Dean Forbes UK's Top Black CEO on Private Equity, & Building a $100M Business, Market Mondays Live

29:53And another thing that's pretty alarming, which you spoke about, where so we spoke with a gentleman named Don Peebles, who's the top black real estate developer in America. And yeah, shout out to Don. And he he told us that there was 11 trillion in private equity and venture capital in America, money that's been flowing every every single year. And out of that$11 trillion, 97.5 % goes to white men. So that means that 2.5 % is divvied up between women, all women of every race, and every person of any color. Black, Spanish, Indian, doesn't matter. So the whole entire, every single person outside of white men are fighting for 2.5%.

30:50So when we spoke to Robert Smith, who's the richest black American ever, he told us the other side of that story where he said that 97.5 % of all venture capital and private equity firms are run by white men. So now it starts to make sense. White men lend to white men. so how do we have more private equity venture capital firms because i mean it's been proven that people kind of usually look out for each other and that's just like historical fact so black firms higher proportionally lend to black people it would make sense the problem is that we just don't have enough black companies. So how do we get more black private equity firms and more black venture capital?

31:45Because that's the part of the wealth gap that nobody talks about. Where it's like, okay, we can implement programs, we can get more college degrees, but you ultimately are only going to be as good as the exposure that you have and the capital that you can raise. So if you don't have access to money and you don't have any relationships, you could be the brightest person in the world. It's not going to work. where Mark Zuckerberg, he has a great idea, but more importantly, he has millions of dollars in capital to get Facebook started. If he didn't have that money, then Facebook would have just been another good idea.

32:22So how do we work to solve this problem? Wow. I don't know. No, I'm kidding. It's a big deal. I think there's a few different elements to it, right? So I'm a big believer in taking responsibility for it. Let's take responsibility for it. I think I don't have hostility towards the way capital is deployed by private equity or venture capital because of the familiarity with what you see. right so I don't hold any grudge to a white man who's going to make a 50 million euro investment in a company doing it to something and somebody that he feels very comfortable with very familiar with he's seen a bunch of times before right I don't have any I don't have any any issue with that his job is to turn that capital into more capital so if he's more comfortable with this bet versus this one I don't I don't have hostility towards them for doing that so when I say take responsibility i mean i feel like there's an element there's an element of us understanding this game and when we walk into those rooms understanding that 110 is the minimum 120 maybe gets us the gig right that's just where we are in society we're a minority in most of the major economies so on whether we like it or not that is the gig right so when i say to you i see I spend every Saturday morning looking at pitches for FFG and let's say I look at 10 pitches each Saturday morning I can tell you that seven or eight of those pitches are poorly prepared contains the spelling mistakes how people are wrestling with the technology for the first time and this is before we get to the viability of the business idea but before we get to the viability of the business idea we can show up better than that like let's let's invest and use our friends and use our networks to show up better than that.

34:21So let's take responsibility for being uber excellent in the first place. Then there comes the next part, which is coming up with something that is credible, viable, and having the tenacity to push it in the first place. So being prepared for the no's, being prepared for the ego bumps, but continue to go. Because even Zuckerberg and Jobs and Bezos all had their moments where people were kicking them in the shins and saying this thing perhaps isn't gonna make it out so we have to be ready for those things too and then yeah there is us in private equity there are is us in VCs who have to work harder to break that familiarity cycle of only ever deploying capital and things that we've seen before things we know before and people that we've worked with before right and I take myself out of that for a moment because now we're talking about the people who control those firms who are invariably you know not us and don't look like us there is more effort that needs to be made you know to to break that familiarity cycle but i definitely put it in place free i definitely put in place free do do we collectively want private equity to deploy a pound behind a black founder who is you know poorly prepared poorly researched i don't think that's reasonable show up A game, well-researched, well-prepared, good deck.

35:41And then, yeah, you've put it on them to back you at that point. So I think we've got to take a lot of responsibility. Do you have a follow-up or you good? You got a follow-up? No. Okay. I do have a follow-up. I know him. Go ahead. I agree with everything you said, but I also think that it's awareness to have positions of... So I... We was at Diddy's house. And... Shout out to Black Caesar. You see the little casual, humble flex? Talk your talk. Say it again. Where, Miami? Star Island? Where were you at? Wait, wait. Where were you at? Oh, they called me. Where were you at? You've heard of that guy before?

36:17Yeah, him. That's so cool, by the way. So we was talking, and he was very passionate about wanting to solve the wealth gap and wanting to help black people. And I was telling him that, okay, we have some people now that have become billionaires through entertainment, through sports, a couple different areas. it's great to start a clothing brand or start a tequila brand, but what would be better is if a few of them came together and started a private equity firm or started a venture capital firm. Great idea, right? Or started a political lobby. Oh. So I think that part of that is the education for the people that do have resources.

