operating company or a lot of the coreassets, they think cash is king.
Realistically, cash is always king because ifyou don't have that, you can't make
investments, And, you know, you do sometimeshave this this difference of opinions between a
certain age group of the gen three through sixthat they wanna do things that are a little bit
(20:04):
flashier.
Doesn't mean that they're not great investmentideas, but it may not necessarily have an eye
on, well, what is the the realization of someof these gains actually and what does that
timeline look like because we might own, youknow, six or seven different real estate assets
that are covering the the bills but if we'renot reinvesting those proceeds effectively, you
(20:27):
know, we can't necessarily do seven venturedeals with big checks that we're not gonna
monetize.
One, if at all, just the realisticness of aventure but then also, you know, maybe in ten
years, right?
And I think being disconnected from thatinitial liquidity event can sometimes cause a
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little bit of a haze on how the ultimate assetswork together, right?
Then I can go into a different part where, youknow, there's some families that they get calls
all the time.
They don't allocate at all.
I think sometimes sponsors forget that familyoffices are not just set up to make
investments.
Family offices are set up to manage the affairsof the family.
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Sometimes they make investments, sometimes theydon't.
Sometimes all they do is make investments.
Sure.
So definitely, you know, for an individual likemyself where my background is definitely
migrated to extensive tax exit legal planning,showing families where you can create extra
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value beyond the investments, you know, freeingup liquidity in ways that have never been
properly explained to them, showing them whatother families have done in similar situations
to extract extra value out of their holdings,that's always helpful.
You know to the degree that you know an advisoror consulting can actually drill down to actual
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holdings or opcos that they have to show howthey can generate more cash or more earnings, I
think is always helpful.
But you need to really have a goodunderstanding and whether you're a family
member or inside the family or outside thefamily as a consultant, just have a great
understanding of what they're trying to achieveas the family dynamic and then, I think you can
(22:17):
really start to build into like that one familyyou mentioned like they want to build a venture
on.
Why are they building a venture?
If they have big real estate holdings, are theytrying to focus their venture on technology
that helps improve the operational efficienciesof their real estate?
I have one family that I've known for over adecade.
They're in a technology space and they neverdid venture until somebody pitched them
(22:41):
something for their opco and they're like, oh,you're a, are you taking angel money?
And it was a vendor and they're like, oh, neverthought about it.
He's like, I'm gonna give you a couple milliondollars because if I need this product in my my
company and I believe in it and all mycompetitors need it and that's just smart
money, right?
At the end of the day, he he was already soldon the vendor relationship but then he saw the
(23:05):
bigger picture that everybody else in myindustry is gonna need this.
So, they're gonna buy it.
Why not make money off of that and help thisguy scale too?
So, it really just kinda comes down tounderstanding what the family's end goal is.
I mean, yes, obviously, I want everyone'salways trying to make great returns but what do
(23:26):
they define great returns as and sometimes thatgreat return could just be adding more value to
the the holdco.
So that's one thing to kind of be cognizant oftoo.
Sure.
Taking a step back on your career because Ithink it's walked us up to like the age of 24.
We'd love to continue the story and learn alittle more about, you know, your career in the
legal industry and then kinda how and it lookedlike you were doing a lot of private equity
(23:50):
transactional work.
How did you pivot into kinda, you know, muchmore private equity focused, you know,
opportunities?
I I you know, we we started talking really deepon just financials of companies and we get
companies enterprise value when we werechatting.
So we'd love to hear kind of a little deepertake on just kind of your career and then kind
(24:14):
of what you're doing now at your current firmand how you're helping your clients.
Yeah, definitely.
That inflection point, I was probably killingmyself.
I was working for a real estate fund manager.
I was tasked with basically building out asingle family office distribution, capital
markets group.
So, meeting some really cool families.
(24:36):
I was going to law school at night.
Really no time for any kind of social life butthat was kind of my my hustle, right?
I knew it kind of makes sense at the end of theday.
Ultimately ended up leaving that firm just youknow kind of ran its course and had an
opportunity to work with one of my families whodidn't really have any boots on the ground in a
(24:58):
certain location they were at and helped themwith a workout.
Really kind of knew nothing about the workoutspace.
I just kind of knew that, you know, I had therelationship with the family.
They asked me who did we know that we couldhelp and then it kinda came down to the point
was, well, can't you just do this?
(25:19):
And I'm like, well, you know, I can if youreally want me to.
It was really what it came down to.
It was like, I can't do attitude.
And you know, we put together a solution withme and a couple of my partners and we basically
took something that would have been a completenegative on their balance sheet and made them a
little bit of a profit which at the end of theday probably looked like 100X to them because
(25:43):
people really don't like to lose money, right?
They already kinda knew it was a sunk cost sothey threw a couple of dollars at this and she
said, let's see if we can figure it out, right?
And that ultimately kinda launched me into moreof the LBO, you know, workout arena.
That then kind of got me a couple referrals tosome family offices who they wanted me to kinda
(26:04):
come internally and build out, you know, theirstuff for lack of a better word.
You know, we're having a big liquidity event.
What do you, you know, we've heard you're asolution oriented guy and you've got some
really good ideas.
You know, here's what we're trying to do.
Sure.
Which was some really cool learning experienceas well too because getting inside of a family
office finally showed me how the true familydynamics worked.
(26:28):
I mean, we were developing really cool luxuryassets and I think we mentioned one of the
things we were working on was car washes.
We were using that at a time where it was veryinnovative in our structure for some tax
depreciation strategies.
Not stuff that would necessarily pitch toanyone but when you kind of looked at the
holistic portfolio of the family's development,their rental income, and then what the bonus
(26:53):
depreciation was doing through the car washthat they're putting into service.
The net gain on the, you know, on the profitskept in the pocket year over year was probably
better than anything any investment managercould have done in their heyday.
So and understanding that sometimes it can beincredibly frustrating from like a fund manager
to try to raise capital because you know,you're saying, oh, our our returns are whatever
(27:17):
151823% and then you see the family wherethey're like, right but our return net tax or
holdco is double that, you know, not to evenembellish like when you take into tax
consideration.
So, it does get hard to kind of compare applesand oranges, you know, just because two
completely different things and people aretrying to maximize their their profits.
(27:42):
So after I did that, I took a brief stint ofalso managing some public money, kind of doing
some fixed income asset management, some publicequity value dividend investing, working with a
number of my single family offices of just kindof building out bespoke products for them.
And really kind of, you know, what, know, thatkind of migrated and shifted into what I would
(28:06):
call my slant on the multifamily office wherewe're working with our clients essentially as
their full on C suite, doing things that arevery near and dear to them.
Outside of investments, it's structuring theirholding companies.
It's helping them put in the right taxableentities.
It's helping them transfer legacy wealth.
(28:27):
It's helping them think about their assetsdifferently.
You know, we work with some some athleteswhere, you know, they're always, you know, for
lack of better word, hit up for money fromtheir friends.
It's like, well, what can we do with your moneyand your brand and your reputation?
So, yeah, we can always allocate, but, youknow, we also know a couple other people that
can increase the revenues of this businesstenfold.
(28:50):
So let's let's be smart about this.
So that's a big thing when we're looking forpartners to work with, how to really just put
our resources together properly and, you know,resources comes to, you know, much more than
just money.
But really the core competencies are, you know,at the truest sense, super advanced tax
(29:11):
planning, restructuring, recalibrating,generating wealth, but not managing it but
necessarily just making sure everybody knowswhat they have and how to optimize those
values, right?
And I think deals always come along, you know,the right deals always get funded.
I think that the real reality is, you know,providing clarity to a lot of families that we
(29:33):
work with because they just don't know what'sgoing on.
I mean, I could go on for some different horrorstories where some families thought that they
were making money in companies but it justlooked like they were making money, you know,
when you kind of sit down and say, okay, here'show we put the full picture together.
Then, it starts to make a lot more sense.
Then, you uncover some problems and you'relike, well, the problems are really just
(29:54):
temporary.
You know, now, we know what solutions to put inplace and pretty soon, you are making a lot
more money.
It just had to be structured properly.
So, there's a lot I could dive into but thereality, it's really just kind of advanced tax
planning, cash flow management, deal screening,deal structuring, you know, quietly disposing
(30:14):
of assets, just things that are very near anddear to the the entrepreneur at the end of the
day and I work with a lot of first and secondgen families, right?
So, it's a much different, let's call itservice offering than if you were, you know, a
sixth generation family who's been with, youknow, one of the larger, you know, banking
relationships for the last, you know, fifty,sixty years.
(30:36):
Right?
And they need to be treated differently too.
So it's not a one size fits all type ofsituation.
Absolutely.
Yeah.
And for the audience, you know, workout isessentially just a process of restructuring
distrust companies, debt and operations.
