Brian Murphy: Fundraising $25B Across 44 Funds, $73B Merger, Private Equity, Secondaries, Buffett

[00:00:00 -> 00:00:02] And within 30 days, every client moved to Blackstone. [00:00:02 -> 00:00:04] And so all of a sudden I find myself [00:00:04 -> 00:00:06] as the senior most person on the team. [00:00:06 -> 00:00:10] How does someone get to a point in their career [00:00:10 -> 00:00:14] and build up the network or the ability and the experience [00:00:14 -> 00:00:19] and even the trust to be able to raise $22 billion [00:00:19 -> 00:00:21] in 44 different funds? [00:00:45 -> 00:00:47] Welcome back to the Startup Ignition podcast.

[00:00:48 -> 00:00:49] Thank you so much for tuning in. [00:00:49 -> 00:00:51] We are so excited for today's episode. [00:00:52 -> 00:00:54] We were talking pre-podcast with Brian [00:00:54 -> 00:00:56] and I am so excited to dive in. [00:00:56 -> 00:00:58] We have Brian Murphy on the podcast today.

[00:00:58 -> 00:00:59] Thank you so much for coming, Brian. [00:00:59 -> 00:01:00] How lucky are we? [00:01:00 -> 00:01:01] Thanks for coming, Brian. [00:01:01 -> 00:01:01] Yeah, Brian.

[00:01:02 -> 00:01:02] My pleasure. [00:01:02 -> 00:01:04] All the way down from Midway. [00:01:04 -> 00:01:05] Is that what it is? [00:01:05 -> 00:01:06] That's where it is.

[00:01:06 -> 00:01:07] It's not Heber, it's Midway. [00:01:07 -> 00:01:07] It's Midway. [00:01:07 -> 00:01:08] It is Midway. [00:01:08 -> 00:01:09] It's not Connecticut.

[00:01:10 -> 00:01:11] Yeah, it's not Connecticut where you used to come from. [00:01:11 -> 00:01:12] Yeah, it's not Connecticut. [00:01:12 -> 00:01:13] It's moved to Utah, which is awesome. [00:01:14 -> 00:01:16] We have Brian back in the flesh in Utah.

[00:01:16 -> 00:01:17] We're happy to have him back. [00:01:17 -> 00:01:19] But yeah, Brian is an amazing guy [00:01:19 -> 00:01:21] and he is affiliated. [00:01:21 -> 00:01:22] He's affiliated with our fund. [00:01:22 -> 00:01:25] He sits on our LP advisory committee.

[00:01:26 -> 00:01:29] Brian also is near and dear to my dad. [00:01:30 -> 00:01:30] You guys have been friends for, [00:01:31 -> 00:01:32] I don't know how many years now. [00:01:32 -> 00:01:32] 20 years. [00:01:32 -> 00:01:33] 20 years?

[00:01:33 -> 00:01:34] Wow, okay. [00:01:34 -> 00:01:36] That's more than I even thought it was. [00:01:36 -> 00:01:38] He's a very nice wife. [00:01:38 -> 00:01:39] She's the sweetest of sweets.

[00:01:40 -> 00:01:44] And I just recently met you probably about the time [00:01:44 -> 00:01:46] that we were getting our fund set up and running. [00:01:46 -> 00:01:49] I think I was kind of formally introduced to Brian via you. [00:01:50 -> 00:01:50] And then you met his son. [00:01:51 -> 00:01:51] And then.

[00:01:51 -> 00:01:52] And now we know your son. [00:01:53 -> 00:01:56] And also I go to his donut shop very frequently, [00:01:56 -> 00:01:57] probably more than I should, [00:01:57 -> 00:01:59] just like probably your Diet Coke problem. [00:01:59 -> 00:02:01] That's my donut problem. [00:02:02 -> 00:02:06] He is one of the owners and franchisors of Parlor Donuts, [00:02:06 -> 00:02:07] which just came to Utah, which is really cool.

[00:02:07 -> 00:02:08] Oh, that's awesome. [00:02:09 -> 00:02:11] But I have a bio for Brian. [00:02:11 -> 00:02:14] So Brian, before we get into anything with the podcast, [00:02:14 -> 00:02:15] you can correct this bio on the fly. [00:02:16 -> 00:02:17] So hopefully it's 100% right.

[00:02:18 -> 00:02:21] If not, I'm going to blame ChatGPT. [00:02:21 -> 00:02:21] For that. [00:02:21 -> 00:02:22] Oh, yeah. [00:02:22 -> 00:02:24] So here we go.

[00:02:24 -> 00:02:25] So Brian Murphy. [00:02:25 -> 00:02:27] So everybody knows who Brian Murphy is, [00:02:27 -> 00:02:32] is the founder and former managing partner and member of Portfolio Advisors, [00:02:32 -> 00:02:36] a private markets firm he helped build into a major institutional platform. [00:02:37 -> 00:02:40] Over the course of its growth, Portfolio Advisors raised roughly [00:02:40 -> 00:02:44] $25 billion across 44 funds. [00:02:44 -> 00:02:45] Is that an accurate number?

[00:02:45 -> 00:02:51] So we raised that much for funds, but we also had an advisory business. [00:02:51 -> 00:02:54] And across the 30 years, we invested about $90 billion. [00:02:54 -> 00:02:56] $90 billion in advisory side. [00:02:56 -> 00:02:56] Okay.

[00:02:56 -> 00:02:57] Total. [00:02:57 -> 00:02:57] Total. [00:02:57 -> 00:02:58] Oh, total. [00:02:58 -> 00:02:59] On top of the $25 billion.

[00:03:00 -> 00:03:04] And more than 2,500 limited partners. [00:03:04 -> 00:03:05] Is that correct, too? [00:03:05 -> 00:03:06] That's correct. [00:03:06 -> 00:03:08] That's an astronomical number, by the way.

[00:03:08 -> 00:03:08] That's crazy. [00:03:09 -> 00:03:16] Later, managing more than $38 billion in assets before combining with FS Investments in 2023. [00:03:16 -> 00:03:19] I'm assuming that's around the time you exited? [00:03:19 -> 00:03:20] Right.

[00:03:21 -> 00:03:22] You exited the day of the merger. [00:03:22 -> 00:03:23] That was the day. [00:03:23 -> 00:03:27] And I'm sure that was very much so talked about throughout that whole deal [00:03:28 -> 00:03:34] to help form the $73 billion plus alternatives platform that now FS Investments is today [00:03:34 -> 00:03:36] with the combination of Portfolio Advisors. [00:03:36 -> 00:03:43] So Brian has spent decades building across private equity, private credit, private real estate.

[00:03:43 -> 00:03:48] And what makes his story super interesting is that he didn't just build something successful. [00:03:49 -> 00:03:49] He did it himself. [00:03:49 -> 00:03:51] He was a founder of the firm that you created. [00:03:52 -> 00:03:52] I was a co-founder.

[00:03:52 -> 00:03:53] A co-founder. [00:03:53 -> 00:03:56] I had some excellent partners that helped me found the firm. [00:03:56 -> 00:03:58] Yes, but a founding member nonetheless. [00:03:58 -> 00:04:00] And I can't wait to get into what- [00:04:00 -> 00:04:06] It's one of the most important advisory and investment firms of its type in the country.

[00:04:06 -> 00:04:07] It's really an amazing story. [00:04:07 -> 00:04:10] And this is also something I'd just like to point out about Utah. [00:04:11 -> 00:04:12] And now he's back. [00:04:12 -> 00:04:13] He's in Utah.

[00:04:13 -> 00:04:15] You were in Utah as a kid, right? [00:04:16 -> 00:04:16] I think. [00:04:16 -> 00:04:17] I was born here. [00:04:17 -> 00:04:17] You were born here.

[00:04:17 -> 00:04:19] I was at the U getting his PhD. [00:04:19 -> 00:04:21] We moved to New Jersey when I was three. [00:04:21 -> 00:04:22] Exactly. [00:04:22 -> 00:04:24] And my dad worked for Johnson & Johnson.

[00:04:24 -> 00:04:28] He was on the team, the research and development team that invented the disposable diaper. [00:04:29 -> 00:04:30] Disposable diaper. [00:04:30 -> 00:04:31] Yeah, that's really an interesting story. [00:04:31 -> 00:04:36] And so what's interesting is that just the, I call it kind of the Mecca effect.

[00:04:36 -> 00:04:42] People that come to Utah with this type of pedigree, there's just so many in Utah that comes in. [00:04:42 -> 00:04:43] And Brian's just another great one. [00:04:43 -> 00:04:47] I mean, of all the places with the incredible career you built on the East Coast in Connecticut, [00:04:47 -> 00:04:49] and you chose to come back here to Utah. [00:04:49 -> 00:04:51] It was an easy decision.

[00:04:51 -> 00:04:51] Why? [00:04:51 -> 00:04:52] Why? [00:04:53 -> 00:04:56] Because if I didn't move to Utah, I would never see my wife. [00:04:56 -> 00:04:57] Okay, there you go.

[00:04:57 -> 00:04:58] She's a professional grandma. [00:04:58 -> 00:04:59] She introduces herself. [00:04:59 -> 00:05:02] I'm a professional grandma and a part-time philanthropist. [00:05:02 -> 00:05:03] Okay, there you go.

[00:05:03 -> 00:05:05] So three of my four kids live in Utah. [00:05:05 -> 00:05:08] Twelve of my 16 grandkids live in Utah. [00:05:09 -> 00:05:10] It's the only place we can live. [00:05:10 -> 00:05:12] So Louise really kind of generated this.

[00:05:13 -> 00:05:16] Because of my career, I had lots of clients out here. [00:05:16 -> 00:05:19] Because of BYU affiliations, UU affiliations. [00:05:19 -> 00:05:22] We have lots of professional friends and other friends. [00:05:22 -> 00:05:24] It was a very comfortable place.

[00:05:24 -> 00:05:31] Well, all I can say though is the ecosystem is very big beneficiary that you chose to come here [00:05:31 -> 00:05:33] and make your next phase of your life in Utah. [00:05:33 -> 00:05:34] So thanks for coming. [00:05:34 -> 00:05:36] It's been great to see you more often too. [00:05:36 -> 00:05:39] And maybe that's another part of the bio that we need to introduce you as.

[00:05:39 -> 00:05:40] Because I know you do. [00:05:40 -> 00:05:45] You mentioned philanthropy with your wife and everything that you're doing. [00:05:45 -> 00:05:48] You're a huge steward of a lot of charities and a lot of things that you're doing. [00:05:48 -> 00:05:53] And I know I've watched a couple of your other podcasts and other public words that you've said.

[00:05:53 -> 00:05:59] And you try to actively give back pretty heavily in your life compared to a lot of people. [00:05:59 -> 00:06:00] So that's a huge thing as well. [00:06:00 -> 00:06:05] And also your roots to BYU and Utah and your long-term service and mentoring [00:06:05 -> 00:06:07] and everything you're doing with charities. [00:06:07 -> 00:06:09] So we got to introduce you.

[00:06:09 -> 00:06:12] We got to put that into your bio too because that's a huge part of who you are as well. [00:06:12 -> 00:06:12] Yes, very much. [00:06:13 -> 00:06:13] All right. [00:06:13 -> 00:06:14] So thank you, Brian.

[00:06:14 -> 00:06:17] So hopefully the viewer and the listeners who are watching, tuning in, [00:06:17 -> 00:06:20] you get to know Brian a little bit more over this episode. [00:06:20 -> 00:06:22] But hopefully that sets the table for what's to come here. [00:06:23 -> 00:06:24] So Brian is a big deal. [00:06:24 -> 00:06:28] But before, Brian, we dive into that big deal, I told you pre-podcast, [00:06:29 -> 00:06:32] we always do an icebreaker to kind of set the tone of the podcast.

[00:06:33 -> 00:06:36] And I'm going to play a game with you and my dad. [00:06:36 -> 00:06:41] And the icebreaker game's name is Where Were You When? [00:06:41 -> 00:06:41] Okay? [00:06:42 -> 00:06:43] And I want you to think back.

[00:06:43 -> 00:06:46] I'm going to give you some pretty big events over the decades. [00:06:46 -> 00:06:47] I can tell you the answer. [00:06:47 -> 00:06:48] I was on an airplane. [00:06:50 -> 00:06:54] So we're going to blanket statement, he was on an airplane, [00:06:54 -> 00:06:58] but maybe he has to tell us the exact flight number and what airlines he was on.

