Why Most People Aren’t Built for CEO Pressure (And That’s Okay) 💼 E162

18:41Eric Spofford:And so strategically, could I have grown that business larger and sold it for more money? Yes. But it was just time for me to go. And so I made the decision in March of 2021, made the call to the team, said, guys, We're going to market, called the investment banker and said, let's go and signed a contract with him, took it to market. It was a 10-month process. And then we sold in late December, four days before Christmas.

19:09Dan Fleyshman:So oftentimes people think that's the goal, but they actually are not watching part of the journey, meaning they just think one day I'm going to sell the company or take it public. And then I realize how rare that is. It's very hard to have an exit of a company.

19:24Eric Spofford:Yes, it is.

19:25Dan Fleyshman:It's not just that even if you have a good EBITDA or you have a good business, it's not like there's just a line of buyers just because you did X amount of dollars in sales. You have to package it up and be prepared for it. You said it's a 10-month process. What parts of that can you tell us about those 10 months?

19:40Eric Spofford:I think the 10-month process might be misleading. It was several years prior to that process that I spent professionalizing the company. nice and so when i started professional and i'll talk about the 10-month process of the transaction but when i started professionalizing the company in preparation for its sale what the company looked like was it was the eric spofford show i had to show up to work every single day i had a dozen direct reports i was central to the company it was very mom and pops there's a ton of key man risk yeah i didn't even know what key man risk was i was like what are you talking about it's my company.

20:18Eric Spofford:I'm here to run it. Like, and so I had to learn the information first, and then I had to execute in the business. And the things that I learned was businesses with the institutional knowledge is written down in written policy, standard operating procedures that operates with a dashboard of key performance indicators, KPIs, and metrics that has a leadership team that could run the business if the owner and founder got hit by a bus that operated professionally. One, we're able to transact, period. Not every business is a sellable business in the state that it's in. And two, would sell for instrumentally more money than something that didn't have, and there's a lot more that goes into it, but didn't have those core factors of professionalizing the company installed.

21:10Eric Spofford:And so when I saw that and understood the equation, right, it is earnings, EBITDA, and a multiple. A lot of people think about the value of their company and they focus exclusively on how much money we make. The variable is also the multiple. The multiple is driven by professionalization of the company and how well packaged this is. So if you have a company that does, say,$10 million a year in earnings, but it runs like a sloppy piece of shit, a buyer might come in and look at it and go, well, they have earnings. It has a lot of potential. We're going to have to come in. We're going to have to take the risk.

21:45Eric Spofford:We have to build the leadership team. We have to protect ourselves and our investment against the owner-founder and start to build a team around him, replace him as the CEO. We're going to take a lot of risk. We'll pay you 5 to 6x this company. Great. It's$50 million,$60 million. But if you, as the owner of the company, understand that this business is worth more without you than it is with you, and all these other key factors of how to professionalize the company, and you take the time to do that work, you can take that same company without ever increasing earnings, professionalize it, and go out to market and get a 10 to 12x.

22:21Eric Spofford:The earnings are the same. The business valuation can be double at times. Huge. Huge. And so I took the time to start to professionalize the company. I documented everything. I hired the biggest thing that I did was I hired a leadership team and onboarded them and trained them and hired the right people and got them in the right seats. when I brought all of that stuff into the realm of professionalization, leadership team, and all of that, what actually interestingly happened with the company as well is I had less and less time obligation to it, so much so that I was fucking bored. Sure. And revenue exploded.

23:02Eric Spofford:We doubled in revenue and doubled in EBITDA. And so when we made the decision to go to market, I hired the banker, the investment banker. That is someone who represents your company, typically they work for a success fee. It's a percentage anywhere from 2 % to 4 % is market on the transaction value of the business. They came in, they started to work with the team. They compiled what's called a data room, which is exhaustive. I mean, it is burning midnight oil, getting all this information together on your business. You think you have everything together until you see that request list. That data room is then put into a teaser which is a no-name document that says it's in the businesses in the northeast here's some key facts about it and you know it does this service this revenue this employees this that the other thing that that teaser goes out to a buyer list and we went out to like i think 130 different people buyers private equity firms and strategic buyers about 80 of those folks came back and said, we're interested.

24:14Eric Spofford:Next, you send out a non-disclosure agreement, the NDA. Some of these folks just sign it. A lot of them, you wouldn't believe it. They want to go back and forth and volley this NDA over minor details. It's like, it's very annoying. It's an NDA. It's not a big deal. You get the NDA signed and you send them a full deck. This is, you know, has full financials. Everything about the company is in this packaged brochure, essentially, about the company. but it's very extensive and deep information. And then you schedule what's called an IOI due date, which is indication of interest due date. And then the companies get to look at the financials and look at the company, and they come back with IOI letters on this day.