So some of the things that, you know, I'mfamiliar with is just, you know, just doing the
whole debt restructuring, operationalrestructuring, you know, whether it's cutting
(30:58):
costs or, you know, obviously increasing sales,but like you said, and then, you know, possibly
you could alongside the debt restructure, maybeget some equity as well, or kind of do some
negotiation with the creditors.
And, you know, essentially just trying to avoidbankruptcy so that hopefully they're, they're
in the green and they could, you know, havesome type of liquidity event where they can
(31:18):
sell to, you know, a larger conglomerate or,you know, just a bigger PE shop that's just
trying to add to their balance sheet.
So I think those are some of my thoughts.
But any any other scenarios with essentially,like, a turnaround that, that'll work out would
be relevant?
Or just did I miss anything else in terms of
No.
No.
I think I think the other thing I would say toois, you know, I think there there is a a
(31:41):
misconception that family offices have alltheir their stuff together.
They're ducks to so outside of the workout,restructuring is also something that's very
important, right?
So there was a situation where family waslooking to sell a business and they really
didn't have what I would call any type offormal tax council.
(32:03):
And we're just sitting there.
We're like, you know, if you do x, y, and z,you're going to save x millions of dollars.
And they're like, well, can't we just do thisas is?
And the answer was yes.
We can.
But if you take thirty to sixty days and dothis, you save this much more money.
And it involved doing a couple different entityswitches and all stuff that, know, is very
(32:25):
pretty standard, but they didn't have what Ithink is being, you know, colloquially thrown
around now.
It's like that expert generalist in house whocould say this needs to be done a little bit
differently to optimize family assets.
Right?
And I guess to a degree that is what we dohere.
But I think that's a big thing where you canprovide, again, a lot of extra value for the
(32:47):
same transaction that needs to happen or wantsto happen but just by doing the right thing.
I mean, it's not saying anything it would be,you it's done wrong.
It's just being smarter about it.
That's really what it sure comes down to.
Yeah.
And I I I think you make a good point.
I mean, I think some people are just lookingfor a bigger picture of how to think about
(33:08):
their strategy and just kind of a holisticplan.
So I'd love to just kinda workshop a couplepermutations of that.
So we've seen, especially in my community, wehave successful business families, families
that have operating companies, but they're alsoallocating to venture.
Maybe that's like a separate LLC.
(33:29):
So I've seen that and then I've seen people setup a formal single family office and kind of
allocate out of that structure.
And they'll build new strategies as they kindof evolve their knowledge of those sectors.
But, if you got a couple and again, these couldjust be generic examples of just kind of a
family.
Hey, they've got, you know, the principles thatare kind of thinking about their holdings and
(33:53):
how they're gonna maybe they're investing insome real estate, they're investing in some
public markets, private markets.
And then there's some families that like, look,we don't we don't really know how to hire this
stuff.
We also don't have the budget.
So we're gonna go out and get like an OCIO,right?
Someone coming out externally, connecting alltheir accounts, coming up with like an
aggregate plan and and developing some type ofholistic strategy.
(34:15):
So, again, you know, you talk to one family,you've talked to one family, so everybody's got
different, problems and different goals.
But maybe just a couple personas.
I figured that'd be kind of fun to kind ofworkshop in terms of, like, couple different
sizes of families, couple families that comefrom different backgrounds or businesses.
And, again, these don't have to be realclients, but maybe just persona types.
(34:38):
Yeah.
I mean, there's a you know, you've kinda gotwhat I would say, like, the first example,
which is, the embedded family office, right?
Where it's a family that they've got theiroperating company.
They're making, you know, 10 to $30,000,000 ayear if you will.
They know they're eventually gonna sell thatbusiness for a couple 100,000,000 but they've
got their internal controls all kind of share.
(35:00):
Like, their bookkeeper for the Opco is alsodoing the bookkeeping for, you know, the family
office.
The CFO for the OpCo was also doing thefinancial analysis for their real estate
acquisition.
If this sounds sloppy to you and the audience,it's because it is, but it is also very common
in the single family first generation space.
(35:26):
That sometimes can be a difficult dynamicbecause of the family of business has been
business for a number of decades, transferringthem to a better entity structure is
challenging because you're going up against,well, this is how we've always done it.
Let's not do it this way.
Right?
(35:46):
But, again, the value proposition would kindabe, okay.
Well, you know, you wouldn't, you know, youwouldn't put a a Hyundai in a garage where you
keep your Ferraris.
Right?
Like, that's kind of ultimately, I think, avery simple anecdote and, you know, kind of
saying, well, if you're gonna make a lot ofreal estate investments, let's start off a real
(36:07):
estate holdco because then you can kind of setup a legitimate property management company if
that's something that you wanna do.
Otherwise, you can outsource it just fine withthe best of them but understand you need to
have a certain amount of mass to get access tothe better ones and make it worthwhile.
If you wanna do some venture investing, youknow, let's make sure that we've got the right
(36:29):
entities again structured so you're not payinga stupid amount of capital gains in certain
situations.
You know, we talk with them through, you know,the qualified small business stock and how to
maybe set that up across different individualswithin the family.
If we can do that in a series.
So, there's a lot of just different strategiesthat you can put together that can create a lot
(36:52):
of value and sometimes it's just saying like,listen, here's what happens in your best case
scenario.
You sell something for $100,000,000.
Here's your tax situation.
If you do it in this situation, here's$100,000,000 and here's how much more you make
that resonates a lot, right?
So then all of sudden, they're like, oh, wedon't, it's not really a problem but I would
like to keep more money, right?
(37:13):
And I would like to basically keep those aftertax returns.
I think that's a really good example whenyou're dealing with those first families.
The second one is kind of like the newly, thenewly liquid, right?
I mean, they've just sold their business for acouple $100,000,000, you know, maybe a billion
dollars.
They never they they maybe did the rightplanning with, like, in the state and a
(37:35):
trusted, team, but they never really took thetime to build out the infrastructure.
And family offices have become very popular andmainstream in some kind of idea with my sales
the last five to ten years, even though it'sbeen around since like the 1600s.
But they want to have a family office.
Like, you know, they just sold their bigbusiness and now they want to be the new shiny
(37:56):
new toy on, you know, wherever they are.
But educating them through what that actuallymeans.
Right?
And, again, in some ways, if they've beenallocating certain private deals, they're used
to one exception and what their cost of capitalis for investing.
And now all of a sudden, you're saying, well,do you wanna do this with a full on team?
It's gonna cost anywhere from 2 to $5,000,000for a typical SG and A, right?
(38:18):
Then, they have a heart attack because they'renot making $25,000,000 a year in EBITDA with
their opco.
They're like, I can't do that.
Like, well, then, you have to go this OCO, OCIOmodel, right?
Now, then, you get into what I would call thehybrid where some people are, well, can I just
do the OCIO model for some stuff that I don'twant to be as hands on because I really want to
get involved in real estate?
(38:38):
Look, of course, but you need to have a planand it's just like anything where I think a lot
of newer families forget that when they firststarted off, they had a strategic plan for
building their business and scaling wealth andgrowing.
You kind of need to do that again from thebeginning.
You know, what your what is your vision foryour family office?
Do you wanna leave a legacy?
(38:59):
Do you wanna maximize wealth?
Do you just wanna buy iconic assets?
You need to kind of set them in.
Who's gonna be the people to do that?
Do you have the talent and resources in house?
If you do, how do you augment it with, youknow, CIO or other external advisers and the
other big issue is too and I kind of counsel alot of the families that I've I've worked with
(39:19):
in the past Do you, how much of thatindividual's time do you need and is there good
alignment there?
Because you might say, oh, I'm working with thebest lawyer in New York City or Los Angeles and
they've done everything for forty years.
I'm like, fantastic but you're not their onlyclient.
It's just a reality.
(39:40):
Now, you may not be able to afford them fulltime but if you want somebody like them, let's
have a conversation about getting somebody inhouse on a manageable budget so you can get
that full time dedication if that's what you'redesiring for the next twelve two thousand four
hundred thirty six months and that's not toodissimilar what you see in the CFO community.
(40:01):
Yeah.
Like I've explained to people where there'sdifferent types of CFOs or CFOs who you're
bootstrapping.
There's CFOs who are helping you through yourseries A and B rounds or CFOs who prepare you
to go public and then they're gone and there'snothing wrong with that.
It's just it's a certain skill set.
So, those I think are the two archetypes that Ideal with a lot.
(40:21):
You know, the other than side is you know, thatfourth, fifth, sixth generation family that's
been established.
You know, I know one good one of my greatfriends.
They basically just manage the affairs.
You know, it's a large family.
They've been an industrial family forgenerations and they've got some cool dynamics.
