Turning Setbacks into Stepping Stones with Justin

0:00Welcome to the Big Success Podcast. Cutting edge conversations on business and personal success, as well as how to level up. Here's your host, number one business coach in the world, Brad Shoghers. All right, so how do you get massive success? I know we're talking that we're the big success podcast. Justin's going to take us through massive success from his background door to door, then selling with the family bills business, building that to tens of millions during COVID. Now running his own capital fund, built the family into more than 1 ,600 real estate investments. So many amazing lessons coming.

0:38I can't wait for you to listen through. Take a lot of notes, okay? Hit the show notes as well. Go follow, go listen, go learn. But this is going to be a podcast that you're going to love. Justin, take it away. Justin, first question, always the same on my podcast. What's your definition of success? I love that question. and it's truly evolved over the years. You know, it used to be these benchmarks that I would put in place, things I was chasing, you know, comparison. Like, I want to get to this level. I see that guy doing this and that. And you realize at some point that that's just a perpetual cycle of actually being miserable.

1:14So really. There's always a guy with a bigger jet. Yes. Yeah, so, you know, you got to learn these things and you got to go through it and realize that, you know, success is not things. You know, you're taught to set goals and, you know, put the picture of the car you want. You work 10 years, you get the car and then all of a sudden, you know, you're upset the next day. So to me, it's really just auditing all the areas of my life and making sure that I'm better today than I was yesterday. And that's really how I show up for other people. It's how the business is progressing. It's holding the capacity and efficiency within everything that I'm doing.

1:52If I can be just a little bit better than yesterday, that's truly what success is to me. Yeah. How did you shift? Was it an immediate shift one day? You just woke up and thought, that doesn't work. I got to go this way. Or did it gradual? Very gradual. And usually you got to learn it through life experience and painful lessons, you know, and how you audit information. You start to realize that everything you read isn't isn't, you know, the Bible and you got to start sifting through things because for a long, long time, all of the goals were things. It was destinations. And you end up in this loop of chasing things instead of really being in the process.

2:30And then you look back and you're like, wow, I was so upset. And now I'm upset. And finding that happiness factor is very difficult when you're chasing things. So I think it's just being okay with where you are today and, still striving for the future, but knowing that being in the process is really where the happiness is. In your life, if you look back, where do you think you chose success? Was it as a young man? Was it as a boy? What led to you choosing to be a successful person? I think a lot of this is actually out of our control. Everybody wants to say that anybody can be a billionaire. Anybody can do this.

3:11Anybody can do that. I think it's really the self-awareness of knowing who you are, how you're wired, and then you can develop anything within that construct. But it started just with sports. When I was a kid, I just had to be the best I could be in everything. And I was upset if I didn't. And it wasn't about winning. You're never most in sports and business, most days you're going to lose. It was just about I just couldn't live with myself if I didn't put everything into it, you know, and put everything I had into whatever I was doing. It started with sports. It was the first time I picked up a guitar and then I ended up being a music major.

3:46You know, all these things I've done in my life, whatever I'm doing, I only have one speed. So it's just all out the pursuit of just maximizing, squeezing absolute every last bit of juice out of everything that you're doing in life. yeah now where is that from was that like your your parents instilled that in you was it from a school that you're like where did that show up for you because it's always interesting there's always a somewhere where it showed up yeah i think a lot of it is your parents you're definitely molded by what you see my dad was an entrepreneur um great successes big setbacks i got to see all of that but then when i zoom out you know i look at i'm the oldest of five kids we're all very different.

4:28We were all exposed to the same thing, went in totally different paths. And then I started learning more about the neuroscience and how our brains work. And then I started to realize that you don't get to pick your dopamine system, right? And that's why I have this mentality now of a little bit more grace for people who aren't like me. Whereas I used to just be like, why are you making excuses? Why can't you go hard? And the reality is, I think a lot of it really is the inherited wiring that you have in your neuroscience. So yeah, I think a lot of it is finding that self-awareness of what you're great at, how you're wired, and then leaning into being the best version of what God gave you.

