MI Rewind: Studying Billionaires & Portfolio Allocation w/ Trey Lockerbie

23:18The dollar is just going to continue to go higher, which would make debt around the world more expensive for everybody holding it, which means they have to devalue their own currency to cover it, or they have to liquidate their positions. So that's where you can feel a lot of pain once the dollar keeps climbing higher. And so I guess long story short is I think the Fed can and will continue to raise rates, which is a concern. And the only other question I guess from that is how much is already priced into the market? And I don't know. Robert Leonard One thing I've learned just recently with this rise of inflation is people talking about the Taylor rule.

23:52Could you talk about what exactly that is and how that potentially plays in here? Yeah. So it's got basically three indicators, the federal funds rate, price level, and changes in real income. And basically the idea is that interest rates should follow the Taylor rule target. And right now there's a huge gap. I think the Taylor rule is suggesting that interest rates should be in the 8 % or higher range, and we're at less than 1%. So you see this huge gap, but historically it tracks pretty closely, a fairly good correlation. So it's just suggesting that interest rates are going higher. Is it something that the Fed uses as a metric?

24:28I'm not entirely sure, but I think that a lot of people will look at that and say, well, if history is any indicator, then interest rates could and will probably go higher. Yeah. I almost think of it as like a natural law where if someone's lending out money, then that should at least cover the inflation rate. Well, CPI inflation today is over 8%. So your interest should be at least at that level. Over time, it's generally followed that rule, but there are times where there's exceptions where crazy things can happen in the economy. And for whatever reason, it might not always follow that rule.

25:00It's just kind of like a general rule of thumb is the way I think about it. Yeah. For some reason, I kind of have this sense that all bets are off. I could be really wrong. It might be like that this time is different thing where really it's not at all, but I kind of feel like the playbook has been thrown out the window. And I think it does go back to 2008. So when you kind of go back in history to even the 70s and other time periods, first of all, we didn't have nearly the amount of debt that we have now. So yes, they were able to raise interest rates up to 15%. I think we had a 30 % debt to GDP at the time.

25:30Now we're pushing, we're like 120%. That's a totally different scenario. And I'm not sure how much the Fed is considering back when they, like I said, I think they're going to say, well, the treasury will figure that out. And maybe we continue to base the currency and buy more bonds to cover it. But I think that once 2008 happened, we started the TARP program and the money printer started, I was going to think of a good analogy, the money printer starts roaring a little bit, if you will. I think the playbook has kind of gone out the window. I don't think the Fed will be able to raise rates much beyond, say, 2 % before something breaks.

26:04And it's because of this, what Ben Berninke would call the financial accelerator. They lifted the interest rates 25 basis points, and you saw the NASDAQ sell off 30%. And that's the accelerator at work, meaning these little butterfly effects create much bigger implications around the world. And I think whether it's the debt level or whether it's just the currencies around the world, something will break. And I think the Fed is going to keep moving as is, and they're very reactionary. So I think they're probably going to overdo it before they correct, but the markets will probably get a lot worse before they get better.

26:34Yeah. You mentioned that you don't expect the federal funds rate to go above 2%. I just pulled up a quick chart just to look at what that looks like. And I've heard people mention that the federal funds rate, when it goes up, it's never gone up above where it previously kind of topped out. In 2000, I see it hit 6.5%, 2007, 5.2%. And then early 2019, it was 2.4%. So like that 2 % mark you mentioned, if that downtrend sort of continues, that seems to be in line. Let's talk a little bit more about Bitcoin. When it comes to Bitcoin, it's almost forced us to think about the world in an entirely different way.

27:12You mentioned earlier how Dalio really changed the way you think about the investment landscape and the investment world. Preston would tell you that Bitcoin is a value investment. It's a value play, which most value investors, Buffett, Munger, those types of people would just completely roll their eyes at. With that, I'd like to ask you, do you see Bitcoin as something that's risky, or are people misperceiving what it actually is, or is it more of a value play? So here's where I am today, and it might be different than what people expect, but basically, I'm of the opinion that Bitcoin today is an incredible store of value asset.

27:50Now, I do also believe that I've seen it. I mean, I've seen the infrastructure being built on top of it in layer two and three even now, where it could be a very reliable, medium of exchange over time, but that doesn't take away the fact that it's a very deflationary currency. And if you look back at history, that hasn't worked so well. If it's a gold standard or whatever have you, it's never really worked. And so the reason why this is what I believe, and I would love to see this future unfold potentially if it goes hopefully smoothly, which is unlikely. But if you're bullish on Bitcoin as a medium of exchange long-term, I think you're really voting for a completely different looking future.