I mean, you know, stuff that you know, if someof the younger generations want to buy a house,
(40:46):
they don't give them the money but they gothrough the process of getting what like a pre
qualification letter for their home and thenthe family funds the loan based on those
dynamics, right?
Because the family idea is like we wanna beable to assist but we wanna keep the money in
house.
You know, one of the big things that they alsodo is, you know, they do their annual family
(41:08):
meeting which is very akin to a publiccompany's, you know, shareholder annual
shareholder meeting.
Some things that you know, sponsors andoperators may not realize but you know, some of
these families are quite large.
Three forty five hundred people.
So, they rent out a hotel in a really niceplace and they talk about what's going on with
the family holdings and it's different but forthem, it's very normal because they've been
(41:32):
doing it for for generations.
Guys like that though or for families likethat.
I mean, they've got much different processes,much more institutional controls and harder to
access, harder to work with, maybe sometimesimpossible to work with because they are been
working with the same managers for the last,you know, thirty, forty, fifty years or they
(41:55):
don't really wanna take any more risks so theyjust give capital to, you know, the bigger
banks of the world and there's nothing wrongwith that but it's just like sometimes these
family have amassed so much money that there'snot really a need to take any more risk, you
know, so that becomes challenging too.
So, those are, I guess, probably like the threeout there that would say kinda when you're
(42:15):
thinking about the family office community.
Sure.
Are the different types of kind of be aware of.
Yeah.
No.
That's really helpful.
There's there's one more point I wanna discussas well.
So, you know, I just finished the book which Ihighly recommend, really enjoyed reading.
It's called Die With Zero.
It's by Bill Perkins.
I think he's a hedge fund manager in Austin,and he talks about just thinking about how many
(42:38):
more decades you have.
He he uses this app.
I think the app is called the the countdown appand it actually visualizes how many days you
have left.
And, you know, what what what's interestingabout that point is if you're giving away your
money, you know, the best time to give thatinheritance to your kids is, you know, the
prime time to use that money is in yourthirties.
(43:00):
Right?
They're not gonna they're not gonna use thatmoney and enjoy it the most when they're in
their sixties or seventies.
Right?
So they're starting to come into their career.
They're starting to think about their kids orbuilding a family.
So I thought that was a pretty interestingpoint that, you know, the the prime time to
kinda use that inheritance is probably in yourthirties to maybe, you know, late late forties
(43:22):
to early fifties.
But after that, you know, it's just not the themost desirable time to to make use of that.
And then his whole concept is, you know, afteryou've taken care of all of your affairs, you
know, kinda made sure that everything is set upwith your trust and you've given away all of
the money to your kids and taken care ofeverything, there's a there's an amount of
money that you actually need to retire.
(43:43):
And what the book is saying is that you it'sactually lower than you really expect, you
know, in terms of your your runway to be ableto cover most of your expenses, You know, and
and you wanna be able to spend the most of thatas you can, you know, so that you can enjoy,
you know, life experiences.
So just wanted to hear your reaction to thatand just maybe tie in a few examples that you
(44:06):
have with just families and how they thinkabout their second gens and kind of thinking
about their planning, because that's a hugetheme that, you know, we're we're cascading in
this conversation.
Just having a plan, you know, if you're in yourfifties, you got maybe what?
Like another twenty five, thirty years left, tokinda really think about your legacy.
So how, you know, how have you kinda tied insome of those conversations with planning
(44:28):
around that?
So, I love the Perkins comment and I'm gonnabutcher it but Warren Buffett had a kinda
similar slang but it was basically like, it'snice to have a lot of money but you know, you
don't wanna keep it around forever.
It's basically like, you know, wait untilyou're 80 to start having sex.
(44:49):
Sorry, that's a little coward but Warren saidit, not me.
And the reality is it's like, yeah, I mean,what is it?
Pick a dollar or something.
You know, man.
I mean, what what is the point of leaving$50,000,000 to your grandkids when they're 65?
When it could have helped them when they're 25or 30 or or 35 or what have you.
(45:11):
I think the more intentional families realizehow to kind of transfer that wealth for
operative points.
So funding college in its entirety, maybe doinga year abroad to fund that if they want to go
experience the world.
(45:33):
There's some unique things there.
You know I have a family friend who I wouldn'tnecessarily call like a family office so they
probably are.
The family basically allows the kids to borrowa certain amount of money to start a business
but they actually have to go through theprocess of giving the grandparents like a
(45:54):
business plan and be like, they get the moneyas long as it's not crazy but like they want
them to go through that process.
So, I think, you know, just being veryintentional about what you're trying to do.
I mean, I think that the big thing is also kindof like, you know, now, everybody's gonna like
build your legacy and make sure you have yourlegacy.
It doesn't, your legacy as a family officedoesn't necessarily have to be like, oh, like,
(46:16):
I wanna own an iconic building or you know, Iwanna build this.
It could just be like doing well by yourindividual family members and making sure that
they have the start that you didn't have,right?
I mean, not everybody's built for the struggleof entrepreneurship.
We could read as many of these books as I mean,whatever the Vanderbilts and the Rockefellers
(46:37):
did, you know, back in the eighteen hundreds.
Like, I don't think anybody, you know, wants todo that stuff nowadays, right?
And you can only imagine but I mean, you know,I think the reality is, you know, regardless of
the wealth, it's just, we are very human stilland like a lot of these families just wanna do
well by their their family members and makesure that they're taken care of.
So, I think that's that's ultimately theplanning purpose where it's like, what do we,
(47:00):
what are we doing here?
I've I've I've worked with one family andthey're like, well, I'm like, who, day one, who
are we planning for?
Who are the key members?
Who are we, what, what do we need to thinkabout?
And the Patriots was just flat out like, youknow, my kids have already gotten X, Y, and Z.
They've got enough.
Like, okay.
So, what's, now, he didn't, he didn't know whathe wanted to do with it afterwards but the
(47:23):
reality was he's like, they're good.
Yeah.
You know, by all 10 counts, the the kids aregonna be fine But, you know, you still have to
define what do you wanna do with the rest ofthat capital, whether it is donating to
charities, setting up a foundation.
So it's a lot of interesting other potentialproblems that come up, but, you know, I think
also helping those family members define whatit is and why and what that vision is.
(47:49):
Is every bit is just as important as when yougo to start out a company too, right?
So, it's like now you've got this wealth,What's the end result?
It's not the worst thing dying with extramoney, right?
I mean, it's still going to somebody but beingable to kind of utilize that to get to what
goals you want to see for yourself and yourfamily members.
I mean II always say use it now.
(48:10):
Why wait?
You know, you kinda get into the whole argumentabout, you know, I'm not saying don't save for
retirement, right?
For a normal under ultra high net worth folksbut the reality is like, the dollar now is
always going to be worth more today than it'sgonna be worth in ten years.
Sure.
So, even if you're like putting it away andputting all these like tax advantage retirement
(48:31):
accounts, it's like, well, in theory, if taxeskeep going up, you're actually hurting yourself
by saving in a four zero one ks.
Like, I don't care what your tax deferral rateis.
Like, you're not gonna make that money back up.
Sure.
Unless you invest it in something really goodnow or start a pet project or began a charity
event.
So, I think that's just showing like how thatmoney today can really spur what you want to do
(48:56):
in the next five to ten years as long as youhave a plan.
It's, you know, you can't beat that.
Sure.
Well, hey, this was amazing.
I really appreciate all the wisdom.
I'd love one final piece of advice.
This could be from a mentor.
It could be from a past experience that you hadin your career, but, you know, if you were to
give us a piece of wisdom, what would you leaveus with?
(49:22):
I would say in my younger years, I was workingwith on a deal with a banker who was very
prominent and he just kinda looked at me andwas like, you are at such an inflection point
that you were so worried about doing theperfect deal that you forgot that you just
(49:42):
needed to get a deal done.
Sure.
And then you were good.
And I'd never really kinda clicked until maybeabout four or five years after the point but
the reality is kind of just in simple termslike, don't wait for the stars to align because
they're never going to.
The reality is get going because you as anindividual, if you're 25 or 35 or even 45,
(50:04):
you've got a lot of compounding interest interms of time in years, right?
Yeah.
Not just as an investment.
So, the sooner you can get started doing whatyou love or what your ambition is, It doesn't
have to be perfect.
Just get out and go.
Yeah.
You know, that that I think was something thatalways kinda stuck with me.
No.
I totally agree with that.
(50:24):
I think there's people that synthesize andanalyze and they're paralyzed.
Right?
The analysis by paralysis.
Yeah, and then just the deal never happensbecause it needs to be perfect.
And then I think the other fork in that ispeople just believe in overnight success.
But like in reality, everything is like goingto the gym.
Right?
I mean, you gotta to to get those muscles towhere they need to be.
(50:48):
You know, you gotta go in the gym every day andit might you know, an overnight success for
many of these successful entrepreneurs is liketen years.
