DiscoverMy Worst Investment Ever Podcast
My Worst Investment Ever Podcast
Claim Ownership

My Worst Investment Ever Podcast

Author: Andrew Stotz

Subscribed: 137Played: 4,778


The mission of My Worst Investment Ever Podcast is to share stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it. 

Andrew Stotz, Ph.D., CFA, is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

To find more stories like this, previous episodes, and resources to help you reduce your risk visit
334 Episodes
BIO: Dror Tamir is a serial food and nutrition entrepreneur with a passion is to improve the health of children and families through better nutrition. He is the CEO & co-founder of a startup, Hargol FoodTech, the world’s first commercial grasshopper protein producer. STORY: Dror was looking for investors when one particular one showed interest in being the lead investor. He was super excited about this opportunity so much that he put his entire focus on this investor. After eight months of due diligence, the investor refused to follow through with their promise leaving Dror with zero investment. LEARNING: Do not chase just one investor when raising capital; keep your options open. Time is money, especially for a startup with limited resources so use it wisely.    “As an entrepreneur, you have to be the most optimistic person on the planet and believe that your startup is going to succeed.” Dror Tamir   Worst investment everRaising capital for his startupDror is always looking for suitable investors, and in one of his previous rounds of raising capital, his company received a lot of interest from investors. One particular investor approached him and said they wanted to be the lead investor. From day one, they said they would invest 70% of the funds that Dror needed. Opening up his company to strangersDror was excited about this opportunity. These were the guys that he wanted to work with. Dror discussed the valuation, terms, and plan with them, and then they went into due diligence, the longest due diligence he ever had. They did eight months of due diligence. Part of the due diligence meant that Dror had to answer hundreds of questions of every aspect of the company. Another part of that due diligence included discussions with experts that the investors hired and got into the company’s heart. This made Dror feel very uncomfortable because it meant he had to share delicate company information with persons that had no relation with his project and who could even become competitors. But Dror needed the money, and so he had to comply with the due diligence process. Show me the moneyAfter eight long months, it was time for the investor to show Dror the money. The investor said they would invest the funds that they promised but only a third of the valuation they discussed. This was unacceptable for Dror. It became apparent that the investor had prolonged the due diligence process to put pressure on Dror. Things got even worse because while the due diligence took place, Dror had received interest from other investors. But because this particular investor was supposed to be the lead investor, Dror never negotiated terms with other investors. He just told them he had a lead investor, and any other investor would enjoy the same terms as the lead investor. They signed the investment documents and waited for Dror to finish the due diligence. Losing it allAfter the lead investor went back on their word, Dror went to the other investors and asked them to move forward with what they had agreed on. The result was horrific. The investors pulled their agreements and decided not to invest. Dror was left with nothing. What irked Dror most was the eight months his company lost during the ( due diligence process) that yielded nothing in the end. Lessons learnedHave a devil’s advocate to help you deal with investorsDo not engage investors all on your own. Bring in another person from your team who will be your devil’s advocate. A person that will tell you when you are just wasting your time. Someone who will not be afraid to ask the hard question that you personally cannot ask. Do not chase investors too much; otherwise, you will chase them awayDo not apply too much pressure when chasing investors. If they feel too pressured, they will not invest or offer you a deal that you will not accept. So think about how much pressure...
BIO: Marko Höynälä is the Founder and CEO of Kipuwex Ltd and has invented three game-changing IoT products. Kipuwex is a medical device that wirelessly and continuously measures a person’s biomarkers which can then be accessed by health care professionals from anywhere in the world. STORY: Marko jumped blindly into an opportunity to partner with a Pakistani company to distribute his medical device. The company ordered a considerable amount of devices but never paid for them. LEARNING: Do not trust people or businesses blindly. Building trust is an essential part of a business, and when it is broken, the business breaks down too. Be confident to go out of your comfort zone.   “Do your homework on how foreign markets operate. Do not just go there blindly.” Marko Höynälä   Worst investment everMarko had been actively seeking investors and customers of Kipuwex outside of Finland, his home country. Coincidentally, Marko was contacted by a company from Pakistan that was very eager to have this kind of device because it can do more than most of the other devices and is more affordable. He decided to go to Pakistan and find out what the market had in store for his company, despite the security risk that the country is. Marko spent some time with a company that wanted to do sales and distribution of Kipuwex. Getting into a foreign partnershipMarko spent a week with the Pakistani company. The company introduced Marko to about five hospitals, and he got to demonstrate Kipuwex to them. The hospitals were eager to buy the device. Marko and the distribution company got all the agreements and paperwork ready, and they agreed to partner and distribute Kipuwex in Pakistan. The company even ordered some devices. Then Marko returned to Finland and sent the devices to Pakistan. The company did not pay upfront for the devices; they promised to do so the next day. Marko is yet to receive the money to date. The company gave a shoddy excuse claiming that the problem was with Marko’s bank account. Marko lost a considerable sum of money in the deal. Lessons learnedDo not trust people blindlyDo not trust people or businesses blindly. Find out as much as you can about them before partnering with them. Cultures are different around the worldPeople are not necessarily similar in other countries. Just because people do business in a certain way in your home country does not mean it will be done the same elsewhere. Be confident to go out of your comfort zoneIf you want to be a successful entrepreneur, you must be bold enough to get out of your comfort zone and try new things. Andrew’s takeawaysBuilding trust is an essential part of a businessTrust is the glue that keeps a business together. If that trust breaks, the business breaks down too. There is no shortcut to building trustTrust is built over time. You get to see how a person or a relationship performs over time and get to know whether they are worth trusting. Actionable adviceTo be successful as an entrepreneur, you must go out of your comfort zone. But, first, do thorough research and seek guidance from those who have been in your area of business before. No. 1 goal for the next 12 monthsMarko’s number one goal for the next 12 months is to focus on the next round of investment that his business needs to deliver products to customers around the world. Parting words  “Do not replicate my mistakes.” Marko Höynälä   [spp-transcript]   Connect with Marko Höynälä (LinkedIn) Andrew’s books (How to Start Building Your Wealth Investing in the Stock Market)...