[00:06:58 -> 00:07:02] No, but it's some pretty big events over the decades because you guys both, [00:07:02 -> 00:07:08] I'm not trying to date you guys at all, but you've had quite the seasoned career, okay? [00:07:08 -> 00:07:13] And you guys have been doing a lot of business and finance and investing and everything. [00:07:13 -> 00:07:15] Since the 80s, okay? [00:07:15 -> 00:07:17] And so I'm going to do it decade by decade.

[00:07:18 -> 00:07:24] I'm going to give you an event in every decade, 80s, 90s, 2000s, 2010s, and 2020s. [00:07:24 -> 00:07:27] And you tell me what you best remember where you were. [00:07:27 -> 00:07:28] Okay? [00:07:28 -> 00:07:28] Okay.

[00:07:28 -> 00:07:29] And I want to hear from both of you. [00:07:30 -> 00:07:30] Okay? [00:07:30 -> 00:07:31] So here we go. [00:07:31 -> 00:07:37] The very first one, we're going all the way back to the 80s and it is Black Monday.

[00:07:37 -> 00:07:38] Okay? [00:07:38 -> 00:07:38] 1987. [00:07:39 -> 00:07:41] I'm sure you guys both remember. [00:07:41 -> 00:07:42] And for the viewers and listeners, [00:07:42 -> 00:07:47] this was October 19th, 1987, the stock market crash that shocked Wall Street [00:07:47 -> 00:07:50] and reset how people thought about market risk.

[00:07:50 -> 00:07:51] What was the percentage drop? [00:07:51 -> 00:07:52] Was it 25%? [00:07:52 -> 00:07:53] It was close to 30. [00:07:53 -> 00:07:54] 30%.

[00:07:54 -> 00:07:54] Yeah. [00:07:54 -> 00:07:55] I mean, it was dubbed. [00:07:55 -> 00:07:56] In one day. [00:07:56 -> 00:07:57] In one day.

[00:07:57 -> 00:07:57] That's what I know specifically. [00:07:58 -> 00:07:58] Okay. [00:07:58 -> 00:08:00] That's why I included it, Brian. [00:08:00 -> 00:08:01] I was working.

[00:08:01 -> 00:08:04] So I went to Columbia Business School in New York City. [00:08:05 -> 00:08:06] I had finished my first year. [00:08:06 -> 00:08:09] My dream was to have an investment banking job. [00:08:09 -> 00:08:11] I was fortunate to secure that.

[00:08:11 -> 00:08:13] Many of my peers also secured them. [00:08:13 -> 00:08:18] And I think out of the 860 that were going to graduate the next year, there were probably [00:08:18 -> 00:08:22] four or 500 investment banking job offers that had been given. [00:08:22 -> 00:08:23] Black Monday hits. [00:08:23 -> 00:08:28] And that week, almost every bank canceled their analyst program and their associate [00:08:28 -> 00:08:31] programs and rescinded all offers but like four.

[00:08:31 -> 00:08:34] And I was one of the four people who didn't have his offer rescinded. [00:08:34 -> 00:08:39] Not because of who I was, but because of the organization I agreed to join. [00:08:39 -> 00:08:40] They just didn't have anyone to cut. [00:08:40 -> 00:08:42] We was a brand new startup.

[00:08:42 -> 00:08:44] And so they needed everybody that they had made offers to. [00:08:45 -> 00:08:48] And so I got to be an investment banker when I graduated. [00:08:48 -> 00:08:51] And but yet it was massively disruptive to most of my class. [00:08:52 -> 00:08:52] Wow.

[00:08:52 -> 00:08:53] So you were in school. [00:08:54 -> 00:08:55] I was in business school. [00:08:55 -> 00:08:55] Yeah. [00:08:55 -> 00:08:57] I mean, and by the way, I was born.

[00:08:57 -> 00:09:00] I didn't lose anything on my portfolio because all my money was invested in tuition. [00:09:01 -> 00:09:01] And there you go. [00:09:01 -> 00:09:03] And it went up by a thousand bucks a semester. [00:09:05 -> 00:09:05] Where were you?

[00:09:05 -> 00:09:08] I had just completed my. [00:09:08 -> 00:09:15] In my early career, I was in the old page industry and I had completed my largest acquisition [00:09:15 -> 00:09:16] of a competitor. [00:09:16 -> 00:09:19] And so that was really interesting. [00:09:19 -> 00:09:23] And so I remember just completing that deal.

[00:09:23 -> 00:09:28] And a couple of days later, I'm in the office of the new the place that I had acquired. [00:09:28 -> 00:09:30] They were called Great Northwest directories. [00:09:30 -> 00:09:36] I was different up in the Seattle area and they were almost the same size as my company. [00:09:36 -> 00:09:38] So I acquired a company about the same size.

[00:09:38 -> 00:09:41] And I was just sitting there going, Hmm, interesting. [00:09:41 -> 00:09:43] A few days after this acquisition, this happens. [00:09:43 -> 00:09:48] And so I remember that distinctly, all of us sitting around talking about that. [00:09:48 -> 00:09:54] But obviously, as an entrepreneur and with a very recession proof type business, which [00:09:54 -> 00:09:56] is what Yellow Pages was, was very recession proof.

[00:09:57 -> 00:10:01] I didn't get hit financially that bad because I wasn't doing a lot of stock trading. [00:10:01 -> 00:10:06] I was an entrepreneur building my first business that didn't impact me financially, but it [00:10:06 -> 00:10:08] impacted, you know, advertising. [00:10:09 -> 00:10:17] So, you know, my condition was I was going big, and I built banks and analysts was [00:10:17 -> 00:10:18] not going to cause any trouble that didn't affect me financially. [00:10:18 -> 00:10:25] Again, I think that I think I've learned now a lot and I remember the ability to sit [00:10:25 -> 00:10:27] And I recall I remember some of the best among, you know, the best of my, you know, [00:10:27 -> 00:10:29] my work was, was Anything Yeah.

[00:10:33 -> 00:10:34] Anything. [00:10:34 -> 00:10:37] And even before I knew anything about what was going on. [00:10:37 -> 00:10:46] 1987 yeah okay so 1990s next decade and this one's not a specific date or day but where were [00:10:46 -> 00:10:53] you when you first used email on the internet when you can remember having an email address [00:10:53 -> 00:10:58] and sending your first email in the 1990s internet era when digital communication started changing [00:10:58 -> 00:11:03] how business moved connected and scaled where were you i'll give our guests a moment to think [00:11:03 -> 00:11:09] okay you go first i remember specifically because um i used uh for the tech nerds out [00:11:09 -> 00:11:13] there so we had digital equipment corporation minicomputer in our company and we use weiss [00:11:13 -> 00:11:19] dumb terminals and one guy walked into my office one day and again in the yellow pages industry [00:11:19 -> 00:11:24] and walked in and said uh you're gonna be out of business in two years what do you mean well [00:11:24 -> 00:11:28] there's this thing the internet coming and email was just commercialized what do you mean email [00:11:28 -> 00:11:33] was commercialized one attorney sent out a bunch of emails saying he's a personal injury attorney [00:11:33 -> 00:11:33] and he's a personal injury attorney and he's a personal injury attorney and he's a personal [00:11:33 -> 00:11:37] and if anybody needs a personal injury attorney contact him and he got a call immediately and [00:11:37 -> 00:11:41] made a great settlement and now people are saying you can advertise on this thing [00:11:41 -> 00:11:49] and so um i got an account i can't remember it wasn't aol because i don't know if it existed yet [00:11:49 -> 00:11:55] but something and i said i got to check this out and i got on and sent an email to somebody [00:11:55 -> 00:12:03] what was that that was probably 1994 ish okay how about you brian so [00:12:03 -> 00:12:08] realize that when i started my investment banking career they gave me a 1-800 number so i could call [00:12:08 -> 00:12:14] in and get my messages there were no cell phones at least we didn't have them um they did issue me [00:12:14 -> 00:12:19] a pager i remember when fedex finally kind of hit and i thought oh this is going to put the [00:12:19 -> 00:12:23] post office out of business so i distinctly remember when email and i thought man if this [00:12:23 -> 00:12:28] doesn't put the post office out of business what's going on and i kind of think it has but [00:12:28 -> 00:12:33] um so i was working i was uh i had just started my own business and i was working on my own business [00:12:33 -> 00:12:40] and it became a great way to send documents and get signatures and do so many things that [00:12:40 -> 00:12:45] i was a real game changer that's awesome yeah yeah so next one 2000 there are you ready [00:12:45 -> 00:12:53] where were you when the whole financial crisis actually went down with the housing crisis [00:12:53 -> 00:13:01] when lehman brothers uh collapsed like in september of 2008 do you remember getting that [00:13:01 -> 00:13:03] news and for the views viewers and listeners [00:13:03 -> 00:13:08] on september 15 2008 it was official the day the financial crisis turned from anxiety into [00:13:08 -> 00:13:14] full-blown panic mode and lehman brothers had collapsed do you guys remember where you were [00:13:14 -> 00:13:19] in 2008 on those days what was the other big firm not smith barney it was what was it solomon [00:13:19 -> 00:13:26] solomon down a bunch of ones so yeah go ahead you you were in probably in the mix i get that [00:13:26 -> 00:13:31] because being a finance guy and being back in the new york area um it was a big deal yeah [00:13:31 -> 00:13:33] in our congregational areas [00:13:33 -> 00:13:40] we had 263 people lose their jobs oh wow and our little town which only had about 25 000 people [00:13:40 -> 00:13:45] made the front page of the wall street journal because 73 percent of the people that lived in [00:13:45 -> 00:13:50] that town were affiliated with financial services either as bankers investment bankers lawyers [00:13:50 -> 00:13:57] accountants whatever and so it was a big deal yeah it was very painful um i had friends that had [00:13:57 -> 00:14:03] all of their money in bear stearns or so that's the one with some bear stearns or down to or all [00:14:03 -> 00:14:07] these different groups that had just been entumbled and you know like called one friend say you okay [00:14:07 -> 00:14:12] he said i've worked for free for the last 13 years because all of my bonus I put in the deferred [00:14:12 -> 00:14:17] account program and now I'm an unsecured creditor in this bankruptcy I will not see a dime right and [00:14:17 -> 00:14:25] so it there was just a tremendous amount of pain and suffering but it also was an opportunity right [00:14:25 -> 00:14:31] in chaos opportunity presents itself we had just raised a secondary fund which is buying used [00:14:33 -> 00:14:39] partnerships from distressed sellers we found a lot of distresses and so we were able to raise [00:14:39 -> 00:14:45] over a billion dollars to buy these assets and that launched in a really critical vertical for [00:14:45 -> 00:14:49] our company yeah I'm sure you got into a very nice entry point on some of those distressed [00:14:50 -> 00:14:55] yeah we had people that say look I'll give you my capital account if you'll just take over the [00:14:55 -> 00:15:01] unfunded commitments yeah and so we've got major stakes in great funds and at really attractive [00:15:01 -> 00:15:03] prices but you know [00:15:03 -> 00:15:08] what was hard for my wife and I was that we would look around and we just saw massive carnage and [00:15:08 -> 00:15:13] you really start to feel guilty that you're having your best year ever yeah and that you're making [00:15:13 -> 00:15:17] more money than you've ever made before and yet you know you don't deserve it it's just right [00:15:17 -> 00:15:22] place right time right product that kind of a thing and so my wife and I made a very important [00:15:22 -> 00:15:27] life decision we said let's give away a hundred percent of our salary this year let's give it to [00:15:27 -> 00:15:32] charity let's just ding dong ditch and put thousands of dollars on people's kind of porches [00:15:33 -> 00:15:37] that are either utility or they're going to lose their house and we did it as a family and it was [00:15:37 -> 00:15:42] so fun yeah I mean we knew that we were making a difference and we said that felt so good let's [00:15:42 -> 00:15:47] do that for the rest of our career and so starting then we never collected any more [00:15:47 -> 00:15:52] salary because because of the personal pain you saw from that Financial crisis yeah you saw it on [00:15:52 -> 00:15:58] a personal level not that smart so the fact that I was winning seemed like it was unfair and it was [00:15:58 -> 00:16:02] just kind of a gift of God that I didn't deserve and it was a great way to rebalance the scale so [00:16:02 -> 00:16:06] Right, right.

How about you? Do you remember where you were when that happened? [00:16:07 -> 00:16:12] In September, well, here in Utah, it actually hit August of 2007, a year earlier for the people in real estate. [00:16:12 -> 00:16:18] It was kind of a funny experience that that recession, Utah is very real estate orientated.

[00:16:18 -> 00:16:25] And so the real estate started crumbling in about August 2007 and got worse and worse for two straight years. [00:16:25 -> 00:16:34] It was bad. And I had a lot of friends who thought in 2005, 2006, when things were flying so high in real estate that they were set for the rest of their life. [00:16:34 -> 00:16:39] And starting in August 2007, it just went off a cliff and got worse every month.