28:27It would be a future where people work less, things get cheaper over time, and there is more hopefully abundance of things. But I don't know what that would do to consumption. The theory is that people won't consume because the price will be cheaper tomorrow, but people consume what they want to consume. They're not driven by needs only. They're driven by wants and they're going to do that. And if I were running BetterBooch in a deflationary environment, you can make the argument that I wouldn't buy tea to make today because it's going to be cheaper tomorrow. But over time, that just means my profits are getting stronger over time as well.

29:01So I would love to see that world unfold. I think that would eliminate a lot of our issues around the world. Our consumption is really what's causing a ton of trouble in this world. And I think that the inflationary monetary system we have obviously just drives more and more consumption, probably more than necessary. So I guess what am I saying? I'd say that right now, I basically supplement Bitcoin as my savings account. And I don't necessarily look at it like a value investment. I do think, I would argue that yes, you can generate yield off Bitcoin. A lot of people don't think you can. I think you can.

29:33I've seen it. You can lend it out and get a yield, but that's not really how I look at it. I would actually rather not rehypothecate or have the risk of rehypothecation through somebody else just for a little bit of yield personally. So for me, it's an asset, like a piece of property that I'm going to hold forever and probably pass down to my kids and they're going to pass it down to their kids. And that's how I look at it, I actually see a world where Bitcoin and say the US dollar can coexist in a very friendly way where, yeah, if they continue to debase the currency as they have over the last few years, great, you can opt out.

30:02You've got an exit ramp for your discretionary income or savings. You can park it in Bitcoin. Does that mean we have to buy our coffee with Bitcoin? I don't know. I don't know. You can switch back. You can convert back to US dollar to do other things. And generally speaking, the monetary network we have works pretty well. It's not perfect, but it works pretty well. So I'm a big believer in Bitcoin long-term, but it's kind of for reasons that are less extreme probably than some of the folks we interview on the show. Robert Leonard My thinking definitely aligns with what you just described. I'll tell someone about Bitcoin and they'll be like, Bitcoin is the dumbest thing.

30:36No one is buying anything with Bitcoin. Why would you want to own or no one uses it? What's going on? I'm like, our current payment system, it works fine. I can go to the coffee shop down the street I can buy my coffee just fine. The problem is the dollar doesn't hold its value over time. It's lost over 99 % of its value against gold over the last 100 years. And many people live in a country where the currency is just falling much faster than the US dollar. One or 2 billion people are living in very high inflation environments and they don't have access to something like the stock market. So I like that.

31:09I've heard you use the analogy of thinking of it like Manhattan in real estate that you hang on to, you have your piece of the, your digital stake of the network. Yeah. And imagine that in reality, right? Imagine there was a piece of New York real estate property that someone was like, hey, you can buy 50 bucks of this at a time if you want over a period of years or whatever it is. And dollar cost average into a piece of real estate like that. I mean, I think everyone would jump on that. So that's been an old analogy, but that I've heard for years, but I still feel like it holds up. I feel like as an asset, and when I say about an asset, I do also see the fact that banks will probably look at it as pristine collateral.

31:44I think that sovereign nations will look at it like pristine collateral. When you're talking billions of dollars and things like that, it makes a lot of sense. It will make sense for less money. And with the Lightning Network today, as it is, you can argue it does already. But I look at it like the best piece of collateral you could possibly have. And that's what my kids will probably use to fund whatever they want to do in the future. Yeah, that is a very exciting future. I like the idea of having the US dollar work alongside Bitcoin because I've read Saif Adin's pieces. He talks about time preference.

32:15And with the US dollar, like you mentioned, people want to consume, consume, consume because their dollar is losing value. And they know it's not going to be worth as much over time. Even if they might not know it, they're almost incentivized to act in that way. And I was at the Bitcoin conference with you in Miami. And I was at a couple of events where Jordan Peterson was speaking. And he was like, yeah, Bitcoin might bring all of these great things to the world. But if we use that as our currency, we don't really know what implications that'll bring because we've never had anything like it. Gold was similar, but it wasn't near as deflationary as Bitcoin.