36:59They may not be able to do it themselves, but collectively, and they're not expertise. That's why you say, well, I'm not an expert. well you don't have to be an expert this is when you bring somebody that has an expertise in to run the company just like somebody might not be an expert in fashion but they'll bring a designer in and they'll so I understand why white people would why a white man would lean to a white man but it is not sustainable here's a reason why the economy is on a decline this is what I told we was in front of we was in Bloomberg I told the room full of Bloomberg I said look the way that the capitalistic society in America has worked is not working and if you keep if you keep with the same philosophy of empowering people the problem is that a lot of people look at empowering disenfranchised people as charity it's really it's best practices if you keep looking at it like it's charity this is why we are declining right and other countries are inclining China and China are rising off of our relationship.

38:05So I think that we have to start pushing a narrative of this. Like we got to push a narrative to even make people aware that most people don't even know that. They don't even know about private equity and venture capital and different things of that nature. So it's like we need more private equity, more venture capital. But if they're not even aware of it or if the narrative is not pushed for it, then we're not even in a position where we can even try to help ourselves. I think you're right. But how it happens at scale, I think, is something that we can really take charge of. If you take Corton Capital, we raised$1.2 billion.

38:42As part of my participation with them, I said, we are going to invest in 10 black-led businesses each and every year, right? Which is cool. Does it shift the needle entirely? Probably not. The main reason that's important to me is it will condition these guys to reviewing 50, 60 businesses. So now they see 60 businesses that they may otherwise not have looked at, would invest in 10, and you start to change that familiarity cycle. And that, for me, is the main thing, changing that familiarity cycle. That's why these conversations are great. That's why my career, I think, has been important away from the numbers.

39:20There's now a set of private equity firms who think, well, we backed Dean, we made three, four, six times our money. So when the next dean walks through the room, they kind of go, well, we don't want to miss the next dean. So maybe we listen to this a little bit differently. For me, it's like breaking that familiarity cycle. But we got to show up with our A game. We got to take responsibility for that. AI is changing everything right now. And website creation is officially part of the wave. Wix just introduced Wix Harmony. And honestly, it's one of the smartest tools we've seen for entrepreneurs, creators, and business owners.

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43:00We have enough DoorDash and delivery service type companies. What's the next wave? AI is already here, so I think most of us may have missed the boat on that. What do you think is the next innovation or project or product that we need to create that can get funded? The thing I struggle with the most at Fortero, the thing we struggle with the most at Corton, and the businesses we look at at Corton, and even Fortero struggle with, is talent. It is finding brilliant people, getting them into the company, keeping them in the company for the right amount of time. I know it sounds strange, but extracting value from them whilst they're a tenant of our company.

43:42So I think any technology solution that is helping companies find the right talent, engage the right talent, extract value, or not extract, exchange value because people should be compensated for their work. That to me is a really important place right now. Our strategy to create value at Fortira I think is very defensible. market conditions are favorable. Whether or not I'm successful depends on the 2 ,000 people that come to work every day, the 300 of them that will leave and the 600 of them I'll replace with. How does that cycle move? That is where success or failure will be determined. So anything around optimizing human capital and human talent.

44:27Do you think we have more talent if tech companies decided to pay more?

44:34You don't have to taxi. Somebody's going to work tomorrow. Need that raise. Can we be very honest here and in the States? There are a lot of people, I think, who are looking for jobs, but it seems when I talk to people on a daily basis, they've almost given up hope that almost all the good jobs are gone. Or if I have a tremendous value, I won't. Does everyone in here feel like they're getting paid what they're worth?

45:00Does anyone in here feel like they are getting paid what they're worth? Shout out to you. Nobody's going to pay you like you pay yourself. So you're never going to get paid how much you're worth unless you're paying yourself. Great point. They took their clap back. I don't know if compensation creates talent. I don't know if I pay a person more, they become more talented. I do think there's a comp issue. Like in the tech space, we've seen Facebook bin people. Google have laid off a bunch of people. I think even Amazon have announced that they're laid off people. So, yeah, there's clearly a talent and compensation issue in the tech space for sure.

45:46Yeah. I think the beauty. But not in my company. Not yours, of course. Yeah, we got to be clear. Not his. Yeah, yeah, not me. Of course. Well compensated. Well compensated. The thing about tech, and I love it, is because of the growth and because of innovation and because of disruption that it causes, we said AI is here. I wonder how you look at it from a private investor in terms of are you looking for companies that are creating new forms of AI? Or are you looking at companies that if they had AI can enhance their performance? We love the latter. Like if a company is doing great and just haven't figured out that applying AI could create a bunch of value, then yeah, you acquire that company, you put the AI in and you create a set of value that they may be missed out on.