BIO: Rise, fall, rise again. Along the way, get divorced, get turned over by a friend on a new business idea, get ripped off in the sale of another. Get married again, become a father again, build again. STORY: David had this excellent novel business that he shared with a trusted friend who went on to stab him in the back by taking the idea and making it hers. LEARNING: Always have an NDA or any other formalized document before sharing your proprietary ideas with anyone. Be careful when doing business with friends; it is best to avoid it altogether. Do not be afraid of competition; keep reinventing yourself to stay ahead.   “Opportunities and choices come along all the time. It depends on the ones we take.” David Ward   Worst investment everDavid was traveling through Asia when he met a friend from London at an airport lounge. They talked, and David shared a business idea with her in the sustainability space he was quite passionate about. His friend expressed interest in doing business with David, but nothing was put on paper at the time. David went ahead and shared the first outline of the business with her. Keeping the conversation goingDavid and his friend continued talking about the business idea for the next six weeks or so. However, they did not come to any sort of agreement. David was really passionate about starting this business, so he launched his first sustainable products brand in Asia. The launch went well, and he further launched the products in the US market eight months later. Getting stabbed by his friendAll this while, David was still communicating with his friend who was now in London. David would share many details regarding his newly launched brand as he always hopes to go into business with his friend. Two years after David launched his product, he saw some details on the internet about his friend that devastated him. David’s friend had taken his idea and started a company on her own. She claimed to have thought up the business idea on her own. David was not angry that his friend had started a business without him, but because she had taken something that was shared with her in good faith and turned it to hers. Lessons learnedGo into a partnership with your eyes openIf you are going to share something fairly proprietary, make sure that you have an NDA in place. Do not leave it all to trust, especially if you are dealing with friends. Andrew’s takeawaysCompetition is inevitable and never endsWe are all going to face competition in our business, but the real entrepreneur is the one who keeps fighting to stay ahead of the competition. NDAs are not a sign of mistrust; they are just a securityWhen a prospective business partner asks you to sign an NDA, it does not mean that they do not trust you, it is just a formal way of keeping your interests, and theirs protected. Actionable adviceDo not start businesses with your friends because your relationship with them can suffer if something goes wrong. If you go into business with your friends, do not be afraid of setting things out on paper. Be clear about who has proprietary over the idea and ensure you protect yourself through an NDA or other formalized documents that give clarity to whose role is what. No. 1 goal for the next 12 monthsDavid’s number one goal for the next 12 months is to see his products launched into at least four more markets, including the US and the UK. David’s business objective is to reduce the use of as much plastic as possible around the world. This means entering new markets and extending reach to as many people as possible so that they have the choice of sustainable, lower impacting alternatives. Parting words  “You can’t keep a good person down. They will fall to their knees, but they will get back up again.” David Ward   [spp-transcript]   Connect with David Ward (LinkedIn) (Twitter)...
BIO: Scott Buss lives his life and runs his business based on the principles of TRUST and TRANSPARENCY. He is an aviation expert who explores and connects the synergies between the private jet industry and the unlimited number of luxury lifestyle VIP brands. STORY: Scott found himself on the wrong side of Arizona’s law and landed in jail for four months. During his time in jail, Scott chose to focus on his life after prison. It was while in prison that he came up with his business idea, a business that is now thriving. LEARNING: Do not let your past mistakes define you. Always try to make the best out of a bad situation. Be kind and supportive to those going through a rough patch.   “With every negative, there is a positive. It is up to you to figure that out the positive.” Scott Buss   Worst investment everMaking the best out of a bad situationScott found himself on the wrong side of Arizona’s law and landed in jail for four months. Being locked up left Scott with lots of time on his hands. He decided to put this time into good use. Scott would read magazines, newspapers, and books. He would then write notes of CEOs and executives worldwide from Entrepreneur, Businessweek, and Wall Street Journal. Scott knew he wanted to be a CEO after finishing his jail term. Hatching a business ideaScott would also read quotes on entrepreneurship and keep himself motivated. In the process, Scott got an idea of starting his private jet business. He had been in private aviation for about four years. When Scott was done with his four months, he was fully prepared to build his business, and so he hit the ground running. Leaving with life’s lessonsThe four months Scott was in jail taught him a lot, mentally and physically, and also about what one can do with limited resources. It also taught him about trust and transparency. Lessons learnedIf you are a spiritual person, draw your strength from prayersThe best form of energy is prayer energy, so renew your strength by praying. Make the most out of your bad situationIf you are in a bad situation, focus on the positives. Do not wallow in self-pity and just count down the days. Know that the only one who can control the person you will be once the storm is over is you. So make the most out of your horrible situation. If you have been shown kindness, pay it forwardYou never know what someone could be going through. So pay kindness with kindness and bring a smile to someone’s face. Andrew’s takeawaysSupport those who are struggling with the consequences of their bad decisionsIf you know somebody struggling with the consequences of their mistakes but is trying to make up for them, do not give up on them. Identify someone who is at their most painful point and reach out to them. It could be a short phone call, a quick visit, or a short talk. This simple gesture could change that person’s life. Own up to your mistakes but do not let them define youOwn up to your mistakes, apologize and make amends. However, do not let the bad decisions you have made in life define you; instead, learn from them. No. 1 goal for the next 12 monthsScott’s number one goal for the next 12 months is to continue scaling his private travel business and to launch other businesses. Parting words  “No matter what you’re going through, if you need somebody to talk to, reach out; I’ll be happy to be a lending hand.” Scott Buss   [spp-transcript]   Connect with Scott Buss (LinkedIn) (Twitter) (Website) Andrew’s books (How to Start Building Your Wealth Investing in the Stock Market)...
BIO: Paulina Tenner is an entrepreneur, angel investor, TEDx speaker, and author. Her company, GrantTree, specializes in research and development tax credits and grants. She is passionate about burlesque and used to perform as a showgirl! STORY: Paulina’s company ventured into a new business area of renting out office space, a venture that almost killed the company. LEARNING: Focus on your core business. Check-in whenever you delegate a project and ensure you put controls in place. Do not fall prey to overconfidence bias.   “Focus on what you are good at instead of trying to break into new territories.” Paulina Tenner   Worst investment everAbout five years ago, Paulina’s company reached a point where the team was too big for their current office, so they needed a new one. They had the option to get an office that was a perfect fit for them, slightly bigger than the current one, so that they could grow into it. But there was also this genius idea of taking over an entire building, renovate it, and sublet to other companies with a similar culture to theirs. Taking a votePaulina’s instinct told her to go with the smaller option instead of an entire building. But when the two options were put into a vote, there were two or three votes more for the building. So they decided to go with the idea of an entire building. One colleague in Paulina’s company had big ambitions and a clear vision of what he wanted that building to be. So he found one. The company took over the building and paid a hefty deposit of about £300,000 or so. Then they started renovating it. The costly mistake of delegationPaulina and her co-founder decided to put the colleague with the big vision in charge of the entire project. They were not paying too much attention to the management of the project and thought because this particular colleague was in charge, everything would be fine. So much money was spent on renovating the building. By the time Paulina and her co-founder put