32:47So there's a saying, be careful what you wish for. That's it. Like I said, the fact that the US has been as amenable to Bitcoin as they have to date is encouraging to me. I think that they probably see it, either they're not paying enough attention or maybe they see it as a means like I'm talking about where, hey, we could use this as really good collateral over time and make settlements in a different way or store value in a different way. And I think they can coexist. I should also mention that my opinion is very myopic and biased because I live in the US and there are countries, as you mentioned, that are just, their dollars are getting inflated away, like Turkey and a number of others, Venezuela.

33:21And so is there a better use case there? Absolutely. I think so. When the inflation is just arguably more aggressive, maybe that changes things. I don't know. I live in the US and we have the world reserve currency and I would like to see it stay that way because I'm biased. And I generally like the US having that kind of power, I guess, over the world. But if I could snap my fingers and create a future, it would look like a Bitcoin future where things are abundant, consumption might be less because it doesn't need to be as high and people get richer over time for working less. That just sounds like an ideal scenario, but I don't think we get there in a smooth fashion.

33:56I'd like to chat about your role with We Study Billionaires and TIP, as well as what you got going on a better booth. But before we move on to that, I'd like to ask you if there's anything you're keeping your eye on over the next few months as far as the investment landscape. Well, yeah, I can tell you I'm keeping my eye on a new indicator that came up from our conversations with Dan Rasmussen, which is the high yield spread. Basically, that's the high yield debt interest rate over basically a treasury rate. And that has been this really interesting indicator for if we're entering into a crisis or not.

34:29And I think right now, and for the foreseeable future, we're kind of walking that razor's edge of, are we back into a crisis or not? And so, interestingly enough, today it's at about 4.2, which in Dan's opinion, is kind of right at the threshold of entering into that crisis area. And six is, we're definitely in crisis mode. And every time it gets to six, you kind of see it skyrocket higher before it comes back down. The trend line is going up. So it does kind of seem like we're entering into the crisis phase, but I'm watching it very closely because I really like that as a tool. It talks to how many companies can finance what they're trying to do and how much liquidity they'll have access to.

35:06So it's a really good economy indicator. And I think that ultimately will affect the stock market. So for me, I'm watching that pretty closely. As far as asset classes, I'm watching oil very closely. I'm kind of strong opinions weekly held with it. I have a lot of reasons why I do think it's going higher, but I'll be quick to change my mind if that's starting not to prove out. That being said, the fact that Buffett bought as much Chevron and Occidental as he did lately gives me a lot of conviction as it typically does. But at the same time, because I hold so much Berkshire, sometimes I don't go as hard on things because I'm like, I've already got it in that position.

35:39So I'm looking at my portfolio right now. I'm trying to see what else I've got. It's pretty defensive right now, if I'm being honest. And the last thing I'm looking at is just really great companies getting cheaper and cheaper, really no matter what it is. There's an argument right now to be made that Google's in a fair price range. I'm no expert on Google, but I am keeping a close eye on things like that. I'm more driven to small caps at the moment though, because I'm running a very concentrated portfolio. That's typically where I'm going to find, I think, the yield I'm looking for. And yeah, I think that over the next six months, there's probably going to be some really good opportunities to find some really cheap stuff.

36:12Yeah, I 100 % agree. I actually had an episode talking all about Google. That was 173. It was just last week prior to this recording. Let's talk a little bit more about what you're working on. Step outside of the investment world for a second. You run a very successful company, Better Boots, and you are also the host of We Study Billionaires podcast. I can't help but think on top of running a business that does seven figures per year, you have your family, you have all these things going on. What led you to want to interview and learn from billionaires on the side? Well, to be completely honest, it wasn't really a dream or a goal of mine.

36:54I will tell you this much though, because it's just kind of interesting. This is my California yogi spiritual framework in mind. But I was leaving my office at Better Boots one day, and I just had this overwhelming amount of feeling of gratitude. So I was driving home. I was like, wow, how cool is this? I'm leaving this business that I started. I'm driving in the car that I've always wanted. I'm going to my house that I love to see my family that just couldn't be more perfect for me. So I just had this overwhelming sense of gratitude. And I was listening to the podcast. This is before, obviously I was a host because I've been listening to it since its inception.