[00:16:39 -> 00:16:43] Every month I had friends in the real estate industry that some got suicidal. [00:16:44 -> 00:16:46] And it was that serious. They lost everything. [00:16:46 -> 00:16:50] It was disasterville for two years.

So bad. [00:16:51 -> 00:16:55] And I was a tech guy and, you know, I had already made my money. [00:16:55 -> 00:16:58] And I was a tech guy. So I didn't feel it as bad.

[00:16:58 -> 00:17:05] But everybody here in Utah, there are people here that went down 80 plus percent in net worth or lost it all and barely saved. [00:17:06 -> 00:17:09] It's kind of funny. But the chaos created massive opportunity. [00:17:09 -> 00:17:15] The smart people that took their ingenuity afterwards came back and did better than ever.

[00:17:15 -> 00:17:17] Right. But there were some that just made some bad decisions. [00:17:18 -> 00:17:24] But it was in September when I remember I was at BYU teaching. [00:17:25 -> 00:17:30] And a mentee of mine who had gone to Salomon Brothers or no, excuse me, Lehman Brothers.

[00:17:30 -> 00:17:43] And he about spring of 2008 came to me and said, man, it's so dark and gray at my office when I walk in in New York is right before like months before the collapse. [00:17:43 -> 00:17:46] He goes, first of all, they had me working one weekend. [00:17:46 -> 00:17:48] Then it was two weekends. It was three weekends.

[00:17:48 -> 00:17:51] It was all four weekends. I just working seven days a week. [00:17:51 -> 00:17:55] And there's just such a dark cloud when we're in the office. [00:17:55 -> 00:17:59] Right now.

And he goes, I just wonder if I should come back to Utah and get an entrepreneurship. [00:17:59 -> 00:18:01] That's what he's saying. Right. Because he said that.

[00:18:01 -> 00:18:04] And that was like about May or June of 2008. [00:18:04 -> 00:18:07] Little did I know, a few months later, that whole thing would collapse. [00:18:07 -> 00:18:08] It was bad. Right.

[00:18:09 -> 00:18:12] That in our lifetimes, that was the worst financial. [00:18:12 -> 00:18:14] Yeah, that was. Yeah, that was about him. [00:18:14 -> 00:18:16] Sorry, I didn't mean to make it so doom and gloom there.

[00:18:16 -> 00:18:21] Well, but the funny thing is, is it's 89 90 if you're in the tech business was pretty. [00:18:21 -> 00:18:21] Yeah. [00:18:23 -> 00:18:24] So, OK, let's move. [00:18:25 -> 00:18:29] To I'm going to do one more because it's because we have such great stories and I want you guys to do that.

[00:18:29 -> 00:18:31] But I'm going to do one more. [00:18:31 -> 00:18:37] OK, so we're going to go to the 2000s era now of 2010s ish. [00:18:37 -> 00:18:42] OK, where were you when you first saw an iPhone? [00:18:43 -> 00:18:51] You know, when the phones kind of switched, not just cellular phones from like the flip or even the T9 or the very first ones or even the Palm Pilot.

[00:18:51 -> 00:18:54] But when you first saw, you know, the smartphone, [00:18:54 -> 00:19:05] the screen and the picture and like the zooming in of like taking a photo on your phone, where were you and when did you see about the 2007, 2008, wasn't it? [00:19:05 -> 00:19:06] Is that yeah, is that when you saw him? [00:19:06 -> 00:19:14] Yeah, the first one, because the Palm Pilot was a big part of this because we I love Palm Pilot and our we had Palm Pilot. [00:19:14 -> 00:19:16] I love the Palm Pilot and it was going.

[00:19:16 -> 00:19:22] But then when the iPhone came out and the concept of apps and app store, that kind of changed that. [00:19:22 -> 00:19:24] Well, I think the app store was even built after the iPhone. [00:19:24 -> 00:19:25] And I was like 2008 or nine. [00:19:25 -> 00:19:28] But yeah, the iPhone officially came out in 2007.

[00:19:28 -> 00:19:29] Did you get one right away? [00:19:29 -> 00:19:37] Yeah, my my memory is that the big change of iPhone was the app store with the ability because it was an entrepreneur frenzy. [00:19:37 -> 00:19:38] I'm going to build an app. [00:19:39 -> 00:19:42] I'm going to, you know, make my money by being an app builder and put apps in the app store.

[00:19:42 -> 00:19:43] And that was huge. [00:19:44 -> 00:19:46] Yeah. Did you get an iPhone when they came out, Brian? [00:19:46 -> 00:19:47] I didn't.

You didn't. [00:19:47 -> 00:19:48] I was too cheap to buy one. [00:19:48 -> 00:19:52] Our company didn't issue them because they kind of viewed them like Macs. [00:19:52 -> 00:19:53] They were toys.

When did you make the smart for business? [00:19:53 -> 00:19:57] And that a Palm was for business or a Blackberry was for. [00:19:57 -> 00:19:58] Yeah, Blackberry is big. [00:19:58 -> 00:20:00] It probably was several years.

[00:20:00 -> 00:20:01] And my wife probably got one before I did. [00:20:01 -> 00:20:03] Really? Yeah, that's hilarious. [00:20:03 -> 00:20:08] Yeah.

I just remember seeing the first one and I remember being really impacted by it. [00:20:08 -> 00:20:09] I was super cool. [00:20:09 -> 00:20:17] Yeah. But it finally the light bulb went off and I said for all these years when these VCs I'd go to an annual meeting, they were talking about how everyone's going to live their life on a screen.

[00:20:17 -> 00:20:19] You're going to watch your movies on your phone. [00:20:19 -> 00:20:20] You know, my ice cream was this big. [00:20:21 -> 00:20:23] It's like, there's no way people are going to watch a movie on this screen. [00:20:23 -> 00:20:25] And all of a sudden you see this phone.

[00:20:25 -> 00:20:27] It's like, OK, I get it. [00:20:28 -> 00:20:29] Yeah. Yeah. [00:20:29 -> 00:20:32] So, OK, thank you for playing my decade game.

[00:20:32 -> 00:20:33] That was interesting. Yeah. [00:20:33 -> 00:20:37] And again, I didn't mean to make it such a, you know, bad memory. [00:20:37 -> 00:20:41] Well, you brought up the 87 crash and you brought up the 2008 recession.

[00:20:41 -> 00:20:42] OK, what are you going to do? [00:20:42 -> 00:20:51] I mean, there's not those are memorable, but there's I mean, is there specific days in the financial market to two guys in the, you know, private equity and venture business? [00:20:51 -> 00:20:52] Yeah, we're going to be impacted. [00:20:52 -> 00:20:53] Are there days that are like.

[00:20:53 -> 00:20:58] Really specific around the highs of the markets. [00:20:58 -> 00:21:01] There's not really high days that are memorable, right? [00:21:01 -> 00:21:01] Yeah, there are. [00:21:02 -> 00:21:02] Are there?

[00:21:02 -> 00:21:05] Yeah, I like ninety nine and two early 2000. [00:21:06 -> 00:21:10] I like the rock and twenty, twenty and twenty, twenty one as being on the selling side. [00:21:10 -> 00:21:13] I guess I guess we could have done twenty, twenty and twenty, twenty one. [00:21:13 -> 00:21:15] Those are some crazy times, too.

[00:21:15 -> 00:21:16] But yeah. Yeah. Yeah. [00:21:16 -> 00:21:18] OK.

Yeah. So much. [00:21:18 -> 00:21:20] Thank you for playing, Brian. That was awesome.

[00:21:20 -> 00:21:21] Good to get to know you a little bit better, too. [00:21:22 -> 00:21:23] But I. [00:21:23 -> 00:21:33] As I was saying before the icebreaker, I'm excited to go into where you were before you did all of the portfolio advisers, because that's obviously a huge mark on your career. [00:21:33 -> 00:21:53] But I think it's going to be really interesting for our audience and for everybody that's tuning into this podcast to understand how does someone get to a point in their career and build up the network or the ability and the experience and even the trust to be able to raise twenty two billion dollars in your portfolio?

[00:21:53 -> 00:21:53] But I think that you've been very well well prepared and that's what I think is what I like about this. [00:21:53 -> 00:21:55] Different funds, right? [00:21:55 -> 00:22:00] Like that's not just something you wake up and pop off your bed and say, hey, I think I'm going to be a fund manager today, right? [00:22:00 -> 00:22:03] It's a huge momentum build.

[00:22:03 -> 00:22:05] It's a huge process that takes time and experience. [00:22:06 -> 00:22:10] And so I want to go as far back as you want to go. [00:22:10 -> 00:22:18] And you said it born in Utah, but your dad moved to the East Coast, raised in New Jersey, and your dad was one of the inventors of. [00:22:18 -> 00:22:23] Yes.

