Navigating Impact Investing, Technology Integration, and Multi-Generational Wealth

In this episode, the panel of family office experts and investors discusses the impact of emerging technologies like AI and data analytics on business practices and communication. The conversation touches on the integration of AI tools in real estate, the shift to remote work, and how these innovations are shaping the future of family offices and investments. The experts also dive into strategies for building strong, long-term relationships in investing, the growing importance of impact investing, and the benefits of incorporating philanthropy and legacy-building into family office strategies. The episode offers insights on finding success through both financial and social value while emphasizing the importance of balance in life and business.

Transcript

>> Great. And, you know, Joe said something when he was speaking about the human
relationship, like technology doesn't change the need for, you know, human interaction.
However, with the advancement of AI and technology, whether it's Google DeepMind or
chat, you know, GBT or all the different tools out there, Danny,
like, have you implemented any of this stuff, like CRM or data analytics into your
practice or into your business that's helped with communication and your overall
structure? >> Yeah, we have. I mean, I heard -- I don't know if it was in here
today, but at this conference I've heard a few people say that the AI boom is
starting to come down a little bit. I personally don't agree with that. I think
we're just now starting to see what AI can do. I think AI is -- we're not even
-- we haven't and scratch the surface personally. So we've got some investments in a
couple of AI companies that we think are gonna change the industry,
right? We feel very confident what they're gonna do. We've definitely implemented,
we've always been, I've always said real estate is about five or 10 years behind on
the technology side, versus like the rest of the country on different things. So
fintech, one thing we love about that world and business sass is, we feel like
that's kind of leading the way. You know, don't get me wrong. There's definitely
some great real estate players. We saw a service tight and go IPO, uh, what was
it? Nine billion this year. And I think you're going to see a few more of those.
Um, the markets love the FinTech space and they love when you combine the FinTech
with the real estate space. So that's, that's one of our favorite softwares or
software on the market. So we've definitely definitely implemented a lot of different
tech. Before COVID hit we were already pretty much remote. I don't believe in
bringing back the staff into the office. I know Amazon and others feel like you
have to. I think the smaller companies you can get away with work from home. It's
definitely more popular obviously for recession hits. That's gonna be a good reason
to bring people back in or lay off, right? So But from our perspective, you know,
we've got employees here in LA, ones with me at this show. We've got other guys in
Dallas and Florida. So our firm, we're pretty much remote nationally, and then we
have our in -office meeting for whoever's in Scottsdale. >> Okay. >> Great. >> Yeah.
That's our take on it. >> So Hill, what would you say, I mean, obviously each
family has a unique kind of perspective on the market right now and and different
strategies that you're utilizing. So what would you say is working for you right now
that you're taking advantage of in the market today? - Well, I mean,
as far as the public markets goes, I've always been one to kind of ignore that
because there's so much speculation built into the pricing that it's hard to see
where the actual value at is. So I much prefer, I mean, there are definitely
certain kinds of trends that you can capitalize on. So for example, right, all of
this talk about bringing back 100 % bonus depreciation, that's a very, very good
avenue for places like car washes, places like gas stations to really take advantage
of certain things that could reverse the pressures that were inherent in the market.
We're in a world of cap rate expansion, but when you bring that back to the
equation, at least in places like gas stations, you might see a little bit of
compression there. And that's a very small and very specific market shift.
But I feel like that's kind of the angle that you need to go in, because if
you're looking at the same, if you're looking at things the same way as everybody
else, you're going to make the same exact mistakes that everybody else makes. because
people are much more, it's much more common for someone to make a mistake than to
succeed. And you wanna look for success where other people aren't looking for it.
- Got it. Kip, you just throw in the same question back to you. What strategies in
this market are you looking to deploy? - Well, I'm gonna describe something where you
were just starting to use with some families and it's a little different. It's
called impact investing. And the concept with impact investing is not about going out
and making money for yourself, so to speak. It's not investing in hotels or single
family or I mean multi -family and so forth. It's actually a philanthropic program
and the idea is, and we're actually using this potentially with a, and I'll describe
it, it's up in Montana, it's a ranch if you will, that wants to help young ladies
who've been trafficked, but they're looking at buying more property. So in this
impact investing program, what you do is you put money into a DAF. And then what
the DAF does, instead of just giving the money away, it actually loans out the
money and gets a return on it, but the money also comes back into the DAF so that
you can then recycle those dollars and help more people. So that's a, it's a form
of investing. You still get some return on your investment, but you also get a nice
tax write -off and you're helping the community and other people. So that's a program
we're looking at right now. - Right, same question, Yuna. - So we,
from, you know, from as communications, we do have CRM and communication portal that
we developed. So it's proprietary that's safe that's safe to communicate.
