February 16, 2024 • 40 mins
MapableUSA.com: The ugly truth of crowdfunding is that a very high percentage of businesses that try to raise money never raise money. Why is that? In this podcast, Mike Brette from Small Cap Equity Advisors explains why hiring outside consultants makes sense depending on the stage of your business – as well as the step-by-step process on how to raise that capital you need to take your business to the next level!
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(00:21):
Everyone, and welcome brother map USAout there where we put you on the
Maphis is Ron Costa broadcasting live fromthe Mappable USA Studios in Las Vegas,
Nevada, and folks, today we'regoing to talk about the importance of business
consultants and I think you're going tofind this very very interesting. But before
we get going on that, let'sintroduce Vicky Hutchmala from the World Token Market.
(00:43):
Vicky, how you doing today?I'm fabulous today, Ron, It's
a beautiful day in Vegas. Ithink spring has arrived and we couldn't be
happier. And now we've got apodcast with one of our favorite guests and
we're going to talk about making yourbusiness successful. I think we should start.
(01:04):
Okay, well, let's get going. Let's introduce again Mike Brett from
Small Equity Advisors. Mike, howare you doing today? I'm doing well,
Ron, Thanks a lot, great. I'm glad you took the time
out again to do a podcast.And as Vicky mentioned that, you're one
of our favorite guests or how doyou want? So many times? And
(01:25):
everybody loves it when you're on becauseyou give out the best information. And
I think today is going to bea really good show because I think we're
going to talk about something that everyonewants to hear if they're a business owner,
for sure. Yeah. Actually,you know, I think it's uh.
First off, I get a lotof phone calls from people that want
to raise capital, but you know, they don't understand. They don't have
(01:45):
a clue as to how they getstarted or why or anything. So I
you know, I thought maybe we'dcover on this show about companies using an
outside consultant to help, you know, guide them through the process. And
you know a lot of these companiesdon't understand there is a process' raising capital.
I mean, I get so manyphone calls and emails from we need
(02:07):
a half a million dollars, weneed a million dollars why? But you
know, first you got to askthe questions. You know that, you
know that for the entrepreneur, youknow, why do you need the money?
You know, you know, maybeyou could just generate cash flow through
sales and you don't need to raisemoney. So again, there's a lot
of questions that need to be answeredbefore the company goes out and starts raising
(02:30):
money, and then they have tounderstand how to raise money. How to
find investors, the legal structures,you know, how to comply with security
laws. I mean, there's awhole litany of different things that you know,
business owners need to be aware of. But do you think they would
be aware of them or they wouldn'tbe calling to raise money? But that's
(02:51):
all they see your dollar signs andthey they don't want have a clue about
the process. Yeah, you know, here's the problem with that though.
The elephant in the room with consultantsbasically is that your your qualifications to be
a consultant is basically just saying,hey, I'm a consultant, right.
I mean, if I just callmyself a consultant, I call myself an
expert. That doesn't make me anexpert, doesn't make me know what I'm
(03:12):
doing right. And so there's apart of the industry. I think a
lot of these business owners say,wow, these guys don't know. How
could these guys help me? Yeah, that's true, But again, it
depends on who you're dealing with.You know, you do your research,
you have a phone call, andyou know, get some insight as to
the consultants' abilities. But again,you know, it comes down to delivering
(03:38):
you know, the business owner cantry to do it themselves, and they're
probably not going to be any betteroff doing it themselves than working with a
consultant for the first time and findingout, you know, how the consultant
can help them. I mean,I you know, I give a lot
of people the initial consultation, youknow, maybe fifteen minutes at no charge,
(04:01):
and if they want to book aone hour consultation, you know,
I charge them for that. Butit's the way of finding out whether you're
you know, there's a fit.I mean, I get a lot of
requests, but sometimes there's just isn'ta fit. I mean, I don't
like the way the person sounds onthe phone. I don't like what they're
talking about. I don't like theirdeal, I mean, and some of
them don't like me, you know, because I'm too matter of fact.
(04:24):
So you know, the phone callhelps kind of weed everything out on both
sides, to take care of whatthe comment you made. Yeah, no,
that definitely definitely helps. All right, So you've talked about it as
a as a process. Let's let'sgo through that then. What's uh,
what's what's step one? Basically?Yeah, the first step, I mean,
they really need to understand the processof raising capital. And I'll get
(04:46):
into that in a minute. Butlike I mentioned at the top of the
hour, a lot of companies thatcall me anyhow, and a lot of
them I see on LinkedIn and othersocial media sites is they're posting a social
media comment saying, you know,we're looking for investors, we need to
raise a million dollars, And Imean, that's not the way to go
about it. At first, youhave to understand why you're trying to raise
(05:11):
the money. I mean, you'retrying to build a prototype, You're trying
to do market research. Are youdoing the seed round? Are you doing
the series A round, you knowfor expansion. I mean that's part of
the process, right there is understandingyou know why you want to raise the
money. Number two, once youget through that, it's what's the use
(05:31):
of proceeds. I don't know howmany people I've asked that question to what's
the use of proceeds? Well,you know, I'm paying myself back first.
I put one hundred thousand dollars init, and plus I have I
have a half a million dollars ofsweat equity in my business. So I'm
going to pay myself back six hundredthousand dollars before. Oh, ait everybody,
(05:53):
it doesn't work that way. Sweatequity is nothing. It's your business.
You should have some sweat in thedeal to get it going, you
know so, and then paying yourselfback for any money you might to put
in. No, it doesn't workthat way. Investors don't want to see
their money going to line your pocketto paying expenses or whatever it should be
(06:15):
going to grow the business. Soagain that's part of the process of understanding
why you're trying to raise money.If you're just trying to raise money to
pay yourself back, that's not goingto work if you don't understand why you're
trying to raise money. Again,seed round, Series A, Series B.
If you don't have a correct valuationfor your company, how are you
(06:39):
going to raise money from an investorbecause you don't really understand how much equity
you give up that investor. Sothose are some of the steps in the
process of you know, raising capital. You know. I when I think
of businesses starting off, I thinkof strategy. And you need to have
(07:02):
a strategy regardless of your product,regardless of your service or whatever. And
part of strategy is understanding what's ahead, anticipating the possibilities, anticipating the potential,
and then being adaptable to things thathappen. So if you can know
(07:25):
in your mind this might happen,that might happen, this is what I'll
do. This is where I'll goput together a team of people who can
help you do that. But thenit's not an overnight success. It's not
something that just because you have thepassion for what you're doing doesn't mean you
(07:46):
know how to do it. Andthe best, best best thing you can
do is hire someone like yourself,Mike, who can take you step by
step down the road to make surethat what you're thinking today is going to
be a reality tomorrow. And ifit's not, what do I do to
fix it? I mean, butnot very many people can contemplate that in
(08:09):
their mind. Yeah, that's true. And the reason they can't is most
of the people trying to raise moneyare desperate. Yea. You know,
they have a payroll to make,or you know they're trying to make their
rent, or you know, they'rejust desperate for the money, so they
don't really take the time to thinkthrough those issues like you raise. And
(08:31):
secondly, they're good at, orthey think they're good at, coming up
with a technology or a software ora widget, gidget, gadget, whatever
it is, they're probably good atthat, and so they think that makes
them an expert at everything. Raisingcapital, being their own being, their
own CPA, being their own attorney, you know everything. You know,
(08:54):
they do it yourself mentality, orgo to the internet, download some forms
and you know, I know whatI'm doing kind of an attitude and they
don't like you mentioned, they don'tprepare the business side of it for any
you know, problems that might surface, and that all comes into the what
a consultant can do to the tohelp the business stay focused. I don't
(09:18):
know how many deals I get involvedwith where the focus just isn't there.
You know, they're so desperate toraise the money that you know, they
they forget again about the process thattheir business really isn't ready to raise money,
and they don't want to hear that. You know, they want to
hear that. You know, somebodyis willing to put in a half a
(09:39):
million dollars or a million dollars becauseyou know, the founder thinks it's the
best things in sliced bread and whenyou give them a reality. Look,
when you give them a reality andsay, look, you know you really
don't have anything. You know,what you're talking about is out there?