37:27And I was listening to it on the way home. And I had this thought that was like, what could possibly make my life even better? And I was like, hmm, I guess if I were the host of the show. But you got to understand, at that time, there was no prospect of that. It was such a wild thought. First of all, I don't come from a finance background. Preston and Stig were doing quite well on their own. And there was just really no reason for that to happen. So I'm saying all that to say, I don't know if it was a manifestation of sorts or whatever, but within a couple of weeks or so, they announced that they were looking for a host and Preston was going to go full-time Bitcoin.

37:58And to me, because I'd had that thought so recently, I think I was just like, oh, well, well, maybe I'll throw my hat in the ring. So the reason for that is not so much because it's like some egotistical thing. It's more because I'm a constant learner. And I just thought, how cool would it be to do what these guys are doing, interviewing all these amazing people? And who knows what conversations happened before and after the recording or behind the scenes, what relationships are being built. And that just seemed like such an amazing thing that would be a huge advantage to access and just learn from the best minds in the world.

38:32I mean, for me, it was kind of a no-brainer. It was a really long shot that they take a chance on me like they did, but I'm sure glad they did because I've been really enjoying it. Let's take a quick break and hear from today's sponsors.

39:02We Study Billionaires is our flagship podcast, and we've made a name for ourselves over the years by interviewing the best investors in the world, including Ray Dalio, Howard Marks, Joel Greenblatt, and many, many more. My colleagues Stig Brodersen, Clay Fink, Kyle Grieve, Preston Pysh, and William Green each host their own We Study Billionaires episodes and bring their own unique perspectives. A whole new world of insights awaits you. Just go ahead and type in We Study Billionaires into your podcast app and see what you've been missing out on. Seriously, go ahead. I promise you'll like what you find.

39:36Bonus points if you show your support for our work by clicking follow. If something piques your interest, just start listening. No hard feelings. I'll be waiting for you back here. Just like everybody else, there was a time when I was a beginner investor, and I have to say, investing is particularly filled with jargon that can just make it so difficult for new investors to understand what is going on. But it's never too late to get smarter about stock investing from the ground up. At The Investor's Podcast Network, we've made a habit of studying the world's best investors. And now I'm just selling those learnings into a simple course for you or for anyone in your life who you might want to share the gift of knowledge with.

40:10With my How to Get Started with Stocks course, you can master the principles of excellent lifelong investing with valuable insights for both beginners and pros. The course covers 10 different sections, beginning with the basics of what a stock actually is and how the stock markets work, to strategies to optimize your retirement savings, how to pick great companies for the long-term, what to look for in ETFs, and how to monitor your investments, plus so much more. To begin getting smarter about investing, just visit theinvestorspodcast.com slash get started with stocks. That's theinvestorspodcast.com slash get started with stocks.

40:46And for a limited time, you can use code stocks15 for a 15 % discount at checkout. Not to be cliche, but building a market-beating portfolio really doesn't have to be a mystery, at least with the right tools. If you've listened to our podcast for a while, then you know we spend a lot of time learning from savvy investors. So why not use the same tools we do? With TIP Finance, you can. Screening for great companies, calculating intrinsic value, keeping up with legendary investors' portfolios, and more are all not just possible, but easy to do. TIP Finance was created by investors for investors.

41:23It's quite literally the tools we wanted to use ourselves when researching investments in a simple-to-use interface. You can get started by creating an account for free. Who knows? Maybe TIP Finance will help you find your next 100 to 1 investment. Between the screener and Legend Investment Portfolios to reference, I've gotten a ton of ideas from TIP Finance. What are you waiting for? Take the next step in your investment journey today with the right tools at your fingertips. Grab your device and type into your browser, theinvestorspodcast.com slash tip-finance to get started. That's theinvestorspodcast.com slash tip-finance.

42:04All right, back to the show. That's awesome. And you guys are bringing on just like these incredible people. Many of them are billionaires, which is pretty incredible that these billionaires would want to give up the time to be so giving and just give out this information for free to all these podcast listeners. Are there any billionaires or people you've had on the show that have had a really big impact on you and how you think, whether that be people you've interviewed recently or maybe people you've listened to from Preston and Stig early on? Yeah, that's a good question. I mean, I'm trying to give a really honest answer.

42:39I did my top takeaways episode at the end of last year. So if I look at that, because that was kind of an indicator of who really had an impact on me, it was people like Howard Marks, of course, Jeremy Grantham, but it had up-and-comers too, like Brian Feraldi in there. So it's a wide range. It's not just the billionaires. A lot of the takeaways I have come from more up-and-comer types. I mean, Dan Rasmussen recently had some really great insights and Brent Johnson, I really like. So yeah, it's really hard to say. With all of that said, it can kind of become like alphabet soup in your brain because you're hearing so many different opinions all the time, or if you're doing your job correctly, you are.