For 100 % agree with you on the foundation side, we do have our own 5 .1 C3 called
Legacy of Safety, providing technology to those communities who can really afford to
obtain them on their own. And everything we do is sort of impact related because if
that's why we actually found everything because we live in such a world, there's so
many school shootings, there's so much uncertainty. When kids uncertainty. When kids
have two children, we're worried about them. And if we can do anything to help to
have a safer place or safer safety for our families, for our children, that's kind
of I feel the impact that our office is creating. Okay. I can see you down there.
I'm going to ask you the same question tonight. So our strategy is pretty simple.
We like to develop a few deep long -term relationships that turn into several
investments. I think it was Michael who was on the stage just before us who was
talking about getting slapped around with all kinds of investment ideas or pitching.
We don't respond well to that either. What we do respond well to is a long -term
relationship, get to know them, understand them better, and that usually turns into
really good opportunities. We typically look for off -market, independent, kind of
quiet deals that not a lot of people know about and if you and then we have
friends that will call and syndicate with other family offices and that turns into a
really good situation. So it's pretty simple. It's relationship building that turn
into lots of good opportunities down the road. Can I piggyback off that?
Yeah, go for it. I absolutely agree. We had an event in Arizona not too long ago
and it was a small group of individuals trying to raise capital capital and I said
the same thing, I said if you're still raising capital after 10, 15, 20 years,
you're doing something wrong. We work with a small group of family offices, they
trust a handful of people, we trust a small group of people. I've loved everything
you said on this panel, actually I would love to get some wisdom from you because
my kids, I've been telling them we're broke all these years, it's not working
anymore, they're in high school now, now. So at some point I think they're gonna
figure it out. I think my oldest already has, but you work with good people and
you do business the right way. If you're here raising capital it shouldn't be about
you. It should be about what you could do for the family office. You should flip
it and that's a way I always looked at it when I was young. I said hey let me
work hard for you. Let me prove I'm a good guy and I could do a good job for
you And I could tell you now, fast forward 22 years later, that one of the
individuals that invested in my company back in 2002, 2003, every time I've called
this family office, he's retired, it's his kids now that have taken over. And now
we're a family office, so we actually, GP deals together, but on the last deal I
did it before B of A, they put in a couple million dollars, we 10X their money in
18 months. So every time we call this individual Tony within, I'm talking 24 hours.
You get a response back. It's funded. Well, just like how Kip is talking about the
DAF and recycling the money back in, you're recycling the money from your LPs and
great relationships and investments. Yep. Julie, what for you? Same question. Any
specific strategies that I think I think identifying secular friends early and then
finding top -decile fund managers in that space and developing relationship with them
is smart. I think for the most part we're more long -term interested if you're
talking about more micro identifying say end of last year the pending volatility was
a good sense. We kind of sensed that was coming and I think for the most part,
and we've moved away from real estate for the time being, just with the prices
being high as they are, and then also thinking, you know, when would be the right
place to get back in? Because when you're doing development projects, there's usually
several years before that comes to fruition, so you're trying to read the tea leaves
and also see where everybody else is. I think moving to the open space is not a
bad idea, idea and sticking to those general rules of thumb of greed and fear that
we all sort of live by. >> Yeah. So if you were to -- this is a question a lot
of guests ask, but just the biggest kind of takeaways from the topics that we just
talked about, is there anything that you just opened to anyone who wants to answer
here that any lessons or observations you want want to share with the audience?
Well, just to sort of chain it all together, there is certainly-- I mean, if you're
familiar with stoicism, for example, you'll be very familiar with the phrase, the
obstacle is the way. And I do truly find that some of the best places to go are
places where you can flip everything on its head. And also, at the end of the day,
have everybody better off, do some impact investing. So for example, if you go into
places like universities, cities, small cities, or other organizations,
especially in other countries, you'll find that a lot of their critical
infrastructure, water fountains, tanks, solar panels, or other kinds of energy,
or other kinds of infrastructure like that, is often not owned, but rather rented.
And if you can find a way to go into their P &L, see what they're renting or
leasing and they don't have an ownership stake in that's incredibly valuable and
mission critical, you can find a way to structure it so that they come in paying
less than they were initially, you end up getting a little bit of a kickback from
that. And Everybody has safer and cleaner access to, say, potable drinking water.