So when my dad was getting very old and he was going to pass away, I told him I'm a little worried about what it is I'm going to move to. [00:22:23 -> 00:22:28] worried about your eternal salvation yeah why i said because you're like personally responsible [00:22:28 -> 00:22:33] for filling the world's land plants and i'm pretty sure god's an environmentalist and he's like i [00:22:33 -> 00:22:39] think if he lets the women vote i'm in so do you want to know our first similarity as i got to know [00:22:39 -> 00:22:43] your background better than i ever have is my father worked for johnson johnson really yeah [00:22:43 -> 00:22:48] yeah yeah he was many years at johnson johnson matter of fact i was born in bristol pennsylvania [00:22:48 -> 00:22:54] just outside philadelphia even though i'm a total seattle boy because the five months he got [00:22:54 -> 00:23:00] reassigned by johnson johnson out to the east coast that's when i was born wow so that's crazy [00:23:00 -> 00:23:05] yeah so growing up in new jersey my dad was very entrepreneurial he had patents and and you know he [00:23:05 -> 00:23:10] he always had lots of ideas so he was like an inventor type yeah kind of and and he worked in [00:23:10 -> 00:23:14] the new consulting business for johnson and johnson so they're always out solving their [00:23:14 -> 00:23:18] problems and other companies problems and so whenever i said i'm gonna go get a job i want [00:23:18 -> 00:23:18] to make a living i'm gonna make a living i'm gonna make a living i'm gonna make a living [00:23:18 -> 00:23:22] some money he'd say why don't you start a business yeah so you know i did the paper [00:23:22 -> 00:23:26] routes and i expanded it and i you know i hired kids to help me deliver them and then i did a [00:23:26 -> 00:23:31] landscaping company expand i started a painting company and you know painted my way through [00:23:31 -> 00:23:36] college you know i used to bank a thousand bucks a week back in you know early 80s and that was a [00:23:36 -> 00:23:41] lot yeah and so so you know there's always something kind of entrepreneurial that was [00:23:41 -> 00:23:46] kind of there so in the back of my mind i knew at some point i'd like to have my own business but [00:23:46 -> 00:23:48] i was intrigued by investment banks [00:23:48 -> 00:23:54] banking by asset management even management consulting and so when i went to byu i studied [00:23:54 -> 00:24:00] business and i wanted to be prepared for all of that stuff i had seen successful people from being [00:24:00 -> 00:24:05] in the new york metro area in those careers so i kind of had a little bit of that vision of what [00:24:05 -> 00:24:09] that could be like did you have a little thought of medical dental though well you know because [00:24:09 -> 00:24:13] because i thought i read that and what's interesting is i was accepted medical school [00:24:13 -> 00:24:18] and turned it down well it's interesting you say that because because you know the question is [00:24:18 -> 00:24:23] well how do you get one of those jobs that's not in the family that's not in your blood yeah a sure [00:24:23 -> 00:24:28] thing would be to be you know an orthodontist surgeon yeah i could i could do that so when i [00:24:28 -> 00:24:33] got to byu even though i always had business interests i went ahead and took pre-med pre-dent [00:24:33 -> 00:24:37] and i was going to be a surgeon and and everyone was like why you want to do that and i said because [00:24:37 -> 00:24:41] i used to go to one and he drove a mercedes and a big house and he had a really great life and it's [00:24:41 -> 00:24:48] like look good way to go so you did microbiology you refer that bit do you know i did that too i i i [00:24:48 -> 00:24:53] switched to chemistry though to because i said there's not a lot of options if you stick with [00:24:53 -> 00:24:59] my challenge yeah well i went on my mission and people quickly said are you out of your mind i [00:24:59 -> 00:25:05] mean you you have a personality to be a businessman don't be a dentist yeah and so i changed when i [00:25:05 -> 00:25:10] got back um that was fascinating i teach a class at byu i teach one of their uh private equity [00:25:10 -> 00:25:16] classes yeah once a semester i'm not the teacher and i used to tell all the students look you know [00:25:16 -> 00:25:18] when i was you and i was a senior i had a lot of questions and i had a lot of questions and i had a [00:25:18 -> 00:25:24] really key weaknesses one i was pretty shy and i had no interest in sales and i thought i'd be a [00:25:24 -> 00:25:31] horrible salesman second i couldn't get on an airplane without throwing up i would just get [00:25:31 -> 00:25:36] tremendously airsick and i went and took the career assessment up at the thing and they [00:25:36 -> 00:25:42] gave me my results and it suggested i become a mortician like man i have no interest in being [00:25:42 -> 00:25:47] a mortician and so i thought okay if i'm going to do these business careers that i want they [00:25:48 -> 00:25:53] are tremendous amount of travel they all require a tremendous amount of presentations i got to just [00:25:53 -> 00:25:57] change and so i kind of ground it out to figure out how do i become a master salesman how do i [00:25:58 -> 00:26:03] fly around the world and not throw up on everyone around me and i didn't meet or drink or talk to [00:26:03 -> 00:26:07] anyone for the first two years of my career on an airplane because i would get sick wow and so i [00:26:07 -> 00:26:12] would ride backwards on the train to help get over it i would sit in the back of the car and try to [00:26:12 -> 00:26:16] read a book while my wife was driving to try to get over it and it took a lot of effort but i've [00:26:18 -> 00:26:23] flown around the world 260 times been to 103 countries i think john's probably been to more [00:26:23 -> 00:26:28] countries than me but me but you've done over like six million plus miles or something like that [00:26:28 -> 00:26:33] probably like you're a 10 million miler or something no six million okay really but you [00:26:33 -> 00:26:38] know how much that is people that's a lot the airlines treat you very well yeah the other night [00:26:38 -> 00:26:42] i landed and i was getting out of the plane i was tired in salt lake and ladies that got a little [00:26:42 -> 00:26:46] card with my name on it and i said this is i'm going home this is my home airport i'm not doing [00:26:48 -> 00:26:49] anything i'm going home i'm going home i'm going home i'm going home i'm going home i'm going home [00:26:49 -> 00:26:55] put me in a porsche cayenne and drove me to my car in the parking lot are you serious i thought [00:26:55 -> 00:27:03] all right that's cool that's a nice little spiff i gotta get myself to six million miles here [00:27:03 -> 00:27:13] um so basically you grew up in connecticut you got into school you held your job when the financial [00:27:13 -> 00:27:18] crisis of 1987 went through that job was for where [00:27:18 -> 00:27:23] is that where you first got your first job the place i did my internship was a company called [00:27:23 -> 00:27:27] chemical bank they were the fourth largest bank in the city and that was that so you went undergraduate [00:27:27 -> 00:27:32] byu is what major yeah what business okay you did switch to business for microbiology [00:27:32 -> 00:27:38] and then you went to columbia for an mba yep and as you had always taken emphases in international [00:27:38 -> 00:27:43] business and in accounting just to make sure i had but your goal was investment banker and you [00:27:43 -> 00:27:48] got an mba at columbia okay got it and i did my internship at chemical they offered me a full-time [00:27:48 -> 00:27:52] job so i've only interviewed technically for one job my whole career yeah that's chemical bank is [00:27:52 -> 00:27:56] the name of that i've heard of they ended up merging with manufacturers hanover which then [00:27:56 -> 00:28:03] merged with um with j chase bank and then they merged with jp morgan so they're like 300 banks [00:28:03 -> 00:28:09] that all merged together over the years to create jp morgan so yeah my friends are now retiring from [00:28:09 -> 00:28:15] jp morgan yeah so it was great so so i i won a really cool assignment so one of the interesting [00:28:15 -> 00:28:18] things was we do a rotational program to kind of see all these different [00:28:18 -> 00:28:23] areas of the bank and my last rotation was in a restructuring and reorganization advisory group [00:28:23 -> 00:28:29] and they were basically providing advice to creditor committees for broken lbo's but kind [00:28:29 -> 00:28:34] of was my introduction to private equity and what happens when it doesn't work yeah and and i loved [00:28:34 -> 00:28:40] my boss who was a great team he was the number one revenue producer uh at the bank he'd come [00:28:40 -> 00:28:45] you know very highly regarded guy from wall street and everything's perfect i got the best [00:28:45 -> 00:28:48] job we're you know we were just killing it you know this is a group that we had maybe [00:28:48 -> 00:28:54] 15 contracts were paid 150 000 a month for this advice no capital was needed to be invested there [00:28:54 -> 00:28:59] were success bonuses and you know there are only ten of us so it was a very profitable group and [00:28:59 -> 00:29:05] one day announced hey uh great news i'm going to blackstone so what they say yeah this little [00:29:05 -> 00:29:09] merchant bank just started up they offered me to be their fifth the beginning of blackstone so he [00:29:09 -> 00:29:13] was one of the original guys getting into blackstone they decided they wanted to do a [00:29:13 -> 00:29:18] distress group so i'm taking all you with me i'm like great you know blackstone we're not going to [00:29:18 -> 00:29:23] wasn't what it was today.

So it was a little startup. And so he comes back a week later, [00:29:23 -> 00:29:28] he goes, bad news. The bank said, if I take the whole team, then we're going to have a litigation [00:29:28 -> 00:29:34] and they're a lender to Blackstone. So I told him I would take half the people.

And he said, [00:29:34 -> 00:29:38] so I'm taking all the MDs, all the SVPs, all the VPs, I'm leaving all the associates and [00:29:38 -> 00:29:43] the analysts behind. Don't think that's exactly what Blackstone expected. And there were 30 day [00:29:43 -> 00:29:48] termination agreements in all these contracts. And within 30 days, every client moved to [00:29:48 -> 00:29:52] Blackstone.

And so all of a sudden I find myself as the senior most person on the team, [00:29:52 -> 00:30:00] as a senior, as a senior associate at the bank, and we had zero revenue and we were a cost center. [00:30:00 -> 00:30:05] And you thought, this is not safe from a jobs perspective. So we had 30 days to find a new gig. [00:30:05 -> 00:30:07] And in that 30- [00:30:07 -> 00:30:09] What year was that?

Was that in the middle of the recession? [00:30:09 -> 00:30:12] So that would have been in 1989. [00:30:14 -> 00:30:15] Oh, okay. [00:30:15 -> 00:30:17] And so I hadn't been there long.

[00:30:18 -> 00:30:23] And so it was one of those things where during that month, there was a really interesting [00:30:24 -> 00:30:29] distressed turnaround of a private equity portfolio assignment that came up. And I'm 29 [00:30:29 -> 00:30:33] years old. It's like, I have to go pitch the governor of the state of Kansas. I'm like, [00:30:33 -> 00:30:37] that's not going to work.

So I went and grabbed an MD that I had worked on an M&A deal with. [00:30:37 -> 00:30:40] And I said, how would you like to be on my team and help me pitch the governor? So I have some [00:30:40 -> 00:30:46] gray hair. He goes, yeah, let's do it.

And we won. And so we took over a $395 million broken [00:30:46 -> 00:30:47] private equity portfolio. [00:30:48 -> 00:30:55] I had investments in about 69 companies, mostly in Kansas and that surrounding area. And so I told [00:30:55 -> 00:31:00] them the deal was, you be the cover, I'm going to be the portfolio manager.

And so I just, for [00:31:00 -> 00:31:06] years, I was drinking through a fire hose. We had chapter sevens and chapter 11s. We did IPOs and we [00:31:06 -> 00:31:11] had to do restructurings and mergers. And we just had to work this portfolio out.

And it was a [00:31:11 -> 00:31:18] wonderful learning experience. And that client became so key to my career. One, it saved me at [00:31:18 -> 00:31:23] the bank. But second, when the bank was going through all these mergers, there was a little bit [00:31:23 -> 00:31:28] of a power struggle.

And some of the managing directors wanted my deal because it was pretty [00:31:28 -> 00:31:34] sexy. I had no managing director to defend me. And I had no managing director to negotiate my [00:31:34 -> 00:31:38] bonus. So we watched the pay kind of fall off a cliff and watch everybody trying to steal it.

[00:31:38 -> 00:31:42] And I thought me and all of the other people working on this deal are all going to lose our [00:31:42 -> 00:31:48] jobs. So I called the runner up from the beauty contest and said, are you still interested in [00:31:48 -> 00:31:52] this deal? And I said, absolutely. I said, if I could bring the deal and my team, can we start a [00:31:52 -> 00:31:59] new investment management firm and I can run it?

And they said, yeah. And so that client voted to [00:32:00 -> 00:32:05] move this big contract from one of these huge banks over to a startup run by a 30-year-old. [00:32:06 -> 00:32:08] And that was a really big deal. [00:32:09 -> 00:32:14] What do you attribute that deal to in that first meeting and getting that kind of size of client?

[00:32:15 -> 00:32:18] And how did you win the deal? [00:32:18 -> 00:32:21] It really helped that we were with such a big bank. [00:32:21 -> 00:32:21] Yeah. [00:32:21 -> 00:32:24] I mean, I'll give you an example.

There was a crazy thing that happened [00:32:25 -> 00:32:28] because there was a huge write-down in the portfolio. And that's why we got hired. [00:32:29 -> 00:32:34] There were all of these depositions. All these people wanted to ride this problem into office.

[00:32:34 -> 00:32:40] And so they had a guy who was in charge. He was the general counsel for the state. He wanted to [00:32:40 -> 00:32:46] be the governor. And so he put out tons of subpoenas and he wanted to have all these [00:32:46 -> 00:32:48] legislative hearings.

And so they got all these legislative hearings. And so they got all these [00:32:48 -> 00:32:52] legislators involved. And in one of the meetings, one of the legislators finally said, [00:32:52 -> 00:32:57] hey, I have a solution to this problem. We've got $200 million of write-offs.

This is silly. [00:32:58 -> 00:33:02] Let's make all of our asset managers have insurance to cover any losses ever in their [00:33:02 -> 00:33:07] portfolio. And that way, we make all the upside, but we have no downside. We always have our [00:33:07 -> 00:33:12] money back.

And I'm thinking, that's a bad idea. And so I get back to New York and the guy asked [00:33:12 -> 00:33:17] me, the executive director calls me and says, so hey, do you have this insurance? And I called our [00:33:17 -> 00:33:18] insurance group and they said, no, we don't have it. And I said, well, we don't have it.

And they [00:33:18 -> 00:33:22] said, we're one of four institutions in all of New York that actually has this insurance. It's [00:33:22 -> 00:33:27] really hard to get, super expensive. And I said, well, what would it cost if we had to cover a [00:33:27 -> 00:33:33] $195 million portfolio? And they came back and said, $23 million would be the annual insurance [00:33:33 -> 00:33:39] cost.

So I told the client, I said, you currently pay me two. We're going to have to add the cost [00:33:39 -> 00:33:43] of the insurance. And so this is what's going to cost you to keep our services. And he just starts [00:33:43 -> 00:33:46] to laugh.

And he said, well, first of all, I called 17 managers and you're the only one that [00:33:46 -> 00:33:47] has this insurance. [00:33:48 -> 00:33:53] He said, so they went to their next legislative session and they rescinded the law. But they did [00:33:53 -> 00:33:57] no homework on it. They didn't think anything about it.

I thought, is this how laws are made [00:33:57 -> 00:34:06] in America? Apparently it is. It was kind of nuts. And so that client was capable and they [00:34:06 -> 00:34:13] had a big problem.

And so when five years later, I said, I picked the wrong partners. In my haste [00:34:13 -> 00:34:17] to leave the bank and to protect myself, I went to the wrong firm. They just weren't interested [00:34:17 -> 00:34:21] in building a business. They were really a turnaround consulting firm.

I'm going to find [00:34:21 -> 00:34:26] better partners. And so I found another partner and I went back to them. I said, I know I'm asking [00:34:26 -> 00:34:33] a lot, but would you switch the contract again and move it to portfolio advisors? And I'll be the [00:34:33 -> 00:34:39] lead on your account.

We've now worked together for seven years. And they did that. And they also [00:34:39 -> 00:34:43] gave us a billion dollars of fresh capital to invest because we had done such a good job. [00:34:43 -> 00:34:47] We turned their portfolio from a minus 15 percent compounded return to a positive, [00:34:47 -> 00:34:52] 15 percent compounded return.