43:17I can definitely relate to some of the things you're saying. We were talking about earlier how we're bringing in all these different types of guests onto TIP and getting all these different viewpoints. And when I was thinking about how some of the people at TIP invest, I think of Preston, he's very into Bitcoin. Then I think of Stig. I don't want to speak for Stig, but it's almost like he's taking this Ray Dalio approach where he's brought in these uncorrelated bets. And I almost think of it like building a bulletproof portfolio. You have some Bitcoin, you have some, say, Berkshire Hathaway, you have some gold.

43:52And it's like, through any economic environment, there's no way you're not going to survive going through that. And that's the benefit of bringing on all these different types of guests. But on the other hand, And you mentioned the alphabet soup analogy where you have all these 100 different viewpoints. How can you put the pieces of the puzzle together to make it make more sense? So it's a double-edged sword, I would say. Yeah. Basically, after my conversation with Jeff Snyder yesterday, and we were going over this huge macro idea of why we're in a dollar shortage and all, and we're comparing that to Brent Johnson's work, and then we're comparing that to even what Preston has come up with.

44:28And at the end of the episode, I was like, this almost has an adverse effect on me where I retreat to Buffetology again. And I'm just sort of like, you know what? This is over my head. I don't want to pay attention to it. I'd rather just go buy a company like Dairy Queen. I've just been kind of retreating more and more to that. The more that I learn, it's like the more I don't know and the more I kind of just retreat back to Buffetology. But I want to continue to learn because I just find it fascinating. Preston Pysh, MD That's so funny. Transitioning to talk about your company, Better Booch. When I came into TIP, I had to try it.

45:00I like kombucha. And now I like kombucha even more since I've had your tea. It's just so much better. The name's pretty fitting. I just love it. If you're interested in kombucha, I highly recommend checking it out. If the kombucha you've had just tastes terrible, then you haven't had real kombucha yet. Talk to me about the experience of scaling this business. I've heard you mention that you started out at farmer's markets, just passing it out. I see videos of you on the street, just like handing out can by can, which is pretty cool coming from the founder. Talk to me about the experience of scaling from a farmer's market to now being in Costco.

45:37Well, first of all, I really appreciate your comments there about the product. And yeah, it's always hard to transition into something like kombucha from investing. On my Twitter, I have Buffett, Bitcoin, and BetterBooch still figuring out how they go together. That's how I feel. I don't know how the three of them go together, but somehow that's what makes up my mind. So I'll do my best transition here. But basically, the experience of scaling it has been a wide spectrum because in the early days, we were bootstrapping. So we bootstrapped the business for about six years. And when I say bootstrapping, I mean it in every sense of the word.

46:10So for example, we wanted to use purified water. Well, we literally couldn't afford a purification system that could do tens of gallons at a time. So I would load up my car with those five-gallon jugs, drive it to the Ralphs. There was a little purified water dispenser. You put a quarter in and it gives you a gallon. And I would fill up 10 of those, put it in my car, take them back, brew some tea with it. I mean, I would go buy one case of bottles. Yeah, we started out with bottles, just so you know. I go to the store and buy 36 bottles to take three cases to a farmer's market. And then over time, as it built up, I ultimately was able to buy a pallet at one point, which is like 300 cases, let's say.

46:44But I couldn't afford the freight to get the pallet to our facility. So I took my minivan down and I unstacked the pallet into my van, got to the brewery, and then put it all back onto a pallet. So when I say bootstrapping, that's what I mean. I mean, those are like penny pinching things out of pure necessity. So when we got to these inflection points where Ash and I, we feel like we've had two or three of these inflection points where we get to this crossroads and we have to say, well, are we doing this or not? Are we really doing this or not? Because if we're really doing this, then there's a whole another huge commitment ahead of us.

47:15So the first one, for example, was like signing a two-year lease on our brewery, on our first brewery. Like, okay, two years. At the time, that was like, oof, that's a big commitment. As of late, it's been more things like, should we take on outside capital? Because if we really need to do this, it requires a lot of money, actually. And I don't think a lot of people get this. This could tie back to the Bitcoin thing a little bit. We can talk about why. But basically, I don't think enough people appreciate this, but there is usually this chasm between startup mode and at scale. And that chasm, it's like, there's a book called No Man's Land.