24:59Eric Spofford:You know what's a fun fact about buyers and private equity companies is they all do the same thing and they wait till the last 10 minutes. And so like you'll say it's due on Tuesday, February, whatever by 5 p.m they're going to come in between 4 45 and 5 p.m so interesting it's so weird dot dot dot so you're open you're like ripping open these emails and these letters because the letter is telling you we're interested in the company right here's who we are here's where we're sourcing the money this is what we plan for the business and here's our range of value so you're just sitting there on ioi day clicking emails opening opening pdfs reading scanning look just looking for the numbers okay 100 million great great great and our ios ranged from like 65 million to 185 million whoa it was such a broad yeah and i was like well i'm never selling to 65 million and i don't really believe that person at 185 million right i think it and it ended up being i was like the right number is probably in the middle exactly the middle yeah and that's where we ended up 115 after IOI day you schedule management meetings where all the the key players of the private equity group or the buyer come and visit the business they want to meet the team they want to see the business they want to dig in they want to meet the team it's typically a dinner the night before and then all day the next day with a schedule you're going to meet marketing you're going to meet sales you're going to meet operations you're going to and you're just running people through meeting them and they're just drilling them with questions we we boiled it down from 130 buyers in the buyer list 80 iois we got a uh we cut out half of those and then picked the top nine uh told others to go back to the drawing board and pick the top nine and had managed meetings with them and then went on to loi letter of intent which is a binding document they're like okay we're really in this here's the exact number and if you sign this you're exclusive with us and we're entering the due diligence period to purchase the company and then you go into due diligence where they're going it's a full rectal exam and simultaneously you're you're negotiating and drafting purchase documents and and other necessary things to get over the finish line of closing and then you schedule closing yeah and on closing day god the amount of anxiety and the amount of like just electric energy right like i don't care you can be as stoic and as disciplined as you want to be when you're in this process you're spending the money in your head you're like i can't believe this my life my kids lives this is about to change this family forever and so december 21st of 2020 21.

27:57Eric Spofford:I woke up. I was like, it was closing day and it was scheduled for 10 AM. And I went to my new office, which I had set up and I sat at a conference room with my right hand at work. And we got on this call and they, you know, they go around, they have the bankers, the lawyers, the buyers, me, the seller, the executive team that's staying behind. And they sign off and they sound off, they go around and everyone has to verbally commit to closing. And so they got to me and said, Eric, you're, you're good to close. I said, yep, clear to close. And everyone else clear to close, clear to close, clear to close, clear to close.

28:37Eric Spofford:It's like 20 people. And at the end, um, I said, all right, congratulations guys. This deal is closed. And my fucking hood ass was like, Hey guys, uh, when do I get my money? where the fuck's my money you know what i mean back back up the brinks truck i'm getting out of here it's been a bank robbery you know i'm out and they said the wires have been initiated and i waited all day and it was like 5 30 at night refresh refresh the banking app right the banking app over and over and over and over and over again waiting for that wire to hit and about 5 30 at night and i was like getting pissed i was ready to start calling people because i'm like banking hours over where the fuck is the money we close at 10 a.m and you know you just wait there's all this tens and tens of millions of dollars just where is it like why why is it when you press the button here it doesn't just show up there right it takes all day and so i thought i was gonna have to wait till the next day i was sitting at my kitchen table with my feet up and i refreshed one more time and fucking boom the numbers were just like nine numbers and i was like god damn to be clear it's eight numbers because i'd already sold three minority shares I didn't make the whole 115.

29:51Eric Spofford:People get that fucked up. But nonetheless, it was more money than I'd ever seen or ever thought I was going to see. And I just sat back and I was like, holy shit, we did it. This is fucking crazy. I immediately turned to prayer. I said, God, thank you. This is unbelievable. You know, what a testimony of what someone could do when they put their mind to it and make the right decisions.

30:14Dan Fleyshman:What did you do the next morning?

30:16Eric Spofford:The next morning? Listen, I never took a day off. the next morning i was up in at my house in new hampshire and i woke up and uh grabbed my number two a very very close person to me that's been with me a long time and we drove like almost two hours to a city called fall river massachusetts to look at these brick buildings come on the next morning the next morning yeah december 22nd it's cold it's cold as fuck out and we're looking at these brick buildings that i'm looking at buying them and developing them into fucking apartment buildings i have a hot dunkin donuts coffee in my hand i'm all bundled up it's freezing and my my right hand at work literally elbows me it's 9 a.m we've been up on since 5 30 and together we're looking at these big buildings and i have architects and engineers with me and all and she looks at me and goes, we're never going to take a fucking day off, are we?

31:16Eric Spofford:It's a fair question. I agree with her. I just laughed and I was like, no, no, we're certainly not.

31:23Dan Fleyshman:All right, let's go to the final chapter. Let's talk about the charity side, but I'm going to do a different twist with you. So obviously you're passionate about the sober industry and getting people sober.

31:32Eric Spofford:Yeah.

31:33Dan Fleyshman:It's not exactly philanthropy, but there are philanthropy versions of that. There are ways to donate to that, but it's more about the message that you send and the energy you put into it. And actually, you've told me about stories of guys that have come to you and that you've guided on and pushed them to go get sober, which is the butterfly effect. If they fix their life, obviously it helps their family, their friends, their community, et cetera. How does someone find that for themselves, like to get behind something? Because it's very different to just donate$100,$1 ,000,$10 ,000, whatever to a charity versus finding something that they're passionate about.

