Ego Kills Deals — Plus 3 Secrets Nobody Talks About: PPLI, Board Seats & Cap Table Disasters | FOC

0:03I would say, you know, don't have an ego. I see a lot of people, you know, in my industry and other industries have a very huge ego. And with that ego, you make a lot of mistakes. You miss a lot of things. Like you said, just reading agreements and paying attention. and you'll look at a great opportunity in that too-big-to-fail mentality and looking at all your past success and then being surprised when it doesn't work out because you didn't pay attention to the small details, and usually that's fueled by ego. And I'd say come into every deal with humility. I don't care what you've accomplished, humility.

0:45Appreciate everybody that's a part of the deal. See their value in the deal, not just the deal itself. Beautiful. Really, really, really, really important because we're all guilty of it. We think we're amazing at AI. We think we're amazing at cyber. It's like, I know more about real estate. And really good people who are pitching will play to that. They'll see it and they'll make you feel better and better and better until you're like, oh my God, I'm so good. I should do this deal. But we just got like played. So yeah, don't do that, anybody. Any questions, anyone, by the way, as we go along? Everybody's on the panel here.

1:18Nobody? Okay, good. Quiet crowd. Okay, Natalia. So what we've been, we've done a lot of like different trials and errors to see what kind of structures are interesting and different because we like to do things a little differently. So in our ecosystem, we run a control public company where between our internal group is about, you know, more than 50 % of ownership as well as 100 % of voter control. So it's a pretty closely, you know, close market. When we do different SPVs or create invites, different companies invest in them, we have a group of investors that are investors in a public company, but they like what we do, and they like it just because of the loyalty.

1:59Because when we bring investors to, and they're usually angel investors or partners, when we bring them to a private entity that we're doing, we give them, it's convertible preferred, but we're not only giving them percentage of the company that traditional convertible preferred with interest rates and equity convertible, but we'll also give them shares in the public company because public companies sometimes does technologies. So ability to connect to different entities and ability to kind of de-risk different situations really help investors. And also we always make sure that we have very open line of communication with them.

2:40They know what's going on and that surely helps. And one very interesting thing that we do, which I haven't seen before, is when we bring different companies in our ecosystem, we invest in them in a safety and security space, we want to see that the founder or somebody in their company becomes actually advisor to our ecosystems and earn shares in our company. As we're going back and forth, can't speak anymore. And this way, you know, this way they feel that they're not only providing the technology, to invest in them, but they also bring value to the whole ecosystem that we created. Yeah, building, holding companies and community around it.

3:16By the way, just before we get to Dave, does anybody else have like a really big insight as to deal structure, deal formation, but just really good deals? Like somebody here has got something burning where you're like, folks, you've got to know about this. Nobody's talking about it, but we can make a ton of money. where's heath where's heath stand up tell him what you do i learned so much from this guy the other day and pplis this is insane just like is that okay like 20 seconds i guess it's gonna have to be you called me out um i was on the panel the other day we did talk about something called private placement life insurance and as soon as i say life insurance 95 of you turned off excuse me You turned off your ears.

4:02But private placement life insurance is the custom creation of a policy for you and your family that can own alternative assets. So essentially what you're doing is creating a tax-deferred environment, utilizing the IRS code section for life insurance, not traditional like you're thinking of normally. So Brian, thank you. Sorry, it's been Brian for 20 years for me, but now it's David. Yeah, I met Heath when he was dancing in a bar. But he does life insurance as well. Thank you. Thank you. Thank you, Heath. Who else? Who else has got something? Give us something. Come on. What minerals? Anybody here like minerals, like silver?

4:39There are folks I know who love silver. What's going on with silver? Me? Oh, I got some minerals down here in the back. Okay. Yeah, let's go here. Yeah, I'm a software investor. I only invest in experienced entrepreneurs. First time entrepreneurs may be great, but high risk. And I think the number one reason why deals go sideways is lack of good board governance. As a preferred shareholder, I have to be confident that I'm well represented or I'm on the board myself. And I'm on the board about half the companies I invest in. That's such a great point. It's like first time parents, right? You know, it's going to be a shit show because they're learning, but the second or third child, they kind of get it right because they're working it.

5:21But it's actually a really, really good point because most of us, investors, founders, anybody, we don't know what we're doing at the very beginning. Give me one more before I go to Dave. One more. What you got? Cap tables. Oh. Oh. Yeah, I was in M &A at IBM, and we bought a company that had, like, 40 different investors on the cap table, and it was a nightmare to do anything with it. So don't take money from 30, 40, 50 people. It doesn't have to be one or two, but that's, you know, just be reasonable about it. So I have a company that I invested in at 1.4 million valuation, and today they are valued at$350 million, and we are four times up.

6:04So it sucks. One thing that sucks more than a company failing, it's a company being successful while I'm failing. So be very careful on cap tables. You can see it coming a mile. Dave, okay, we got some juice here. What you got? All right. I get to wrap this show up or no? Great. Actually, great comments from the panel. We do a bunch of M &A with IP kind of stuff, so love the IP comment. We value that all the time. The depreciation thing is a big thing, so appreciate that. A couple other just personality things. I have a no-asshole rule. You're familiar with that? At an age and the point in life that if there is a big ego and a bunch of other stuff going on, I just can't tolerate it.

6:52So I want to hang out and have fun, do deals, do good, make a little money, but no assholes. So can you talk a little bit about it? By the way, that is more about no assholes. I was going to get into the deal structure. But the asshole thing is really important. The asshole thing is really important because you want to be around people. You want to celebrate wins with great people. And you want honest people. You want people who are going to support you and people who will show loyalty to the end. So it's a great point. Join the Family Office Club by visiting familyoffices.com. We look forward to seeing you at our next live event.

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