Who's your competition? We don't haveany competition. That's a that's the first
(10:01):
statement that investors don't want to hear. You know that the founder doesn't know
who his competition is. So again, you're right. I mean, they
don't stop to think about all thenegative things about operating a business, and
they don't think about the positive thingsthat investors want to hear in order to
put their money into the deal.Okay, all right, Well in that
(10:28):
case, Mike, when you're lookingto get a consultant, then do you
hire or do you talk to differentconsultants based on what your need like for
for example, are you in thedevelopment of planning stage you're looking for something
more of sales and marketing wise?Does one consultant take care of all that
stuff or do you have a numberof cost consultants on your staff. Yeah,
(10:50):
that's a good that's a good question. I mean, really, what
I tell people that it depends onwhat stage you are in your business.
If you're if you're contacting me,you know, I'm gonna give you advice
and assistance in accessing capital. Ifyou're solely interested in sales, marketing,
(11:13):
business development, that's a different consultantaltogether. So you know, my first
question to somebody a new client,is, you know, what do you
need from me? Well, youknow, we need somebody to do engineering.
Well, that's not what I do. So that's the first step,
right there is and answer your question, you know, and sometimes you have
(11:35):
to go to multiple consultants if youthe founder can't handle those things internally.
Now, if you if you don'thave a marketing department, a sales department,
you know, internally, yeah,you're gonna have to go outside for
those services, you know, toget your level, to get your business
to a certain level, because that'swhat investors are going to look at.
(11:56):
You know, they're gonna ask,what kind of traction do you have?
I don't know how many times I'veheard from from people raising money, we
have a disruptive technology, all right, how many sales, actual cash sales
do you have? Well? None, we don't have anything yet. Well,
then you don't have a disruptive technology. You have an idea, you
(12:18):
know, Well, we're a unicornwe're the next unicorn. Well wait a
minute, a unicorn is a billiondollar valuation or more. What's your valuation?
Well we're not there yet, butyou know, I mean, see,
they're they're so distracted by the thingsthey hear in the media and the
things they might read on social mediathe Internet that they lose focus is to
(12:41):
how important their deal is to investorsand how important their deal is to consumers.
You know, is it gonna fly? So again, the company needs
to focus on what it is thatthey want from a consultant. And if
they can't do all these things internally, they have to reach out to multiple
consultants, just like you have toreach out to multiple other professions like a
(13:05):
CPA to do your accounting, thelawyer to do your securities filings. You
know, you have to go outto different sources. And anybody that tries
to be a jack of all tradesas a consultant, I think they do
a disc service to the client becausenot every not every consultant can do everything.
Now, having said that, aconsultant can be valuable in directing you
(13:31):
to people like a securities lawyer,a CPA, you know, a sales
and development specialists, and marketing,you know, so you can do business
with one consultant for a specific serviceand then rely on them to direct you
through referrals of people they've worked within the past for other services you might
(13:52):
need. And again that's where thefounder tries to wear too many hats and
lose focus. They try to doeverything themselves. Then they neglect the business
and the business never really gets offthe ground. You know, the statistics
are pretty startling. Sixty five percentof the company's trying to raise money.
(14:13):
Never raise money sixty five percent.Yeah, you know, and there's there's
a lot of reasons for that.But the main reason they lose focus and
they don't know what they're doing andthey don't understand the process well well.
And plus they also they don't knowwho their customers are. They haven't figured
out like, oh, I havethe best widget, but who's going to
(14:35):
buy it? What kind of aperson wants this? How do I market
it to that person who's going tobuy it? And then how am I
going to get the money to makeit all happen, which is where the
consultant comes in, because, likeyou said, they're focused on the wrong
thing. They're focused on the endof the journey instead of developing the beginning
(14:58):
of the journey so you can makeit to the end. And you've got
to know that who's your customer.You've got to know what do I need
to help me? Yeah, anda lot of people, I mean again,
a lot of founders think, youknow, their geniuses that they understand
just because they came up with somekind of you know, technology. First
(15:20):
Off, they think it's the bestone out there, it's the only one
out there, and it's not.Secondly, they don't really know who they're
going to sell to. They don'tknow the cost of selling to a consumer.
They don't understand their profit mark.They think they do when they put
together a deck. I don't knowhow many decks I've reviewed in thirty years
being in business, but you know, a deck is the most useless thing
(15:46):
that an entrepreneur, a founder canspend their time on. But a lot
of them that's where they spend theirmoney and their time putting a deck together.
The investors never read. I've reada few and they all have the
same thing. They're all projections.They're all a pipe dream. You know,
there's nothing, there's no reality intheir deck because they really don't understand
(16:07):
the business. All the understand is, look, I've got an idea and
I need a half a million dollarsto make it happen. Will you put
the money in that? I mean, those are their steps to them.
That's the process, and that's notInvestors are going to hear that and they're
going to roll their eyes and getup and walk out of a meeting.
So there's a process, and youknow, the founder has to understand.
(16:32):
You know, are you doing aseed round? What is a seed round?
A seed round is to raise enoughmoney to get a prototype, to
do some market research to find outthose questions, who my consumer is,
what price point do I need tosell? How many? You know,
what is my markup on the onthe cost of what I'm doing? That
(16:52):
that's what a seed round does.A seed round is not for expansion.
The seed round is not to goout in the hire a bunch of people.
That's not what a seed round is. Now you go to a series
A, Series B, Series C, you know, follow on financings and
then you do a stair step upof you know, opening up a manufacturing
plant, hiring additional engineers and employees, and on and on and on.
(17:17):
And that's what you do with withgrowth capital is do a series A,
B or C and financing. Butagain, most of the people that are
starting out have an idea, it'snot flashed out. They think they know
where they're going. They don't.I see it all the time in my
business when people contact me. Youknow, I had a guy just before
we got on the air. Italked with him last year and well,
(17:41):
I know everything about this. Iknow that I got a securities lawyer.
You know, I know investment bankers. Right then, why are you calling
me? You know, if youknow it, if you have all those
why are you calling me? Youknow? So we didn't we never hit
it off. Well, just beforewe come on the air, I get
another message from him that he wantsto talk to me, and he's got
fourteen patents. Well, big deal, you know if you can't get those
(18:03):
patents. I mean I haven't talkedwith him. I just got a text
from him about, you know,wanting to set up a call. But
again they fail to understand the importanceof a consultant and they failed to keep
focus on what they want to do. The other thing is it gets down
to the documentation I mentioned decks.To me, a deck and a business
(18:27):
plan are the most useless documents thata business can have, especially when they're
trying to raise money. First off, a business plan and a deck are
not the documents you need to raisemoney. Those are blueprints to show you
how you're going to run the businessyou as the founder. It's a blueprint,
(18:48):
it's a map. Investors don't readbusiness plans, they don't read decks.
They're too busy making money and doingwhat they do as an investor.
So the other thing that the foundersfailed to understand is what's the proper documentation
to raise money. Well, we'vetalked about this on the show before.
(19:10):
The only two ways to legally raisemoney to go out and start soliciting money.
You either register with the SEC oryou file under one of the exemptions
under the Jobs Act Reggae reg Dor reg CF. That's it, you
know, there is no gray area. I mean, I get all these
comments all the time from people onLinkedIn or referrals that no, you know,
I'm not trying to spend money,I'm trying to raise money. Well
(19:34):
yeah, okay, but you can'traise money without spending money. You know,
you have to have, you haveto complex with state and federal security
laws. You just can't put asocial media post out there and say I
need vestors for a million dollars.You know you can't do that. So
again, it gets back to thedocumentation. Once you go through the other
steps we talked about, it getsdown to what documentation and when you open
(19:59):
the founder's eyes as to look,you just wasted ten thousand dollars on the
deck or you wasted fifteen thousand dollarson putting a business plan together that nobody's
gonna read. And even if theydid read it, they couldn't write you
a check to invest because you don'thave the proper sec documents. And they
just throw their hands up in theair, and you know, they move
on to somebody else. Of coursethey failed, They never raised any money.