a hard stop to it, the company had spent over £600,000 on renovating that building. It was over the top and way more than they needed. The desperate struggle to make a return on investmentAfter they were done with the renovations, they started advertising the building and looking for companies to take up the office spaces. That is when they realized that they knew nothing about the office rental space, it was not their specialty. Their specialty is finding government funding schemes to fit in with what their clients do. It took many months, more than they anticipated, to find companies to use the space. At some point, they got truly desperate to get people into the building and share their ongoing costs with them, so they decided to rent it out at cost. So no profit whatsoever. And as if that was not enough, when the company decided it was time to wrap up this crazy idea and get out of the building, they were charged enormous amounts of money for dilapidation. The landlord wanted the building in its previous state, even though they had made it better with all the renovations. Paulina’s company lost so much money on the entire operation, it almost died. Lessons learnedFocus on your core businessFirst, focus on what you are good at because it is tough to diversify and break into an entirely new industry before you get good at what you are doing. If you are a relatively small startup company, do not take on projects that cost a lot of money upfront. Mistakes are part of learning; embrace themEvery founder will, at some point, make a costly mistake. It’s part of the learning process. Do not wholly delegate a new projectIf there is a big project that is important for you, do not delegate it to just one person. Make sure you put controls in place on how much money is to be spent and how the whole thing is to be managed. As a founder, you need to get involved in that project or at least have oversight of it if it is significant for your company. Andrew’s... (Christopher Elliott) is an award-winning consumer advocate, multimedia journalist, and customer service expert. He is known for his practical advice and creative solutions to customer-service problems. He’s the author of ( Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals) and ( How to Be the World’s Smartest Traveler (and Save Time, Money, and Hassle)). Christopher is a nationally syndicated columnist through King Features Syndicate, which distributes his work to publications from the Seattle Times to the Miami Herald. He writes a weekly column for The Washington Post and USA Today and is the founder of ( Elliott Advocacy), a consumer advocacy organization.   “If you are not going to be in one place for more than five years, do not buy a house, just rent.” Christopher Elliott   Worst investment everChristopher bought his first house in 2001 after resisting the homeowner bug for so long. But he found a great place in the Florida Keys, and he loved being there. And at $175,000, the price was just right. This was before the big housing boom. A few weeks after moving into the new house, Christopher’s partner got pregnant as luck would have it. Now the two-bedroom home was not going to cut it for long. Selling in a booming marketBy the time Christopher’s son was a year and a half, they started getting very serious about selling. At the time, the housing market had exploded. He did a couple of renovations on the house and ended up selling it for $350,000. Buying another home when he really should have rentedChristopher took all the money he made from selling his house and moved to Central Florida. Here he paid $235,000 cash for his new home. The house needed a little tender loving care, but Christopher did not mind; he still had some money left. So he renovated the house. Being a nomad, he started getting restless and thought maybe they should sell the house and move into something a little bit bigger in a different area. And just as they were having that discussion, the bottom fell out of the housing market. They ended up staying in the house for about 12 years because they could not get a reasonable price for it. Finally selling the houseEventually, Christopher could no longer stay in the house, so he decided to sell it for the best price possible. Selling the home was a massive undertaking for Christopher. He got several buyers that came in and fell through. Others kept renegotiating the price down. They finally settled for $285,000. Once the real estate agent took her cut and adding the money he had put into the house for renovations, he ended up losing a significant amount of money on that house. Christopher made a resolve never to buy a home as an investment again. Lessons learnedDo not listen to conventional wisdom when buying a houseStop assuming that what everyone says about owning a home is the best investment you can make, to be true. It is never a guarantee that you won’t lose money from buying a home. The American dream of being a homeowner is overrated. Andrew’s takeawaysA house is not always an investmentIt is never a guarantee that you will always be able to buy low and sell high when dealing with real estate. Be careful when listening to marketing messagesMarketing messages are intended to hook you in. It is not always that you will gain from what is being sold. Remember that whoever is putting out that marketing message is looking to gain and not necessarily help you. You do not have to get into debt just because loans are availableSeriously contemplate your options before you get sucked into a mortgage just because there are facilities that can offer you the loan. Be sure that this is a debt that you can... (Lou Adler) is the CEO and founder of ( Performance-based Hiring Learning Systems) – a consulting and training firm helping recruiters and hiring managers around the world source, interview, and hire the strongest and most diverse talent. Lou is the author of the Amazon top-10 best-seller, ( Hire With Your Head) (John Wiley & Sons, 3rd Edition, 2007), ( The Essential Guide for Hiring & Getting Hired) (Workbench Media, 2013), and the Lynda.com ( Performance-based Hiring) video training program (2016). His current “Diversity Hiring without Compromise” initiative is focused on developing a color-blind hiring process that ensures the best people get hired regardless of race, religion, age, sexual preference, and physical challenges. Lou is one of the top bloggers on ( LinkedIn’s Influencer program) writing about the latest trends in hiring, employment, and recruiting. His articles, quotes, and research can now be found in Inc. Magazine, Business Insider, Bloomberg, SHRM, and The Wall Street Journal. The company’s new mobile-ready learning platform— (TheHiring Machine)—provides instant access to all of the tools needed to find and hire outstanding talent.   “Do not take money from your friends unless you want to lose them.” Lou Adler   Worst investment everLou was running a company with 300 people in it when he was 32 years old. He hated his boss, and they would argue every other week. Lou would quit every other month. One day he just left for good. Becoming a recruiterIn his old job, Lou would work with recruiters who were making so much money. This enticed him to become a recruiter after he quit his job. When Lou became a recruiter, he realized that hiring was just like any other business process. You just had to do it right. There were so many things being done wrong, and if he did them right, he could make a lot of money. And that is precisely what he did. Winning the recruitment gameAfter year two, Lou tripled and then quadrupled his income. He could not believe his luck. After riding on this wave of success for about 25 years, Lou decided to try something different. He decided to automate his recruitment process. This was during the dot-com boom. Losing his business and his friendsLou invested a million dollars and borrowed another million dollars from his friends and used the money for his new business venture. While Lou’s idea was a smart one, the market was just not ready for it. For this reason, everything fell apart. He lost his company and the friends he had borrowed money from. Lessons learnedRaising capital by borrowing from your friends is a bad ideaBe very careful when asking friends for money to run your business. When you take someone’s money, you got to deliver. If you do not, you will undoubtedly ruin the friendship. Learn how to manage your cash flowCash flow is vital in running a successful business. Do not ignore it. Learn how to ( manage your cash flow), and everything else will fall into place. Andrew’s takeawaysBeing skilled in something does not necessarily make you a good businessmanYou may be very good at doing something, for instance, a great technician, then you decide to start a business as a technician. Soon enough, you will realize that the job of running a business is very different from the position of being a technician. Sometimes the problem is just your timingJust because a business fails to succeed does not mean it was a bad business. Sometimes, it is just the timing that is wrong. Great idea, but at the wrong time. Cash flow is kingIt is not cash that is king; it is cash flow that is king. Raising money is easy. The real challenge comes in creating the cash flow to... (Eric Siu) is the CEO of content intelligence software ( ClickFlow), which helps you grow your traffic while looking like a genius. He also owns ad agency ( Single Grain) and has worked with companies such as Amazon, Airbnb, Salesforce, and Uber to acquire more customers. He hosts two podcasts: ( Marketing School) with Neil Patel and ( Leveling Up), which combined have over 48 million downloads to date. He also speaks frequently around the world on marketing and SaaS.   “If you keep chasing the money, you are going to run out of steam at a certain point, and you will not want to keep working at it anymore.” Eric Siu   Worst investment everEric was in the first year of running his ad agency, and things were not going too well. So he decided to look for something else he could venture into. He ended up settling on the senior living niche that he believed would blow up in a few years. Partnering with his high school matesAt the time, two of Eric’s friends from high school were interested in Eric’s idea. They made a power team. One had a finance and operations background, another was a developer, and Eric had a marketing background. Together, they started a company called CareSprout. They each contributed $80,000 to start the company. Focusing on too many things at onceWhile the team was great, their heads were not in the game. Each partner had other things they were focusing on simultaneously, so they could not give their business the full attention it needed. Needless to say, the business did not work out even after going at it for two years. When they ran out of money, one of the partners suggested they raise more money, but Eric felt it was time to cut their losses, and so they did. Lessons learnedDo not chase the money; chase the opportunityDo not get into a business just because you want to make money. Go into it because there is an opportunity you can benefit from. Focus on one thing until you have it workingDo not be a jack of all trades. Work on one thing and nail it before you try to scale anything else. Make sure that your values and those of your partners alignBefore you ( get into a partnership), make sure that you vet the people you want to partner with and see if their values align with yours. Make sure that everyone understands their roles and responsibilities, and they are comfortable with them. Andrew’s takeawaysImplementing an idea is more challenging than you imagineImplementing an idea to fruition is such a huge challenge. It is better to work in an area, understand it, and then implement an idea in that area. Start small before you go big. Is your idea worth investing in?Before you turn your idea into a business, ask yourself if it is an idea that people can invest in. Can you confidently ask people to invest in your idea and guarantee them a return on investment? Money is secondary in businessMaking money should not be the primary goal of a business. The idea, the implementation, the passion, and the customers are the primary thing. Money is just a measure of success. Actionable adviceSlow down and think things through so you can have the tool belt to sidestep critical mistakes. So just be very intentional and slow down from time to time. No. 1 goal for the next 12 monthsEric’s number one goal for the next 12 months is to hit the Wall Street Journal bestseller list for his new book ( Leveling Up). Parting words  “Keep going.” Eric Siu   [spp-transcript]   Connect with Eric Siu (LinkedIn) (Twitter) (YouTube)... (Dr. Britt Andreatta) is an internationally recognized thought leader who creates brain science-based solutions for today’s challenges. As CEO of ( 7th Mind, Inc)., Britt Andreatta draws on her unique leadership, neuroscience, psychology, and learning background to unlock the best in people and organizations. Her series of books, ( The WIRED TO™ Series: Books on the brain science of success), focuses on how we are wired to grow, resist, and connect.   “Failure is information, and it helps us get better as long as you know what to do better.” Dr. Britt Andreatta   In today’s episode, rather than focus on Dr. Britt’s story, we will focus on what she has learned about failure as a brain science researcher, author, speaker, and consultant. Leaders can apply these lessons to bring out the best from their teams. Lessons learnedBiologically, we are constantly sensing our environment, trying different actions, and trying to maximize our positive results. We are wired to learn through trial and error. Having goals and setting a standard, and achieving that standard is essential. But, it is also important to celebrate progress and effort. Leaders should refrain from focusing on their team members’ faults and instead focus more on their accomplishments. If a leader is all about the numbers, they will have a disengaged workplace. Care about how people feel, their sense of satisfaction, their sense of purpose, and their sense of feeling respected. These are the real performance indicators. When conducting performance reviews, have two scores: individual contributor score and team score. Using fear as a leader will always undermine performance because people cannot perform at their best when they are in a fight or flight state. Competition is excellent for driving performance but be sure to nurture healthy competition instead of a toxic competition. Andrew’s takeawaysThere is a difference between training and education. Training is about ( acquiring a skill), and education is about expanding the mind and bringing new information into the system. As a leader, it helps develop a common goal rather than giving everybody separate KPIs. Working separately makes it a lot harder for the team to cooperate and achieve a common goal. Actionable adviceEmbrace your true nature as a learning being. Failure is just the first attempt at learning. Therefore, create space for making mistakes, taking risks, failing, picking yourself up, learning from it, trying again, and letting yourself get better at something. Mastery takes time. No. 1 goal for the next 12 monthsBritt’s number one goal for the next 12 months is to launch her Brain Aware Manager training, a program on how managers can use brain science to bring out their teams’ best. She is currently putting the finishing touches on the training and will be launching it soon. Parting words  “Go out and learn something fun.” Dr. Britt Andreatta   [spp-transcript]   Connect with Dr. Britt Andreatta (LinkedIn) (Twitter) (Instagram) (YouTube) (Website) Andrew’s books (How to Start Building Your Wealth Investing in the Stock Market) (My Worst... (Bracken P. Darrell) is the president and CEO of ( Logitech). The company is worth 12x more than when he started there in 2012.   “Failure is rarely fatal. But success is never final.” Bracken Darrell   Worst investment everBracken once went to lunch with one of his board members at Logitech. His name is Neil Hunt. As they were chatting, Bracken asked Neil what he had worked on. At the time, Bracken did not know anything about the company Neil worked for. Neil told him that he had worked on an algorithm all day. It was an algorithm that was trying to help recommend something to users. He explained to Bracken that they already had a recommendation algorithm, but he was trying to understand why the two algorithms were bringing different results. Impressed by Neil’s curiosityNeil was the head of product at his company. Bracken was so impressed by the level at which Neil and his company were trying to understand their product and user behaviors to give their customers a good experience. Bracken invested in the company as soon as he got back to his office. He put in a lot of money into the company. The stock doubled in two months. In six months it had gone up by 250%. Something just did not sit right with his investment decisionThough Bracken was super impressed by Neil’s company, he had this little voice in his head that made him uncomfortable about the investment he made. Bracken felt uncomfortable because Neil was a member of his board, and he thought that this would be seen as a conflict of interest. Bracken thought that the smart move would be to sell his stock, so he sold half of it. The stock continued to double, and the more the stock went up, the more Bracken felt uncomfortable. He kept thinking that if people knew that Neil was a board member, they would think he had gotten insider information. Eventually, he sold his entire stock. The stock ended up going up 30-fold. The company is Netflix. Bracken should have known betterInstead of selling his stock, Bracken should have gone to his general counsel and inquired if he had done anything wrong. He would have been told that there is nothing wrong with investing in your board member’s companies. But Bracken never asked, so he lost so much money by selling a stock that has continued to grow tremendously over the years. Lessons learnedTrust your instinctsTrust your intuition on things that you feel are good for you. Chances are, they are good. Hold onto your investment for as long as possibleMost people get out of investments too early. When you invest, do not be afraid to hold on to it for as long as you can. Communicate and ask for adviceBefore you ( sell your investment), seek advice. If you are having doubts about your investment, communicate with the people