People think that they just became successfulimmediately, but it's several years of time
refining that craft and whatever it is.
But you gotta go out there and do it.
(51:08):
If you don't do it, then it never, you know,the first steps never happen.
Yeah, I mean, to your point, a lot of people, Ithink, always kind of see the end result.
They never witness a struggle because they tryto distance themselves from the struggle.
Sure.
You know, so but again, you gotta put in thehours.
That's it.
Yeah.
So Absolutely.
Well, hey.
I really appreciate you having me.
(51:30):
Yeah.
Absolutely.
This is fun.
Well, thank you so much, Greg, and thanks foreverybody else, and, have a have an amazing
day.
Yeah.
Thanks so much, y'all.
All
right.
Take care.
A lot of the first and second gen families arevery much, like, dollar in, dollar out, in at
(00:04):
least what I've come across where they getsimple concepts.
They've been laser focused on a business forten to thirty five years.
They know that industry inside and out.
But if you can't explain to them in very simpleterms what you're doing your business
transaction, they get turned off pretty quicklybecause they're they they tend to think that
you're not a professional because they canexplain their industry like you would to a four
(00:29):
year old child and child would get it.
And if you can't do that where you're supposedto be an expert, well, then you're not on the
same plane.
Right?
And I think that's a big thing.
So, just throwing around IRRs and DPIs andthings like that, they don't get the lingo.
But if you know, they do get the idea of MOIC,I think, very quickly because it's just your
(00:50):
multiple on capital.
To The Investor, a podcast where I, JoelPalafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
(01:12):
So join us on this journey as we explore theseinsights.
All right, so we are live today with a goodbuddy of mine, Greg.
Got to catch up with him over dinner a fewweeks ago and really got to know about his
story.
And it was just a really interesting storyabout career pivots.
(01:32):
A lot of us get into this space one way or theother.
And it's oftentimes not one clear path.
You could become an attorney, you could go tobusiness school, you could be a rocket
scientist, and really pivot your career intoany industry that you want to get into.
(01:55):
Spend some time with Greg.
And what's really interesting about his storyis he's pivoted his career a couple times
similar to how I have.
He started in the legal industry and then kindof pivoted into private equity.
And now he's working with ultra high net worthindividuals and collaborating with them and
building communities and building networks.
(02:16):
And that's how we met.
We met through another close friend that justhas been able to curate amazing communities of
institutional investors.
So, Greg, number one, welcome to the show.
Number two, excited to see you again latertonight to talk talk more, more about this.
So I'm really, really privileged to have, aseasoned private equity professional like Greg
(02:38):
come in and share his story.
So Greg, why don't you kind of tell us a littlemore, we got plenty of time.
So tell us a little more about your career,your background.
You know, you got pretty much got a free ride,you know, to law school.
So that was a unique story as well.
But why don't we start with, you know, yourearly childhood, what you thought you wanted to
do, and how that evolved over time and how thatcomplemented, your ambition to just kinda
(03:03):
continue growing in your career?
Oh, jeez.
We're going back deep, though.
Okay.
So a story that probably doesn't get shared toooften, but I think my first foray into private
equity and private finance was I was in a club.
It was called, FBLA as future business leadersof America, which oddly was the, like, you
(03:30):
know, smaller group of what was called DECA, isvery big for for marketing if some of your
people in your audience are familiar with that.
And that really kinda gave me, like, theentrepreneur bug.
I came in second actually for New Jersey's,like, mister f b l a.
I didn't really understand how, but it wascool.
I got involved.
It was kinda helping, like, do smallbusinesses, involve with the community.
(03:53):
One of the things I actually started when I was15, 16 was actually doing basically, like, you
know, computer repair work.
Right?
Back in the day when Geek Squad, for everybodywho remembers that, was just kinda starting
off.
I was kinda like a competitor for them locally.
I mean, I was just kind of, you know, helpingfriends and, you know, friends, families fix
(04:17):
their computers and stuff, their IT stuff.
Really didn't think there was much of abusiness before before.
It just kinda was helping add value, whichwould be a a theme of my my career.
But one of my friends' mothers gave me, like,$200 for, like, an hour and a half worth of
work, which, you know, when you're in highschool, it's a ton of money.
Oh, yeah.
And then I and then I went and did work forsomebody else.
(04:38):
Wasn't even expecting anything.
It was more of a favor, and she gave me, like,another 150, $200.
And I'm like, I think I've got, like, abusiness here.
Like, it was just very weird.
And, you know, I asked two of my friends tohelp me because I was basically was getting a
little bit of a following within the localcommunity.
(04:59):
And one of my friends who was a really goodprogrammer was almost laughing at it because he
was like, there's no way people are paying usfor this because he was very advanced, far
beyond me.
Didn't have a lot of great human social skills.
But he's like, there's no way somebody's payingus a couple $100 an hour just to get this stuff
(05:19):
done.
And I'm like, well, that's the going rate.
I mean, I never really set the price.
This is what they offer, and we're solving aneed, and they don't know how to fix it.
So that kind of really stuck with me.
You know?
I probably didn't know how prescient thatcomment was back in the day, but that really
got me into focusing on that.
(05:40):
I tried to do a couple tech ventures, which Iwasn't so great at.
But, I mean, I think that was kind of the firststep in entrepreneurship.
I went to Monmouth University and got anundergraduate degree in business and finance.
Didn't really know a whole heck of a lot aboutfinance but was able to sync up with an
(06:00):
individual who took a number of companiespublic for a couple billion dollars back in the
early 90s, really true venture capitalist.
Other runner at MAMA, the sports injury kind ofgot me into this weird world of private equity
and venture capital.
But I was fortunate to just really kind oflearn through osmosis through some really big
guys who made a lot of money back in the 80sand 90s and created a lot of value for their
(06:25):
shareholders.
And that kind of really started me into thatventure capital space working with some medical
device, software technology, telecombusinesses, you know, just kind of really
learning the industry, getting very fortunatethat I got to work on some projects that
probably at the time a 27, 28 year old who'sgone to business school should have been
(06:46):
working on.
And then I mentioned to you when I was workingon a couple of larger transactions and we're
looking for some institutional capital for someventure capital funds, I started to realize
that a lot of the matching partners had lawdegrees.
They weren't lawyers but they had law degrees.
And thinking I was already working on some highfinance business, I didn't really think an MBA
(07:10):
would be the most prudent use of my time.
I didn't really come from a financial familyper se.
My mom was an aide for special needs kids.
My dad was military.
And I was just kind of like, I had to figureout what more of this is about.
And, you know, long story short, I applied toabout 30 different law schools.
I figured, you know, getting a law degree wouldreally help me evaluate deals and know how to
(07:32):
structure transactions.
I was also working with a number of familyoffices at the time who were allocating and
they were asking me very technical questions.
So much like how curating this community thatwe're talking about, I would ask my friends who
are CPAs and attorneys and say, hey, can yougive me some advice here and make me look good
and then maybe you can get a new client for foryour practice.
(07:56):
Sometimes it works, sometimes it didn't but youknow, just trying to build the the ecosystem
But, yeah, went to I ended up going to lawschool, really focusing on taxation and
partnerships, entity structuring, things thatwere kinda near and dear to the ultra high net
worth and deal making community.
And that kinda really put me on a differenttrajectory so to speak where I just became a
(08:18):
little bit more than a deal raiser or a dealmaker and a capital raiser, but also just
trying to help, you know, deal guys and familyoffices can make sense of their life and you
know, that's kinda what I've been doing forlack of a better word for the last five to six
years.
I can kinda get some other iterations.
But that, I guess, it took me from 16 to to 24,so to speak.
(08:41):
I'm happy to drill down into anything there.
Sure.
I mean, one thing that I would maybe hammerdown on is just the mistakes that connectors
make.
So when you're trying to connect deal makers toallocators, A big mistake I see and I always
(09:03):
like this phrase, but you don't want to feed asteak to a vegan, right?
If somebody likes climate, they may not belooking at AI deals.
So kind of curating and personalizingopportunities to appropriate people that are
looking for those opportunities.
I feel like that's a common mistake thatcommunity builders are making where they're
(09:24):
just not kind of appropriately connectingpeople to what they're really interested in.
Then people just actually drop off becausethey're not interested.
But I don't know if you have any other examplesof just kinda
I would say, though, the worst would be andthis is gonna be a little bit of a a terrorist
analogy, but feeding a filet mignon to astarving hyena.
(09:45):
Sure.
And what I mean by that is I had a situationwhere very wealthy family had a very certain
look for what they wanted, got introduced to asponsor through a friend, didn't particularly
like the vertical that they were in, but heactually had something that this one family
(10:09):
wanted.
I gave the sponsor ample time to tell them howto address the family, what their pain points
were, how this could, you know, in more waysthan one be a really good rifle shop slam dunk.