(20:22):
But you know, so again itgoes back to the process that founders
just don't understand. There is aprocess to running a business and raising capital.
Yeah. And then the best partabout that is that when you tell
them that, then you're the stupidone like, oh yeah, he isn't
nobody's talking yeah, yeah, yeah, you don't know what you're talking about.
Okay, yeah, all right,Well then you know you call,
(20:45):
you call the SEC and tell themwhere you're going. I got another response
through uh LinkedIn, you know,to one of my posts and you know
it, I you know, Icited some SEC rules and regulations. Guys
said, oh, that's that's abunch of malarkey. Yeah, well you
call the SEC then and you findout from the Enforcement Division if you can
(21:06):
do what you're saying you're going todo, and we'll see what happens.
Like for instance, for instance,some people want to form an LLC or
a joint venture or partnership and raisemoney. They got the false information that
if they do an LLC or ajoint venture or partnership, they don't have
to do any filings. Well that'swrong. You can violate security laws if
(21:30):
you do it wrong. Like inan LLC, for instance, if you
have five or more members of anLLC, that's a security even if you
give those members of the LLC theinvestors voting rights and there's certain other elements
of factor in you're selling these investorsa security and you got to do a
reg D filing. Same with ajoint venture or partnership. So again there's
(21:56):
all that there's this misnomer out there, this myth that they don't have to
comply with rules and regulations. Well, all right, do battle with the
SEC. Then that's what I tellthem. Go to court with the SEC.
And they don't care what you callyour offering. You can call it
a non security, they don't care. They define what a security is.
(22:18):
And if you don't, you know, file your paperwork, you do the
way you're going to get dragged intocourt. I mean you can't. There's
no gray areas. What I tellpeople. Yeah, then you got to
get a consultant who's also a lawyer, right well, or or again,
like I mentioned earlier, you geta consultant to bring in a lawyer that
can bring in an accountant that canbring in a business development specialist that can
(22:41):
bring in a consulting engineer that youmay not have on staff because you can't
afford it, but you know,you can afford to pay an hourly fee
based on you know, whatever moneyyou're going to raise to at least get
some insight asto what you're trying todo. So again, that's the role
of a consult Olton is to helpyou, first off, avoid the expense
(23:04):
of having a payroll, full timepayroll when you don't really need it,
and if you need access to otherprofessionals like for instance, I mean,
I know, I've been in businessthirty years. I know where all the
bodies are buried, I tell people. I mean I know securities lawyers,
I know other consultants, I knowtransfer agents, I know investment banks,
(23:26):
family offices, broker dealers. Imean, I've worked with them all over
the thirty years. And I've mentionedthis on the show before. I've done
two hundred and fifty road shows acrossthe country in New York, here,
in California, Austin, Houston,San Francisco, Las Vegas, at the
Capitol Grill in Las Vegas, orI would bring in twenty five investment bankers
(23:48):
for apply it to make a presentationto a pitch. I mean, I
know these people now well the investin your deal, I don't know,
not until we first off get theprocess going, put together. You know
your tools, and then reach outto these various retail and institutional investors and
(24:10):
find out whether it's something or interestedin. You know, there's nobody out
there that can guarantee that somebody's goingto fund your deal. If somebody gives
you a guarantee, run exactly exactlyand you know it all goes back to
the first concept of you've got tohave the strategy before you act, because
(24:32):
even though you think you know everything, you hardly know anything except what you
think that your business is going tobe. That you have the best thing
since life spread, but you don'tknow how to use a knife. So
what difference does it make? Youknow? So that's where consulting. If
you can't figure it out yourself,then don't just pretend you know everything.
(24:56):
At least be smart enough to findsomebody like yourself who can advise and consult
and take you down the road tosuccess, as otherwise nothing's going to happen
except you're gonna waste time, you'regonna waste money and nothing, and you're
gonna be defeated. Yeah, andagain, a lot of a lot of
these people trying to raise money.A lot of the founders, you know,
(25:18):
they they spend too much time onsocial media getting the wrong information and
instead of calling a consultant or callattorney direct if you know, if you
know, if you know one.But again, call a consultant and you
know, get some free advice initially, and then pay for it later on.
Again, there's no racing capitals,not free, cheap or guaranteed.
(25:41):
I tell people. So, Imean, apart from apart from the strategy
that we've talked about and the duesand the don'ts, a lot of these
people rely on social media for theirinformation, and it's most of the time
it's wrong. I'd say ninety percentof the information out there is wrong.
So, like, I had agentleman call me up last year when spack
were really hot, and he calledme up until he wants a form of
(26:03):
spack. He wants a form aspack. I said, okay, great,
I said, do you know itcosts about two million dollars for legal
fees, accounting fees and all thefees necessary just to form a spack.
That's before you raise any money.Well, he said no, he said,
I want to pay all the feesout of the money we raised in
this pack. Yeah, I said, where did you get that in it
(26:26):
from? Well, I read,I read something on the internet. I
said, but it doesn't work thatway, you know, I mean,
so I had to explain it tohim, and he thought I was just
trying to get him to retain meand everything like that. I said,
look, if you don't have anymoney, and he says, why don't,
I don't have that kind of money. I said, then you have
no business doing a spack or thinkingabout a spack. I said. The
(26:47):
other thing you need to understand abouta spack is even if you've put one
together, investors in this back stillhave the option of asking for their money
back. All the money you raisein the back has to go into escrow.
You can't use it to pay fees, salaries, operate expenses, or
anything. So if an investor wantshis money back, you've got to take
(27:10):
it out of esk go and refundit. So you can't take any of
the money. Well I didn't knowthat. Well, you know, see,
this is where a consultant can helpguide somebody before they, you know,
go off in the tangent, whetherit's forming a spac or a regg
d or reggae. You know,you can't really rely or just rely on
what you read on the internet.I mean, it's a great place to
(27:33):
start, but then you have toget into reality mode and figure out,
all right, how do I getthis actually done? I don't know how
to do it. Who could doit for me? Right? Right?
Well, a couple of things beforewe close this out. First of all,
getting back to your road show things. You know, I'm we're obviously
here in Vegas as well. Igo to a lot of investor shows and
(27:56):
very often, to your point iswe see these guys is pitching stuff from
their PowerPoint deck that you can't evenread. The print is so small and
all they really just reading with theslide and I can't think of anything more
cringing from an investor, So Iwant to invest in this guy. I
mean, these people need consultants atthat point, because theyre pitch always falls
(28:18):
flat. I'm sure you've seen thata lot, right, Yeah, that's
a good point to bring up herebefore we do sign off, because that's
the role of a consultant is tohelp coach and walk the founder through a
presentation, multiple presentations as a practice, before they actually get in front of
investors. I mean, I toyour point, investors just roll their eyes
(28:41):
when they see a pitch deck comeup on the screen where they're you know,
the founder is not looking at theinvestors in the eye, He's looking
at the pitch deck and reading fromit. Well, if you run off
copies and hand them out, theinvestors can read them later on. What
the investors wanted to have is theconversation. I tell the founders, get
up there and tell a story.Don't use any que cards, don't use
(29:03):
a power point. Get up thereand tell a story of who you are,
what you're doing, where you're goingto go, and how are you
going to get there, what's yourbackground, what you know, how are
you going to make money? Sothe investor understands how he's going to make
money. Tell a story, engagedwith the audience, turn it over to
questions and answers. Forget these powerpoints and everything like that. So anyhow,
(29:27):
that's the role of a consultant isto, you know, get the
founder ready for presentation. I don'tknow how many times I've got on the
phone with people they want to pitchme. On the phone, I said,
wait a minute, I'm not yourinvestor. You know you don't I'm
not gonna this is our first call. I don't want to hear a forty
five minute business plan on the phone. Let's first off, let's talk.
(29:51):
So I go. I try towalk them through a process you know that
they want to pitch me their fortyfive minute business plan, you know,
and it just puts everybody to sleep. And that's what I tell them.