46:30So yeah, we love AI. We're doing some interesting things with AI at the moment. But any company that we can acquire where the application of AI is an immediate accelerant is a great deal to go after. Can I get a follow-up real quick? Absolutely. So in terms of creating talent, I want to go back to that a little bit because, yes, AI will make things more efficient. And so that talent level kind of gets decreased unless they have the talent inside of that space. how do we go about forming intentionality around crafting the talent or creating an incubator in a sense to have talent so that we know where we can go if we need it like there's been a lot of debates about ai like wiping out mass jobs and these kind of things and it comes back to like the innovation question you know like over over time over decades disruptions innovations happen in the market the wheel took out a bunch of jobs where people would carry stuff from one place to another place then we had the wheel so now it needed one person to drive wherever it was so like this stuff happens you know all of the time so like humanity will just redefine itself i think although ai is probably the biggest you know innovation disruption of the of the 20th century or 21st century um in terms of in terms of talent people are staying less in education than than uh than they ever have and people are staying shorter 10 years in jobs than they ever have.

47:55So as an employer, I am a little bit worried about the depth of expertise. So where people stayed 10 years in a job and they built up incredible expertise and domain knowledge in a job, they don't really do that anymore. And where people stayed in education and got PhDs because it was the thing to do, they don't do that anymore. So statistically, you would expect the degree of expertise to fall off. which as an employer is a worrying phenomenon. Can I just ask a question? Yeah. How are you, you say you're excited about AI as far as, how are you utilizing AI and what are your plans to utilize AI in your businesses?

48:35So at Forterra, the main application of AI, which I think is pretty cool, so we serve industrial companies who are usually manufacturing goods, right? Manufacturing, you know, different elements of machinery, et cetera. so for some of our customers their the goods and products that they make are kind of weather dependent so we have a weather customer who makes garden furniture so we are using AI to predict sales demand which is based on historical trends effectiveness of their salespeople plus weather patterns like forward forward-facing weather patterns so we know in you know good weather times people all the more kind of garden furniture and bad weather times they don't that now that's important because instead of buying i don't know they have a garden table which is predominantly glass so instead of buying 50 glass sheets for these tables because they've got 52 orders they buy 300 glass sheets because they anticipate 300 orders and as we know you buy 300 at a lower price per unit than you buy 50 so it's just unlocking margin for them with clever use of AI and you apply that across all of their products, all of the timelines, all the sales people, you help them incrementally buy elements and components of their products at a lower and lower per unit price.

50:01You also help them not stock things that they're not going to sell. So now they're not buying things, deploying cash, putting it in the warehouse, paying for its storage. So you're just helping them gain more and more margin. very, very simple but effective use of AI and machine learning. You've had a few successful exits. Just talk like it's just me and you. Yeah, a few. A few. How the hell you pull this off this many times? Like walk us through your process, and can you tell us how difficult it is to have that many exits, but for all the aspiring entrepreneurs or entrepreneurs in the building, did you start with that end goal in mind, or like what was your rationale?

50:39Because like to be able to do what you've done and be a unicorn, that's not by accident.

50:47uh i always had like each project at a time like i was never when i was at for at primavera i was never thinking one day i'll be in a company we do with the unicorn i was just kind of at primavera thinking man like these people are talking about this thing going for 300 400 million i've got you know three percent of this company that will be like life changing so now this deal has to get done because that's gonna and then that happened and you go to kds and kds was a much smaller company losing money so that was a pride thing where it was like okay i've come out of the comfort of oracle you know the the um cachet of being in one of the world's greatest tech companies i'm in this kind of startup in france it's going badly so now this has to work right so now you're trying to make that work and that was very difficult and then i went to core hr and i was asking myself, are you any good?

51:40You did Primavera, you weren't the CEO, you did KDS, okay, you've done one. You need to prove that you're actually good and you know what you're doing. So, that became the Core HR thing. And then when I came out of Core HR and I had this opportunity, yeah, that's when I put the billion on it to say, I like the sound of two billion and exit. So, this now has to be two billion. It was always... You hear how casually he says that like it's two billion dollars. You know something? And it's something I've heard you guys talk about as well. I was very lucky. People broke my horizons. Because growing up, how I grew up and how a lot of people grew up, you cap your horizons.