32:11Eric Spofford:I'm going to answer your question with a question because I think it's important. Have you had pain in your life? Yes. The pain is the purpose. The pain is the purpose, right? Whatever it is that you've been up against, whether it was childhood abuse, homelessness, you know, the hundreds and thousands of problems that's, you know, people, sickness, illness, health problems, you lost someone to cancer, fucking the grief is overwhelming. Like I advise people to look to what has personally impacted you and caused you pain. And if you can't find a way to get excited to have some sort of purpose that is driven by the pain that you've been through.

32:55Eric Spofford:Like do you think it's a coincidence that we struggled that way? Right? Like God fucking himself chose that I was a drug addict or however fate works. Right? Fate brought me to addiction, and it was unbelievably painful. It destroyed my life. It destroyed the lives of fucking people around me. It caused a lot, a lot of chaos and a lot of harm. But it inevitably became the greatest gift that I could possibly have because it gave me a purpose for my life. My life is important, and my life is meaningful because I was able to take the most painful experience of my life and turn it into a purpose. I don't know a person that I've met yet that hasn't had their own story of pain at some level.

33:43Eric Spofford:It doesn't need to be addiction. It can be anything, right? Your purpose and the thing you can get excited about and where you can make a difference is there. It's on the other side of your pain.

33:54Dan Fleyshman:It might be something that happened to a significant other, a child, a parent, a grandparent. However it impacted you.

34:00Eric Spofford:Someone who's influential to your life, you know?

34:02Dan Fleyshman:All right, so you're one of my only repeat guests because I really have repeat guests. So you've already answered this question, but we're going to ask it again. It's the only question I ask on every single episode, and I've never gotten the same answer, and I think I'm going to actually get a different version of the same answer from you because over time, people think about things different. You just had another baby.

34:20Eric Spofford:I did, yeah.

34:21Dan Fleyshman:And so you sell more companies for another$100 million here, $100 million there, hopefully, God willing, a billion and$2 billion over the course of time. But eventually, Eric Spofford passes away, unfortunately. what percentage of your net worth do you leave to those children?

34:38It's an interesting question on how do you think,

34:43Eric Spofford:and I've just recently, because I just had my third child, I went back and have started in them again right now back in my trust estate and will docs redoing them because I have two boys. And so the rules that I had in place for my two sons don't really translate to my daughter, right? These are very different things. And revisiting them, my wealth will all go into my trust. And my trust is left to all three of my children. But they do not have open access to it. There is a criteria that for them to even be eligible to benefit from my wealth. One, because sobriety and abstinence from drugs is such an important piece, central fact of how I made this wealth and what's important to me.

35:36Eric Spofford:I give them the choice that if they want to be on drugs, smoking pot, doing whatever it is with their life, they can do that on their own dime. They get nothing from me. They also need to be gainfully employed in school. There's all this stuff that is a requirement for them to participate in the wealth. But one of the things that terrifies me is that we pass this wealth down to them and we work our whole lives to create it. We don't live long enough to get to spend it all. And we pass it down to them and they fuck it up. And it doesn't benefit my grandchildren, my great-grandchildren, et cetera, et cetera, et cetera, generational.

36:21Eric Spofford:And so how I currently am setting mine up is that they're only allowed to access 4 % of the total value of my trust, the wealth, annually. Nice. Right. And so how that works is that, you know, if you invest the money, you can safely predict over time an average return of 8%, right? 3 % stays in the portfolio, and it grows to grow the basis. Compound it, yeah. To compound it and to keep up with and hopefully beat inflation. Yep. 1%, so 5 % comes out. They cannot access more than 5 % of the wealth in any one annual calendar year. Got it. 5 % is distributed, 1 % pays the tax, capital gains, and 4 % is the net.

37:15Eric Spofford:So they have to meet all of this requirement, but this is never going to be guns blazing yahoo dad's dead here's millions and millions of dollars it's going to be enough to and mind you now that four percent needs to get divided at this time amongst three sure and so it's an assistance it's a guide it's something i could do i can ensure that they'll never be hungry and hopefully they'll never be homeless as long as they aren't fucking losers and don't fuck it up for themselves but i could also ensure that it will precede them It will survive them and it will survive the next generation and the next generation and the next generation.

37:49Eric Spofford:Yeah.

37:51Dan Fleyshman:All right. Where can people find you on social media or anything that's going on in your world? At Eric Spofford. Easy. Nice. Drop the mic. Boom.

37:57Eric Spofford:Boom.

37:58Dan Fleyshman:All right, guys. As I mentioned earlier, this podcast is not just for you. You might be sitting somewhere four months from now and someone's going through something that they might need to get sober or they might want to be getting some help in their life. And you might refer them to start following Eric across social media. some of the things that we've talked about here on this episode. Maybe a friend is trying to sell their company. Come here and listen to the masterclass Eric just put on about preparing this 10-month situation to prepare for an exit and the years before that to actually be dialed in for it because it could save your friend a lot of time, money, and energy.

38:28Dan Fleyshman:It will save a lot of time, money, and energy because if you're not packaged prepared, I pinky swear, you're going to go through a long headache before that even allows you to exit your company. As you guys know, we run this commercial free. I am sponsored by Fanbasis because I actually use fanbasis.com for years, but there's no affiliate code. It's just a company that I actually work with. Same thing with Go High Level. I've been working with them for years to handle my entire backend, but there's no fancy affiliate codes. I just work with High Level and Fanbases. As you guys are listening to these podcasts, just keep it in mind, it's not just for you.