5:12What's your formula now for how success happens? Like what's your methodology that these things are all makeup of why success happens for someone? I think it's the authenticity of being able to stick to something, not trying to be ahead of where you are, being 100 % authentic and real about everything in your life. All the biggest progresses, leaps that I've had are when I am on that frequency of authenticity. Yeah. You know, and it goes both directions, not complexing myself, thinking I can't do the next thing, but also being very honest about exactly where I am. And in that dynamic of when you're dealing with other people, because everything's people, right?

5:56Success is your ability to work with other people and people that are ahead of you are going to want to pull you up when you're authentic with them. And people beneath you are going to want to follow you when you're authentic with them. So I think it's staying right where you are, being very clear about your vision forward, humble about where you come from. All of that sauce of authenticity, I think, is where you're going to have those big leaps forward. Talk more about that clarity of vision, because I think a lot of people struggle with finding that and even finding their authenticity. So I'd love your thoughts on how to do that or how to get better at that.

6:32Yeah, vision is something I struggled with early, you know, thinking too small. I think that your potential ends at the distance you can dream, right? Hang on, say that again. Say that again because that's real important. Your potential ends at the distance you can dream. Wow. That's cool. I'm going to write that one down. Because the goalpost moves, right? When you first get started, you're like, man, if I could just make 30 grand a year and be able to support myself and move out of my parents' house, right? That's the goal, right? It's not millions. That's like it's not even close to your radar.

7:11It's not billions. It's not any of this stuff. And I think the sooner you realize that you don't have to know how, you're never going to know how until you've already done it. So dream as far as you can and you're going to land further along. But if your goal is I need to make$100 ,000, which at one point it was for me, that I was doing the things that would get me there. Why wasn't it a million? I would have got there faster. Why not a billion? So I think if you can move the vision further in the distance to where you can't even see or make sense of it, you're going to get there faster. So what's in your mind, I hear a lot of people when they talk about success, they bring failure into the equation as well.

7:52What's your mental construct of the relationship between failure and success? Yeah, this is a big one. I think in the beginning, me included, we're doing everything we can to protect, to not fail. And especially in terms of money, we're all very weird about money. And, you know, when I didn't have a lot of money. Yeah, I was going to say, when you don't have a lot, you got to protect it sort of thing. But the reality is, it's the opposite. What are you trying to protect if you don't have anything? Yes. that was that was a big click for me and i think you have to go to a certain level of success lose it to understand that tomorrow you get up again the world's not coming to an end and uh being able to survive that i think if you haven't been through extreme failures there's this thing in the back of your head where you can't go forward at the right pace and speed you can't really go for it because you're so terrified of what happens when i lose and when you take your first big loss, which is going to happen to everyone, I used to think that I could prepare and do due diligence to the moon and no one's ever going to scam me.

8:58I'm never going to get hurt. And then once you go through the first big one and you really get tested, this is where number one, you get to find out who you are. How do I perform when my back's really against the wall? And you build out a whole new capacity within yourself. And that's what's going to really take you to the next level is being able to use that big failure as a spring to just shoot back better. Yeah. So what was one of the two or three things you had to do to mentally get yourself from that one mistake, failure, whatever you want to call it, to jumping forward? What was one of the two of the things you did?

9:35The first thing I had to do was, and I've done this at every level, I think this is very important is max out your capacity where you are first, you know, before moving on to the next thing. A lot of people, they want to play in the next space, but, you know, they're not ready for it. And they can't, you know, that's where you're off on your authenticity. So first it was it was door to door sales. You know, I had to be the best in the industry before it was time to move on to the next thing. So and part of it's a failure moment when you realize I have built this thing out to its max capacity. I can't get any more out of this.

10:12I have to leave this thing, go back to zero, which is almost a planned failure in order to get to the next thing. Most of us, we max out and we go, OK, here I am. And that's it. Right. But in order to get the next thing, something's got to go. So very interesting transition from sales to in that product going to zero again, getting into a new industry where the potential was a thousand X having great success. And then boom, we have a big failure and I'm back to zero overnight. But as much as that hurts, I know how to get to a whole new level now. So I get to go do it again. So there's, there's peace in failure when you're leaping forward, it takes you to a new level.