I mean, it was just kinda they had what thefamily was was looking for.
Right?
Sure.
Sponsor couldn't get out of their own way bysimple deal structures.
(10:32):
Family despite amassing a significant amount ofwealth not very up and up on the typical
private equity lingo.
Which common theme is if families don'tunderstand things, they won't tell you that.
They're just going to get shy and just loseinterest.
So Sure.
You have the sponsor coming in with these hightechnical terms.
(10:54):
It wasn't that the family was unsophisticated.
They just didn't know the lingo.
It's not their world.
Yeah.
So that kinda turned them off.
And then when the sponsor realized that theyweren't gonna get this particular deal done
with them, which in all intents and purposes,they really should've been able to do so.
They pivoted to four other deals that had zerointerest to the family.
(11:14):
The sponsor just thinking, well, the family hada lot of money and clearly, they'll just take a
look at anything they wanna do.
Sponsor not really recognizing that they, one,couldn't deliver on the first thing that they
wanted and then two, you know, really never hadthe trust built up with the family.
Sure.
So that the family comes back to me and isbasically a known certain words like, what's up
with this guy?
(11:35):
You know, why why is he still contacting me?
Which in turn, as a connector, as somebodywho's trying to be a facilitator, somebody
who's already gained the trust, it tends tomake you look not so valuable.
Now.
Yeah.
In this situation, I did things for the familythat provided tremendous value.
So, I wasn't too aware of it but if it was afamily who I had, not a solid foundation with,
(11:58):
you can quickly burn a bridge there too, right?
Because then all a sudden, you become, youknow, unreliable or.
Yeah.
Just not valuable to them anymore.
So, that's something I think everybody needs tobe cognizant of even people with the best
intentions and listen, the sponsors are a greatindividual but at the same point, wasn't very
coachable.
(12:18):
I think it's ultimately what it came down to orfor whatever reason didn't think what I was
telling them which was true.
And you'll see a common theme when you'reworking on family offices.
Some people tell you they work with familyoffices.
Oh, you know, done deals with this family, thatfamily.
We look at this stuff together and then thetalk track, you kind of realize that they've
(12:39):
never actually done a deal with the familyoffice because they don't know how to approach
them.
They don't know how to make the alignmentproperly and quite candidly, they don't know
when to say, listen, this this deal isn't a fitfor you, Right?
Like, I'm working on this.
It's a great opportunity but it doesn't alignwith anything that you want and you pick that
up.
Right?
And then I think you wanna make sure you'reworking with individuals who who get that too
(13:01):
when you're making those introductions.
I would say too, you know, a big tool that I'veseen sponsors and managers use is just just the
concept of education.
So if there's these very sophisticated terms,you know, just kind of integrate in some of
that education around those terms within thepresentation.
That way the family kind of gets that knowledgeor that knowledge transfer, you know,
(13:26):
throughout the process.
So do you feel like that?
I mean, obviously this person wasn't coachableat all, but have you seen managers and sponsors
kind of use that to kind of break the ice and,you know, help help LPs and allocators just
kinda learn about sectors?
The good ones.
Yeah.
I mean, right?
I mean, good ones really I mean but it's funny.
(13:46):
So when I see different, you know,presentations or pitches or however you wanna
look at it, there's such an institutionalizedprocess around what what information is out
there.
So, how you have to show, you know, what theIRR is and sensitivity analysis and I do think
if you're talking about specifically going tofamily office capital and allocators, there's a
much different approach to a fifth or sixth genfamily versus a first or second gen family.
(14:12):
Sure.
A lot of the first and second gen families arevery much like dollar in dollar out.
And at least what I've come across where theyget simple concepts.
They've been laser focused on a business forten to thirty five years.
They know that industry inside and out.
But if you can't explain to them in very simpleterms what you're doing your business
transaction, they get turned off pretty quicklybecause they're they they tend to think that
(14:36):
you're not a professional because they canexplain their industry like you would to a four
year old child and child would get it.
And if you can't do that where you're supposedto be an expert, well, then you're not on the
same playing field.
Right?
And I think that's a big thing.
So, just throwing around IRRs and DPIs andthings like that, They don't get the lingo.
(14:58):
But if, you know, they do get the idea of Moic,I think, very quickly because it's just your
multiple in capital.
You put a dollar in, get three out.
But I do think when you're getting into thingsthat are more nuanced, I mean, I have a I've
been work I've been working with a friendshipwith a gentleman who's a music royalty expert
and he's done a tremendous amount of work thereas an operator and sponsor.
(15:19):
But I constantly have had to stress to him.
They don't know what you know.
So, educate the families on what they need toknow and why this makes a lot of sense.
Otherwise, they're just taking a look at whateverything like BlackRock and, you know,
Blackstone, KKR, and the larger institutionsare in the headlines too.
(15:42):
You know, show them that you know what you knowreally well by walking them through case
studies or you know giving a good anecdote ormaking a comparison to something that they're
comfortable with.
Make it real and tangible.
The sponsors and operators who take the time toreally lay that out in a clear and concise way.
(16:04):
They forge long lasting relationships thatmaybe won't result into an allocation in the
first month.
Never does that quickly but it will over time,right?
And again, I think it's just a a paramountpoint.
Most family offices want to invest with verysharp people.
Sure.
And you need to show that, right?
You can't just say, hey, here's my teaser.
(16:25):
You know, show me why you're sharp.
You know, that that's the whole idea.
Yeah, well love to double click on what you'veseen with sixth gen, you know, maybe even third
to sixth gens in terms of how that's differed.
There's been a pretty large real estate familyoffice that came on our podcast a few, you
(16:46):
know, think maybe a month ago and they hiredsomebody specifically to build a venture and
alternatives portfolio.
So that person was tasked with building out aprogram.
That person was, I think, just kind of hiredexternally,
but
essentially an extension of the family.
(17:06):
And maybe the family or the principals were100% focused on just the real estate and the
family business.
But they have interest in getting into othersectors because there's just other interesting
opportunities.
And sometimes you have to do that to kind ofmitigate risk of the markets when it comes to
your family's business.
(17:26):
So, you know, what I've seen is managers, ifyou're a manager focused on AI or if you're
focused on cybersecurity, you know, that familymay not have any understanding of that
industry, they may not even be interested init.
But if it's interesting, you might peak theinterest of that family.
Maybe the family will eventually allocate, notonly because they have a slight interest in the
(17:49):
industry, but they might just like you as aperson, And they may just see that
entrepreneurial spirit in you kind of similarto how they were right when they were building
their business or their enterprise.
So maybe they just may take a chance and backyou.
So I've seen that a few times where peoplehave, you know, built master classes or they've
had webinars or people come in and they seeinteresting people sign up.
(18:11):
And then I've also seen some MFOs do somepretty interesting webinars to kind of gain the
interest of families through some type of taxstrategy web.
I've signed up for a few of those too.
Thought it was pretty interesting.
How do you think about tax efficient holdingcompanies and structures?
So there's been things that I've nerded outabout that I typically don't allocate my time
(18:34):
to.
I'm like, hey, I saw this in my feed.
And then now we're, you know, we haveprogramming and podcasts and short form content
that can stay on the top of people's newsfeeds.
So how is kind of maybe Gen two to Gen six kindof reacting to that differently versus the, you
know, the Gen ones?
Yeah, there's a lot to unpack there, a coupleof things that you said.
(18:57):
So I would say on the pure investing side, andgetting into new asset classes, I mean, listen,
I probably, you know, in our Adrian, probablyidentify more fundamentally with, you know, a
gen three or a gen four, you know, what I wouldcall the the rising family office members where
(19:19):
Sure.
They've grown up around this technology.
They've seen things like Bitcoin and crypto andall these different new wave, you know, asset
classes or quasi asset classes, and they thinkthat's exciting.
You know, the gen two, the gen ones who havemade the money have shepherded the the capital
through different storms, so to speak, theytend to have a realization that if they still
(19:43):
have the operating company or a lot of the coreassets, they think cash is king.
Realistically, cash is always king because ifyou don't have that, you can't make
investments, And, you know, you do sometimeshave this this difference of opinions between a
certain age group of the gen three through sixthat they wanna do things that are a little bit
(20:04):
flashier.
Doesn't mean that they're not great investmentideas, but it may not necessarily have an eye
on, well, what is the the realization of someof these gains actually and what does that
timeline look like because we might own, youknow, six or seven different real estate assets
that are covering the the bills but if we'renot reinvesting those proceeds effectively, you
(20:27):
know, we can't necessarily do seven venturedeals with big checks that we're not gonna
monetize.
One, if at all, just the realisticness of aventure but then also, you know, maybe in ten
years, right?