52:21You start to think that certain things are not possible or certain numbers just sound too big. I remember pitching KDS to Google. And we were in the hotel room the night before we wanted Google to buy KDS. So we were in the hotel room the night before with our business plan. and everything I said about investing in well-thought-out business plans just pause that for a second. Because we're in the hotel room going through the business plan going, this isn't exciting enough for them. So add a zero. Add a zero to all of these numbers. So it's adding zeros. And then we're looking at it again going, You've all done it when applying for a job.

52:52This is the same thing at a higher level. And then we're like, add another zero. Just get out of it. So we're just dumping numbers into this business plan and rehearsing the business plan to say it with authority like we really did it. and we went into Google and the guy said see if we achieve this business plan what will be our market share in those in those economies I think we said you know we'll get up to like 14 15 percent which isn't bad market share and the guy said how do you measure market share and we said so of all of the companies that would use a product like this we'll have 15 14 15 percent of them and he said oh we measure market share differently so I said how do you measure it he said by population of the globe that have internet connectivity.

53:37Jesus Christ. Perspective is key. So you're just like, all right, you know, we couldn't have put enough zeros in this thing to make it relevant. But I'm lucky I've had those moments where people have just blown my context. I remember when we were pitching, I think it was KDS again, and we had an offer for 65 million and I was telling the then investor that it was really difficult and maybe we should accept this offer you know it's a good offer 65 million and it was on his jet actually was sat on his private jet talking through this talking for this offer and I've never seen anybody me be more disappointed he invested four million dollars by the way and he was going to get back 65 and I've never seen anybody more disappointed in that return profile like he and he said to me I'll never forget it.

54:26And I've told this story before. He said, you know, what are you going to do? If we sell this company for$65 million, you know, you're going to make a bit of money. You're going to buy a beach house, a holiday house in the south of France, a watch and a Porsche. And then what are you going to do? But he was telling you a truth, though. But I was thinking, that sounds great. You know, you got it. But he was so disappointed that my aspiration for this company was so mediocre. Because for him, it wasn't. And he was spending far less time in the company than I was. So it made me think, if I'm going to put six days a week into this, I should get.

55:06Do you know what I mean? So I've had those moments that have just blown my horizon. So$2 billion, I know, is a lot of money. But it's not nearly enough. Like, there's nowhere near enough. How much is enough? stretch our horizons the number for me isn't so for terror we did it we did it a billion i think by the time we get done you know three years four billion would be a good how much is enough for you though in turn of my own my own um my own personal money i'm okay now i'm gonna flex clap it up for that yeah so before we before that's a fact before we leave last question i wanted to ask you is about the wine.

55:48Oh, sparkling wine. This is in tech now. This is a different industry. Yeah, you know, I've never invested outside of my two comfort zones of property and tech. But I've always been curious about our culture. And our culture is, forgive me, it's kind of music, food, and drink to a degree. That's kind of our culture. When we're enjoying ourselves, when we're celebrating our successes plus family and friends, that's really our culture. So I always wanted to do a drink. I always kind of had this passion to do that. But I knew I couldn't put it in our culture. I don't have the connectivity to music and the social culture in that way.

56:30So I never really committed to it. And then by chance, Carl Loco, who's chairman of Black Seed, which is a VC investing only in black founders, had me come and speak at an event. And I bumped into a friend of mine, Dumi, who I've known a long time, but we've never really collaborated on anything. And we're just chatting backstage. And he says, what do you think of this? He shows me the pitch deck. And it's the pitch deck for Severin, which is a sparkling wine. And the theory behind the wine is it's an African grape, so South African Chardonnay grape, that we bring over to the UK and finished. And Dumi's thing was it's born in Africa, finished in the UK, which is us.

57:10And if you met Dumi or you know Dumi, Dumi's like our Damon Dash. Like when you sit with Dumi. okay like you get tired listening to him because he's like you know we gotta do this and our culture need this and we're gonna make a bunch of money and we need to stop drinking other people's drinks and he just i love that he he was so like passionate about it and he managed uh whiz kid you know jesse j tiny temper so he's and many others so his connectivity to the culture was there he's got amazing energy and passion started in africa finished in the uk which is which is us so I was in and I think the beautiful part of that was he had a little bit of equity left for investors and it wasn't enough for me because I wanted to be a meaningful investor so I said is there a way for us to make it bigger and he was just like yeah we're going to do that because this is a thing for us so we want us involved in it and it was kind of a beautiful moment for him to just open the door in that way and I'm like excited we got bottles backstage we've been drinking before we came out I'm excited.

58:14Severin Wines. Everybody go check it out. I'd love to hear what you think. If you buy it and you like it, tell me. If you buy it and you don't like it, you can tell me too. We're trying to get it right. It's a very important investment for me. We can't wait to go backstage and sip it with you. Ladies and gentlemen, make some noise for Dean Borg.

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