38:57Dan Fleyshman:I'm gonna keep saying this because every time I say it, I get messages and message and message. They're like, you're right. I was listening to an episode about restaurants and then my friend had the restaurant. I sent it to them and I saved them all this money. Those things are burned into my mind and I wanna burn it into your mind. Follow Eric Spofford across social media. Check out his content. It's obviously been fantastic to watch him over the last few years go like a rocket ship in the social media world. And he's going to be pouring a lot of gasoline on that fire over the next few years in particular.

39:20Dan Fleyshman:So really spread his message about straightforward, actual business content from an actual business operator. Appreciate you guys. See you guys next Monday here at TheMoneyMondays.com.

39:35Dan Fleyshman:Ladies and gentlemen, welcome to a special edition of The Money Mondays podcast where we cover three core topics. how to make money, how to invest money, how to give it away to charity. As you guys know, these podcasts are under 40 minutes because the average workout is 45 minutes. The average commute to work is 45 minutes. This episode will be between 34 and 38 minutes for your listening pleasure. Why do I say that? It's because we have a 93 % listen-through rate, which keeps us way high up there on the podcast rankings because you like, comment, subscribe, and share. So when you see these clips, when you're listening, it might not just be for you.

40:07Dan Fleyshman:You might hear something from our guest today that you're like, oh, wow, this is interesting. two months from now or two years from now for the podcast. You never know what might happen. You might help them learn something new, get a new job, fix something in their company, just from the little tips and tricks that you hear today on this podcast. So it's not always just about you. It could be for someone from your past, present, or future. As you guys know, I run this commercial free. I do work with Fanbasis, obviously, because Fanbasis is a company I've been using for years. That's fanbasis.com.

40:33Dan Fleyshman:There's no affiliate code. It's just a great company. And HighLevel, I happen to be wearing the sweater as we speak because it's going to HighLevel powers the world my entire back-end system, multi-billion dollar company. So check out Go High Level if you are an affiliate, agency, coach, course, creator, etc. All right, let's dive right in. The goal is to cover all things money-related because we grew up thinking it's rude to talk about money. I think it's ridiculous. We have to talk about it. Loans, leases, taxes, investing. Should I buy? Should I rent? There's so many questions. What if my friend borrows$600?

41:05Dan Fleyshman:How do I ask for it back? These are real life things that go on in our daily life. And for so many years, we grew up thinking it's rude to talk about it. We have to talk about it. We're about to talk about it right this second. Justice, give us the quick two-minute bio so we can get straight to the money.

41:18Justus Parmer:Sure. And thank you so much, Dan. Great to see you. Thanks for having me on this beautiful set. Quick two-minute bio. I'll give it even quicker than that. I was very blessed in life. I was born in Canada. I was born on third base. If you're born in Canada or America, you're already born on third base. You might not realize that. might not believe that really, because maybe you grew up in a lower middle class or even maybe a welfare state or welfare household. But the reality is, is if you were born in one of these two great countries, you're ahead of 80 % of the population. So my first day when I was born in Canada, I actually was fortunate.

41:51Justus Parmer:I was blessed to be born in Canada. Now, you know, I did grow up in a lower middle class household. I struggled. I, you know, I lost my father at a very young age. I became enamored with money because the fact that we had money, then we kind of lost the money that we had. Father passed away. So I went on this pursuit to try and obtain money and figure out some tips and techniques, not having a father around to really not only help myself, but to help my family and my friends around me. So I've had this pursuit. I'm 43 years old now. I've done exceptionally well. I've co-founded and founded many companies that have gone to hundreds of millions of dollars of value and actually even a couple that have gone to billions of dollars of value.

42:29Dan Fleyshman:What's the primary focus now? What are you working on in this time frame of your life?

42:34Justus Parmer:Well, the primary focus, I mean, so I used to be, my firm, we used to be global investors for a long period of time. About four or five years ago, when I came down to Miami here, we opened up operations and offices in the US. I looked around this beautiful country and I realized, holy crap, this country doesn't make anything anymore. I'm not talking about t-shirts and blue jeans and things like that. I'm talking about the real bread and butter, the stuff that's gonna carry this country forward 50, 100 years. So I went on this very aggressive pursuit to change our investing focus. And we started buying great things like, you know, we bought a rare earth mine, for example.

43:10Justus Parmer:Sounds crazy, but we bought a rare earth mine in Texas. We bought the largest uranium measured and indicated deposit in the country. And so if you know anything about energy, you probably realize you need your nuclear to sustain the energy in the future. And so uranium is the byproduct that goes into nuclear, for example. And so a little bit less high tech and SaaS types of things, but I guess you could call myself more of an industrialist. So we've been very aggressive in those industries, aerospace, defense, all sorts of things like that. And so those areas are very important for a number of reasons.

43:44Justus Parmer:One, they're going to help to sustain this country for the next 50 and 100 years. I think that's extremely important. I think it's, you know, America is falling behind in a certain way. I think we've lost our way to a certain capacity. It's not that we can't get back on track, but we've got$39 trillion in debt. Some would say the next generation's lazier than the previous generation. So there's some structural issues. I'm a man of faith. Faith is not as prevalent, church and things like that in our society and values. Having families that are husband and wife and having kids, we're not reproducing like we were or are.