And you've now turned something that's been a liability on their balance sheet into
something that not only on their P &L shows profits, but also probably enables them
to be more secure in their mission. And everybody is happy. Great. Adela,
you want to add anything? Well, I think just kind of addressing everybody, because
everybody in this room, we have more ways to contribute to society,
to help other people, to make a world a better place. And I think we also just
need to ask ourselves, okay, it's not about me, what can I do, list a little bit
one day at a time to help a stranger, to help, you know, with impact investing,
whether anything is and getting some advisory reports in universities. I do that in
New York, South Maryland. I mean, also I wrote a book on breakable guided treatment
for the life just as a guide to help people overcome challenges because people are
faced with so much with how fast the economy is growing, what's going on in the
world. So I think where should be the role models for so many people to look up
to and to focus that? It's okay, you know, we've all been through challenges. I'm
sure there's not one person here who did not have something bad happen to them and
they overcome. So I think that's what we must share what I want to live with for
me. - And it's only February, yep. - Yeah, we're a really big fans of philanthropy.
For all of these, the reasons we've been talking about here 'cause the value
obviously of helping other people but the value of what it can do to your family
is incredible. So, and I use this generically. So let's assume we do have a family
foundation, again, it could be a donor advice fund. A foundation is a business,
right? It has financial statements, it has tax returns, it's got investments to
manage, it's got to do research as to what causes do you want to fund, and it's
got to have a management team. Well, in today's world, the current generation is
excited about doing social things. So now you have an opportunity to bring the whole
family around the table and to open up We've talked about the communication now you
can hear what the kids are doing you can hear find out which kids want to be
involved in this and Mom and dad get the opportunity to watch what the kids are
doing and responding. So now if we go back to the family office Which is the for
-profit side of the family? They now have the parents have a good idea of which
children are going to rise to the occasion. But the point is you're creating a
platform of real life experiences teaching this next generation what's the difference
between a mutual fund and a checking account? Because again they're going to inherit
a whole bunch of money and they don't know what anything about real estate as an
example because so much of that is what we're talking about.
What's going to happen to that well? So we want to bring them into that process,
and philanthropy is just a great way to do it. And they can't fight over the money
because they're not going to get any help. - Robert, could I point something out?
- Yeah, go for it. - So we have a legacy in the mentoring space going back to
about 2005. We've done mentoring projects with Julian Schnabel and an autistic artist,
Harkinar Selenian. We worked with a young person of color in Zulu Nation,
South Africa, got him to be the first black person playing for the South African
polo team. We've done medical projects in East Africa, the Harvard School of Public
Health, so it's kind of a long list of projects that we've done and we've gone
through a number of iterations, published at Best Practices, and more recently we did
an AI -type project where we interviewed people on the telephone in a 30 minute
intake automated interview process to find out about mentor and competencies and also
to analyze people's motivations and so forth. Worked with a company called Million
Ways.
Martin, I can't remember his last name, calls me up one day. He says, you know,
we've come up with something that I'm not sure I want to share with you. And I
said, Well, you've got to tell me what that is. And he says, well, you know, we've
done about 50 of these interviews, and it turns out that the biggest motivation for
people to be mentors is power. And so we were a little disappointed by that,
but I just want to point out that it's created a little bit of a jaded impact
upon me when I think about impact investing and philanthropy and so forth, because
yes, I think many people do want to give back, but not everybody, okay?
And I think, especially in this space, once there's money in the room, you know,
there's one guy and then there's 15 around it. So just as we sort of remain with
a sober perspective about this whole thing. So just wanted to show that. Yeah,
Danny.
To, you know, go back to what I was saying earlier, we're so close with some of
our investors and family offices. One of the Greatest things I think we did when we
sold our last company, we set up our own family foundation. But we're so tight with
some of the family offices that sometimes we'll just be on a golf course and most
recently the guy had a passion for a new church addition to the Christian school
that he helped found and the two, three other family offices all have their own
family foundations. We all kind of chipped in and helped build out that auditorium.
So again, you work with good people that have the same values and vision and focus
for us. It's not, I've always said I don't want to be the richest guy in the
cemetery. I mean, you're taking nothing with you. So to sit, you know, complete what
you're saying. But once you find that good group of investors and family offices,
we're so aligned even on the Christian, you know, focus of what we want to do
before we pass that we work not just on the investment side, but also on the
giving back side. So it's pretty, we're blessed to be where we're at, but absolutely
you have to, that's a part my wife loves. She says you make the money in the
family office, I'll take care of the donation.
In the 15 seconds we have left, I will tell you that my advice has nothing to do
with financial. You know, I'm at the point in my life where I look back a lot now
and the thing that I am super happy that I did was I kept balance in my life.
So if you're chasing your career and your dreams, don't forget balance, don't forget
your health, your kids, your family, you know what? What matters most at the end of
the day after all this is all of those things. And if you're pursuing this and not
bringing that along with you, then it's a big mistake. Thanks,
guys. Great panel. [ Applause ]