Look, if we're going to getyou in front of investors, you have
to learn how to talk to investors. Give investors what they want now real
quick. Getting with a regg Dand a REGAE. There's some big differences
(30:14):
with those. And when I saygive the investors what they want, you
have to look at what you're doingand what you're offering investors. With a
REGGAE, the investors put money intoyour deal and they get free trading stock,
which means they have a liquidity eventimmediately. So six months or a
year from now, if they're runninginto a pinch financially, they could sell
(30:36):
their shares to somebody else, notsell with a reg D. With a
reg D, all the shares you'reselling to an investor are restricted for twelve
months or longer, and you asthe founder have to do a registration at
some point to free up that stock. So you have to ask your question
to yourself, what would be moreenticing to an investor a liquidity event now
(30:59):
with free trade eating stock or somethingwith dead money where he puts his money
and he can't get access to itif he runs into a problem. So
those are some things a consultant canpoint out. Where I didn't, I
get calls from people, well myfriend did a reg D because it's cheaper
than a reggae. Well, youknow, maybe it might be, but
(31:21):
is that what the investor wanted wasrestricted chairs out of a reg D?
You know, and he has heraised any money. No, he hasn't
raised his money yet. I mean, so again, this is where when
we started this show right now,I wanted to cover the importance of a
consultant, and I hope you knowthe listeners take this to heart that it's
not an expense on their part.It's an investment. I mean, if
(31:45):
you're going to go out and tryto raise a million to five million dollars
or more, you know you've gotto invest the time and the money to
do it right. So, becauseas the old saying goes, you only
get the one impression to make agood person impress, I mean you can't.
You can't get in front of aninvestor group and blow it and then
want to have a second meeting withthem. They're just not interested. So,
(32:07):
yeah, a consultant can help stretchyou on the right foot. Well,
it gets a bauck that old thingabout how much does it cost to
do it? And then how muchwill it cost you not to do it?
So everybody has to worry about that, right, Yeah, well yeah,
I tell people. I tell peoplealso, I said, you know
you want to go, you willgo cheap higher an amateur, but then
(32:28):
you know you're going to pay alot more when the amateur screws it up.
You know. I had a clienttell me the other day, you
know, your your retainers pretty prettyexpensive. It's way too much. I
know people that do it cheaper.And I said, I've got clients that
pay more. Yeah. Yeah,And there was kind of dead silence on
the phone then. But I mean, you know, you get what you
can't tell people. Yeah, amateurs, I mean, why do you think,
(32:52):
why do you think these these bigshot lawyers in New York and LA
get one thousand dollars an hour orfive thousand dollars an hour. It's because
they know what the hell they're doing, and they have connections with other people
you should know, such as peoplein the SEC or state regulators or CPAs
(33:15):
and you know, so you paytop dollar to get access to top dollar
people that can help you. Exactlycorrect. Okay, last question. You
know, we talked about multiple consultantsfor a company. I'm sure there's a
scenario where one consultant may have hisbunch of lawyers and accountants, et cetera,
(33:35):
where you know, consultant being mayhave theirs. You know what happens
if that kind of conflicts with thefounder says, well, you know,
consultant, he says to go tothis guy. Consultant be says to go
with this guy. What do youdo? It's just basically yeah, yeah,
that's a good point. I mean, I've been involved in transactions over
the years where you bring in thewrong person. In other words, you've
(33:57):
been a consultant brings in the lawyer. The lawyer tells the client, Look,
you don't need to spend money withthat consultant. I could do everything
for you. You don't need todo that. Use him, just use
me. I mean, there arepeople like that, and there's no way
to avoid that. And people arepeople no matter what profession they're in.
There's unscrupulous people, greedy people.As a consultant or whatever the profession you're
(34:22):
in. If you're going to networkwith people and bring them to the table,
you first need to know and trustand understand how they're going to handle
things when you're not in the room. I mean, are they going to
try to take the business out ofyour hand and do it all themselves.
Are they going to work as ateam? Accountant, lawyer, consultants work
(34:43):
together. That's the consultant's job,right there, is to bring in people
that he's trusts and works with.And when he's not on the phone or
if he's not meeting with the client, he knows that that CPA is not
going to say get rid of thelawyer, get rid of him, get
rid of him and just work throughme. Pay me all the money you
were paying them, and we canget this done. I mean, that's
(35:06):
gonna happen if you're not careful.Yeah. Well, look in Las Vegas,
we don't have any greedy people here, so we don't have to worry
it. Yeah. Yeah, sure, I'm sure. If we're listening for
this podcast, people are gonna havequestions for you, Uh, Mike,
how to what's the best way toget a hold of you? Yeah,
I mean they can email me it'sreal simple. It's my name, Mike
(35:28):
Brett v R E T T Eat gmail dot com. And they can
call me uh nine five one twothree six eight four seven three. They
can go to LinkedIn. I'm reallyactive on LinkedIn. They can look at
my profile, my services. Theycan even book an appointment, uh,
consultation with me. And again ninefive one two three six eight four seven
(35:52):
three. All right, excellent,excellent, And so, Vicky, what
do you think about this podcast?Got any exswer if questions or comments from?
Well, you know, I lovedoing podcasts with Mike because he puts
out so much information in such arelatively small amount of time. But I
(36:13):
will say this though having opening asmall business, Starting a business is not
easy. It's not cheap, andit's not a quick overnight sensation. And
not every person who has devised orinvented the best widget or the best service
(36:34):
possible knows how to do everything.And so there's a little bit of a
humility involved in understanding the concept thatI can't do it. I need someone
to help me. And it's okayto ask someone to help you. Because
if you hire a consultant, ifyou hire an advisor like Mike. Then
(36:57):
they're going to help you to thinkof and to make it through all of
the stuff you didn't know, youdidn't know how to do. And that's
how you get to become a successfulbusiness. That's how you get to the
next stage, to get your twohundred million to take you to the next
level. You can't do that unlessyou hire someone like Mike who will guide
(37:22):
you down the road and make iteasier for you. So all I can
say is, if you want tobe a successful new business, you need
to hire Mike because he will helpyou absolutely with integrity. And to that
point, I appreciate those comments,Vicky. To that point, I tell
(37:45):
people, look, look at Airbnb. They're in the real estate business,
but they don't own any real estate. Look at Uber, they're in the
uber is in the ride share transportationbusiness, but they don't own any cars.
How do you think both those companiesgot where they are today? The
(38:06):
founders came up with an idea.But the founders came up with an idea,
but they couldn't execute to get themwhere they're at today. They needed
help along the way in order todo their ideos and get the business concept
fleshed out. I mean, Uberwas deal was competing with all taxi cabs
and everything. Now taxi cabs arealmost out of business because exactly Uber and
(38:30):
Airbnb is you know, really notAgain, they don't ownly the real estate,
but they're in the real estate businesswith rentals. So again I tell
people, you can take a lookat those and you know, if you're
in those industries, the consultants canhelp you work your way to success.
If you're in some other business,the consultant can also help you work your
way to success. Right. Andyou know, every industry has its own
(38:54):
language, and that's another reason whyyou need an advisor too, because they
have a group of people, Theyhave a team around them to represent all
the aspects of what your new businessneeds, and they know the language.
Because if you can't speak the languageof a lawyer or the language of a
CPA, then they're more likely tonot want to do business with you.
(39:19):
Yeah, exactly, yeah, exactly, Mike. I got to tell you,
I have fourteen yellow post it notesall around my office here, each
one with a multimillion dollar idea,so I expect to raise money for it
real easily. Huh yeah, okay, yeah, yeah. I tell people
look, if I could raise tenmillion dollars without any laying any money out
for legal fees, accounting fees,and marketing fees, I'd do it for
(39:43):
myself. I wouldn't do it foranybody else. That's yes, yes,
So all right, well listen Mike, thanks for bringing a guest on the
show today. Another great podcast.Thank you Vicki, thanks for co hosting
this episode. And folks who arelistening for the Mappable USA podcast MAPPABLEUSA dot
com. If you go to thatwebsite, scroll down you see your syndication
(40:04):
sources. Just pick the one youlike best, subscribe and you'll never miss
another one of our episodes. Asyou want to be a guest on the
show like Mike was today, there'sa guest head there. Fill that out.