10:58And it's like, you read these books. Here, all these people made a billion, lost a billion, did it again. If you're not willing to lose it all, you're never going to go further. It's just the price you have to pay at some points. You're on the Big Success Podcast. We're going to come back in a moment. We're going to talk with Justin about going from million-dollar businesses right the way through to the billions today. Start living your life on purpose and with a plan. As Brad Sugars teaches, you only get 4 ,000 week. So learn the principles of success and make the most of your life. Join Brad's Purpose event now and create the life that you deserve.

11:33Visit bradsugars.com to attend this program as a standalone or as part of Brad Sugars' Entrepreneurial University. All right, you're back. Big success. Justin, Heartland Foods, East Coast, farm to table, you took it to 87 million gross. What were some of the secrets or your thoughts on what made you successful in that business? The food business is a very difficult business. It was the first business that I was involved in that was meaningful. It was a family business that my dad had started. And he had been through this before, several direct sales companies. That was his bread and butter. Food's a whole nother animal.

12:15I mean, we're talking about cold storage, massive utility bills, thin margins to begin with. So really the success of that business over almost 20 years was just we wouldn't quit. It was so hard at certain points. We were selling bulk food in a freezer to your house. Nobody wakes up in the morning and says, I want six months of food in a freezer. So we had to create the market. That was the biggest lesson for me is that I never want to be in a business again where I have to create the market. I want to go into a space where the market is there. There are people who want this. They hit Google and ask for it.

12:52And I want to be the best player in that space. So that was one of the lessons that came out of it. But the beautiful thing about that being my first business experience was that I had to forge some skills to build that business because it was so incredibly difficult. So I'm very grateful for those 15 years and a pandemic happened and the whole world was in the market for food delivery. It was a gift for us And it was a tragedy for others, which was another big lesson in business that sometimes there are things that are out of your control. Fortunately, we were on the right side of that. But that's how we built the valuation.

13:29The company went parabolic at that point. And, you know, we had to make massive pivots because we were growing so fast it was going to break the company. So lots of lessons in there. Was able to exit that company and move into a new space. And yeah, very, very difficult business. I definitely don't recommend going into food. Here I am over here. I got a catering business. I got restaurants. I got all the different things. But if you look at the key skills, what do you think is that early entrepreneur? What are some of the skills that you had to learn and master that you think other young and early entrepreneurs should really focus in on?

14:10I think the biggest competitive advantage really is being able to anticipate the customer, their thoughts, what they need, customer service. And it's the same thing in sales, right? Being able to get in front of an objection before it happens, right? So having that futuristic mentality of thinking through the customer experience and then building out every piece of your company ahead of what that customer could potentially have a bottleneck, especially in a recurring revenue product like we had, you know, customer retention is everything. to Henry. So you can, it is so easy to lose a customer if you don't deliver correctly, if you don't answer the phone fast enough, if you, if you can drop the ball at any point of your business supply chain and lose a customer and customer acquisition is expensive.

14:59So, so I think that's really just what we were great at was, was delivering the best customer experience. And even when you do that, you're going to have people that for whatever reason, they're just upset. Nothing's ever enough. You take care of them anyways, no matter how angry you are, you keep a smile on your face and just preserve the reputation of the company at all times. Nowadays, you're not just building, you're buying companies. What are you looking for when you're investing? How do you make great investment decisions? Maybe that's two separate questions. Yeah, I think it goes not only with what we do, but any type of purchase.

15:38You need to have a competitive advantage. When you think about what space am I going to play in, right? Let's say oil and gas. I'm not an oil and gas expert, so I shouldn't go into that business, right? You have to find where is your competitive advantage. For us, it's getting discounts on privately held shares of unicorn companies from other either distressed funds, early investors, VC firms that just want to exit because they hit a home run early. So I think being able to purchase anything at a discount, it's what real estate guys do with wholesaling, building in your profit when you purchase, and then upside is just a bonus from there.