involved. There might just be a better solution than selling your investment. Andrew’s takeawaysThink long termYou should look at your investing period over decades. So if you are 30 years old, you want to retire when you are 60. That is 30 years, but do not forget, you are probably going to live to be 90, that is another 30 years, so we are talking about 60 years. When you put 60 years into your head, it helps you think long term and not short term. Sometimes all you have to do is askIf there is anything that you do not understand regarding your investment, ask and get the help or advice you need. But do not keep it inside. Ask. Actionable adviceTake a long-term view of everything in your life because you will rarely go wrong if you bet on long-term trends. No. 1 goal for the next 12 monthsBracken’s number one goal for the next 12 months is to make tremendous progress on diversity and inclusion at Logitech. Parting words  “Stay focused on the long term, and you will have a long successful life.” Bracken... (Rachel Beck) is the author of “ (Finding Your Way When Life Changes Your Plans: A Memoir of Adoption, Loss of Motherhood and Remembering Home),” she lives in Des Moines, Iowa, and is a rising voice in the movement of women’s storytelling. Her story is rooted in a cross-cultural, adoptive-family love story unlike any other. Lifted by wings strengthened through struggle, Rachel’s story flies in the face of society’s expectations for women to look a “certain way” and slip comfortably into the American Dream.   “Take the time to build relationships because, in business, it is not about what you know; it is about who you know.” Rachel Beck   Worst investment everBuilding friendships instead of business relationshipsRachel has always put her heart and soul into every project that she handles. Unfortunately, this has caused her to put emotions first, especially when dealing with business partners. Doing this has cost her a lot as she conducts her businesses. Rachel’s nature of being an empath has led her to make friends instead of building business relationships. Being friends with her business partners has lead her to trust people who have often not kept their part of the bargain. After a couple of mistakes, Rachel has learned how to build healthy business relationships founded on mutual trust. Lessons learnedLook for the red flagsIf something is too good to be true, then it is. Learn to keep your eyes open and look out for any red flags. Learn how to ask for helpFind role models who are successful in your area of interest and let them guide you. Do not let ego stop you from asking for help whenever you need it. Build healthy  business relationshipsTake time to invest in healthy relationships. You have no excuse not to do it because a smart entrepreneur knows that it is not what you know but whom you know that is important in business. Always be professionalJust because we are in a virtual world right now does not mean everything else goes away. This is not the time to stop being professional. Andrew’s takeawaysTrust your intuition but choose logic over emotionAlways listen to your intuition but remember that your intuition is different from your feeling. Your feeling goes longer, deeper, and stronger. But the point is, in business, you must choose logic over emotion. Put your feelings aside and focus on reason. Trust is critical in businessBusinesses should be based upon trust. Build trust with your business partners if you want your business to succeed even when you have contracts in place. Actionable adviceDo the research. Invest time into researching, do it, and then do it more. No. 1 goal for the next 12 monthsRachel’s number one goal for the next 12 months is to keep lifting people. She wants to shine a light on people in her network and give them the platform to get out there and tell their stories.   [spp-transcript]   Connect with Rachel Beck (LinkedIn) (Website) Andrew’s books (How to Start Building Your Wealth Investing in the Stock Market) (My Worst Investment Ever) (9 Valuation Mistakes and How to Avoid Them)...
When ( Jordan West) was 23, he decided to buy a Taco Del Mar restaurant. He knew he had made a huge mistake at 2 pm the first day when only three customers had walked in (and two of them were his parents). For five years, he worked hard to grow sales every way he could think of and, in the end, tripled his revenue, which still didn’t seem to matter on the profit side. (He lost a lot of money). The one thing that he seemed to be the best at in his restaurant endeavor was marketing and getting people in the door. Fast forward to 2014, when his wonderful wife, Carmen, started a modest baby clothing line and was selling at craft markets. He asked Carmen if he could test running a few ads on Facebook, and the rest is history. He learned every up-and-coming strategy and tactic and helped grow her small start-up into a multi-million-dollar company. And it’s still growing to this day! Over the years, he realized what he is good at and what he is not good at. What he’s good at is marketing and helping others scale their businesses, which leads us to now. In 2019 Jordan started the podcast “ (Secrets to Scaling Your e-commerce Brand),” which is now in the top 50 business/marketing podcasts in multiple countries, including Canada and the United States.   “That business idea you have will cost twice as much, and it is going to take four times as much time as you think.” Jordan West   Worst investment everIn 2010, Jordan started thinking about going into business. His family was in the milling business, and he wanted to join in, but his family wouldn’t let him. And because he did not want to go to business school, Jordan thought what better thing to do than to purchase some kind of business and learn on the go. Buying a restaurant off CraigslistIn his pursuit to own a business, Jordan looked on Craigslist and found a Taco Del Mar restaurant. This was a Mexican chain restaurant that had had a lot of success in the past but was currently on a bit of a downward trajectory. But the restaurant itself was selling for about USD 25,000. Jordan figured he could afford to lose $25,000 should the business fail. What he did not factor in was all the money he was going to put in to run the restaurant, plus all the time he would have to spend running it. Getting into the real business of owning a restaurantRunning the restaurant was not as easy as Jordan had thought it would be. The biggest problem he faced was getting the restaurant to start making a profit. Year after year, the restaurant kept making losses. Jordan had it so rough that he had to work 60 hours as a paramedic just to try to afford the payroll. Time to call it quitsJordan kept pushing, trying to turn around the restaurant. But when one day he gave his landlord a check of $56,000, and it bounced, Jordan figured it was time to rethink his business venture. He just could not continue living in so much debt because, at this point, he had borrowed so much to keep the restaurant afloat. About six months before the end of the lease, Jordan went to the franchise headquarters and asked them to find someone to buy the restaurant. They found a buyer who could tell right off the bat that Jordan was desperate to sell. He ended up selling it for $25,000. At the end of it all, Jordan had lost $150,000 and five years of his life. This was indeed his worst investment ever. Lessons learnedMake sure you scrutinize all financial reports before buying a businessWhen buying a business, make sure that you scrutinize all possible financial reports to get proper financial projections. Learn how to read financial statementsLearn how to read a financial statement before you buy a business. This way, you will be able to see what the owners have been spending money on. When you can read and understand financial statements, you will see if there is any possible way to make money from that... (Jess Larsen) started his finance career on a mergers and acquisitions team with Citi. Later he founded several businesses; the three companies he currently co-owns are ( Graystoke Investments), ( Graystoke Advisors), and ( Graystoke Media). Jess was previously the Director of Special Operations and Intelligence Agencies practice for the management consulting firm the Arbinger Institute. Ten years ago, he co-founded a charity called ( Child Rescue Association) that combats child trafficking through prevention campaigns, aftercare support, and undercover rescue missions. You can listen to him regularly on his podcast, ( Innovation & Leadership with Jess Larsen).   “Cash flow is king.” Jess Larsen   Worst investment everWhen Jess was in his twenties, he left Southern California and went back home to Canada, where he started an energy-focused private equity fund. Then some friends got him and his small group of friends into a deal with a billionaire. They co-invested in a company with exclusive rights to bring renewable energy technology for small hydro from Europe. The company had big deals tied up with guaranteed investment contracts from the Ontario government. Jess, his brother, and his partner did their due diligence, and everything was smelling like roses. The group decided to invest two and a half million dollars into the company. Failing to have controls in placeOne thing that Jess and the other investors failed to do was to verify what sort of a person the CEO was. They also did not have controls in place to determine how the CEO should use money from investors. They optimistically just assumed the guy would do what he said he would do. Instead of using the money to install the first unit, which could make the business cash flow positive, he started 12 other projects just to claim he had a good portfolio going. He thought this would make his portfolio more attractive for fundraising. So while the CEO was chasing other projects, he ran the business out of money. CEO manages to get more fundingInterestingly, somehow the CEO got a $50 billion public company to co-invest with the company. Jess tried to warn the new co-investors about how the CEO was running the company, but they chose to trust the CEO and invested $4 million. True to Jess’s prediction, the CEO squandered $4 million into useless projects that were not part of what he had promised his investors. Lessons learnedDo not forget to think about the downside tooDo not get too excited about the upside that you forget to think and prepare for a downside. Think about a scenario where your investment goes sideways. What if you need to remove the CEO or minority shareholder? What is the process to follow? Factor in such essential details before you sign on the dotted line. Cash flow is kingWhen you are ( cash flow positive), you have a runway to make mistakes, experiment, and still survive, and have another swing at entrepreneurship. Do not let over-optimism make you forget about risk managementThe over-optimism that turns somebody into an entrepreneur can sometimes be a hindrance in being an investor. It can make you relax and forget about managing your risk. Andrew’s takeawaysThere is no hack, shortcut, or secret to building trust; it builds over timeDo not just trust anyone right off the bat or after working with them for a short while. Always remember that trust is built over time. Ensure there are controls within the company you are investing inWhen investing in a company, ensure that controls within the business and on the money are strong. During your research process, find out if the accounts are in order and... (Santiago Iñiguez de Onzoño) is the President of IE University and a recognized influencer in global higher education. Iñiguez is also the Vice-Chairman of ( Headspring), a company owned by the Financial Times and IE Business School, providing custom education programs for companies worldwide. Iñiguez is the former Dean of IE Business School and has played a leading role in business education. He was portrayed by the Financial Times as “one of the most significant figures in promoting European business schools internationally.” He was the first European appointed as “Dean of the Year” by Poets & Quants (2017). He is the author of “ (The Learning Curve: How Business Schools Are Reinventing Education)” (2011), “ (Cosmopolitan Managers: Executive Education That Works)” (2016), and “In An Ideal Business: ( How the Ideas of 10 Female Philosophers bring Values, Meaning, and Innovation to the Workplace)” (2020), as well as co-editor of “ (Business Despite Borders: Companies in the Age of Populist Anti-Globalization)” (2018), all published by Palgrave Macmillan. Iñiguez is a regular speaker at international conferences and frequently contributes to different journals and media on higher education and executive development. He is one of the 500 Global LinkedIn Influencers.   “Every business opportunity is a learning experience, not just an opportunity to make money.” Santiago Iñiguez   Worst investment everSantiago’s worst investment was a personal investment that he did years ago in Brazil. He participated in all sorts of real estate development in the Northeast of Brazil. In 2007, Brazil was the land of promise and was close to holding the Olympic Games, so the government invested heavily. Many entrepreneurs came in, so Santiago participated in this personal investment because he fell in love with that piece of paradise. Not such a rosy investment after allWhile Santiago loved the investment he made in Brazil, its value has gone down with time because of the low value of the country’s currency. The Brazilian Real was about two Reals per Euro at the time. Now it is five Reals per Euro. So if Santiago tried to sell his property there now, he would definitely make a loss. Turning his worst investment into pure goldSantiago happened to be the only investor who built a house on the property in Brazil. He turned this spectacular house into a peaceful place where he can write and concentrate. It is now the place Santiago spends his holidays. Even though, from an economic standpoint, the property became a damaging investment, it has rendered so many positive personal experiences that Santiago does not regret having bought it. Lessons learnedDo not be too passionate that you forget to do your researchDo not become too passionate about investing to the point that you forget to do your research. Make sure that you get an expert’s assessment and then do your analysis. Andrew’s takeawaysDo not buy a house if you cannot see yourself in it for the rest of your lifeThe rule about ( buying a house) is that you have to walk in and feel convinced that you want to live there the rest of your life. This is because a property is a significant thing, but sometimes it can be a trap. If you buy something because of a financial aspect, then you run into a potential pitfall. So look for something that you love. When investing in a foreign country, you are investing in two thingsAnytime you are buying something in another country, you are buying two things. You... (Dave Kerpen) is a serial entrepreneur, New York Times bestselling author, and global keynote speaker. Dave is the co-founder and co-CEO of ( Apprentice), a platform that connects entrepreneurs with the brightest college students, as well as the co-founder and CEO of ( Remembering Live), a virtual memorial service company. Dave is also the founder and Chairman of ( Likeable Local), a social media software company serving thousands of small businesses, and the co-founder and Chairman of ( Likeable Media), an award-winning social media and content marketing agency for big brands. Dave’s newest book is “ (The Art of People: 11 Simple People Skills That Will Get You Everything You Want).”   “The greater the risk, the greater the reward.” Dave Kerpen   Worst investment everDave was a young entrepreneur when he got caught up in an opportunity to invest with a venture capital firm. He was drawn in by the allure of feeling like a venture capitalist, and it seemed exciting to be investing in fantastic deals and alongside terrific people. This excitement blinded Dave from vetting the opportunity nor understanding it first before putting $30,000 into it. This was quite a substantial amount for him at the time. Lack of communicationWhat took Dave aback concerning this investment was a real communication gap between the folks running the firm and their investors. The investors never received any communication regarding their investment or how the company was performing. Dave felt uncomfortable about the poor communication after a while. He even reached out to one of the other investors, who confirmed that he was also going through the same lack of communication experience. Where there is smoke, there is indeed fireThe lack of communication continued, and the fund was eventually shut down. Dave never saw a dime, but worse, he never got to know what happened to his money, which, sadly, he lost. Lessons learnedForget the glitz and glamour; understand your investment firstDo not get caught up in the glitz and glamour of investing. Instead, do your homework to understand what you are getting yourself into. Do thorough research until you feel more comfortable about the investment. Understand risk and rewardBefore you invest in anything, make sure you understand what the risk is compared to the reward. To protect yourself from risk, invest different amounts of money based on your ability to stomach the loss. Do not invest everything you have into one speculative investment venture. Instead, diversify your investments. Understand what your communication needs as an investor areKnow what your communication needs are. Go in knowing if these needs are going to be met or not. First, you should have access to the publicly available data regarding any investment you are interested in. You should also be able to get regular communication regarding the performance of your investment. Andrew’s takeawaysScammers will come at you genuine peopleThere are plenty of scams that come across as extremely legitimate. In fact, that’s what they are good at, looking real. So be very careful about the people you invest with. Choose an investment option that gives you liquiditySome investment options have more liquidity than others. If you put your money into a listed company in the stock market and things do not go well, you have the option of exiting and getting money invested. But when you go into private equity or venture capital, it is much harder to exist and make money out of it. Size your position and diversify to avoid losing moneyIf you do not ( size your position), you run the risk of being wiped... (James Leong) is the founder of ( Visions One Consulting), a training consultancy that teaches finance to non-finance people. Using his unique Financial Storytelling approach, James can simplify a complex and dry topic to make learning joyful and fun. James has helped thousands of university students and non-financially trained people grasp finance and accounting easily, empowering them to make better decisions. The Singapore Business Review has featured James as one of ten influential professional speakers in Singapore. James is also a CSP (Certified Speaking Professional), a recognition earned by the top 12% of professional speakers worldwide.   “Go and seek your passion. I think that is what gives us joy and happiness in life, which is ultimately the most important thing.” James Leong   Worst investment everJames got into investing when he was a freshman. Having some knowledge in finance and accounting, he believed he understood numbers. There was this particular young startup listed on the stock exchange. It was a newly IPO company with a lot of hype and tremendous growth prospects. Not a week could go by before an analyst said something great about this company. And, of course, the share price would keep going up. This attracted James’ attention, and he invested a substantial amount in the company. Making huge returns before trouble startsEverything leading up to the IPO was perfect. The growth curve, sales, revenue, everything was going up. IPO year was the best year. The shares made huge returns. After the first year, things started getting rocky for the company. The numbers began dipping. Unfortunately, at the time, it was hard to find financial reports. Investors had to rely on what analysts were saying. While the numbers showed that the company was doing poorly, analysts kept saying that it would turn around. So James ignored the numbers and held onto his shares. Unfortunately, the numbers never went back up, and after three years of making nothing, James finally sold his shares though he did not make much from them. Lessons learnedKnow your numbers and trust themKnow your numbers because numbers speak the truth. Get financial reports that go as back as 10 years and look at the numbers. These numbers will save you from making your worst investment ever. Do not let the story override the numbers, always pick up the story with numbers. Know how much risk you can afford to takeFind out your psychological makeup, what can be absorbed, and how much volatility you can take within your portfolio. This will always help you manage your risks. Andrew’s takeawaysKeep your market exposureThe best way to keep your ( market exposure) for the long-term is to buy an ETF or an index fund. Own 10 stocks, not more, not lessFrom his own research and what he has learned over the years, Andrew’s advice is if you are going to buy stocks in the stock market, own 10. Not more and not less than 10. If you buy less than 10, you will not be fully diversifying, and buy if you buy more than 10, you might as well buy an index fund. So if you want to be a stock picker, build a portfolio of 10 stocks. Actionable adviceTake a course on how to read financial statements and reports so that you at least understand the basics. No. 1 goal for the next 12 monthsJames’ number one goal for the next 12 months is to complete his book that will allow anyone with no financial background to learn and grasp finance and accounting easily. Parting words  “Keep learning. Learning never stops.” James Leong   [spp-transcript]   Connect with James Leong (LinkedIn) (Twitter) (Website) Andrew’s... (Billy Samoa Saleebey) is an entrepreneur, podcast host, and award-winning filmmaker. He has led learning and development organizations for some of the most disruptive companies in the world, including Tesla, where he was Head of Global Sales & Product Training. He is currently CEO and Co-Founder of ( Podify), a podcast agency that provides production and promotion services to companies and individuals who want to create a podcast. He is also President & Founder of Insight Media, a Los Angeles-based production company specializing in podcasting and digital media. In addition to being the host of ( For the Love of Podcast) (a podcast about podcasting), he’s also the host of the podcast ( Insight Out), where he interviews best-selling authors, entrepreneurs, and thought leaders to uncover powerful insights, reveal why they make an impact, and explain exactly how they can be applied.   “There is only one you. There has only been one you, and there will only ever be one you. That is your competitive advantage.” Billy Samoa Saleebey   Worst investment everBilly had a great job at Tesla, arguably, the most disruptive company on the planet. He had worked in the corporate world for about 10 years. Billy truly enjoyed doing sales, and it came easy for him. He loved being real, honest, and speaking from the heart. And so his career blossomed. Enjoying the safety net for far too longBilly was very fortunate to get multiple roles in leadership and management. He moved from manager to director during the 10 years. Billy’s position was a relatively high and prominent one at a global level. He had a team in Asia, North America, and Europe. He felt good about his career and never saw an exit point from it. He was happy. His role becomes obsolete suddenlyIn January of 2019, it was decided that Billy’s role was unnecessary because there were team leaders in North America, Europe, and Asia. And so his position was eliminated. Billy admits that though this came as a shock to him, it was a relief in many ways. He had known that he was ready to go out on his own for a long time, but he just never put in the time to figure out what exactly he was going to do. Making his worst investment everAfter Billy was relieved of his duties, he decided to take his stocks and parlay them into more money. At the time, he had zero experience in the stock market. But he chose to learn day trading. He did it for about a month and made about 40 grand by making a few short trades. This made Billy get this false sense of early success. Feeling confident, Billy cashed in his Tesla shares. He had over 1,000 Tesla shares, which he cashed for $300 a share. Now, had Billy not touched those shares, they would be worth almost $4 million today. While Billy’s poor investment decision cost him a lot of money, what he feels was wasted was the time he spent doing day trading. He spent the next six months day trading after he cashed his Tesla shares, and he never quite made much in return. He regrets that those are six months he would have spent building his business. Lessons learnedTime is more precious than any amount of moneyMake sure that you always spend your time wisely. When you dedicate your time to anything, make sure it is fulfilling in the long term, and not a shortcut that you think will give you a quick benefit. If you make a wrong turn, fret not, you can always pivotIf, for some reason, you find yourself doing something that you are not passionate about and you are struggling with it, stop and pivot. It is never too late to start doing what you have always wanted to do. Just make a hard pivot now, and you can make up for the lost time. Andrew’s takeawaysInvest your time in long-term thingsIf you want to invest your time and money into something, make sure it will bring you long-term benefits. Listen to your gut and (Daniel Burrus) is considered one of the world’s leading futurists on global trends and disruptive innovation. The New York Times has referred to him as one of the top three business gurus. He is the CEO of ( Burrus Research), a research and consulting firm that monitors global advancements in technology-driven trends to help clients profit from technological, social, and business forces that are converging to create enormous, untapped opportunities. He is a strategic advisor to executives from Fortune 500 companies, using his ( Anticipatory Business Model) to develop game-changing strategies based on his proven methodologies for capitalizing on technology innovations and their future impact. He has delivered over 3,000 keynote speeches worldwide. Daniel is the author of seven books, including The New York Times and Wall Street Journal bestseller, ( Flash Foresight), and his latest best-selling book, ( The Anticipatory Organization), and he is a syndicated writer with millions of monthly readers on the topics of technology-driven trends, disruptive innovation, and exponential change. Burrus is an innovative entrepreneur who has founded six businesses, four of which were the U.S. national leaders in the first year. His accurate predictions date back to the early 1980s where he became the first and only futurist to accurately identify the twenty exponential technologies that would become the driving force of business and economic growth for decades to come. Since then, he has continued to establish a worldwide reputation for his exceptional record of predicting the future of technology-driven change and its direct impact on the business world.   “The more you find what is unique in you and leverage it, the more power you have.” Daniel Burrus   Worst investment everDaniel has always been interested in science and technology. He started his career teaching biology and physics. Now he is a respected technology futurist. Naturally, he invested in technology and did well with that. Diversifying his portfolioDaniel wanted to diversify his investments, and so he decided to get into ( commercial real estate). However, this was an unfamiliar area for him, and he did not know anything about it. Daniel had a couple of people who gave him some advice and took it without doing any research independently. Daniel invested in some high-rise buildings. Things take a turnAfter investing in the highrises, some things shifted. Daniel and a few other people that had invested in these highrises decided to take the matter to court. They later found out that the company behind the highrises was Berkshire Hathaway, a big company controlled by Warren Buffett with much deeper pockets than they had to fight them in court. Pushing on with the fightDaniel did not let the company bully him into dropping the court battle. Unfortunately, the court battle took years, and in those years, his investment was dying as he could not sell them because of the court case. The entire court process was super stressful for Daniel. He put so much of his time and energy into it and ended up distracted from his other ventures. In the end, he lost most of what he had invested. Lessons learnedInvest in your area of expertiseInvest in what you know instead of getting outside of your area of expertise. If you do, you must spend a lot of time researching to make that investment a worthy investment. So always ask yourself what is your area of expertise and can you invest in it and make money from it instead of getting into uncharted waters. Let go of all... (Karl Sjogren)’s 2019 book ( The Fairshare Model: A Performance-Based Capital Structure for Venture-Stage Initial Public Offerings) presents an idea for how to raise venture capital via an IPO. The concept can be applied to a blockchain venture that raises equity capital via an initial coin offering (ICO). Its name describes its purpose--to balance and align the interests of investors and employees. A Detroit-area native, Karl Sjogren has a BA and MBA from Michigan State University, is a certified public accountant (inactive), and credentialed in turnaround management.   “Valuation equals analytics, plus emotion, plus deal terms.” Karl Sjogren   In today’s episode, we will do things a little different from the usual. We will look at what motivated Karl to write his book, do a quick summary of Karl’s Fairshare Model, and then an overview of some of the lessons he learned during the process. Karl’s story behind his book The Fairshare ModelKarl was co-founder and CEO of a company called Fairshare between 1996 to 2001. The company had an online community of investors with interest in the IPOs of young companies. The idea was to build an audience by giving them education about the deal structure and valuation and share due diligence. Once the company got to critical mass, the plan was to provide members free access to pick their public offerings. The members were expected to have a legal offering, a passed due diligence, use Fairshare’s deal structure, the Fairshare Model, and allow members to invest as little as $100. Basically, it was crowdfunding before the term was coined. From this experience, Karl got the motivation to write more about the Fairshare model and its impact on raising venture capital via Initial Public Offerings. Summary of the Fairshare ModelWhile writing his book, Karl learned that there are three capital structures: conventional capital structure, a modified conventional capital structure, and the Fairshare Model. The Fairshare Model is for a venture stage company that wants to raise capital via a public offering. In it, there are two classes of stock. Both have voting rights; one trades, and one does not. Investors get the tradable stock. Employees get the tradable stock as well for value generated as of the IPO date. But for future performance for most of the enterprise, the employees get a voting stock that does not trade. It converts into a tradable stock based on performance criteria described in their prospectus. So the basic idea is, instead of developing a valuation upfront before the investors come in, the valuation unfolds based on performance. The conventional capital structureThe conventional capital structure is used in most IPOs and in private offerings where you do not have professional investors, friends, and family types of investors. The hallmark is there is a single class of stock. So an investor who owns, say 10% of the company, if it is going to be acquired, they get 10% of the proceeds. The modified conventional capital structureA modified conventional capital structure is used by professional investors, venture capital funds, and private equity funds. The hallmark is that multiple classes of stock and capital structures are needed if you are going to treat shareholders differently. Lessons learnedNobody can do valuation right (Valuation is a complex topic), and no one knows how to do it right. The real complexity is not so much how you calculate these things but how they all sort of fit into an economy. Emotion plays a significant role in making investment decisionsEmotion plays a crucial role in making investment decisions. Whether you are deciding to buy or sell your shares or trying to understand how the market is... (Chef Marti Mongiello) is a story weaver intoxicating his audiences by stage and television across the world. A mesmerizing speaker, he’s published nine books, 200+ papers, and given over 100 speeches and keynotes in Europe, Asia, and America. Featured on CBS, PBS, ABC, NBC, CNN, and FOX to almost three billion viewers is only eclipsed by articles in 160+ newspapers and magazines like the Washington Post, LA Times, Australian, The New Yorker, FOOD TV Network Magazine, The Times of London, and many more. His latest television series is Inside the Presidents’ Cabinet. Marti is a former White House Chef, Private Investigator, Security Expert, Executive Chef, and a GM of the Camp David Resort and Conference Center working with the past five Presidents for 25 years, from H.W. Bush through Trump.   “Get a super-strong prenuptial agreement that covers everything. You will sleep well at night knowing that every eventuality is covered.” Marti Mongiello   Worst investment everMarti lived in Japan when he was contacted for a business partnership by a food service-oriented company that wanted to bring foodservice training online. They thought it would be great for their business to have a former White House chef as their brand’s face. Marti thought this would be a good idea given that he is a great presenter, business plan writer, and an excellent writer and storyteller. Knocking the plan out of the parkMarti flew to Arizona, where the company founders floated numerous stock certificates and bylaws to him. Marti was still in the military at the time and a bit naive as to how these things work. And so he missed critical statements in the founder’s document and in the bylaws, which were registered with the Secretary of State. Nonetheless, Marti sat with them for several days and honed the entire pitch. He went through several training sessions to perfect the pitch. They then flew to New York and presented their professional pitch to a hedge fund interested in their idea. They did a splendid job and got funded. The drama startsSoon after the funding came, Marti, got a phone call saying that the founders wanted to dilute everyone’s shares. Marti’s shares in the company would reduce from 33% to 4%. He was not thrilled about that, especially because it was not discussed with him before it was made. Per the bylaws, the founders formed a quorum, had a special meeting, and went ahead and slashed everyone’s shares. Then they sent him a check for 40 bucks for the shares that they took from him. Losing everything due to ignoranceMarti was not familiar with liquidation clauses or the various other clauses in the bylaws, such as unanimous voting. And because of his lack of knowledge, Marti lost everything he had worked hard for in this partnership. Lessons learnedAlways have partnership agreements that stipulate bylaws clearlyAlways have partnership agreements prepared before getting into a partnership. Squatters and liquidation clauses must be addressed in a partnership agreement, and so must the bylaws. Whether you are investing in the project or being part of a group that is launching a new product or service, these are just necessary provisions that have to be dealt with initially. Understand the liquidation clauseBefore getting into a partnership, discuss the liquidation clause. How is the company allowed to be liquidated? If you disagree about this as partners, it could get messy down the road. It is ok to retire old shareholders who are no longer contributing to the companyIf you have old shareholders who are no longer contributing to your company’s progress, it is good to remove them from the process. They can still own shares, but they should not be allowed to participate in the decision-making process. Just because someone funds your business does not mean they should run itBe careful when dealing with funders. Be sure to have it in writing, the extent to which...
Download from Google Play
Download from App Store