44:18Justus Parmer:And so there's a lot of things that are fundamentally, I think, that need to get better if we want to continue to grow this thing through. But from a financial perspective, I've been really aggressively trying to find great world-class American assets, build them, grow them, take them public or exit them. And along the way, we create some great American jobs.

44:37Dan Fleyshman:So there's so many different options and categories to invest into. Real estate, stock market, cash-flowing businesses, tech companies, AI companies, cryptocurrency. Oh my gosh, there's so many things. How do you guys filter down to the things that you want to focus your money, time, and energy into?

44:53Justus Parmer:That's a great question. And so, you know, I don't, I go to Vegas a lot for, for different reasons. I actually have season tickets to the Vegas Raiders. I know they're, they're, they're not a great team, but I still support them. I love the underdog. But the reason I say that is like, even, so for example, when I go to Vegas, I don't gamble. Could I gamble? Sure. Like, have I gambled? Yeah. But I don't enjoy it because, you know, psychologically, I know I don't have an edge, right? The best case it's 51, 49, give or take, that's the best it's ever going to get. And that's the best it's ever going to get.

45:22Justus Parmer:And so for me, just, you know, I think life is also about having an edge, right? So if you grew up and say your dad's in some industry, maybe it's the garbage industry, doesn't have the greatest industry in the world, but you're going to learn a requisite skillset, or you can have certain advantages that 99 % of the population won't have. And I think it's going to behoove you if you're not aware of that and you don't embrace that in a certain ability because you kind of have a leg up. And so life is also about math and probability. It's about more than that. It's about skill and luck and timing.

45:52Justus Parmer:But if you've got an edge on something, you want to use that. And so going back to my, I guess, gambling, you know, analogy, right? So I don't gamble because I don't think I'll win over time. And to answer your question, Dan, so the reasons we operate in the arenas we do, first and foremost, it's because I believe the country needs these things. And if the country needs them, that's a great starting point. But I don't live in Silicon Valley, so we're not in deep, heavy tech because I don't have an edge. Most of the folks in Silicon Valley are going to be able to develop a better AI technology than I'll ever be able to fathom, or my team will be able to fathom.

46:25Justus Parmer:And we try and find these areas with an edge. And so the industrialist nature of me is I grew up in Canada. I was a portfolio manager. We invested hundreds of millions and billions of dollars into industrial projects. So that's primarily why I like the industrial stuff. And I think because of the administration, there's been a return to, let's say, greatness and doing things the old way, the new way, but the old way. And so in the limelight, there's the commodities business. And so that's why, you know, I picked the commodities because I've got an edge over 99 percent of the people out there, I believe.

46:56Dan Fleyshman:So let's say someone wants to get into finance. They want to go work for a company like yours or a firm like yours. They want to work on Wall Street or Silicon Valley, et cetera. How do they start? How do they go down that path to go work in the financial services firm?

47:08Justus Parmer:That's a great question. And the one thing, you know, I'm a big proponent of education. I do think education, generally speaking, it's not perfect, but it's a great equalizer if you can learn and do things better than other folks. But, you know, I've gone to great colleges and things like that, but they don't really teach you the minutia of VC and some of these really important things. And certainly, I think you alluded to that earlier. In grade school, they don't teach you about a balance sheet or pay your credit cards or is this good debt? Is this bad debt? You got to kind of ask yourself why.

47:35Justus Parmer:I don't want to turn this into conspiracy corner, but it's just not set up the right way. And so fortunately, because of people like you, podcasts like yours, the information that's readily out there on podcasts, you can educate yourself. And I encourage the people at home to educate yourselves because no one's going to do it for you. Nobody's going to do anything for you. And so ironically, you know, I find people spend more time on booking their next vacation than they do about their own life plan or their life goals or their balance sheet. So you've got to spend your own time and energy to kind of figure this stuff out.

48:06Justus Parmer:And so what I will say is in regards to finance, it's extremely lucrative if you can figure it out, but it's not for everyone per se. And so if you have that burning desire, the information's out there, maybe you catch a break or two, you can do exceptionally well in finance. Absolutely.

48:22Dan Fleyshman:You've been on television, press, building up your social, et cetera. So as more people see you and they hear, oh, he's got a VC firm, he's investing in deals, you get pitched, you get bombarded, you get DMs, texts, emails, people approach you at events, et cetera. How do you filter through to make something stand out? Like what would stand out to you if I've said, hey, invest in my chessboard company or invest in my AI company? What would make it stand out to you?

48:46Justus Parmer:So the interesting thing is, I mean, you know, much like everything in life, we evolve, right? So wherever we started, hopefully isn't going to be where we end. and maybe it's going to be somewhere in the middle. I and we pride ourselves about being fluid, being evolving, kind of always moving and adapting. So we are a typical VC firm, so we want kind of hyper growth, let's call it. But we're also more of a PE firm. We're a blend between VC and PE. And I only say that, and I'll maybe educate some of the viewers at home, is that PE, they take a little bit more of a pragmatic approach. VC basically looks like this.