And they just trusted the people. They didn't care about [00:34:52 -> 00:34:56] the institution as much. Yeah. It was you and the group of people leading out the whole deal from [00:34:56 -> 00:35:01] day one.

We worked really closely with them. We just made sure we were fully transparent. They [00:35:01 -> 00:35:05] could see the good that we were doing and they stepped up. It was a big deal.

[00:35:05 -> 00:35:07] Yeah. That was a pivotal moment. [00:35:07 -> 00:35:11] It was. I mean, to get a billion dollars of fresh capital, what's allows you to build the [00:35:11 -> 00:35:14] track record so you can then start to get other really big clients.

[00:35:14 -> 00:35:17] Yeah. So was that kind of, that was the seed deal that really [00:35:17 -> 00:35:21] gave birth to Portfolio Advisors? Yeah. So I brought a deal when I started [00:35:21 -> 00:35:25] Portfolio Advisors.

My partner brought General Reinsurance. So one of the great things was [00:35:25 -> 00:35:29] we managed General Reinsurance portfolio, but then they got acquired by a fairly little [00:35:29 -> 00:35:33] known guy named Warren Buffett. And Warren said, well, I don't want to have you invest [00:35:33 -> 00:35:38] in private stuff. I'm kind of the investor.

So manage out this portfolio. But we're going [00:35:38 -> 00:35:43] to keep you around because you're doing a great job. We like our returns. So for a decade [00:35:43 -> 00:35:47] and a half, we got to tell people that we work for Warren Buffett.

And out of all the [00:35:47 -> 00:35:51] assets of this insurance company, we were the only asset he kept. He sold everything [00:35:51 -> 00:35:55] else so he could manage it in house. And so that was, that was a nice play to him. [00:35:55 -> 00:36:01] Wow.

Wow. So, okay. So Portfolio Advisors, we kind of, did we skip anything there that, [00:36:01 -> 00:36:05] that, cause you kind of brushed over like from going from chemical bank all the way up to [00:36:05 -> 00:36:09] Portfolio Advisors, but. Well, the, the, the, the interim business, you know, was small.

There [00:36:09 -> 00:36:15] were only seven of us. Yeah. It only had one contract. That was the state of Kansas.

And we [00:36:15 -> 00:36:17] were just grinding, restructuring that portfolio. And we were just, we were just, we were just [00:36:17 -> 00:36:22] and so we didn't need to put any capital in. So we had zero capital invested in our business [00:36:22 -> 00:36:30] because the day we started it, we had a contract that paid us $125,000 a month or something like [00:36:30 -> 00:36:35] that. And so it was, it was a great way to start.

It was a great way to learn. And it kind of [00:36:35 -> 00:36:40] locked in my desire to be in the asset management space. Was that your first like deep actual [00:36:40 -> 00:36:47] contracted deal that you landed? Like that, that, that state of Kansas deal.

That was the first [00:36:47 -> 00:36:50] one that knocked out the door. Yeah. How did, that's what I'm saying. I just think that's pretty [00:36:50 -> 00:36:55] shocking.

Shocking. Isn't it that you, was it you? And then you asked another guy to come out. That [00:36:55 -> 00:36:59] was a little bit more seasoned.

He didn't come with us when we, when we started the firm. He [00:36:59 -> 00:37:03] didn't go with us, win the business. We did it for a year and then they transferred the contract. [00:37:04 -> 00:37:08] Oh, wow.

Yeah. There's just a lot of trust there, right? That was like between you and [00:37:08 -> 00:37:13] people. You don't have to be old to be capable.

Sometimes we, we assume that young people can't [00:37:13 -> 00:37:17] do anything, but you know, we got a lot done. We had a bunch of 28 to 32. [00:37:17 -> 00:37:23] And we, we made it happen. Yeah.

And you were hungry. Yeah. Ambitious. Can you, for our viewers [00:37:23 -> 00:37:27] and listeners, maybe explain kind of a typical prototypical deal in the, like the first five [00:37:27 -> 00:37:32] years of portfolio advisors, what's like a typical deal you did, but like just prototypical, [00:37:33 -> 00:37:37] you don't have to give details or names if you don't want to, but just like an example of what [00:37:37 -> 00:37:44] you actually do.

So in the beginning, we were an advisor with the aspirations to become a fund [00:37:44 -> 00:37:47] manager. But as in the beginning, as an advisor, [00:37:47 -> 00:37:53] we hired like Jenry had a contract with us and state of Kansas did. And our goal was to build a [00:37:53 -> 00:37:59] world-class global alternative investment portfolio, private equity, private real estate, [00:37:59 -> 00:38:02] private credit, and even have private credit back then it was all wrapped into private equity.

[00:38:03 -> 00:38:08] And so our job was to scour the world, identify who the very best managers were, [00:38:08 -> 00:38:14] get access to those managers for our client, and then build this portfolio. And so if you put it [00:38:14 -> 00:38:17] in a fund structure, it would be called a fund of funds. Yeah. If it's in a separate account, [00:38:17 -> 00:38:22] then it was just a portfolio.

And so we had built a really nice portfolio for Jenry [00:38:22 -> 00:38:28] and it included real estate and private equity and venture capital and Kansas wanted the same [00:38:28 -> 00:38:34] thing. And so it was basically 60% buyout and 20%, what we call special situations, [00:38:35 -> 00:38:40] private credit and 20% venture. So I was going to Silicon Valley all the time looking for [00:38:40 -> 00:38:46] access to, okay, how do I get into Accel? How do I get into battery?

How do I get into these [00:38:46 -> 00:38:47] really big top brands? And so we built a really nice portfolio for Jenry and it included real [00:38:47 -> 00:38:51] estate. And so it was a lot of fun. There was a lot of networking, but it was a lot of travel.

[00:38:51 -> 00:38:55] As you started investing in these things, then you're invited to annual meetings because we [00:38:55 -> 00:38:59] could write decent sized checks. Many times we were invited to be on the advisory boards. And [00:38:59 -> 00:39:03] so those are a couple of times a year back then they didn't have Zoom. And so you pretty much went [00:39:03 -> 00:39:09] live to all of those meetings.

I've probably been to San Francisco 250 times in my career [00:39:09 -> 00:39:13] just to kind of cover those kinds of things. So you were helping people with significant [00:39:13 -> 00:39:16] assets or companies, entities, organizations. [00:39:17 -> 00:39:21] Yeah. And so we were able to build a portfolio that got superior returns.

[00:39:21 -> 00:39:27] Right. And when you're a younger firm, people don't want to delegate full discretion. So most [00:39:27 -> 00:39:31] of our contracts early on were what you call non-discretionary. So we would bring a full [00:39:31 -> 00:39:34] investment write-up and present it to their board or their- [00:39:34 -> 00:39:35] You just say, this is what we're recommending.

[00:39:36 -> 00:39:40] Right. This is a deal we really believe in. And this is why it fits the portfolio construct we've [00:39:40 -> 00:39:45] agreed to. And then do you agree or disagree?

And almost every time they would agree. Occasionally, [00:39:45 -> 00:39:47] they would say, well, let's do 15%. [00:39:47 -> 00:39:50] Let's do 15 instead of 20. Sometimes people want to add value.

[00:39:51 -> 00:39:55] So you were doing advisory, which means you were just telling them what to do and their [00:39:55 -> 00:39:56] own people deployed. [00:39:56 -> 00:40:01] So we would typically, for these clients, fill out all the legal documents. We would get it done [00:40:01 -> 00:40:05] and then we would oversee the whole thing. We just had to get their blessing to bring in their [00:40:05 -> 00:40:06] portfolio.

[00:40:06 -> 00:40:08] Okay. But then you started creating funds. [00:40:08 -> 00:40:14] Right. So we were about five years old when we said, okay, so one of the interesting things is [00:40:14 -> 00:40:16] that you would get an RFP for a public pension plan.

[00:40:17 -> 00:40:20] RFP would say, if you haven't been in this business for five years, [00:40:21 -> 00:40:25] don't answer any of these questions. Don't submit. And so you kind of had to go through [00:40:25 -> 00:40:30] a five-year window where we had our early clients to build the track record so that we can actually [00:40:30 -> 00:40:35] hit that condition precedent. And so we went and said, all right, well, one of the problems in [00:40:35 -> 00:40:40] this asset class is nobody really knows how their portfolio is doing.

I mean, Excel and Lotus were [00:40:40 -> 00:40:45] pretty new tools at that time. And so we had one state pension plan we went and talked to, [00:40:45 -> 00:40:47] and they said, yeah, we have $3 billion invested in. [00:40:48 -> 00:40:51] What's your return? They said, we don't know.

I said, what do you mean you don't know? [00:40:51 -> 00:40:55] I said, it's too hard to keep track of. And they said, what we, I said, well, what do you report [00:40:55 -> 00:40:59] in your annual report? They said, we asked the general partner, what's your return?

We add them [00:40:59 -> 00:41:03] all up and divide by 57. And that's how many funds we have. And that's the return. I said, [00:41:04 -> 00:41:10] yeah, IRR math doesn't quite work.

What in the world? And so, so, you know, there was a huge [00:41:11 -> 00:41:16] systems deficit. And so we partnered with a secondary firm that we had worked with. And we [00:41:16 -> 00:41:17] said, look, you guys have been doing this for a long time.

And they said, well, you know, you've [00:41:17 -> 00:41:21] been custom building systems. Can we kick in financially and really get this thing cranked [00:41:21 -> 00:41:26] up? And then you'll use it and we'll use it. We'll each have licenses to it.

And so we started a [00:41:26 -> 00:41:31] private equity monitoring and reporting business. And we ended up getting huge names. I mean, [00:41:31 -> 00:41:37] Bell Atlantic, 9X, GTE, state. Subscribing to it.

Yeah. Saying, well, we would do all the [00:41:37 -> 00:41:42] loading for them. Oh, so it was a service. So here's all our software.

We're going to load it [00:41:42 -> 00:41:46] all in and you're going to get a really customized report. That's going to tell you everything. [00:41:47 -> 00:41:50] What's your return per fund? What's your return for buyout versus venture versus this?

What's [00:41:50 -> 00:41:54] your return per vintager so you could do benchmarking? What's your total relationship [00:41:54 -> 00:41:59] return for Blackstone? All these things and things that they had no idea. So it would help [00:41:59 -> 00:42:04] them as they were thinking what they wanted their thing to be.

We ended up getting, you know, like [00:42:04 -> 00:42:10] $25 billion of assets that we were administering through that. But the best part was it gave us [00:42:10 -> 00:42:15] great systems and it gave us these huge logos. So when we wanted to grow our advisory business, [00:42:15 -> 00:42:17] people say, oh, IBM's a client. Oh, IBM's a client.

Oh, IBM's a client. Oh, IBM's a client. [00:42:17 -> 00:42:21] I know this guy. I'm going to call him.

They're great. You should hire him kind of thing. And so [00:42:21 -> 00:42:28] we quickly picked up multiple really great advisory clients and that allowed us to continue the [00:42:28 -> 00:42:33] momentum and keep building the firm. Wow.

But that was all just because of the systems you [00:42:33 -> 00:42:38] have built and everybody wanted those same systems for reporting and analytics and understanding their [00:42:38 -> 00:42:42] investments. It was the right solution at the right time in the market because there was nothing [00:42:42 -> 00:42:47] like that out there. Yeah. What years were these where you were picking up clients like that left [00:42:47 -> 00:42:54] because of those systems?

90, 91. Yeah. That's early. That's really early.

Yeah. So and so just [00:42:54 -> 00:43:00] so I understand you were doing fund to fund. So you were having these pension funds, large [00:43:00 -> 00:43:05] organizations where all these say this is a good fund to go into. This is a good fund to go in [00:43:05 -> 00:43:10] because these money managers have a good track record and we recommend this.

Did you do direct [00:43:10 -> 00:43:16] investments to like. So when when kind of nirvana for us was wouldn't it be great if we can raise [00:43:16 -> 00:43:17] our own fund? [00:43:17 -> 00:43:23] Part of the reason was the fees were higher. Yes.

But second, these are 15 year non-cancellable [00:43:23 -> 00:43:29] contracts. Unless you commit fraud, you've locked in this long term management stream. Yeah. And so [00:43:29 -> 00:43:34] he said, that's where we need to get to because asset management for advisory was all over the [00:43:34 -> 00:43:39] map.

It was all. Was it like 0.25 to 1.5 percent?

I think our biggest client paid us eight basis [00:43:39 -> 00:43:45] points. Yeah. Oh, because we're deploying two to five billion a year for them. Yes.