We'll see what we can do aboutgetting you on the show. And
if you like what you're heard today, send us an email at info at
mappableusa dot com or just leave acomment on whatever page you listen goes on
right now. So thanks for listening, Thank you support. We'll get you
next time with another Mappable USA podcast. Everyone,
Everyone, and welcome brother map USAout there where we put you on the
Maphis is Ron Costa broadcasting live fromthe Mappable USA Studios in Las Vegas,
Nevada, and folks, today we'regoing to talk about the importance of business
consultants and I think you're going tofind this very very interesting. But before
we get going on that, let'sintroduce Vicky Hutchmala from the World Token Market.
(00:43):
Vicky, how you doing today?I'm fabulous today, Ron, It's
a beautiful day in Vegas. Ithink spring has arrived and we couldn't be
happier. And now we've got apodcast with one of our favorite guests and
we're going to talk about making yourbusiness successful. I think we should start.
(01:04):
Okay, well, let's get going. Let's introduce again Mike Brett from
Small Equity Advisors. Mike, howare you doing today? I'm doing well,
Ron, Thanks a lot, great. I'm glad you took the time
out again to do a podcast.And as Vicky mentioned that, you're one
of our favorite guests or how doyou want? So many times? And
(01:25):
everybody loves it when you're on becauseyou give out the best information. And
I think today is going to bea really good show because I think we're
going to talk about something that everyonewants to hear if they're a business owner,
for sure. Yeah. Actually,you know, I think it's uh.
First off, I get a lotof phone calls from people that want
to raise capital, but you know, they don't understand. They don't have
(01:45):
a clue as to how they getstarted or why or anything. So I
you know, I thought maybe we'dcover on this show about companies using an
outside consultant to help, you know, guide them through the process. And
you know a lot of these companiesdon't understand there is a process' raising capital.
I mean, I get so manyphone calls and emails from we need
(02:07):
a half a million dollars, weneed a million dollars why? But you
know, first you got to askthe questions. You know that, you
know that for the entrepreneur, youknow, why do you need the money?
You know, you know, maybeyou could just generate cash flow through
sales and you don't need to raisemoney. So again, there's a lot
of questions that need to be answeredbefore the company goes out and starts raising
(02:30):
money, and then they have tounderstand how to raise money. How to
find investors, the legal structures,you know, how to comply with security
laws. I mean, there's awhole litany of different things that you know,
business owners need to be aware of. But do you think they would
be aware of them or they wouldn'tbe calling to raise money? But that's
(02:51):
all they see your dollar signs andthey they don't want have a clue about
the process. Yeah, you know, here's the problem with that though.
The elephant in the room with consultantsbasically is that your your qualifications to be
a consultant is basically just saying,hey, I'm a consultant, right.
I mean, if I just callmyself a consultant, I call myself an
expert. That doesn't make me anexpert, doesn't make me know what I'm
(03:12):
doing right. And so there's apart of the industry. I think a
lot of these business owners say,wow, these guys don't know. How
could these guys help me? Yeah, that's true, But again, it
depends on who you're dealing with.You know, you do your research,
you have a phone call, andyou know, get some insight as to
the consultants' abilities. But again,you know, it comes down to delivering
(03:38):
you know, the business owner cantry to do it themselves, and they're
probably not going to be any betteroff doing it themselves than working with a
consultant for the first time and findingout, you know, how the consultant
can help them. I mean,I you know, I give a lot
of people the initial consultation, youknow, maybe fifteen minutes at no charge,
(04:01):
and if they want to book aone hour consultation, you know,
I charge them for that. Butit's the way of finding out whether you're
you know, there's a fit.I mean, I get a lot of
requests, but sometimes there's just isn'ta fit. I mean, I don't
like the way the person sounds onthe phone. I don't like what they're
talking about. I don't like theirdeal, I mean, and some of
them don't like me, you know, because I'm too matter of fact.
(04:24):
So you know, the phone callhelps kind of weed everything out on both
sides, to take care of whatthe comment you made. Yeah, no,
that definitely definitely helps. All right, So you've talked about it as
a as a process. Let's let'sgo through that then. What's uh,
what's what's step one? Basically?Yeah, the first step, I mean,
they really need to understand the processof raising capital. And I'll get
(04:46):
into that in a minute. Butlike I mentioned at the top of the
hour, a lot of companies thatcall me anyhow, and a lot of
them I see on LinkedIn and othersocial media sites is they're posting a social
media comment saying, you know,we're looking for investors, we need to
raise a million dollars, And Imean, that's not the way to go
about it. At first, youhave to understand why you're trying to raise
(05:11):
the money. I mean, you'retrying to build a prototype, You're trying
to do market research. Are youdoing the seed round? Are you doing
the series A round, you knowfor expansion. I mean that's part of
the process, right there is understandingyou know why you want to raise the
money. Number two, once youget through that, it's what's the use
(05:31):
of proceeds. I don't know howmany people I've asked that question to what's
the use of proceeds? Well,you know, I'm paying myself back first.
I put one hundred thousand dollars init, and plus I have I
have a half a million dollars ofsweat equity in my business. So I'm
going to pay myself back six hundredthousand dollars before. Oh, ait everybody,
(05:53):
it doesn't work that way. Sweatequity is nothing. It's your business.
You should have some sweat in thedeal to get it going, you
know so, and then paying yourselfback for any money you might to put
in. No, it doesn't workthat way. Investors don't want to see
their money going to line your pocketto paying expenses or whatever it should be
(06:15):
going to grow the business. Soagain that's part of the process of understanding
why you're trying to raise money.If you're just trying to raise money to
pay yourself back, that's not goingto work if you don't understand why you're
trying to raise money. Again,seed round, Series A, Series B.
If you don't have a correct valuationfor your company, how are you
(06:39):
going to raise money from an investorbecause you don't really understand how much equity
you give up that investor. Sothose are some of the steps in the
process of you know, raising capital. You know. I when I think
of businesses starting off, I thinkof strategy. And you need to have
(07:02):
a strategy regardless of your product,regardless of your service or whatever. And
part of strategy is understanding what's ahead, anticipating the possibilities, anticipating the potential,
and then being adaptable to things thathappen. So if you can know
(07:25):
in your mind this might happen,that might happen, this is what I'll
do. This is where I'll goput together a team of people who can
help you do that. But thenit's not an overnight success. It's not
something that just because you have thepassion for what you're doing doesn't mean you
(07:46):
know how to do it. Andthe best, best best thing you can
do is hire someone like yourself,Mike, who can take you step by
step down the road to make surethat what you're thinking today is going to
be a reality tomorrow. And ifit's not, what do I do to
fix it? I mean, butnot very many people can contemplate that in
(08:09):
their mind. Yeah, that's true. And the reason they can't is most
of the people trying to raise moneyare desperate. Yea. You know,
they have a payroll to make,or you know they're trying to make their
rent, or you know, they'rejust desperate for the money, so they
don't really take the time to thinkthrough those issues like you raise. And
(08:31):
secondly, they're good at, orthey think they're good at, coming up
with a technology or a software ora widget, gidget, gadget, whatever
it is, they're probably good atthat, and so they think that makes
them an expert at everything. Raisingcapital, being their own being, their
own CPA, being their own attorney, you know everything. You know,
(08:54):
they do it yourself mentality, orgo to the internet, download some forms
and you know, I know whatI'm doing kind of an attitude and they
don't like you mentioned, they don'tprepare the business side of it for any
you know, problems that might surface, and that all comes into the what
a consultant can do to the tohelp the business stay focused. I don't
(09:18):
know how many deals I get involvedwith where the focus just isn't there.
You know, they're so desperate toraise the money that you know, they
they forget again about the process thattheir business really isn't ready to raise money,
and they don't want to hear that. You know, they want to
hear that. You know, somebodyis willing to put in a half a
(09:39):
million dollars or a million dollars becauseyou know, the founder thinks it's the
best things in sliced bread and whenyou give them a reality. Look,
when you give them a reality andsay, look, you know you really
don't have anything. You know,what you're talking about is out there?