16:18That's how you really lock in good deals is really just wholesaling, buying at a discount, whatever you're doing, and having a competitive advantage in a specific niche where you know how to duplicate success on a regular basis. That's the only way to raise capital, to have investors, to build out a basis to perform for them at a predictable clip that's better than the rest of the marketplace. Yeah. Let's talk about that just for a second, because when people invest in the fund, when people are investing, they're not just investing in the fund, they're investing in you. And how do you build that trust with people?

16:57What's your keys to building that successful relationship. Yeah, this is a huge part of the capital raising process. My approach when I talk to investors or potential investors is not whether you're going to invest with us. It's not even which one of our funds is the best fit for you. It's I want to talk to you about this space. You're obviously interested in the private placement space, but we wouldn't be on this call. I want to teach you the things that you need to know that you don't know so that you can vet us, You can invent other funds and you can go make the best decision for you. I want to protect people from having to go through what I went through in the early days of my private placement investing, making some very bad decisions, learning some very difficult lessons, losing a lot of money.

17:43And my whole goal is just I want to give you the tools so you know what to look for. And then if you decide to do a deal with us, if you like our funds, that's great. But you need to come out of this call knowing how to play in this space, because most LPs are coming on these calls. They're just, I saw that you're raising for SpaceX. I'm interested. Well, things you need to know. Just one little thing I'll give you is the third party reporting. You know, every scam Ponzi scheme of all time has one common denominator from FTX to Bernie Madoff. They did internal reporting. They falsified reports.

18:19There was no checks and balances of accountability. So the first thing I look for when I'm doing business with another fund is how did you structure your fund from day one? Did you put third party reporting in place to protect the LP investors from something like that? Right. And that's what we did. So your statements in any of our funds, they don't come from Kearns Capital. They come from our third party administrator that sends you monthly statements. We can't even move money without the bank and the administrator signing off on money. Right. So it's little things like that, that the average LP investor has no idea to ask.

18:52They don't know what to look for. And it's very important so that, you know, someone doesn't steal your mind. When did you think you moved to a real education based strategy rather than just a market and sell strategy? After going through these things and learning those lessons, it's like, I just want to save people time. And same thing now when I, if I give a presentation, if you see me speak on a stage or a podcast, you know, I'm saying the same thing. It's just, these are the things you need to know if you're going to go play in the private placement space. And even though you're going to learn these things, ethical people can lose money too.

19:28Deals won't go bad. It's part of the game. So one other area I want to talk about on that, and then I want to flip over to real estate for a little bit. One of the things that you're very clear on is investing where managers have skin in the game. Tell me more about that and why that's a big rule for you guys? Yeah. So you want your GPs to have the same interests aligned as the LPs. There's, I can give some examples, right? There's a lot of people who raise a ton of money and just deploy other people's money. They take an acquisition fee, right? So they're getting paid no matter whether the deal does well or not, right?

20:05If they don't have their own capital going into the deal, I'm not saying that they're not ethical, but the odds of unethical activity go up, right? This is a game of odds and percentages. If someone's putting their own money in the deal, they're not going to cannibalize themselves. So to me, the deal is strong if they put their money on the line. And, you know, people, I think good people sometimes end up in situations like right now where there's a lot of capital that's been raised and all the deals suck. And they either place the capital or they lose it. And they might take a little bit of a gamble on a bad deal because they need to place the money, right?

20:42And those LPs are the people in funds that are getting hurt right now. It's starting to happen. You're seeing this across the whole real estate space. So yeah, that's just another simple thing is how much money are the GPs putting in the deal? Yeah, what's the percentage, all of that sort of stuff? If they're on a two and 20, it's like, yup, congratulations, you're on your two and 20 and they just keep putting money in. Real estate, this is more for you in your family business. massive real estate portfolio. What's your top three or four lessons for a newbie? Then we'll get to the more senior guys and gals.

21:17What's the top beginnings lessons? Yeah, the beginning is just, I think, understanding. Again, we've all done this. I was like this when I got my first five grand. I just wanted to be an investor and didn't realize that you can't play in this space until you have a hundred grand to deploy as an LP, right? So I think it's making sure you invest in yourself first so that you have big capital and big income to then go into the investment space. That's number one for the newbies is, you know, you save your first 20 grand. I don't think it's time to go be an investor. It's time to take 20 grand, put it back into yourself to get your skills, your income up, or maybe it's marketing in your business.