We had some [00:43:47 -> 00:43:50] great companies that would pay us up to 100 basis. So you could do a fund on a normal two and 20 or [00:43:50 -> 00:43:55] something? No, not for a fund to funds. We can do a fund to funds that kind of 75 to 100 basis points.

[00:43:55 -> 00:44:01] No carry. No carry. OK. But so for us, it was like, OK, how do you march up the value chain?

[00:44:01 -> 00:44:05] How do we start doing co-investments? How do we invest directly in deals alongside our [00:44:05 -> 00:44:11] managers? How do we do late stage growth deals alongside our venture managers? How do we lend into [00:44:11 -> 00:44:17] these deals?

And so over time, we got into the secondary business. We got into the equity coinvestment business. We bought this [00:44:17 -> 00:44:21] the DLJ Investment Partners business from Credit Suisse. We started a senior lending business, [00:44:22 -> 00:44:27] and we just started to scale.

We opened our office in Europe, and so we were not only investing in [00:44:27 -> 00:44:32] Europe, but we were raising capital. We opened an office in Hong Kong and Singapore, and we were [00:44:32 -> 00:44:38] raising capital there and investing capital there. So by the time we sold, we had primaries, [00:44:38 -> 00:44:43] secondaries, co-investments, direct lending. We did new funds.

We did secondaries, used [00:44:43 -> 00:44:47] partnerships. We did direct lending, direct co-investing. And so that's one of the reasons [00:44:47 -> 00:44:52] why there were so many offerings, and it got up to 44. Is the measurement assets under management, [00:44:52 -> 00:44:59] is that kind of one we measured?

So like year one or day one, whatever, what did you start [00:44:59 -> 00:45:02] with your first client? That first pivotal client you told us about, you got a billion [00:45:02 -> 00:45:07] dollars assets under management. For January, we were investing about 80 to 100 million dollars a [00:45:07 -> 00:45:12] year. State of Kansas, when they gave us that new mandate, we were investing 200 million a year for [00:45:12 -> 00:45:13] them.

So that kind of got us- [00:45:13 -> 00:45:15] It got us to 350, 400 million dollars. [00:45:15 -> 00:45:18] And then this is about a 30-year career. Is that about right? [00:45:18 -> 00:45:18] Yeah.

[00:45:18 -> 00:45:21] Yeah. So 30 years later when you sell it, what was the AUM? [00:45:21 -> 00:45:27] So we had 44 billion of AUM. Half of it effectively was under funds under management, [00:45:27 -> 00:45:31] and half of it was the advisory stuff.

But when you launched your co-invest fund, [00:45:31 -> 00:45:34] you could charge one and 10. So now all of a sudden we start to get carried. [00:45:34 -> 00:45:37] When we launched our secondary business, we could charge one or one and a quarter [00:45:38 -> 00:45:43] and 10. When we bought the junior lending business, we got one and a half and 20.

[00:45:43 -> 00:45:47] And so we just kind of kept taking the track record, building the capacity, [00:45:47 -> 00:45:49] the capability, rolling out the offerings. [00:45:50 -> 00:45:56] And bigger and bigger funds, better and better fees. And ultimately, we raised a fund that was [00:45:56 -> 00:46:03] a 40-act fund. And it was a private equity 40-act fund that did 50% in secondaries and like 30% [00:46:03 -> 00:46:04] in co-investment.

[00:46:04 -> 00:46:05] What is a 40-act fund? [00:46:05 -> 00:46:06] So that's a mutual fund. [00:46:06 -> 00:46:06] Okay. [00:46:06 -> 00:46:12] And so we basically had a interval fund.

It was non-traded. And you would sell it through [00:46:12 -> 00:46:13] wire houses and broker-dealer. [00:46:13 -> 00:46:17] And things like that. Because our view was, there was a lot of growth opportunity on the [00:46:17 -> 00:46:22] retail side.

And that was really what got FSS attention. They really liked our institutional [00:46:22 -> 00:46:25] business, but that was their business. They were one of the largest fundraisers for the [00:46:25 -> 00:46:31] 40-acts. And so they said, man, we could really scale that fund.

And so we launched [00:46:31 -> 00:46:35] it with $300 million. By the time we merged, we had $600 million. We're approaching $2 billion [00:46:35 -> 00:46:41] now. And so it's a machine because it's organic, it's evergreen.

And as long as people aren't [00:46:41 -> 00:46:43] redeeming out aggressively, it just keeps growing. [00:46:43 -> 00:46:46] Are you totally out now, or do you still have a partnership interest? [00:46:49 -> 00:46:51] You don't have to answer if you don't want to. [00:46:51 -> 00:46:51] We can cut this.

[00:46:51 -> 00:46:57] We did a merger. It was pretty much stock for stock. There was a little teeny piece [00:46:57 -> 00:47:01] of cash, not much. But we really believed in the asset class.

We really believed in [00:47:01 -> 00:47:06] the growth trajectory and the combined firm. The combined firm now has almost $90 billion [00:47:06 -> 00:47:13] of assets. And it's a truly capable firm. I joined the board.

And so, but I think it's [00:47:13 -> 00:47:17] But I did tell my wife, I said, if I drop dead of a stroke, you need to put on the back [00:47:17 -> 00:47:20] of my tombstone. You can decorate the front however you want. But on the back, you need [00:47:20 -> 00:47:27] to put a quote unquote, I'm too rich to feel this poor. Because I own a lot of stock in [00:47:27 -> 00:47:33] a private company.

So we're waiting for the eventual IPO or sale, which will happen in [00:47:33 -> 00:47:34] the next three to five years. [00:47:34 -> 00:47:39] Wow. What a great career. How do you value firms like that?

Like when FS came to you [00:47:39 -> 00:47:43] and said, oh, you know, we want to wrap this up and merge and bring this together. Like, [00:47:43 -> 00:47:46] what's this, what's the valuation or multiple on it? [00:47:46 -> 00:47:50] There were some comps that were publicly traded in the marketplace. And in that timeframe, [00:47:50 -> 00:47:56] people were typically selling for 18 to 20 times EBITDA because it's really stable EBITDA.

[00:47:56 -> 00:48:00] It's all contractual. It doesn't fluctuate. But ours really didn't matter because we were [00:48:00 -> 00:48:04] doing stock for stock. So all we did was say, okay, well, if your EBITDA is five times [00:48:04 -> 00:48:07] more than us, then you'll own five times more of the company when we merge.

[00:48:07 -> 00:48:13] Right. Yeah. So I want to get to some personal side a little bit and where you've come into [00:48:13 -> 00:48:16] this, some things you can teach us, but I do want to ask, did you ever do real estate [00:48:16 -> 00:48:18] or like REITs or anything? [00:48:18 -> 00:48:22] We did a couple billion dollars of real estate.

Yeah. So we did real estate, primary [00:48:22 -> 00:48:26] funds, new funds. So we were a big investor in Blackstone and some of those famous guys, [00:48:26 -> 00:48:29] but we also did secondaries and we did co-investments in real estate. [00:48:30 -> 00:48:33] So until we, and before we get to the personal stuff for that, I'd love to dig into just [00:48:33 -> 00:48:39] a little bit, be fun.

You know, just family beliefs and where you, you know, good advice [00:48:39 -> 00:48:42] you have for viewers and listeners. What about economic right now? What's your feeling on [00:48:42 -> 00:48:43] where the economy is? [00:48:43 -> 00:48:49] Is that right now?

Where do you feel like, like if you were a young person and what should [00:48:49 -> 00:48:52] they get into, if you were somebody in the middle of their career and they had a million [00:48:52 -> 00:48:58] or two in their 401k or, you know, that kind of, where do you think things are headed? [00:48:58 -> 00:49:04] Where? Cause I mean, you obviously had to be on top of where the macroeconomic situations [00:49:05 -> 00:49:09] were and the industry and sectors you probably tracked a lot.

[00:49:09 -> 00:49:12] I'm you probably, since you've been retired for a year or two, you probably haven't tracked [00:49:12 -> 00:49:13] it quite. [00:49:13 -> 00:49:17] As much, but you're probably astute beyond anything we could share. We'd love to tap [00:49:17 -> 00:49:22] into that. Just give a little diatribe on where you see the macro right now and where [00:49:22 -> 00:49:23] things are headed.

[00:49:23 -> 00:49:29] So one of the things I've learned throughout my career was that, that finding the right [00:49:29 -> 00:49:35] talent in the right space with the right product is what drives most of returns. Like you said, [00:49:35 -> 00:49:38] you can have great companies come out of a deep recession. You can have great companies [00:49:38 -> 00:49:43] that are founded and do well at the peak of the market, but there's a lot of noise in [00:49:43 -> 00:49:47] between.

And so one of the great things I loved about my business was that I had exposure [00:49:47 -> 00:49:53] to some of the world's best companies, but I had 20,000 companies in my portfolio across [00:49:53 -> 00:49:56] all of those different funds. Cause if you buy a used partnership and might have 20 or [00:49:56 -> 00:50:02] 30 companies in it, in my secondary fund, we will buy a hundred partnerships. So, so [00:50:02 -> 00:50:05] it was kind of like you were buying a top quartile index.

[00:50:05 -> 00:50:11] So how will the asset class be affected by global changes? How will it ultimately perform. [00:50:11 -> 00:50:20] form, but the top kind of always generated kind of a 10 to 20. And so for me, I had the stability [00:50:20 -> 00:50:26] of massive diversification on a global basis and by industry and the stuff.

So I didn't have to be [00:50:26 -> 00:50:31] quite so micro. I usually get in trouble when I jump in because I said, this is exactly what's [00:50:31 -> 00:50:35] going to happen because the market tends to be irrational longer than you have the ability to [00:50:35 -> 00:50:40] hold on. So like when COVID happened, I was talking to my buyout managers and they were [00:50:40 -> 00:50:45] just telling me of all this horrible stuff that was happening to their companies. So I went ahead [00:50:45 -> 00:50:49] and did a triple short of the S&P.

And I thought, I'm going to make a million dollars easy on this [00:50:49 -> 00:50:54] one. And then they did all the stimulus and I lost a million dollars. And so it was like, okay, [00:50:54 -> 00:50:58] I was exactly right on what was going to happen to the companies, but I didn't know all of the [00:50:58 -> 00:51:03] factors. That's the government would print a lot of money and do this, right?

And so, you know, [00:51:03 -> 00:51:10] my wife's like, I have a million dollars, a lot of money even now. So, so, so for me, [00:51:10 -> 00:51:15] I, you know, the market feels frothy. I have a, I probably have 50 AI investments. [00:51:16 -> 00:51:20] I don't know how many of them are going to ultimately become 10 or 50 X and get liquid [00:51:20 -> 00:51:24] because, you know, in the 89, 90 timeframe, I went to a client and I said, look, you have a young [00:51:24 -> 00:51:31] portfolio.

Your IRR is 200% compounded. Venture market's been straight up. I just can tell you [00:51:31 -> 00:51:36] while I told you that your return went down because time changes returns, it drops. And, [00:51:36 -> 00:51:40] you know, a year later I got to go and tell them, well, your portfolio is now marked at 0.

5. And [00:51:40 -> 00:51:46] from 4X to 0.5 in a year because the market crashed. And so, so for me, it's like, okay, [00:51:46 -> 00:51:49] save, have discipline, invest in the right assets.

[00:51:50 -> 00:51:54] So basic principles will always be true. And there's cycles. [00:51:55 -> 00:51:58] There are always cycles. Now you do get lucky every once in a while.

I did have a friend [00:51:58 -> 00:52:03] convinced me to be a seed investor in figure AI. And so I put money in by the end of this year, [00:52:03 -> 00:52:09] I'll be at 238, 238 X in four years, right? That's, you know, you can't plan those things. [00:52:09 -> 00:52:09] Yeah.

[00:52:10 -> 00:52:10] I'm sure. [00:52:10 -> 00:52:13] And I'm happy with the outcome. Now let's just get it public or get it liquid. [00:52:13 -> 00:52:21] So, so it's one of those things where I'm a believer in mutual funds.

So most of my family, [00:52:21 -> 00:52:25] it's like, look, invest in something that'll generate 10% return with not a tremendous amount [00:52:25 -> 00:52:31] of risk. And so I built products for them that have, don't have equity risk and make about 10% [00:52:31 -> 00:52:35] a year. And it's like clockwork. And so it's like, Hey, money doubles every seven years.

So, [00:52:35 -> 00:52:42] so if you're playing in the market, it's so easy to get sucked in and think everything's going up. [00:52:42 -> 00:52:43] And that's usually when you have a bad outcome. [00:52:44 -> 00:52:48] I feel the need to, I always like to stop and educate our viewers and listeners a little bit [00:52:48 -> 00:52:54] on some things that might be that they might not be exposed to. So this concept of secondaries, [00:52:54 -> 00:52:58] I just want to make sure people understand this.