49:25Justus Parmer:You make 10 investments. It's usually somebody else's money. You make 10 investments. One skyrockets, does 10 ,000x, more percentage you can ever imagine. Maybe the next two do quite well. And the balance of them are pretty much zeros. So the idea is that the one that shoots the lights out takes care of the entire portfolio. And that's the way VC works generally. I've never really loved the genesis of that. Maybe because I hate losing, Dan. I don't know why, but I just, I don't want to be wrong eight times and being super right once. I think that's junk. What we've kind of gravitated towards is maybe we won't hit the 10 ,000 X returns.

50:05Eric Spofford:We don't necessarily, we don't need those.

50:07Justus Parmer:We're not running an outside portfolio. We're on an inside portfolio. And so what we're trying to do is we're trying to take a more pragmatic approach. And we're trying to find companies that are, let's say, out of proof of concept. They can be in any arena that helps America. That's the only mandate. They've got to be American companies. We take a very active approach, right? So we'll put a board member or two. We'll be there 24-7, as little or as much as you need us to be. And that's not there to impede your business. It's just things that I've learned in my 43 years of life. Some of our team members who've learned great expertise and great adjoining skill sets, we want to be there complementary.

50:43Justus Parmer:And I guess what I'm saying is we're looking for companies in private equity as well. They don't have to have crazy cash flow, but they've got to have a growth propensity. And if we can fund them, if we can build them, if we can get in their sub$50 million or so market cap or valuation, and we can help to build and grow them into many hundreds of millions. And as I was mentioning before, if we get lucky, it's into a billion or two or$4 billion of the value. I mean, we don't need much more than that. And so that's kind of the framework. That's the genesis. That said, we're not, you know, we're not as crazy as it sounds.

51:19Justus Parmer:We're not here to compete against Silicon Valley. There's better, and recent, there's a lot better Silicon Valley firms that would take your business on. But we're a blend between the VC and private equity.

51:31Dan Fleyshman:So how much has AI changed the way you look at investments when some companies or some categories could be disrupted? How has AI changed what you're looking at?

51:40Justus Parmer:Well, we're still so early days, right? I mean, I think we're still so early into it. There's going to be so many ebbs and flows. I think people naively think it's going to happen overnight. I can't see it at this point in time from a user perspective. We're investors at ChatGPT. It's a passive investment. I'm sure it's going to do well in OpenAI. But the user experience is to better train search at the moment. That's the capability of it. And so I think in this coming year, 2026, I think it's going to evolve for the user perspective, not the founder perspective, but the user perspective. Actually, it could be the founder perspective where if you can work with AI, it'll help to train your firm, meaning that you'll be able to use assistance, internal assistance.

52:26Justus Parmer:They can go through all your documentation, all your emails. If you can prompt it right, it can help you be more efficient as a founder of your firm. It could be any type of firm. So I think we're going to start to see a lot more of those real world applications in 2026. But in the grand scheme of life, in the grand scheme of things, Dan, we're still so early from any meaningful headway. And so for us, that's obviously very exciting. You know, I'm a large shareholder of SpaceX. SpaceX is going public this year. There's been talk over the last week or so that XAI might actually merge with SpaceX, which is, you know, blows your mind.

52:57Justus Parmer:But this is a guy who's blown our mind for a very long time. Because the reality is that with his XAI, I mean, his goal now is he's trying to get, he solved the problem of the launch, right? He can get things up and down on cadence in outer space. And so Falcon 9 goes up three times a week when the Starship comes online in the next, let's say, next 18 months or so. And to give you perspective, I think you'll enjoy this. You're an interesting data guy. So when you hear about the Starship, this is the Elon's Mars rocket. You might hear about it. I don't think anybody really knows the perspective of it.

53:32Justus Parmer:But to give you some sort of breadth, the Starship rocket that Elon Musk is building that he will have operational is bigger than the Statue of Liberty. So it's bigger than the Statue of Liberty and it's going to fly 16 ,000 to 18 ,000 miles an hour. Whoa.

53:49Eric Spofford:And Dan's like, wow, that's pretty fast.

53:51Justus Parmer:But to give you better context, a bullet and a gun travels 3 ,000, 4 ,000 miles an hour. So it's going to travel four times the speed of a bullet, and it's going to be bigger than the Statue of Liberty. That's what this guy is building. And so if that doesn't blow your mind.

54:09Dan Fleyshman:Airplanes are 400 miles an hour, so that's 40 times. No, 40.

54:15Justus Parmer:Yes. 16 ,000? 16 ,000. 16 ,000. That's 40 times faster than an airplane?

54:19Dan Fleyshman:Yeah. That's nuts.

54:21Justus Parmer:Yeah. Yeah. Are humans going to be on them? Humans will be on them. There's debate whether they put the Optimus robots on them first to start doing things, but absolutely. There's going to be payload. Inevitably, there's going to be humans. Because he wants to use that rocket to initially develop the lunar surface. So they want to go back to the moon. They want to build colony there. And then they also want to go into Mars. And the interesting thing about Mars is you can't just launch a rocket whenever you want. There's only a window once every two years with the trajectory of the solar system and the way the planets are.

54:53Justus Parmer:And the launch window is going to happen. in and around December of 2026, if he's able to hit this two-year window. If not, he's got to wait another two years to try and get the window. That's fascinating. Totally fascinating.