Who's your competition? We don't haveany competition. That's a that's the first
(10:01):
statement that investors don't want to hear. You know that the founder doesn't know
who his competition is. So again, you're right. I mean, they
don't stop to think about all thenegative things about operating a business, and
they don't think about the positive thingsthat investors want to hear in order to
put their money into the deal.Okay, all right, Well in that
(10:28):
case, Mike, when you're lookingto get a consultant, then do you
hire or do you talk to differentconsultants based on what your need like for
for example, are you in thedevelopment of planning stage you're looking for something
more of sales and marketing wise?Does one consultant take care of all that
stuff or do you have a numberof cost consultants on your staff. Yeah,
(10:50):
that's a good that's a good question. I mean, really, what
I tell people that it depends onwhat stage you are in your business.
If you're if you're contacting me,you know, I'm gonna give you advice
and assistance in accessing capital. Ifyou're solely interested in sales, marketing,
(11:13):
business development, that's a different consultantaltogether. So you know, my first
question to somebody a new client,is, you know, what do you
need from me? Well, youknow, we need somebody to do engineering.
Well, that's not what I do. So that's the first step,
right there is and answer your question, you know, and sometimes you have
(11:35):
to go to multiple consultants if youthe founder can't handle those things internally.
Now, if you if you don'thave a marketing department, a sales department,
you know, internally, yeah,you're gonna have to go outside for
those services, you know, toget your level, to get your business
to a certain level, because that'swhat investors are going to look at.
(11:56):
You know, they're gonna ask,what kind of traction do you have?
I don't know how many times I'veheard from from people raising money, we
have a disruptive technology, all right, how many sales, actual cash sales
do you have? Well? None, we don't have anything yet. Well,
then you don't have a disruptive technology. You have an idea, you
(12:18):
know, Well, we're a unicornwe're the next unicorn. Well wait a
minute, a unicorn is a billiondollar valuation or more. What's your valuation?
Well we're not there yet, butyou know, I mean, see,
they're they're so distracted by the thingsthey hear in the media and the
things they might read on social mediathe Internet that they lose focus is to
(12:41):
how important their deal is to investorsand how important their deal is to consumers.
You know, is it gonna fly? So again, the company needs
to focus on what it is thatthey want from a consultant. And if
they can't do all these things internally, they have to reach out to multiple
consultants, just like you have toreach out to multiple other professions like a
(13:05):
CPA to do your accounting, thelawyer to do your securities filings. You
know, you have to go outto different sources. And anybody that tries
to be a jack of all tradesas a consultant, I think they do
a disc service to the client becausenot every not every consultant can do everything.
Now, having said that, aconsultant can be valuable in directing you
(13:31):
to people like a securities lawyer,a CPA, you know, a sales
and development specialists, and marketing,you know, so you can do business
with one consultant for a specific serviceand then rely on them to direct you
through referrals of people they've worked within the past for other services you might
(13:52):
need. And again that's where thefounder tries to wear too many hats and
lose focus. They try to doeverything themselves. Then they neglect the business
and the business never really gets offthe ground. You know, the statistics
are pretty startling. Sixty five percentof the company's trying to raise money.
(14:13):
Never raise money sixty five percent.Yeah, you know, and there's there's
a lot of reasons for that.But the main reason they lose focus and
they don't know what they're doing andthey don't understand the process well well.
And plus they also they don't knowwho their customers are. They haven't figured
out like, oh, I havethe best widget, but who's going to
(14:35):
buy it? What kind of aperson wants this? How do I market
it to that person who's going tobuy it? And then how am I
going to get the money to makeit all happen, which is where the
consultant comes in, because, likeyou said, they're focused on the wrong
thing. They're focused on the endof the journey instead of developing the beginning
(14:58):
of the journey so you can makeit to the end. And you've got
to know that who's your customer.You've got to know what do I need
to help me? Yeah, anda lot of people, I mean again,
a lot of founders think, youknow, their geniuses that they understand
just because they came up with somekind of you know, technology. First
(15:20):
Off, they think it's the bestone out there, it's the only one
out there, and it's not.Secondly, they don't really know who they're
going to sell to. They don'tknow the cost of selling to a consumer.
They don't understand their profit mark.They think they do when they put
together a deck. I don't knowhow many decks I've reviewed in thirty years
being in business, but you know, a deck is the most useless thing
(15:46):
that an entrepreneur, a founder canspend their time on. But a lot
of them that's where they spend theirmoney and their time putting a deck together.
The investors never read. I've reada few and they all have the
same thing. They're all projections.They're all a pipe dream. You know,
there's nothing, there's no reality intheir deck because they really don't understand
(16:07):
the business. All the understand is, look, I've got an idea and
I need a half a million dollarsto make it happen. Will you put
the money in that? I mean, those are their steps to them.
That's the process, and that's notInvestors are going to hear that and they're
going to roll their eyes and getup and walk out of a meeting.
So there's a process, and youknow, the founder has to understand.
(16:32):
You know, are you doing aseed round? What is a seed round?
A seed round is to raise enoughmoney to get a prototype, to
do some market research to find outthose questions, who my consumer is,
what price point do I need tosell? How many? You know,
what is my markup on the onthe cost of what I'm doing? That
(16:52):
that's what a seed round does.A seed round is not for expansion.
The seed round is not to goout in the hire a bunch of people.
That's not what a seed round is. Now you go to a series
A, Series B, Series C, you know, follow on financings and
then you do a stair step upof you know, opening up a manufacturing
plant, hiring additional engineers and employees, and on and on and on.
(17:17):
And that's what you do with withgrowth capital is do a series A,
B or C and financing. Butagain, most of the people that are
starting out have an idea, it'snot flashed out. They think they know
where they're going. They don't.I see it all the time in my
business when people contact me. Youknow, I had a guy just before
we got on the air. Italked with him last year and well,
(17:41):
I know everything about this. Iknow that I got a securities lawyer.
You know, I know investment bankers. Right then, why are you calling
me? You know, if youknow it, if you have all those
why are you calling me? Youknow? So we didn't we never hit
it off. Well, just beforewe come on the air, I get
another message from him that he wantsto talk to me, and he's got
fourteen patents. Well, big deal, you know if you can't get those
(18:03):
patents. I mean I haven't talkedwith him. I just got a text
from him about, you know,wanting to set up a call. But
again they fail to understand the importanceof a consultant and they failed to keep
focus on what they want to do. The other thing is it gets down
to the documentation I mentioned decks.To me, a deck and a business
(18:27):
plan are the most useless documents thata business can have, especially when they're
trying to raise money. First off, a business plan and a deck are
not the documents you need to raisemoney. Those are blueprints to show you
how you're going to run the businessyou as the founder. It's a blueprint,
(18:48):
it's a map. Investors don't readbusiness plans, they don't read decks.
They're too busy making money and doingwhat they do as an investor.
So the other thing that the foundersfailed to understand is what's the proper documentation
to raise money. Well, we'vetalked about this on the show before.
(19:10):
The only two ways to legally raisemoney to go out and start soliciting money.
You either register with the SEC oryou file under one of the exemptions
under the Jobs Act Reggae reg Dor reg CF. That's it, you
know, there is no gray area. I mean, I get all these
comments all the time from people onLinkedIn or referrals that no, you know,
I'm not trying to spend money,I'm trying to raise money. Well
(19:34):
yeah, okay, but you can'traise money without spending money. You know,
you have to have, you haveto complex with state and federal security
laws. You just can't put asocial media post out there and say I
need vestors for a million dollars.You know you can't do that. So
again, it gets back to thedocumentation. Once you go through the other
steps we talked about, it getsdown to what documentation and when you open
(19:59):
the founder's eyes as to look,you just wasted ten thousand dollars on the
deck or you wasted fifteen thousand dollarson putting a business plan together that nobody's
gonna read. And even if theydid read it, they couldn't write you
a check to invest because you don'thave the proper sec documents. And they
just throw their hands up in theair, and you know, they move
on to somebody else. Of coursethey failed, They never raised any money.
(20:22):
But you know, so again itgoes back to the process that founders
just don't understand. There is aprocess to running a business and raising capital.
Yeah. And then the best partabout that is that when you tell
them that, then you're the stupidone like, oh yeah, he isn't
nobody's talking yeah, yeah, yeah, you don't know what you're talking about.
