Navigating Real Estate, Venture Funding, and Market Shifts: A 25-Year Investor's Journey

In this episode, a seasoned investor with 25 years of experience in commercial real estate and finance shares invaluable insights into their journey and approach to business. The conversation delves into the evolution of their family legacy, navigating through various investments like alternative assets, hedge funds, and ETFs, as well as their focus on commercial real estate. They discuss the importance of diversification, risk management, and the impact of interest rates on investments. The speaker also reflects on the mistakes made throughout their career, including missing out on understanding market fundamentals, and how they've learned to balance their portfolio for long-term success. The episode touches on lessons learned from the real estate industry, venture funding, and the world of technology, offering practical advice on building resilience and scaling businesses effectively.

Transcript

My father risked everything and bought a railroad out of bankruptcy and created a
really incredible legacy for myself and for everyone coming through. But he kept all
his cash and he has his world, I have my world. So I built mine through 25 years
of commercial real estate and finance. Where we are today, what we look for, we're
about 14 different investments that are commercial real estate focused. In the
financial world, we're in alternative investments for a hedge fund and we have a
public ETF that we invested in at the incubator side of it, now 80 million asset,
which is great. We own part of a bank. I look for private credit funds out in the
marketplace, but I'm always nervous because they may not have the balance sheet to
withstand foreclosures and issues that come through. I can't tell you how many
private credit funds I get to see and look at and said, "So, when'd you start?"
Oh, about three years ago. I'm like, "Oh, great. Have you ever been through a wait?
Have you ever been through 1991? Have you been through all the different downturns?
Do you have the withstand and look at it?" In the technology space,
we look for some things that are a bit built like a moat as protection.
I get nervous with AI because I feel like it could be changed every six months,
every three months, if you will, because another tech company come in or what deep
sea came through and blew out some of the AI stuff that's happening. But I like
technology focus with AI as a part of it, but it's not the main focus.
In some of the other ventures and things we've gone in, my core ones that I'm
spending a lot of time with, which is a bit annoying because I went in direct and
direct to ownership. I started as a limited then I went up to the cap table to
take over control because a lot of young entrepreneurs kind of lose sight of what
happens as they mature in their company or a couple of black swan issues that
happen, right? We all know what happened in April of '22 and May of '22 when rates
are to scream, a lot of people didn't pay attention to what was happening, including
me and some of my real estate. When we invest, I try to be Marcus Lamonis and
create my own venture fund, if you will, where I'm people process product. I try to
figure out if the people understand their experiences, their core competencies, what
they're doing, very eloquent. He's a great operator, by the way. As a very young
age, he had to take over, become an operator. These are the guys that I would
invest in because he comes from the operating world and understands what it's like
to hire people, to fire people, to increase revenues, to cut costs, to have to deal
with governmental issues, things of nature. You want that experience in that people
side. The process side, everyone's trying to figure it out, especially when it's a
new product. And if they're continually learning and continuing increasing their
appetite for efficiencies in their process, those are the type of people I look for.
Mistakes that I've made are 1 ,000 times over. Yes,
venture does suck, and real estate sucks, and so does tech. And there's a lot of
issues that are going out in the market. What I've missed is understanding market
fundamentals and market issues that some of my businesses and the consumer product
side or the real estate side got really hit by the interest rate increase. And I
didn't pay attention how much that could affect in my portfolio what it looks like.
And so being a little bit more diversified and paying attention to if the rates
really did scream like it did, what is my counterbalance to that? And quite frankly,
we hadn't had an interest rate runs in 40 years of that nature, right? And I
missed it. And that's one of the things I'm annoyed with. And it's like running
with a parachute. I've got some businesses that are kind of caught and trapped
because the interest rates have been where they are. And it's now, according to our
illustrious Mr. Powell, that it's higher for longer, right? And so that's a problem.
So how do we figure that out? How do I reduce my exposure to those interest rate
-driven type businesses? As you know, in a high -industry market, insurance does well,
lending does well, and companies with big balance sheets that have liquidity do well.
So, my next investments are paying attention to cash flow companies that have gone
through a bit of the mess the last five years. And they're now on a next paradigm
shift where they just need an extra million or two million dollars to go in. Our
family office has created an entire capital raising arm of which I'm tied in New
York and we're on a broker -dealer platform where we can raise capital for all our
ventures come through because that's what's new to me is our due dealers process now
has to be understanding capital raising and how we're going to be a part of it
because I can't always be writing the checks into it. We need to be able to co
-invest and bring other families in as well as other ways of how capital is raised
through RA model, the broker dealer model, things of that nature. So hence why I
have an investment bank with me. Thank you. I really like how you broke that down
and also gave us some real life examples on how you're implementing that into your
own family office and I think Richard mentioned it earlier you know we had a
speaker on stage at one of our last events and he mentioned that people
opportunities people problems right