55:03Dan Fleyshman:Okay, on the investing side, I could talk about that all day. Let's focus on money. On the investing side, when you find a company, when do you decide if you're going to do follow-on rounds? Like let's say you invested the first time, you threw in 5 million bucks into this company, it was a$40 million round, you and your guys threw in 5 million bucks, but now they're doing a$200 million round later on. what things make you decide you know what i want to invest again or you know what i'm good with our

55:28Justus Parmer:initial small investment that's it so i mean as the evolution of of you know myself my firm that we were talking about earlier i'll give you a couple different answers and so one traditional vc back to your gambling analogy and playing blackjack you always want to buy that if it's an up round and there's momentum you always want to double down your winners you want to let your winner's ride as, as, as counterintuitive as it might sound, we're like, oh, this thing's up. It's, it's three X from where I put my money in. I'm already positioned cheaply. There's too much risk to traditional and mathematically the better VC performers always buy the higher rounds.

56:04Justus Parmer:Cause they're trying to find the thing that takes off as quick as it can. Um, for us, we, we kind of look at it a little bit differently because we don't invest as passively anymore. It just, it takes so much energy. We're small, you know, I mean, um, and so we, we try not to invest as passively. And so we were back to the PE, we want to take more meaningful stakes. And the answer to that question is, is unfortunately, whether it's a up round, middle round, or sometimes even down rounds, we, you know, we're all in, we, we, we put our chips on the table. So we, you know, we take the shot and we, we, we battle in the trenches with these folks and we celebrate on rooftops with these folks, but we're all in.

56:39Justus Parmer:So we don't necessarily discriminate unless there's something so wrong with the company or the management or the industry or something of that words, We physically can't, but we back companies.

56:48Dan Fleyshman:All right, let's talk about the charity side of things. Why do you think it's important for a brand, product, or service to have some type of charity for their staff or their employees, their clients, vendors, investors? Why do you think it's important to have some type of charity, whether it's money, time, or energy involved in a company?

57:04Justus Parmer:I think you hit on that a little bit earlier when I walked in. I think it's more to do with the butterfly effect and just paying things forward. I don't live in a scarcity mentality or aspect. I always try and pay things forward. I think, you know, making that culture, sometimes you don't even know where it's going to come from or why it's going to come, but as long as you keep giving, I'm a big, you know, I'm a spiritual guy. I'm a universe guy. I'm thinking, you know, and there's been so many instances in my life where I didn't know something really good was going to happen, but I just inadvertently did something good for somebody.

57:34Justus Parmer:And you can never, you know, as Steve Jobs says, you can never connect the dots moving forward. You've always got to look backwards to connect the dots. And I'm sure yourself, Dan, I'm sure some of the viewers, you've seen things where you've just done something nice or kind, not expecting anything, or maybe even did expect anything. That's fine too. But then you look back in some time and that's opened a door or made a relationship or got you a job or got you a promotion or got you a flight or an interview on a podcast or something really, really nice. And so I think not being open-minded to doing that and pushing that forward is very naive, very self-serving, very closed-minded.

58:09Justus Parmer:And so I'm of the camp that you want to do as much as that within reason, as humanly possible.

58:14Dan Fleyshman:Why do you think it's important for people to invest into themselves, invest into their mind, whether it's coaches, courses, colleges, personal brand, why should they be investing into themselves?

58:23Justus Parmer:That's a great question. And I'm a big fan of your friend Tony Robbins. I actually started reading his mentor, Jim Marone, years even before I got into Tony. And so I think Jim does the best job of kind of articulating that, where it's the only, and I kind of articulate as well as he is, So I'll paraphrase it, but at the end of the day, you can't rely on other people. You've got to make your own skill set, right? And it's back to the kind of the hunting and fishing and having that kind of sense of yourself, a sense of self-worth and self-being. And that's how you become, I think, a provider. I'm old school.

59:00Justus Parmer:I'm traditional. If you look back to the lineage of human beings to caveman days, we were hunters and gatherers, right? And so you can't just, is it important to rely on the team? Absolutely. You have to rely on the team. But it's really that person, the man or the girl, looking at yourself in the mirror and having that ability and confidence and just going through the motions. Like it's everyone, I think one of the biggest problems, I think also in this day and age is everyone's so scared of failure. Right. You meet these young 30-year-old kids and they've never asked anybody out. They've been hiding behind this computer and they're socially awkward.

59:32Justus Parmer:And it's like, what chance do you have to, I think, reproduce? I mean, it's, it's tough. Right. And, you know, guys like Tate talk about this stuff quite a bit where it's like, you've got 80 % of the women chasing 20 % of the men, something like that. And so I think just going back into, and again, not a trip back memory, Dane, but just like more traditional, more like, you know, getting out there, failing, embarrassing yourself, trying to ask a girl out that you have a crush on. Maybe she shoots you down and you feel like crap for a week or two, but somewhere, something inside you, that's really good as a male human being.