21:53Whatever you do to create more wealth and income first, there's no better investment in the beginning than yourself. And then once you have all this money piling up, six figure increments, then it's time to go be an LP somewhere. Love it. More senior people. You guys are at 1600 and something separate doors. What is it that you hunt for now? What is it that you're on the look for now? And what makes you guys successful in this stuff across multiple states? Well, I'll talk about it from the LP perspective because on real estate, I am an LP. It's not my primary core business, but I want it to be the foundation of my wealth.

22:34So I learned, I was thinking about going into being a GP in real estate and operating on that stuff. And as I learned more and more about it, I realized how difficult it is and it's a full-time job and it was going to cannibalize the other things I was doing. So I decided that being an LP on real estate made a lot more sense. So if you're a high income earner or you have a business somewhere else and you want to be involved in real estate, I think being an LP is great. So the strategy for me was I want to spread out the risk, right? And let's just use a million dollars. If you got a million dollars to invest, I would prefer to put a hundred grand in 10 different deals than be like, I love this one.

23:12I'm putting 500 in this one and 500 in that one. So that's how I built that LP portfolio out was saying, I don't want too much exposure to one part of the country, one single market. So that's why I started placing investments in different parts. Didn't want too much exposure to one single asset class. So some of it's in A class, some of it's in B, some of it's in C. And that's kind of how I spread it out. Some of them are high cash flow deals. Some of them are going to have bigger equity multiples. Some of them are value add where I'm getting capital out. And I got a refinance coming this month.

23:48And that's another thing, right? Good deals are still working right now. So real estate's dead. I've got a cash out refinance coming this month when rates are at the worst. So I think that's a big lesson. I do have some deals that are under stress. What if I had been all in on one of those? Yeah. Yeah. Very true. You're on the Big Success Podcast. We're with Justin. He's going to take us through the difference between millions to billions thinking when we get back. Justin Freistat is managing partner and president of sales at Kearns Capital. This hedge fund is growing rapidly with several funds that use multiple strategies, including swing trading in equities, joint ventures in aerospace, and$3 billion plus in unicorn companies in late-stage private equity.

24:33To learn more about Justin Freistat, please visit toptierhuman.com. Back on the Big Success Podcast, Justin, I have to ask, nowadays you're in the billions, but back in the early days, you were shooting, and you even mentioned earlier, shooting for your first$100 ,000. Let's jump past that, going for your first million. What was your mindset back then, do you think? Yeah, it was scaling what I was good at. When I realized that I needed to stay with my core skill sets and then find a better product to do the same thing, but something that had more exponential potential, that's really the only difference between making 50 grand, 100 grand, 500 grand, a million or a billion, right?

25:16So that's what it was. It was leaving a product where the most I could make selling it, running around door to door is 300 grand to, OK, let's build bigger relationships. The ticket's not five to 10 grand. Now it's 100 grand with no limit. Right. People investing their capital and we can we can scale up faster. So that's that's how you hit the seven figure mark. And then that's where the quotes like 100 like 90 percent of millionaires come from real estate. 100 % of billionaires come from private equity. So that's why moving into the private equity space was the big goal for us. And being a young hedge fund, we started in July of 22.

25:56So it's only been about almost a year and a half. Out the gate, we went zero to 20 million in the first year, smaller strategies, but looking for the relationships where we could go start playing in that billion dollar space and landing the fund to fund connection with Forte Capital Group and InnovationX is how we're part of these billion dollar deals now. So relationships, right? You're one relationship away from playing in a completely different space. So when you look at going from that million to then the family business up to tens of millions, was there a mindset shift was there a working shift what was the shift and going from millions to tens of really i mean to be perfectly honest in the food business it was just the market shifting in our favor i mean we couldn't have worked any harder we couldn't have tried more things um we pounded it i mean and that was another another lesson of just hard work is not always the answer i mean if you if you were honest with yourself looking back you know i would work 80, 90, 120 days in a row, no days off sunrise, sunset, and not really getting that far.