Okay, yeah, all right,Well then you know you call,
(20:45):
you call the SEC and tell themwhere you're going. I got another response
through uh LinkedIn, you know,to one of my posts and you know
it, I you know, Icited some SEC rules and regulations. Guys
said, oh, that's that's abunch of malarkey. Yeah, well you
call the SEC then and you findout from the Enforcement Division if you can
(21:06):
do what you're saying you're going todo, and we'll see what happens.
Like for instance, for instance,some people want to form an LLC or
a joint venture or partnership and raisemoney. They got the false information that
if they do an LLC or ajoint venture or partnership, they don't have
to do any filings. Well that'swrong. You can violate security laws if
(21:30):
you do it wrong. Like inan LLC, for instance, if you
have five or more members of anLLC, that's a security even if you
give those members of the LLC theinvestors voting rights and there's certain other elements
of factor in you're selling these investorsa security and you got to do a
reg D filing. Same with ajoint venture or partnership. So again there's
(21:56):
all that there's this misnomer out there, this myth that they don't have to
comply with rules and regulations. Well, all right, do battle with the
SEC. Then that's what I tellthem. Go to court with the SEC.
And they don't care what you callyour offering. You can call it
a non security, they don't care. They define what a security is.
(22:18):
And if you don't, you know, file your paperwork, you do the
way you're going to get dragged intocourt. I mean you can't. There's
no gray areas. What I tellpeople. Yeah, then you got to
get a consultant who's also a lawyer, right well, or or again,
like I mentioned earlier, you geta consultant to bring in a lawyer that
can bring in an accountant that canbring in a business development specialist that can
(22:41):
bring in a consulting engineer that youmay not have on staff because you can't
afford it, but you know,you can afford to pay an hourly fee
based on you know, whatever moneyyou're going to raise to at least get
some insight asto what you're trying todo. So again, that's the role
of a consult Olton is to helpyou, first off, avoid the expense
(23:04):
of having a payroll, full timepayroll when you don't really need it,
and if you need access to otherprofessionals like for instance, I mean,
I know, I've been in businessthirty years. I know where all the
bodies are buried, I tell people. I mean I know securities lawyers,
I know other consultants, I knowtransfer agents, I know investment banks,
(23:26):
family offices, broker dealers. Imean, I've worked with them all over
the thirty years. And I've mentionedthis on the show before. I've done
two hundred and fifty road shows acrossthe country in New York, here,
in California, Austin, Houston,San Francisco, Las Vegas, at the
Capitol Grill in Las Vegas, orI would bring in twenty five investment bankers
(23:48):
for apply it to make a presentationto a pitch. I mean, I
know these people now well the investin your deal, I don't know,
not until we first off get theprocess going, put together. You know
your tools, and then reach outto these various retail and institutional investors and
(24:10):
find out whether it's something or interestedin. You know, there's nobody out
there that can guarantee that somebody's goingto fund your deal. If somebody gives
you a guarantee, run exactly exactlyand you know it all goes back to
the first concept of you've got tohave the strategy before you act, because
(24:32):
even though you think you know everything, you hardly know anything except what you
think that your business is going tobe. That you have the best thing
since life spread, but you don'tknow how to use a knife. So
what difference does it make? Youknow? So that's where consulting. If
you can't figure it out yourself,then don't just pretend you know everything.
(24:56):
At least be smart enough to findsomebody like yourself who can advise and consult
and take you down the road tosuccess, as otherwise nothing's going to happen
except you're gonna waste time, you'regonna waste money and nothing, and you're
gonna be defeated. Yeah, andagain, a lot of a lot of
these people trying to raise money.A lot of the founders, you know,
(25:18):
they they spend too much time onsocial media getting the wrong information and
instead of calling a consultant or callattorney direct if you know, if you
know, if you know one.But again, call a consultant and you
know, get some free advice initially, and then pay for it later on.
Again, there's no racing capitals,not free, cheap or guaranteed.
(25:41):
I tell people. So, Imean, apart from apart from the strategy
that we've talked about and the duesand the don'ts, a lot of these
people rely on social media for theirinformation, and it's most of the time
it's wrong. I'd say ninety percentof the information out there is wrong.
So, like, I had agentleman call me up last year when spack
were really hot, and he calledme up until he wants a form of
(26:03):
spack. He wants a form aspack. I said, okay, great,
I said, do you know itcosts about two million dollars for legal
fees, accounting fees and all thefees necessary just to form a spack.
That's before you raise any money.Well, he said no, he said,
I want to pay all the feesout of the money we raised in
this pack. Yeah, I said, where did you get that in it
(26:26):
from? Well, I read,I read something on the internet. I
said, but it doesn't work thatway, you know, I mean,
so I had to explain it tohim, and he thought I was just
trying to get him to retain meand everything like that. I said,
look, if you don't have anymoney, and he says, why don't,
I don't have that kind of money. I said, then you have
no business doing a spack or thinkingabout a spack. I said. The
(26:47):
other thing you need to understand abouta spack is even if you've put one
together, investors in this back stillhave the option of asking for their money
back. All the money you raisein the back has to go into escrow.
You can't use it to pay fees, salaries, operate expenses, or
anything. So if an investor wantshis money back, you've got to take
(27:10):
it out of esk go and refundit. So you can't take any of
the money. Well I didn't knowthat. Well, you know, see,
this is where a consultant can helpguide somebody before they, you know,
go off in the tangent, whetherit's forming a spac or a regg
d or reggae. You know,you can't really rely or just rely on
what you read on the internet.I mean, it's a great place to
(27:33):
start, but then you have toget into reality mode and figure out,
all right, how do I getthis actually done? I don't know how
to do it. Who could doit for me? Right? Right?
Well, a couple of things beforewe close this out. First of all,
getting back to your road show things. You know, I'm we're obviously
here in Vegas as well. Igo to a lot of investor shows and
(27:56):
very often, to your point iswe see these guys is pitching stuff from
their PowerPoint deck that you can't evenread. The print is so small and
all they really just reading with theslide and I can't think of anything more
cringing from an investor, So Iwant to invest in this guy. I
mean, these people need consultants atthat point, because theyre pitch always falls
(28:18):
flat. I'm sure you've seen thata lot, right, Yeah, that's
a good point to bring up herebefore we do sign off, because that's
the role of a consultant is tohelp coach and walk the founder through a
presentation, multiple presentations as a practice, before they actually get in front of
investors. I mean, I toyour point, investors just roll their eyes
(28:41):
when they see a pitch deck comeup on the screen where they're you know,
the founder is not looking at theinvestors in the eye, He's looking
at the pitch deck and reading fromit. Well, if you run off
copies and hand them out, theinvestors can read them later on. What
the investors wanted to have is theconversation. I tell the founders, get
up there and tell a story.Don't use any que cards, don't use
(29:03):
a power point. Get up thereand tell a story of who you are,
what you're doing, where you're goingto go, and how are you
going to get there, what's yourbackground, what you know, how are
you going to make money? Sothe investor understands how he's going to make
money. Tell a story, engagedwith the audience, turn it over to
questions and answers. Forget these powerpoints and everything like that. So anyhow,
(29:27):
that's the role of a consultant isto, you know, get the
founder ready for presentation. I don'tknow how many times I've got on the
phone with people they want to pitchme. On the phone, I said,
wait a minute, I'm not yourinvestor. You know you don't I'm
not gonna this is our first call. I don't want to hear a forty
five minute business plan on the phone. Let's first off, let's talk.
(29:51):
So I go. I try towalk them through a process you know that
they want to pitch me their fortyfive minute business plan, you know,
and it just puts everybody to sleep. And that's what I tell them.