So basically what you're saying is [00:52:58 -> 00:53:03] if there was an existing venture fund, private equity fund, hedge fund, whatever fund it was, [00:53:03 -> 00:53:10] you might buy that from that partnership because it's distressed or struggling or something. [00:53:11 -> 00:53:12] Or they just need money. [00:53:12 -> 00:53:14] Or they, they need liquidity. I was about to say.

[00:53:14 -> 00:53:17] I'll give you a great example. A very prestigious [00:53:18 -> 00:53:24] university in the Northeast called me and said, Hey, we are dying in this global financial crisis. [00:53:24 -> 00:53:30] We live on our income from our endowment. We have no income.

We're losing money like crazy. So we [00:53:30 -> 00:53:33] don't, we don't, we have to sell assets to pay our professors. [00:53:33 -> 00:53:33] Mm-hmm . [00:53:33 -> 00:53:36] But we have to, we shut down every one of our construction projects.

[00:53:37 -> 00:53:42] At the board meeting today, they chewed me out because I'm making capital calls. And I keep [00:53:42 -> 00:53:45] telling them those are legal obligations. I have to fund within 10 days. Otherwise, [00:53:46 -> 00:53:49] they're going to take half of my money.

And, and they said. [00:53:49 -> 00:53:50] That's called confiscation, right? [00:53:50 -> 00:53:54] Right. Or they can charge 18% interest, whatever they want.

It's all in the contract. And they [00:53:54 -> 00:54:01] said, would you be willing to buy our $40 million, uh, portfolio? And I said, well, [00:54:01 -> 00:54:03] what's in it? And they texted it to me, or I guess the back of the, [00:54:03 -> 00:54:05] they probably emailed it to me.

And I looked at it and said, yeah, [00:54:05 -> 00:54:07] we're in all of these funds. So it would be easy for us to put a bid together. [00:54:08 -> 00:54:09] You do that at a discount. [00:54:09 -> 00:54:13] Yeah.

Well, he goes, he says to me, he said, would you pay me 20 cents on the dollar? [00:54:13 -> 00:54:15] You got an 80% discount. [00:54:15 -> 00:54:17] Got an 80% discount. And I said, would that help you?

He goes, [00:54:17 -> 00:54:23] if you can sign a contract in two days, I will sell for 20 cents on the dollar. And [00:54:23 -> 00:54:28] this portfolio was 80, 90% funded. So it was mostly buying existing assets. Great partnerships, [00:54:28 -> 00:54:33] by the way.

So we did our analysis. We said, you know, we can make 20% return. If we pay, [00:54:33 -> 00:54:38] 60. So my wife said, so you called him up and offered him 60.

I said, no, I agreed to his 20. [00:54:38 -> 00:54:44] And we bought it for 20. That's not nice. I said, honey, I solved his problem.

And my clients are [00:54:44 -> 00:54:51] happy. It's a win-win. Yeah. So, so, so in other words there, and I saw that a lot after each of [00:54:51 -> 00:54:57] the cycles I've been through is where there's people that go buy the secondaries and do really [00:54:57 -> 00:55:00] well, you know, you, but you have to know what you're doing.

You have to be able to assess [00:55:00 -> 00:55:03] the portfolio. You have to be able to analyze the value of the underlying asset. [00:55:03 -> 00:55:03] Yeah. [00:55:03 -> 00:55:07] You know, we have about a $10 billion secondary program.

I think our compounded return over time [00:55:07 -> 00:55:09] is 17 or 18%. [00:55:09 -> 00:55:12] And just for our viewers and listeners who are a lot of early stage entrepreneurs, [00:55:13 -> 00:55:16] secondaries is in the early stage venture world. I mean, a startup starts up, [00:55:17 -> 00:55:20] investors put money into it. The company takes longer than it's thought.

[00:55:22 -> 00:55:27] People, other people like what's happening in that company and these people need liquidity. So I own [00:55:27 -> 00:55:31] a million dollars in paper on a company, but somebody might pay me half a million dollars [00:55:31 -> 00:55:33] of cash today for that million. [00:55:33 -> 00:55:35] And I'm like, well, I'm not going to pay you half a million dollars of value in paper money right [00:55:35 -> 00:55:37] now because they like the company. That's a secondary.

[00:55:37 -> 00:55:38] Right. [00:55:38 -> 00:55:40] So you do that at a bigger fund level. [00:55:40 -> 00:55:44] Partnership level. So the whole partnership, or you could do it on the individual security.

[00:55:44 -> 00:55:50] That's a newer phenomenon, but yeah, this figure AI company, they just closed at a $39 billion [00:55:50 -> 00:55:55] valuation. And all these people all of a sudden are worth 10, 20, $30 million. They were happy to [00:55:55 -> 00:56:00] sell for 25 to 50% discount part of their holdings because it was magic and they got to buy a new [00:56:00 -> 00:56:00] house. [00:56:01 -> 00:56:01] Right.

[00:56:01 -> 00:56:03] One of the most successful angel investors in the history of Utah. [00:56:03 -> 00:56:03] Yeah. [00:56:03 -> 00:56:09] And you know who you would know who it is. His career has been built on.

He gets in on a company, [00:56:09 -> 00:56:14] gets preferred stock, gets first right refusal on set, you know, so an existing shareholder goes [00:56:14 -> 00:56:15] to sell their stock. [00:56:15 -> 00:56:15] He buys them up. [00:56:15 -> 00:56:21] He buys them up and he's getting good price in a long way. And that's a great way to invest if [00:56:21 -> 00:56:23] the company turns out great.

[00:56:23 -> 00:56:28] I do want to point out and, you know, bring some attention, Brian, your whole career, [00:56:28 -> 00:56:33] it seems like you've kind of been in a spot to be able to see. [00:56:34 -> 00:56:35] I mean, you've been in a spot to be able to see, you know, you've been in a spot to be able to see [00:56:35 -> 00:56:42] when they're in a little bit of a, you know, dire strait, right, where they're like, oh, I need to [00:56:42 -> 00:56:47] liquidate this or I need to get cash now or, and you're, it seems that you always have a bank [00:56:47 -> 00:56:48] account behind you.

[00:56:48 -> 00:56:53] Well, frequently, the general partner, when they say, I can't make my capital call, then they'll [00:56:53 -> 00:56:58] say, well, call A, B, or C. And because we tend to be very large investors in these funds and we [00:56:58 -> 00:57:01] tell them we have a big secondary business, we're frequently, you know, one of the two. [00:57:01 -> 00:57:02] No, and I'm saying. [00:57:02 -> 00:57:05] Yeah, so we have a really great overarching view.

[00:57:05 -> 00:57:10] So we, you know, having offices all over the world and seeing what's going on, [00:57:10 -> 00:57:13] you kind of see where relative value is and you know where you should be. [00:57:13 -> 00:57:17] I think what you're saying is they have, they started a fund set up just to do this. [00:57:17 -> 00:57:18] I know, I know. [00:57:18 -> 00:57:24] But what I'm saying is it seems like you've been able to kind of pull together the trust and [00:57:25 -> 00:57:29] capital backers that are giving you these kind of bank roles to be able to take, [00:57:29 -> 00:57:32] you know, seize these opportunities when they come by.

[00:57:32 -> 00:57:36] Is that kind of what you would say is the magic secret? [00:57:36 -> 00:57:39] The magic secret sauce is to end these kind of down economies. [00:57:39 -> 00:57:40] That is part of it. [00:57:40 -> 00:57:45] One, you have to have something that people want, but you gotta, they have to trust you.

[00:57:45 -> 00:57:48] You sign into a partnership and you're locking up your money for a decade plus. [00:57:49 -> 00:57:53] That takes a lot of trust because there are an awful lot of people say, I'd rather just buy the [00:57:53 -> 00:57:53] S&P. [00:57:53 -> 00:57:55] I can sell at any second that I want. [00:57:55 -> 00:57:57] Here, I'm locking up my money.

[00:57:57 -> 00:58:02] So you gotta convince them you can outperform the S&P and that you're going to give them [00:58:02 -> 00:58:02] something different. [00:58:02 -> 00:58:02] Yeah. [00:58:02 -> 00:58:06] And then new in their portfolio and that it's worth taking that illiquidity. [00:58:06 -> 00:58:06] Yeah.

[00:58:06 -> 00:58:08] And that's exactly right. [00:58:08 -> 00:58:09] Very well put. [00:58:09 -> 00:58:14] So I hope go listen to the last 30 second statement there, because that's a very important [00:58:14 -> 00:58:15] statement for people to learn. [00:58:16 -> 00:58:20] Another question is, it seems like you're actually relatively conservative.

[00:58:21 -> 00:58:25] Like you, you aren't a massive like risk taker. [00:58:25 -> 00:58:28] It's almost like you're, you're risk adverse throughout your career. [00:58:28 -> 00:58:32] Like, do you have any, but then again, you're also seizing these [00:58:32 -> 00:58:37] awesome opportunities that, you know, a lot of people don't get access to, and you're [00:58:37 -> 00:58:39] kind of the first call of these distressed assets. [00:58:39 -> 00:58:47] And I have you, do you have any regrets around not taking risk or not doing something more [00:58:47 -> 00:58:48] or jumping on an opportunity?

[00:58:49 -> 00:58:53] Because I just feel like, again, you're very, you're very calculated. [00:58:53 -> 00:58:58] You're very conservative and I am, I am pretty conservative and not coming from money. [00:58:59 -> 00:59:00] I didn't have a safety net. [00:59:01 -> 00:59:01] Yeah.

[00:59:01 -> 00:59:02] And so, you know, [00:59:02 -> 00:59:06] I made a promise to my wife when we got married that I would take care of her. [00:59:06 -> 00:59:06] Yeah. [00:59:06 -> 00:59:10] And, you know, one day I said, man, I'm stressing 24 hours a day about our financial situation. [00:59:10 -> 00:59:12] Do you see what's going on in the world?

[00:59:12 -> 00:59:14] And she's like, I don't worry about it at all. [00:59:14 -> 00:59:15] I said, why? [00:59:15 -> 00:59:16] She said, cause I have a hundred percent confidence. [00:59:17 -> 00:59:20] You'd work 22 hours a day if you had to, to take care of our family.

[00:59:20 -> 00:59:20] Right. [00:59:20 -> 00:59:22] Well, I don't want to break that trust. [00:59:22 -> 00:59:26] And so it was very funny when we raised our first fund, our fund of funds, I put my entire [00:59:26 -> 00:59:31] retirement account in there, everything I had made a chemical bank and, and I rolled it all in. [00:59:31 -> 00:59:32] And, and she's like, [00:59:32 -> 00:59:35] okay, so what happens if the market crashes?

[00:59:35 -> 00:59:40] And I said, well, if the market crashes, we're going to be living in a trailer park in Mississippi. [00:59:40 -> 00:59:40] Okay. [00:59:40 -> 00:59:41] That's pretty recent. [00:59:42 -> 00:59:43] And she said, why?

[00:59:43 -> 00:59:46] I could see we would have no money, but you still have a job. [00:59:46 -> 00:59:49] And I said, if the market crashes and I lose everyone's money, then I won't have a job. [00:59:49 -> 00:59:53] But I said, so you'll be in a trailer park cause we'll be broken when we starting again. [00:59:53 -> 00:59:57] I said, you'll be in Mississippi because we got all of our family and friends in here.

[00:59:57 -> 00:59:57] We're going to be hiding. [00:59:58 -> 01:00:01] And she's like, oh, well you better not lose any money. [01:00:02 -> 01:00:05] So, so we only have a few minutes left. [01:00:05 -> 01:00:07] I think at times, cause I want to get to us.

[01:00:07 -> 01:00:08] So I'm going to shift a little bit. [01:00:08 -> 01:00:21] So Brian, you and I know when you start for a lot of years and we hung out in a very, you know, giving environment, we met through BYU and, and you just are a great individual, but I also know you sacrifice. [01:00:21 -> 01:00:26] You had to, I did it first and I had to, you know, also, uh, adjust my things along the way. [01:00:26 -> 01:00:32] Like when you're working so hard, 60, 80 hours a week and all that, tell, tell, give some tips.

[01:00:32 -> 01:00:39] On, on balance, life, work, family, how you make it all work. [01:00:39 -> 01:00:47] Cause I mean, 6 million miles, all the flight, you had to fly around to meet with LPs all the time to see, were you also scouting for deals? [01:00:47 -> 01:00:48] So you were doing both sides. [01:00:48 -> 01:00:52] I was mostly doing investor relations and new fundraising.