And I think being disconnected from thatinitial liquidity event can sometimes cause a
(20:50):
little bit of a haze on how the ultimate assetswork together, right?
Then I can go into a different part where, youknow, there's some families that they get calls
all the time.
They don't allocate at all.
I think sometimes sponsors forget that familyoffices are not just set up to make
investments.
Family offices are set up to manage the affairsof the family.
(21:11):
Sometimes they make investments, sometimes theydon't.
Sometimes all they do is make investments.
Sure.
So definitely, you know, for an individual likemyself where my background is definitely
migrated to extensive tax exit legal planning,showing families where you can create extra
(21:32):
value beyond the investments, you know, freeingup liquidity in ways that have never been
properly explained to them, showing them whatother families have done in similar situations
to extract extra value out of their holdings,that's always helpful.
You know to the degree that you know an advisoror consulting can actually drill down to actual
(21:54):
holdings or opcos that they have to show howthey can generate more cash or more earnings, I
think is always helpful.
But you need to really have a goodunderstanding and whether you're a family
member or inside the family or outside thefamily as a consultant, just have a great
understanding of what they're trying to achieveas the family dynamic and then, I think you can
(22:17):
really start to build into like that one familyyou mentioned like they want to build a venture
on.
Why are they building a venture?
If they have big real estate holdings, are theytrying to focus their venture on technology
that helps improve the operational efficienciesof their real estate?
I have one family that I've known for over adecade.
They're in a technology space and they neverdid venture until somebody pitched them
(22:41):
something for their opco and they're like, oh,you're a, are you taking angel money?
And it was a vendor and they're like, oh, neverthought about it.
He's like, I'm gonna give you a couple milliondollars because if I need this product in my my
company and I believe in it and all mycompetitors need it and that's just smart
money, right?
At the end of the day, he he was already soldon the vendor relationship but then he saw the
(23:05):
bigger picture that everybody else in myindustry is gonna need this.
So, they're gonna buy it.
Why not make money off of that and help thisguy scale too?
So, it really just kinda comes down tounderstanding what the family's end goal is.
I mean, yes, obviously, I want everyone'salways trying to make great returns but what do
(23:26):
they define great returns as and sometimes thatgreat return could just be adding more value to
the the holdco.
So that's one thing to kind of be cognizant oftoo.
Sure.
Taking a step back on your career because Ithink it's walked us up to like the age of 24.
We'd love to continue the story and learn alittle more about, you know, your career in the
legal industry and then kinda how and it lookedlike you were doing a lot of private equity
(23:50):
transactional work.
How did you pivot into kinda, you know, muchmore private equity focused, you know,
opportunities?
I I you know, we we started talking really deepon just financials of companies and we get
companies enterprise value when we werechatting.
So we'd love to hear kind of a little deepertake on just kind of your career and then kind
(24:14):
of what you're doing now at your current firmand how you're helping your clients.
Yeah, definitely.
That inflection point, I was probably killingmyself.
I was working for a real estate fund manager.
I was tasked with basically building out asingle family office distribution, capital
markets group.
So, meeting some really cool families.
(24:36):
I was going to law school at night.
Really no time for any kind of social life butthat was kind of my my hustle, right?
I knew it kind of makes sense at the end of theday.
Ultimately ended up leaving that firm just youknow kind of ran its course and had an
opportunity to work with one of my families whodidn't really have any boots on the ground in a
(24:58):
certain location they were at and helped themwith a workout.
Really kind of knew nothing about the workoutspace.
I just kind of knew that, you know, I had therelationship with the family.
They asked me who did we know that we couldhelp and then it kinda came down to the point
was, well, can't you just do this?
(25:19):
And I'm like, well, you know, I can if youreally want me to.
It was really what it came down to.
It was like, I can't do attitude.
And you know, we put together a solution withme and a couple of my partners and we basically
took something that would have been a completenegative on their balance sheet and made them a
little bit of a profit which at the end of theday probably looked like 100X to them because
(25:43):
people really don't like to lose money, right?
They already kinda knew it was a sunk cost sothey threw a couple of dollars at this and she
said, let's see if we can figure it out, right?
And that ultimately kinda launched me into moreof the LBO, you know, workout arena.
That then kind of got me a couple referrals tosome family offices who they wanted me to kinda
(26:04):
come internally and build out, you know, theirstuff for lack of a better word.
You know, we're having a big liquidity event.
What do you, you know, we've heard you're asolution oriented guy and you've got some
really good ideas.
You know, here's what we're trying to do.
Sure.
Which was some really cool learning experienceas well too because getting inside of a family
office finally showed me how the true familydynamics worked.
(26:28):
I mean, we were developing really cool luxuryassets and I think we mentioned one of the
things we were working on was car washes.
We were using that at a time where it was veryinnovative in our structure for some tax
depreciation strategies.
Not stuff that would necessarily pitch toanyone but when you kind of looked at the
holistic portfolio of the family's development,their rental income, and then what the bonus
(26:53):
depreciation was doing through the car washthat they're putting into service.
The net gain on the, you know, on the profitskept in the pocket year over year was probably
better than anything any investment managercould have done in their heyday.
So and understanding that sometimes it can beincredibly frustrating from like a fund manager
to try to raise capital because you know,you're saying, oh, our our returns are whatever
(27:17):
151823% and then you see the family wherethey're like, right but our return net tax or
holdco is double that, you know, not to evenembellish like when you take into tax
consideration.
So, it does get hard to kind of compare applesand oranges, you know, just because two
completely different things and people aretrying to maximize their their profits.
(27:42):
So after I did that, I took a brief stint ofalso managing some public money, kind of doing
some fixed income asset management, some publicequity value dividend investing, working with a
number of my single family offices of just kindof building out bespoke products for them.
And really kind of, you know, what, know, thatkind of migrated and shifted into what I would
(28:06):
call my slant on the multifamily office wherewe're working with our clients essentially as
their full on C suite, doing things that arevery near and dear to them.
Outside of investments, it's structuring theirholding companies.
It's helping them put in the right taxableentities.
It's helping them transfer legacy wealth.
(28:27):
It's helping them think about their assetsdifferently.
You know, we work with some some athleteswhere, you know, they're always, you know, for
lack of better word, hit up for money fromtheir friends.
It's like, well, what can we do with your moneyand your brand and your reputation?
So, yeah, we can always allocate, but, youknow, we also know a couple other people that
can increase the revenues of this businesstenfold.
(28:50):
So let's let's be smart about this.
So that's a big thing when we're looking forpartners to work with, how to really just put
our resources together properly and, you know,resources comes to, you know, much more than
just money.
But really the core competencies are, you know,at the truest sense, super advanced tax
(29:11):
planning, restructuring, recalibrating,generating wealth, but not managing it but
necessarily just making sure everybody knowswhat they have and how to optimize those
values, right?
And I think deals always come along, you know,the right deals always get funded.
I think that the real reality is, you know,providing clarity to a lot of families that we
(29:33):
work with because they just don't know what'sgoing on.
I mean, I could go on for some different horrorstories where some families thought that they
were making money in companies but it justlooked like they were making money, you know,
when you kind of sit down and say, okay, here'show we put the full picture together.
Then, it starts to make a lot more sense.
Then, you uncover some problems and you'relike, well, the problems are really just
(29:54):
temporary.
You know, now, we know what solutions to put inplace and pretty soon, you are making a lot
more money.
It just had to be structured properly.
So, there's a lot I could dive into but thereality, it's really just kind of advanced tax
planning, cash flow management, deal screening,deal structuring, you know, quietly disposing
(30:14):
of assets, just things that are very near anddear to the the entrepreneur at the end of the
day and I work with a lot of first and secondgen families, right?
So, it's a much different, let's call itservice offering than if you were, you know, a
sixth generation family who's been with, youknow, one of the larger, you know, banking
relationships for the last, you know, fifty,sixty years.
(30:36):
Right?
And they need to be treated differently too.
So it's not a one size fits all type ofsituation.
Absolutely.
Yeah.
And for the audience, you know, workout isessentially just a process of restructuring
distrust companies, debt and operations.
So some of the things that, you know, I'mfamiliar with is just, you know, just doing the
whole debt restructuring, operationalrestructuring, you know, whether it's cutting
(30:58):
costs or, you know, obviously increasing sales,but like you said, and then, you know, possibly
you could alongside the debt restructure, maybeget some equity as well, or kind of do some
negotiation with the creditors.
And, you know, essentially just trying to avoidbankruptcy so that hopefully they're, they're
in the green and they could, you know, havesome type of liquidity event where they can
(31:18):
sell to, you know, a larger conglomerate or,you know, just a bigger PE shop that's just
trying to add to their balance sheet.
So I think those are some of my thoughts.
But any any other scenarios with essentially,like, a turnaround that, that'll work out would
be relevant?
Or just did I miss anything else in terms of
No.