Look, if we're going to getyou in front of investors, you have
to learn how to talk to investors. Give investors what they want now real
quick. Getting with a regg Dand a REGAE. There's some big differences
(30:14):
with those. And when I saygive the investors what they want, you
have to look at what you're doingand what you're offering investors. With a
REGGAE, the investors put money intoyour deal and they get free trading stock,
which means they have a liquidity eventimmediately. So six months or a
year from now, if they're runninginto a pinch financially, they could sell
(30:36):
their shares to somebody else, notsell with a reg D. With a
reg D, all the shares you'reselling to an investor are restricted for twelve
months or longer, and you asthe founder have to do a registration at
some point to free up that stock. So you have to ask your question
to yourself, what would be moreenticing to an investor a liquidity event now
(30:59):
with free trade eating stock or somethingwith dead money where he puts his money
and he can't get access to itif he runs into a problem. So
those are some things a consultant canpoint out. Where I didn't, I
get calls from people, well myfriend did a reg D because it's cheaper
than a reggae. Well, youknow, maybe it might be, but
(31:21):
is that what the investor wanted wasrestricted chairs out of a reg D?
You know, and he has heraised any money. No, he hasn't
raised his money yet. I mean, so again, this is where when
we started this show right now,I wanted to cover the importance of a
consultant, and I hope you knowthe listeners take this to heart that it's
not an expense on their part.It's an investment. I mean, if
(31:45):
you're going to go out and tryto raise a million to five million dollars
or more, you know you've gotto invest the time and the money to
do it right. So, becauseas the old saying goes, you only
get the one impression to make agood person impress, I mean you can't.
You can't get in front of aninvestor group and blow it and then
want to have a second meeting withthem. They're just not interested. So,
(32:07):
yeah, a consultant can help stretchyou on the right foot. Well,
it gets a bauck that old thingabout how much does it cost to
do it? And then how muchwill it cost you not to do it?
So everybody has to worry about that, right, Yeah, well yeah,
I tell people. I tell peoplealso, I said, you know
you want to go, you willgo cheap higher an amateur, but then
(32:28):
you know you're going to pay alot more when the amateur screws it up.
You know. I had a clienttell me the other day, you
know, your your retainers pretty prettyexpensive. It's way too much. I
know people that do it cheaper.And I said, I've got clients that
pay more. Yeah. Yeah,And there was kind of dead silence on
the phone then. But I mean, you know, you get what you
can't tell people. Yeah, amateurs, I mean, why do you think,
(32:52):
why do you think these these bigshot lawyers in New York and LA
get one thousand dollars an hour orfive thousand dollars an hour. It's because
they know what the hell they're doing, and they have connections with other people
you should know, such as peoplein the SEC or state regulators or CPAs
(33:15):
and you know, so you paytop dollar to get access to top dollar
people that can help you. Exactlycorrect. Okay, last question. You
know, we talked about multiple consultantsfor a company. I'm sure there's a
scenario where one consultant may have hisbunch of lawyers and accountants, et cetera,
(33:35):
where you know, consultant being mayhave theirs. You know what happens
if that kind of conflicts with thefounder says, well, you know,
consultant, he says to go tothis guy. Consultant be says to go
with this guy. What do youdo? It's just basically yeah, yeah,
that's a good point. I mean, I've been involved in transactions over
the years where you bring in thewrong person. In other words, you've
(33:57):
been a consultant brings in the lawyer. The lawyer tells the client, Look,
you don't need to spend money withthat consultant. I could do everything
for you. You don't need todo that. Use him, just use
me. I mean, there arepeople like that, and there's no way
to avoid that. And people arepeople no matter what profession they're in.
There's unscrupulous people, greedy people.As a consultant or whatever the profession you're
(34:22):
in. If you're going to networkwith people and bring them to the table,
you first need to know and trustand understand how they're going to handle
things when you're not in the room. I mean, are they going to
try to take the business out ofyour hand and do it all themselves.
Are they going to work as ateam? Accountant, lawyer, consultants work
(34:43):
together. That's the consultant's job,right there, is to bring in people
that he's trusts and works with.And when he's not on the phone or
if he's not meeting with the client, he knows that that CPA is not
going to say get rid of thelawyer, get rid of him, get
rid of him and just work throughme. Pay me all the money you
were paying them, and we canget this done. I mean, that's
(35:06):
gonna happen if you're not careful.Yeah. Well, look in Las Vegas,
we don't have any greedy people here, so we don't have to worry
it. Yeah. Yeah, sure, I'm sure. If we're listening for
this podcast, people are gonna havequestions for you, Uh, Mike,
how to what's the best way toget a hold of you? Yeah,
I mean they can email me it'sreal simple. It's my name, Mike
(35:28):
Brett v R E T T Eat gmail dot com. And they can
call me uh nine five one twothree six eight four seven three. They
can go to LinkedIn. I'm reallyactive on LinkedIn. They can look at
my profile, my services. Theycan even book an appointment, uh,
consultation with me. And again ninefive one two three six eight four seven
(35:52):
three. All right, excellent,excellent, And so, Vicky, what
do you think about this podcast?Got any exswer if questions or comments from?
Well, you know, I lovedoing podcasts with Mike because he puts
out so much information in such arelatively small amount of time. But I
(36:13):
will say this though having opening asmall business, Starting a business is not
easy. It's not cheap, andit's not a quick overnight sensation. And
not every person who has devised orinvented the best widget or the best service
(36:34):
possible knows how to do everything.And so there's a little bit of a
humility involved in understanding the concept thatI can't do it. I need someone
to help me. And it's okayto ask someone to help you. Because
if you hire a consultant, ifyou hire an advisor like Mike. Then
(36:57):
they're going to help you to thinkof and to make it through all of
the stuff you didn't know, youdidn't know how to do. And that's
how you get to become a successfulbusiness. That's how you get to the
next stage, to get your twohundred million to take you to the next
level. You can't do that unlessyou hire someone like Mike who will guide
(37:22):
you down the road and make iteasier for you. So all I can
say is, if you want tobe a successful new business, you need
to hire Mike because he will helpyou absolutely with integrity. And to that
point, I appreciate those comments,Vicky. To that point, I tell
(37:45):
people, look, look at Airbnb. They're in the real estate business,
but they don't own any real estate. Look at Uber, they're in the
uber is in the ride share transportationbusiness, but they don't own any cars.
How do you think both those companiesgot where they are today? The
(38:06):
founders came up with an idea.But the founders came up with an idea,
but they couldn't execute to get themwhere they're at today. They needed
help along the way in order todo their ideos and get the business concept
fleshed out. I mean, Uberwas deal was competing with all taxi cabs
and everything. Now taxi cabs arealmost out of business because exactly Uber and
(38:30):
Airbnb is you know, really notAgain, they don't ownly the real estate,
but they're in the real estate businesswith rentals. So again I tell
people, you can take a lookat those and you know, if you're
in those industries, the consultants canhelp you work your way to success.
If you're in some other business,the consultant can also help you work your
way to success. Right. Andyou know, every industry has its own
(38:54):
language, and that's another reason whyyou need an advisor too, because they
have a group of people, Theyhave a team around them to represent all
the aspects of what your new businessneeds, and they know the language.
Because if you can't speak the languageof a lawyer or the language of a
CPA, then they're more likely tonot want to do business with you.
(39:19):
Yeah, exactly, yeah, exactly, Mike. I got to tell you,
I have fourteen yellow post it notesall around my office here, each
one with a multimillion dollar idea,so I expect to raise money for it
real easily. Huh yeah, okay, yeah, yeah. I tell people
look, if I could raise tenmillion dollars without any laying any money out
for legal fees, accounting fees,and marketing fees, I'd do it for
(39:43):
myself. I wouldn't do it foranybody else. That's yes, yes,
So all right, well listen Mike, thanks for bringing a guest on the
show today. Another great podcast.Thank you Vicki, thanks for co hosting
this episode. And folks who arelistening for the Mappable USA podcast MAPPABLEUSA dot
com. If you go to thatwebsite, scroll down you see your syndication
(40:04):
sources. Just pick the one youlike best, subscribe and you'll never miss
another one of our episodes. Asyou want to be a guest on the
show like Mike was today, there'sa guest head there. Fill that out.
We'll see what we can do aboutgetting you on the show. And
if you like what you're heard today, send us an email at info at
mappableusa dot com or just leave acomment on whatever page you listen goes on
right now. So thanks for listening, Thank you support. We'll get you
next time with another Mappable USA podcast. Everyone,
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