1:00:04Justus Parmer:And there's great examples for women as well too but i think going back to the just the traditional not everything i mean obviously things are good in some capacity but just going back to being self-servant self-sufficient is really going to help our civilization out do you think that most

1:00:19Dan Fleyshman:people are cut out to be a ceo of a startup company i i don't think so i i wouldn't actually

1:00:25Justus Parmer:i wouldn't encourage it for everyone yeah you have to be a you have to have a certain kind of Psycho? A little bit psycho. Something's obviously off if you think you can do something that most people can't. And it's not all, I'm sure when things blow up in a good way, it's obvious. But the math isn't on your side, generally speaking. I think you're trying something really hard. I think I would actually implore and encourage people to not even be CEO. Because maybe you don't have that right skill set or you're 60 % of that skill set. You're just as good being somebody's number two. If you're at somebody's number two or four, a great CEOs, you're going to learn way more and you'll be more collaborative and you'll create more value because you're more conducive to work with somebody who might have a better skill set for that.

1:01:11Justus Parmer:And I'm not here to, you know, shatter people's dreams. That's not what I'm saying, but I'm just saying be real on who you are. And if you're willing to, you know, get hit in the face and fail and fail on the mat for an indefinite future with no guarantee of success. and by the way as a CEO and you're CEO of many companies Dan like it's very selfless right and so if you have any level of like you know people pleasing or you want people to give you accolades it's tough as a CEO sure a couple people give you accolades but usually there's a longer list

1:01:41Dan Fleyshman:of vendors or somebody that goes through and so you have to and I say kind of tongue-in-cheek

1:01:47Justus Parmer:because I've got tough skin but like you have to be okay to do that and if you get a lawsuit or you something shit hits the fan you can't buckle right because it's not just you at that point it's It's the rest of your company, right? And so you have to have that kind of strength within you.

1:02:01Dan Fleyshman:So I'm going to say something very blunt. Employee number six is better than employee number one if you want to get paid. Employee number one, the founder or the CEO, is literally the last on the list of getting paid. Not just of humans. Vendors, bills, rent, lawyer bills, accounting, vendors, shipping, food for the office. every little thing is first before you get paid if you're employee number one that's exactly right stone cold last and by the way when there's extra money to pay employee number one guess what you do with extra money put it back in the company yeah and if things are going good you put it all the way back in the company and so i say that because sometimes people should actually consider just be employee number six get paid your salary on time and don't try to be that c or entrepreneur because you're unlikely to get paid unless you have a good success later on down the road that's exactly right All right, let's talk about the last and final key piece.

1:02:57Dan Fleyshman:There's only one question I ask on every single episode. I've never gotten the same answer out of a couple hundred episodes now. Wow. Ready for this one? Okay. You build up this VC firm. You build up some of these companies you're a part of. You build up these investments and you have billions of dollars of exits over the course of your career. But unfortunately, someday you finally pass away. What percentage of your net worth do you leave to your children?

1:03:23Justus Parmer:Wow, what a great question. So I'll maybe answer it a different way, and I don't know if the other 100 people said the same thing or not. But the key thing for me is, I'm not sure what the percentage is as of yet, but I want to make sure that whatever I leave behind, it's not just a check. It's not just a, here, take X amount of money and figure it out. There's got to be something that's… Parameters? Not even parameters, but some level of sustainability. I'm not talking about sustainability for the earth, but sustainability for the business. Yes, because again, the idea that you want things to reoccur and compound and grow over time.

1:03:55Justus Parmer:And I've seen so many examples of friends of mine who've got kids who give a lot of money to their kids. And they struggle because they lose the value of money because they know there's more behind it. And if you, let's say, arbitrarily give a billion dollars to your kids, they're not stupid people. They know if they can eat through this because there's still$400 million left or$300 million and$200 million. And so I don't think it's actually the percentage. For me, at least, it's more, can we set something up that they're so passionate about that they want to run and build and grow? Hopefully it's my business.

1:04:25Justus Parmer:Maybe it's their own business. I don't know. But it's got some sort of sustainability future where their kids are going to be able to inherit that. And so there's a lot of planning around generational stuff and trusts. And, you know, I'm a member of Milken Institute and a lot of these foundations. I've got my own foundation. So we do some planning around that sort of stuff. But again, the key for me is more so just like, what does that look like? Like less about the dollar amount, but how do we ensure that this business has the right footing? So when my kids who are one and four now, when they're 84 and, you know, 89, I guess, right, or 88, is that still a business that they can pass down to whoever's coming behind them?

1:05:04Dan Fleyshman:Where can people find you on social? Where can they find any of the companies or any of the fun investments that they can look at?

1:05:08Justus Parmer:Yeah, I think probably the best way is just at Justice, J-U-S-T-U-S, Parmer, P-A-R-M-A-R. that's the Instagram handle it connects to a lot of stuff I'm going to bug you about the omnipresence nature of things as well and then yeah and you can find a lot of our stuff on my on the company website investfortuna.com investfortuna.com all right guys as I mentioned earlier in this podcast

1:05:33Dan Fleyshman:this is not just for you it might be for someone from your past present or future it could be two months from now it could be two years from now someone might be thinking about investing someone might be thinking about raising capital you might want to forward this episode to them and the butterfly effect could occur they might start pitching him boom they get a 10 million investment because you passed along this podcast episode so just keep in mind as you listen to these episodes it's not just for you it's also for your friends family and followers appreciate you guys we'll see you guys next monday here at themoneymondays.com