No.
I think I think the other thing I would say toois, you know, I think there there is a a
(31:41):
misconception that family offices have alltheir their stuff together.
They're ducks to so outside of the workout,restructuring is also something that's very
important, right?
So there was a situation where family waslooking to sell a business and they really
didn't have what I would call any type offormal tax council.
(32:03):
And we're just sitting there.
We're like, you know, if you do x, y, and z,you're going to save x millions of dollars.
And they're like, well, can't we just do thisas is?
And the answer was yes.
We can.
But if you take thirty to sixty days and dothis, you save this much more money.
And it involved doing a couple different entityswitches and all stuff that, know, is very
(32:25):
pretty standard, but they didn't have what Ithink is being, you know, colloquially thrown
around now.
It's like that expert generalist in house whocould say this needs to be done a little bit
differently to optimize family assets.
Right?
And I guess to a degree that is what we dohere.
But I think that's a big thing where you canprovide, again, a lot of extra value for the
(32:47):
same transaction that needs to happen or wantsto happen but just by doing the right thing.
I mean, it's not saying anything it would be,you it's done wrong.
It's just being smarter about it.
That's really what it sure comes down to.
Yeah.
And I I I think you make a good point.
I mean, I think some people are just lookingfor a bigger picture of how to think about
(33:08):
their strategy and just kind of a holisticplan.
So I'd love to just kinda workshop a couplepermutations of that.
So we've seen, especially in my community, wehave successful business families, families
that have operating companies, but they're alsoallocating to venture.
Maybe that's like a separate LLC.
(33:29):
So I've seen that and then I've seen people setup a formal single family office and kind of
allocate out of that structure.
And they'll build new strategies as they kindof evolve their knowledge of those sectors.
But, if you got a couple and again, these couldjust be generic examples of just kind of a
family.
Hey, they've got, you know, the principles thatare kind of thinking about their holdings and
(33:53):
how they're gonna maybe they're investing insome real estate, they're investing in some
public markets, private markets.
And then there's some families that like, look,we don't we don't really know how to hire this
stuff.
We also don't have the budget.
So we're gonna go out and get like an OCIO,right?
Someone coming out externally, connecting alltheir accounts, coming up with like an
aggregate plan and and developing some type ofholistic strategy.
(34:15):
So, again, you know, you talk to one family,you've talked to one family, so everybody's got
different, problems and different goals.
But maybe just a couple personas.
I figured that'd be kind of fun to kind ofworkshop in terms of, like, couple different
sizes of families, couple families that comefrom different backgrounds or businesses.
And, again, these don't have to be realclients, but maybe just persona types.
(34:38):
Yeah.
I mean, there's a you know, you've kinda gotwhat I would say, like, the first example,
which is, the embedded family office, right?
Where it's a family that they've got theiroperating company.
They're making, you know, 10 to $30,000,000 ayear if you will.
They know they're eventually gonna sell thatbusiness for a couple 100,000,000 but they've
got their internal controls all kind of share.
(35:00):
Like, their bookkeeper for the Opco is alsodoing the bookkeeping for, you know, the family
office.
The CFO for the OpCo was also doing thefinancial analysis for their real estate
acquisition.
If this sounds sloppy to you and the audience,it's because it is, but it is also very common
in the single family first generation space.
(35:26):
That sometimes can be a difficult dynamicbecause of the family of business has been
business for a number of decades, transferringthem to a better entity structure is
challenging because you're going up against,well, this is how we've always done it.
Let's not do it this way.
Right?
(35:46):
But, again, the value proposition would kindabe, okay.
Well, you know, you wouldn't, you know, youwouldn't put a a Hyundai in a garage where you
keep your Ferraris.
Right?
Like, that's kind of ultimately, I think, avery simple anecdote and, you know, kind of
saying, well, if you're gonna make a lot ofreal estate investments, let's start off a real
(36:07):
estate holdco because then you can kind of setup a legitimate property management company if
that's something that you wanna do.
Otherwise, you can outsource it just fine withthe best of them but understand you need to
have a certain amount of mass to get access tothe better ones and make it worthwhile.
If you wanna do some venture investing, youknow, let's make sure that we've got the right
(36:29):
entities again structured so you're not payinga stupid amount of capital gains in certain
situations.
You know, we talk with them through, you know,the qualified small business stock and how to
maybe set that up across different individualswithin the family.
If we can do that in a series.
So, there's a lot of just different strategiesthat you can put together that can create a lot
(36:52):
of value and sometimes it's just saying like,listen, here's what happens in your best case
scenario.
You sell something for $100,000,000.
Here's your tax situation.
If you do it in this situation, here's$100,000,000 and here's how much more you make
that resonates a lot, right?
So then all of sudden, they're like, oh, wedon't, it's not really a problem but I would
like to keep more money, right?
(37:13):
And I would like to basically keep those aftertax returns.
I think that's a really good example whenyou're dealing with those first families.
The second one is kind of like the newly, thenewly liquid, right?
I mean, they've just sold their business for acouple $100,000,000, you know, maybe a billion
dollars.
They never they they maybe did the rightplanning with, like, in the state and a
(37:35):
trusted, team, but they never really took thetime to build out the infrastructure.
And family offices have become very popular andmainstream in some kind of idea with my sales
the last five to ten years, even though it'sbeen around since like the 1600s.
But they want to have a family office.
Like, you know, they just sold their bigbusiness and now they want to be the new shiny
(37:56):
new toy on, you know, wherever they are.
But educating them through what that actuallymeans.
Right?
And, again, in some ways, if they've beenallocating certain private deals, they're used
to one exception and what their cost of capitalis for investing.
And now all of a sudden, you're saying, well,do you wanna do this with a full on team?
It's gonna cost anywhere from 2 to $5,000,000for a typical SG and A, right?
(38:18):
Then, they have a heart attack because they'renot making $25,000,000 a year in EBITDA with
their opco.
They're like, I can't do that.
Like, well, then, you have to go this OCO, OCIOmodel, right?
Now, then, you get into what I would call thehybrid where some people are, well, can I just
do the OCIO model for some stuff that I don'twant to be as hands on because I really want to
get involved in real estate?
(38:38):
Look, of course, but you need to have a planand it's just like anything where I think a lot
of newer families forget that when they firststarted off, they had a strategic plan for
building their business and scaling wealth andgrowing.
You kind of need to do that again from thebeginning.
You know, what your what is your vision foryour family office?
Do you wanna leave a legacy?
(38:59):
Do you wanna maximize wealth?
Do you just wanna buy iconic assets?
You need to kind of set them in.
Who's gonna be the people to do that?
Do you have the talent and resources in house?
If you do, how do you augment it with, youknow, CIO or other external advisers and the
other big issue is too and I kind of counsel alot of the families that I've I've worked with
(39:19):
in the past Do you, how much of thatindividual's time do you need and is there good
alignment there?
Because you might say, oh, I'm working with thebest lawyer in New York City or Los Angeles and
they've done everything for forty years.
I'm like, fantastic but you're not their onlyclient.
It's just a reality.
(39:40):
Now, you may not be able to afford them fulltime but if you want somebody like them, let's
have a conversation about getting somebody inhouse on a manageable budget so you can get
that full time dedication if that's what you'redesiring for the next twelve two thousand four
hundred thirty six months and that's not toodissimilar what you see in the CFO community.
(40:01):
Yeah.
Like I've explained to people where there'sdifferent types of CFOs or CFOs who you're
bootstrapping.
There's CFOs who are helping you through yourseries A and B rounds or CFOs who prepare you
to go public and then they're gone and there'snothing wrong with that.
It's just it's a certain skill set.
So, those I think are the two archetypes that Ideal with a lot.
(40:21):
You know, the other than side is you know, thatfourth, fifth, sixth generation family that's
been established.
You know, I know one good one of my greatfriends.
They basically just manage the affairs.
You know, it's a large family.
They've been an industrial family forgenerations and they've got some cool dynamics.
I mean, you know, stuff that you know, if someof the younger generations want to buy a house,
(40:46):
they don't give them the money but they gothrough the process of getting what like a pre
qualification letter for their home and thenthe family funds the loan based on those
dynamics, right?
Because the family idea is like we wanna beable to assist but we wanna keep the money in
house.
You know, one of the big things that they alsodo is, you know, they do their annual family
(41:08):
meeting which is very akin to a publiccompany's, you know, shareholder annual
shareholder meeting.
Some things that you know, sponsors andoperators may not realize but you know, some of
these families are quite large.
Three forty five hundred people.
So, they rent out a hotel in a really niceplace and they talk about what's going on with
the family holdings and it's different but forthem, it's very normal because they've been
(41:32):
doing it for for generations.
Guys like that though or for families likethat.