47:49It's kind of about this, where there's no bridge. It's like, you have to cross this chasm and make it to the other side at scale, because there's just this awkward moment where you're too big to be small and too small to be big. And you either can't get financing or you can get financing, but not enough. There's a lot of interesting things we've experienced at that stage. But a lot of businesses, I think even software businesses and you name it, there's that inflection point where they have to scale. And that usually requires a period of running a deficit in your business. And that's really hard.

48:18And we've been doing it the last couple of years at Petter Booch, taking on outside capital just so we could get the capacity we needed to go into Target, go into Costco, as you mentioned, going into Walmart, Sprouts and Whole Foods. And so in my opinion, it's been the spectrum where we've experienced everything from the far end of bootstrapping to now we've to date raised about 10 million bucks. And we've put that to work. So it's been a very interesting journey. I've learned a ton, but it's not without its anxiety and challenges. And my wife and I both have one too many sleepless nights trying to get through it all, but we love it.

48:49And I would say that if you are an entrepreneur and starting out and you're looking to do something, you have to make sure it's a product that you actually love because you won't get out of bed to just do it for the money. I know that all too well. There's been too many days where I'm like, I would have just given up. But I was like, I really believe in this product and I really love this product. I love the brand. So I get up and go to work and that's what it takes. Really cool story. And this is a reminder to me of a tweet I read the other day from Nick Huber. He's a big fan of running these small physical businesses.

49:18And the tweet was about, a lot of people say, you should do a business online. Doing stuff online just makes things so much easier. You have the whole world to sell to. You have these powerful platforms like Amazon. You can put your product up there and put it in front of millions of people. But Nick was saying in his tweet, no, you should do things in the physical world. There's so much less competition in the physical world. You only have the guy across the street to really compete with. So it's an interesting perspective to think about how we have this physical and digital world where that relationship between the two and how there's so many ways to go about running a business.

49:52So funny enough, I like to make this joke where I had this idea for the business because I was brewing the product at home, but it really wasn't until I read The 4-Hour Workweek by Tim Ferriss. And I like to joke that I read that and I was like, oh, starting a business is so easy because you lay out what you just said. And then that gave me the kick to go start the business. But then I did the complete opposite of everything in that book. I was like, okay, locally sourced, handcrafted, everything that was completely the opposite of that book. So I like to joke that it got my start, but in a totally different way.

50:23And to Nick's point, I think too many people just have software type businesses in mind, they're not giving enough appreciation to the real commodities like food and beverage and things like that. You know what's so funny? I can go to the doctor's office and when it says occupation, or usually if you're filling something out, say there's a dropdown menu for occupation or industry, food and beverage, never listed. Never listed. Can you believe that? It's like we do it three times a day, but that's how overlooked it is as an industry. It's mind boggling. You recently got stocked in Costco and Target.

50:54How in the world were you able to do this? Like I mentioned, Amazon, they allow anyone to put a listing up on Amazon. Costco and Target, there's a limited amount of space and shelving space that people can put their products. So how'd you make that sale and what was that like? Well, it took years, quite frankly, just to get the meeting. And as you would expect, no one's probably surprised by that, but it takes a long time. You don't usually just start out at Costco. You have to build a story. You start wherever you can. So interestingly enough, we've been at Whole Foods and a couple of regions for many years, but having gotten the opportunity to go national.

51:27So while we're waiting for that opportunity to come, companies like Walmart approached us and said, hey, we want to go national. And so you say, well, all right, I mean, that's the bird in the hand. I got to take it and grow my business. And so we did that. And that kind of proved to Costco that we could sell in mass type scenarios in stores. So I think that helped. And usually in my industry, even though in my opinion, this is kind of archaic, it's still very heavily broker driven. So there's a lot of brokers that represent many brands, and they're the ones who meet with the buyers. It's rare that the founder or people like even the sales reps get an opportunity to meet with buyers.

52:01It's a little bit like, you can imagine in the 80s or 90s, people go out golfing and it's like this broker and the buyer. They've got the relationship and he says, hey, can you put better boots in for me? And the guy goes, all right, let's do it. But I mean, that's like the simplified version of it. But usually what I do, it's actually a real estate business. So grocery stores, if you think about it, they're focused on dollars per linear square foot. So that little shelf space that I take up with BetterBooch, that is money in their eyes. And if your product isn't selling fast enough and not generating enough dollars per linear square foot, they're going to put in something else that does.