[01:00:52 -> 01:00:52] Yeah. [01:00:52 -> 01:00:54] So you were, and that's hard work. [01:00:54 -> 01:01:01] So LP getting limited partners for your partnerships and funds and it all around the world going around. [01:01:01 -> 01:01:03] You were probably not home.

[01:01:03 -> 01:01:04] A lot at some points of your career. [01:01:04 -> 01:01:09] So how did you make it all work with, you know, you have a great family, your wife, everything. [01:01:09 -> 01:01:15] Just give some tips to everybody on how you made it all work and what advice, a rockstar wife. [01:01:15 -> 01:01:20] That's that's the first thing she carried a tremendous amount of load while we were building it.

[01:01:20 -> 01:01:26] So, so I feel like the family built it because my, I wasn't there for everything, but it was interesting. [01:01:26 -> 01:01:30] I have fretted about that because I have not had balance in my life until recently. [01:01:30 -> 01:01:33] And you wonder how do your kids view your kids? [01:01:33 -> 01:01:35] Your career, you know, I mean, you weren't there for everything.

[01:01:35 -> 01:01:41] And, and my son happened to marry a friend's daughter and he called me up and he goes, I had a great morning. [01:01:41 -> 01:01:41] I said, yeah. [01:01:42 -> 01:01:44] He said, I interviewed your son for a couple hours. [01:01:44 -> 01:01:47] I said, did he ask to marry your daughter?

[01:01:47 -> 01:01:48] He was, he did this morning. [01:01:48 -> 01:01:49] Is it great? [01:01:49 -> 01:01:53] And he said, well, I just wanted to tell you other than some of the first questions I asked him. [01:01:53 -> 01:02:00] My one question was, I know your dad and I don't know anybody who works harder than your dad and he's travels constantly.

[01:02:01 -> 01:02:02] Is that the life you have planned? [01:02:02 -> 01:02:06] And for my daughter, but man, that's really a brutal question. [01:02:06 -> 01:02:08] And I said, what did he say? [01:02:09 -> 01:02:11] And he said, you know, my dad did travel.

[01:02:11 -> 01:02:12] He worked hard. [01:02:12 -> 01:02:15] He said, I learned to work hard watching my dad and working with my dad. [01:02:15 -> 01:02:18] He said, but he was the only male face in the room. [01:02:18 -> 01:02:25] When I had my 32nd kindergarten presentation, he said, there are many times that he was there and none of the other dads were there.

[01:02:26 -> 01:02:27] And they, many of them worked local. [01:02:27 -> 01:02:31] They just didn't see it as being worth their time said when he could be there, he was there. [01:02:31 -> 01:02:31] He flew. [01:02:32 -> 01:02:33] I've flown over a year.

[01:02:33 -> 01:02:36] You're in my life on red eye flights, just to get back for family activities. [01:02:37 -> 01:02:41] I flew back from Tokyo to watch my son wrestle in the state, the county wrestling tournament. [01:02:41 -> 01:02:44] And after it was over, I flew back to Tokyo because I wasn't done. [01:02:45 -> 01:02:47] And so you don't know the timing of some of these things.

[01:02:47 -> 01:02:49] So you try to have to pivot what you can. [01:02:49 -> 01:02:58] But my son, the most important thing that he said was even though he wasn't there physically, we knew he was there in spirit because he wanted to be there. [01:02:58 -> 01:03:02] We knew we were his first priority, but he had a lot of things on his plate and he took his job seriously. [01:03:02 -> 01:03:05] And he wanted his employees to win.

[01:03:05 -> 01:03:08] And so, um, balance it the best that I could. [01:03:08 -> 01:03:16] I'm sure he screwed it up many, many, many times, but, uh, my wife held all the pieces together and we're now able to kind of experience some of the benefits of that. [01:03:16 -> 01:03:17] That's very cool. [01:03:17 -> 01:03:20] So I take away from that.

[01:03:20 -> 01:03:21] You can do it. [01:03:21 -> 01:03:32] You can be a little imbalance while you're building and growing your career and then work out with your partnership with your spouse and you can kind of make it work and you show up. [01:03:32 -> 01:03:32] Yeah. [01:03:32 -> 01:03:36] And you can, you like those red eye flights is a really key thing.

[01:03:36 -> 01:03:42] Like, you know, you sacrificed a little bit by having to jump on a red eye flight from Japan to come back for a wrestling match. [01:03:43 -> 01:03:45] Not all people will do that. [01:03:45 -> 01:03:45] Right. [01:03:45 -> 01:03:50] And that's, so you're a hard worker, but you're also hard at keeping the family burning.

[01:03:51 -> 01:03:51] Yeah. [01:03:51 -> 01:03:53] So that, that goes hand in hand. [01:03:53 -> 01:03:54] All my kids still talk to me. [01:03:54 -> 01:03:54] Yeah.

[01:03:54 -> 01:03:55] That's good. [01:03:55 -> 01:03:56] That's a good start. [01:03:56 -> 01:03:56] That's good. [01:03:56 -> 01:03:57] Yeah.

[01:03:57 -> 01:04:02] And so, uh, you know, this is not about me, but I'm just sharing, I have the same type of wife, you know, her. [01:04:02 -> 01:04:05] And I think they're, we're at the same accomplish what we've accomplished. [01:04:05 -> 01:04:06] Same with autumn. [01:04:06 -> 01:04:14] And, and, and halfway through my career, my wife sat me down and taught me a few principles that I adjusted on and went great from that.

[01:04:14 -> 01:04:20] So in closing them, Brian, we always ask our guests like the final question here. [01:04:20 -> 01:04:26] And I don't mean to preemptively close this up, but we are getting to over an hour of talking time goes really fast. [01:04:26 -> 01:04:31] But what is one piece of advice or one takeaway you would leave with the listeners? [01:04:31 -> 01:04:42] And viewers, uh, whether that be startup oriented, business oriented, family oriented, uh, emerging manager oriented, whatever it may be.

[01:04:42 -> 01:04:45] What's the one thing that you would want them to hear? [01:04:45 -> 01:04:47] Like, how could you wrap this all up? [01:04:47 -> 01:04:48] And what's the one piece of advice? [01:04:49 -> 01:04:51] So I'll give two different audiences.

[01:04:51 -> 01:05:00] When I talk to young people that are in school or just graduating, I always tell them, don't focus on how much money you make until you turn 40. [01:05:00 -> 01:05:01] Focus on. [01:05:01 -> 01:05:13] Building the network, getting the credentials, whether you need a master's degree or other certifications, whatever you need in your quiver so that you can go to war and win, do it and up until you turn 40. [01:05:13 -> 01:05:21] When you turn 40, you should have identified the industry, potentially the company, what exactly you're great at and what gives you passion and what you're going to do.

[01:05:21 -> 01:05:24] And almost all the money you make in your career is after you're 40. [01:05:25 -> 01:05:30] Now, you know, if you work as an engineer and you get 3% pay raises a year, then that might not be true. [01:05:30 -> 01:05:31] But in most careers. [01:05:31 -> 01:05:35] Where you're paid on performance, it's pretty linear and you make most of the money after that.

[01:05:35 -> 01:05:49] And so, you know, if you think you're the winner because you went to Goldman Sachs straight out of school and you gave up a job where you can learn five times more and build that skill set, you probably made a bad decision because you wanted to brag at the parties that you went to work for Goldman Sachs. [01:05:49 -> 01:05:52] So be careful about that on the career side. [01:05:54 -> 01:05:58] I probably should have been more aggressive in expanding the firm earlier.

[01:05:59 -> 01:06:01] I should have added more. [01:06:02 -> 01:06:06] I should have added more partners earlier so that we had the manpower to build the firm at a faster pace. [01:06:06 -> 01:06:08] We were pretty early in a lot of things. [01:06:08 -> 01:06:13] Right now, growing, you know, like a secondary business is hard because there are a lot of great secondary firms.

[01:06:13 -> 01:06:14] We were one of the early ones. [01:06:15 -> 01:06:17] And so, you know, we always wanted to be profitable. [01:06:17 -> 01:06:20] I always wanted to have the biggest bonus pool that we've ever had. [01:06:21 -> 01:06:26] Reinvesting part of that money into the business, bringing in more talent, we probably could have been two or three times bigger.

[01:06:26 -> 01:06:30] I mean, a great example of that is Freddie Gantner and his partners at Partners Group. [01:06:30 -> 01:06:32] Freddie's built an amazing business. [01:06:32 -> 01:06:39] He's built an amazing company, many times bigger than my company, because he was much more aggressive and brought in the talent earlier. [01:06:39 -> 01:06:43] And they were willing to make those sacrifices to really create a world-class company.

[01:06:43 -> 01:06:45] So what's the advice there? [01:06:45 -> 01:06:48] To just, like, go all in sooner? [01:06:49 -> 01:06:49] Yeah. [01:06:49 -> 01:06:50] Yeah.

[01:06:50 -> 01:06:53] I mean, it was interesting. [01:06:54 -> 01:07:00] We had people that we paid them bonuses that were 100%, 200%, 300% of their salary if they were a senior person. [01:07:01 -> 01:07:02] We were. [01:07:02 -> 01:07:03] We were very employee-owned.

[01:07:03 -> 01:07:05] I pushed equity out to many people. [01:07:05 -> 01:07:12] And so the problem is, when you do that, it becomes more of a democracy, and it becomes harder to make some of those decisions. [01:07:12 -> 01:07:17] And so we would say to people, hey, can we cut the bonus pool by 20% and launch this new business line? [01:07:17 -> 01:07:24] You're never going to get unanimity when you've got people of all different world, you know, or, you know, life consequences going on.

[01:07:24 -> 01:07:31] And so, you know, probably should have kept it a little tight, more tightly held in the beginning, and then given people the opportunity. [01:07:31 -> 01:07:33] I call that a benevolent dictatorship a little bit. [01:07:33 -> 01:07:37] I used to tell people, even though you own stock and you get to vote, it is not a democracy. [01:07:37 -> 01:07:39] We got to run a company.

[01:07:39 -> 01:07:40] I love that. [01:07:40 -> 01:07:42] But it does slow you down a little bit. [01:07:43 -> 01:07:52] But yet, for me, one of the great outcomes, one of the great legacies was of my 130 employees, 85 of them were multimillionaires when we sold the company. [01:07:52 -> 01:07:52] Wow.

[01:07:52 -> 01:07:57] So we created wealth, not just for two or three people, but it was everybody wins, and people did. [01:07:57 -> 01:07:58] And so we passed out carry. [01:07:59 -> 01:08:01] I only got 4% carry in our life. [01:08:01 -> 01:08:05] And I was the last fund, because I had spread 100% out to 85 different people.

[01:08:05 -> 01:08:05] Wow. [01:08:05 -> 01:08:06] Yeah. [01:08:06 -> 01:08:09] No, it's not about building a firm or just making money. [01:08:10 -> 01:08:15] It's really about, you know, what compounds over time, trust and discipline and stewardship.

[01:08:15 -> 01:08:17] It's really alignment and incentives. [01:08:18 -> 01:08:22] And we had relationships, tremendous people that built a great firm. [01:08:22 -> 01:08:23] It was not me building it. [01:08:23 -> 01:08:25] I was supported by a massive cast.

[01:08:26 -> 01:08:27] And so everyone deserved to win. [01:08:28 -> 01:08:28] Yeah. [01:08:28 -> 01:08:29] Cool. [01:08:29 -> 01:08:31] Well, we have sat at the feet of somebody.

[01:08:31 -> 01:08:45] That's just brings so much to our local community here in Utah and just, he's been a good friend and he teaches our senior, most limited partner advisory member in the fund industry and we've, you've guided us and helped us. [01:08:45 -> 01:08:45] Thank you. [01:08:45 -> 01:08:46] Thank you. [01:08:46 -> 01:08:47] So thank you, Brian, for coming on.

[01:08:48 -> 01:08:51] Thank you for spending the time and thank you guys for tuning in. [01:08:51 -> 01:08:58] This is going to be an awesome episode and like subscribe, comment, reach out to Brian. [01:08:58 -> 01:08:59] He's a really great guy. [01:08:59 -> 01:09:01] Um, but also follow.

[01:09:01 -> 01:09:02] Follow him on whatever he's on. [01:09:02 -> 01:09:14] I'm sure you have a LinkedIn and I'm sure you have all the other things contemplating turning off my LinkedIn now that I'm retired, everything now is an ad, which is getting quite annoying, but yes. [01:09:14 -> 01:09:16] Thank you so much for coming on Brian and we are out.