I mean, they've got much different processes,much more institutional controls and harder to
access, harder to work with, maybe sometimesimpossible to work with because they are been
working with the same managers for the last,you know, thirty, forty, fifty years or they
(41:55):
don't really wanna take any more risks so theyjust give capital to, you know, the bigger
banks of the world and there's nothing wrongwith that but it's just like sometimes these
family have amassed so much money that there'snot really a need to take any more risk, you
know, so that becomes challenging too.
So, those are, I guess, probably like the threeout there that would say kinda when you're
(42:15):
thinking about the family office community.
Sure.
Are the different types of kind of be aware of.
Yeah.
No.
That's really helpful.
There's there's one more point I wanna discussas well.
So, you know, I just finished the book which Ihighly recommend, really enjoyed reading.
It's called Die With Zero.
It's by Bill Perkins.
I think he's a hedge fund manager in Austin,and he talks about just thinking about how many
(42:38):
more decades you have.
He he uses this app.
I think the app is called the the countdown appand it actually visualizes how many days you
have left.
And, you know, what what what's interestingabout that point is if you're giving away your
money, you know, the best time to give thatinheritance to your kids is, you know, the
prime time to use that money is in yourthirties.
(43:00):
Right?
They're not gonna they're not gonna use thatmoney and enjoy it the most when they're in
their sixties or seventies.
Right?
So they're starting to come into their career.
They're starting to think about their kids orbuilding a family.
So I thought that was a pretty interestingpoint that, you know, the the prime time to
kinda use that inheritance is probably in yourthirties to maybe, you know, late late forties
(43:22):
to early fifties.
But after that, you know, it's just not the themost desirable time to to make use of that.
And then his whole concept is, you know, afteryou've taken care of all of your affairs, you
know, kinda made sure that everything is set upwith your trust and you've given away all of
the money to your kids and taken care ofeverything, there's a there's an amount of
money that you actually need to retire.
(43:43):
And what the book is saying is that you it'sactually lower than you really expect, you
know, in terms of your your runway to be ableto cover most of your expenses, You know, and
and you wanna be able to spend the most of thatas you can, you know, so that you can enjoy,
you know, life experiences.
So just wanted to hear your reaction to thatand just maybe tie in a few examples that you
(44:06):
have with just families and how they thinkabout their second gens and kind of thinking
about their planning, because that's a hugetheme that, you know, we're we're cascading in
this conversation.
Just having a plan, you know, if you're in yourfifties, you got maybe what?
Like another twenty five, thirty years left, tokinda really think about your legacy.
So how, you know, how have you kinda tied insome of those conversations with planning
(44:28):
around that?
So, I love the Perkins comment and I'm gonnabutcher it but Warren Buffett had a kinda
similar slang but it was basically like, it'snice to have a lot of money but you know, you
don't wanna keep it around forever.
It's basically like, you know, wait untilyou're 80 to start having sex.
(44:49):
Sorry, that's a little coward but Warren saidit, not me.
And the reality is it's like, yeah, I mean,what is it?
Pick a dollar or something.
You know, man.
I mean, what what is the point of leaving$50,000,000 to your grandkids when they're 65?
When it could have helped them when they're 25or 30 or or 35 or what have you.
(45:11):
I think the more intentional families realizehow to kind of transfer that wealth for
operative points.
So funding college in its entirety, maybe doinga year abroad to fund that if they want to go
experience the world.
(45:33):
There's some unique things there.
You know I have a family friend who I wouldn'tnecessarily call like a family office so they
probably are.
The family basically allows the kids to borrowa certain amount of money to start a business
but they actually have to go through theprocess of giving the grandparents like a
(45:54):
business plan and be like, they get the moneyas long as it's not crazy but like they want
them to go through that process.
So, I think, you know, just being veryintentional about what you're trying to do.
I mean, I think that the big thing is also kindof like, you know, now, everybody's gonna like
build your legacy and make sure you have yourlegacy.
It doesn't, your legacy as a family officedoesn't necessarily have to be like, oh, like,
(46:16):
I wanna own an iconic building or you know, Iwanna build this.
It could just be like doing well by yourindividual family members and making sure that
they have the start that you didn't have,right?
I mean, not everybody's built for the struggleof entrepreneurship.
We could read as many of these books as I mean,whatever the Vanderbilts and the Rockefellers
(46:37):
did, you know, back in the eighteen hundreds.
Like, I don't think anybody, you know, wants todo that stuff nowadays, right?
And you can only imagine but I mean, you know,I think the reality is, you know, regardless of
the wealth, it's just, we are very human stilland like a lot of these families just wanna do
well by their their family members and makesure that they're taken care of.
So, I think that's that's ultimately theplanning purpose where it's like, what do we,
(47:00):
what are we doing here?
I've I've I've worked with one family andthey're like, well, I'm like, who, day one, who
are we planning for?
Who are the key members?
Who are we, what, what do we need to thinkabout?
And the Patriots was just flat out like, youknow, my kids have already gotten X, Y, and Z.
They've got enough.
Like, okay.
So, what's, now, he didn't, he didn't know whathe wanted to do with it afterwards but the
(47:23):
reality was he's like, they're good.
Yeah.
You know, by all 10 counts, the the kids aregonna be fine But, you know, you still have to
define what do you wanna do with the rest ofthat capital, whether it is donating to
charities, setting up a foundation.
So it's a lot of interesting other potentialproblems that come up, but, you know, I think
also helping those family members define whatit is and why and what that vision is.
(47:49):
Is every bit is just as important as when yougo to start out a company too, right?
So, it's like now you've got this wealth,What's the end result?
It's not the worst thing dying with extramoney, right?
I mean, it's still going to somebody but beingable to kind of utilize that to get to what
goals you want to see for yourself and yourfamily members.
I mean II always say use it now.
(48:10):
Why wait?
You know, you kinda get into the whole argumentabout, you know, I'm not saying don't save for
retirement, right?
For a normal under ultra high net worth folksbut the reality is like, the dollar now is
always going to be worth more today than it'sgonna be worth in ten years.
Sure.
So, even if you're like putting it away andputting all these like tax advantage retirement
(48:31):
accounts, it's like, well, in theory, if taxeskeep going up, you're actually hurting yourself
by saving in a four zero one ks.
Like, I don't care what your tax deferral rateis.
Like, you're not gonna make that money back up.
Sure.
Unless you invest it in something really goodnow or start a pet project or began a charity
event.
So, I think that's just showing like how thatmoney today can really spur what you want to do
(48:56):
in the next five to ten years as long as youhave a plan.
It's, you know, you can't beat that.
Sure.
Well, hey, this was amazing.
I really appreciate all the wisdom.
I'd love one final piece of advice.
This could be from a mentor.
It could be from a past experience that you hadin your career, but, you know, if you were to
give us a piece of wisdom, what would you leaveus with?
(49:22):
I would say in my younger years, I was workingwith on a deal with a banker who was very
prominent and he just kinda looked at me andwas like, you are at such an inflection point
that you were so worried about doing theperfect deal that you forgot that you just
(49:42):
needed to get a deal done.
Sure.
And then you were good.
And I'd never really kinda clicked until maybeabout four or five years after the point but
the reality is kind of just in simple termslike, don't wait for the stars to align because
they're never going to.
The reality is get going because you as anindividual, if you're 25 or 35 or even 45,
(50:04):
you've got a lot of compounding interest interms of time in years, right?
Yeah.
Not just as an investment.
So, the sooner you can get started doing whatyou love or what your ambition is, It doesn't
have to be perfect.
Just get out and go.
Yeah.
You know, that that I think was something thatalways kinda stuck with me.
No.
I totally agree with that.
(50:24):
I think there's people that synthesize andanalyze and they're paralyzed.
Right?
The analysis by paralysis.
Yeah, and then just the deal never happensbecause it needs to be perfect.
And then I think the other fork in that ispeople just believe in overnight success.
But like in reality, everything is like goingto the gym.
Right?
I mean, you gotta to to get those muscles towhere they need to be.
(50:48):
You know, you gotta go in the gym every day andit might you know, an overnight success for
many of these successful entrepreneurs is liketen years.
People think that they just became successfulimmediately, but it's several years of time
refining that craft and whatever it is.
But you gotta go out there and do it.
(51:08):
If you don't do it, then it never, you know,the first steps never happen.
Yeah, I mean, to your point, a lot of people, Ithink, always kind of see the end result.
They never witness a struggle because they tryto distance themselves from the struggle.
Sure.
You know, so but again, you gotta put in thehours.
That's it.
Yeah.
So Absolutely.
Well, hey.
I really appreciate you having me.
(51:30):
Yeah.
Absolutely.
This is fun.
Well, thank you so much, Greg, and thanks foreverybody else, and, have a have an amazing
day.
Yeah.
Thanks so much, y'all.
All
right.
Take care.
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