52:33So you have to build this story that shows not only can you sell, but you're selling compared better than the competition or other products that are taking up that space. And so when you get the meetings, that's always the argument that has to be made. and you have to convince them of that. So with Costco and with Target, both of those, we went through brokers, but it took years just to get a meeting or two and finally get an opportunity. Time and time again, I feel like you've mentioned this idea that Buffett says he's a better businessman because he's an investor and he's a better investor because he is a businessman.

53:06What are some ways in which this has applied to your own company? I'm super curious. Robert Leonard Leonard So the reason I go back to that quote so often is it did have a profound effect on how I ran my business. And the profound effect was, I realized earlier than maybe I would have otherwise that being say, the CEO of a company, you are the capital allocator for that company. That is your job. That is your main job. And even if that capital means hiring a person, and it's more of that qualitative side of business, you're allocating capital to that. So what I kind of go back to earlier when we were bootstrapping and allocating capital to pay for the freight or not, if I could just drive my van down there and load it up.

53:46Those are decisions you have to make as a CEO to save money, to make payroll, to cover cashflow gaps, to make investments on a plant. So say, for example, our beverage company gets to capacity. Well, we have to figure out where the next plant's going to be. How big is it going to be? What equipment are we going to put into it? What can we afford? So in every aspect of what I do, it's capital allocation. And so Buffett being arguably the best capital allocator in the entire world. You can just easily imagine there's a lot you can learn from him. And then beyond that, I would say that from reading his letters, what really stuck with me is how he treats his shareholders like partners.

54:19And I genuinely really think he does think this way. It's just over decades, you just see it written over and over. You see it at the meetings. And so when we took on investment, that kind of excited me in a similar way because I had done the bootstrapping thing. And I was at a point where I was like, I want this experience. I want to know what it's like to have investors, to have shareholders that I have to be accountable to that I can write letters for, that I can make proud, make a good return on. So that philosophy of bringing on shareholders, treating them like partners really stuck with me.

54:48I think it's a big, important piece if you're going to raise outside capital. And then lastly, there's a few other points from Buffett that I like. One is keeping things really simple, sometimes doing a deal on a handshake, I mean, that kind of simple. And I think it's Buffett who said this, but you can't make a good deal with a bad person. That is something I found to be very true in business. When I was in the music industry, your whole career was based on your reputation. I found that when it comes down to just dollars and cents type businesses, people don't really care as much. They'll burn you, they'll move on.

55:16And the reputation thing is not always in consideration. I think Buffett has been very mindful of his reputation, how he treats people. And that's something that stuck with me as well. Yeah. That last point kind of reminds me of, I think it's Guy Spear. He talks all the time about compounding goodwill. Work with people who just give, give, give, and they expect nothing in return. Who doesn't want to work with that type of person? And having that type of attitude yourself when you're working with your employees, your shareholders, your customers, that compounding of goodwill, I think, can provide such good returns in ways that you might not even expect.

55:52Trey, thank you. Thank you so much for joining me today. This was one of my favorite conversations to date. And I'm really glad you took the time to come onto the show. Before we close it out, you know the drill. I'd like to give you a handoff to BetterBooch, We Study Billionaires, anything else you'd like to share? I really appreciate it, Clay. And I got to say, it's a little bizarre to be on this side of the table. And I really appreciate you taking the time to talk with me. And if people want to follow me, you can go to Twitter at Trey Lockerbie. I have a lot of episodes on We Study Billionaires.

56:21So go ahead and follow that podcast. And if you want to check out BetterBooch, Just go to betterbooch.com. We're on all the social media channels with the same handle. So I encourage people to check that out. Thank you, Trey. Appreciate it. All right. I hope you enjoyed today's episode. Please go ahead and follow us on your favorite podcast app so you can get these episodes delivered automatically. If you've been enjoying the podcast, we would really appreciate it if you left us a rating or review on the podcast app you're on. This will really help us in the search algorithm so others can discover the show as well.

56:52And if you haven't already done so, be sure to check out our website, theinvestorspodcast.com. There you will find all of our episodes, some educational resources, as well as our TIP finance tool that Robert and I use to manage our own stock portfolios. And with that, we'll see you again next time. Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by the Investors Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com.

57:31This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.