From Safe Jobs to Startup Risk (Investor Mindset)

a lot of people don't recognize how much risk they're taking in exchange for that potential upside because most startups don't turn into that big payday. But if you can be intelligent and really understand the industry, the market, where the players and get in with an organization instead of founders that really do have the backing to turn that into something great, it can be a phenomenal way to be able to make a big payday at some point in the future. Welcome back to the investor mindset podcast. I'm your host Steven Pessevento and today I have Scott Cleary in the studio. How you doing today, Scott? Hey Steve, how's it going? Nice to be here. Thank you for having me on. Yeah, it's good to see you, man. You're doing some really cool things. You've got a huge podcast. You've been able to get some incredible partnerships with it. You've interviewed some amazing people in your building businesses. So we're going to talk a little bit about building businesses and being an investor and kind of the difference between the two, we're getting some other stuff on your story as well. But before we get into all that, let's start at the very beginning. What influences or events from your childhood shape to you are today? I would say that I wanted to end up in the exact opposite position as my parents funny enough and not because they ended up in a bad position because they were very safe and they were very risk-adverse and they only dad worked for the government. My mom worked for university. She took some time off from work when she had me and my brother. But they had pensions set up until the day that they die, which was something that I don't think a lot of us were even aware used to exist. The defined contribution or the defined benefit pension and that was something that if I wasn't going to get access to that kind of safety and security after I stopped working, I realized very quickly that I had to make enough money to put into a little bucket so that when I stopped working, I could take out whatever $80,000, $90,000, $100,000 until the day that I died and I started to realize that that ended up being quite a bit of money that was hard to save when you consider inflation and cost of living and home prices in Toronto, which are not much better than other major cities in the US. So in my mind, it was not going to get a pension and working for a mediocre salary is probably not going to make me the money that I need to make to truly retire comfortably. So it was, let me try and be a little bit riskier in my career choices at least early on and see if something works out. And if it doesn't, then fine. I can default to the type of career that I kind of know from my childhood. So I would say that was probably the one thing that pushed me towards tech and working in startups and consistently trying to not be complacent and not be comfortable and move into the next thing and move into the next company. And I made jumps very quickly, but that was probably it was it was fear of how do I want to live my life from 65 to 100? Yeah, it's so fascinating because I see this often where high achievers grew up in kind of either a very rocky environment or very safe environment and they took a look at what they were seeing around them and they made a decision, hey, I'm going to go a different path because I know this is always available, but instead I'm going to go out and try to find my own way whether that's in a career or entrepreneurship. I know you did both, but let's let's talk a little bit about kind of the entrepreneurial journey. You've bought or you've built and operated a number of businesses. You've invested in some businesses. You've been both an operator and investor. Talk to me a little bit about what your journey looked like and what was what what is the business that you run today? So the journey was the journey was very clear. I never went into sort of public service or more safe positions. I always worked in tech even for someone. When you work in tech, then you start to I guess become aware of opportunities in earlier stage tech and to really move your career forward, you're not necessarily going to get the fastest career progression by working for even a Fortune 500 or a Fortune 1000. So you start to try and jump to earlier stage companies to move a little bit quicker. Maybe get a better role. Maybe get at the point I didn't realize, but you could get equity. You can make a little bit more money by jumping ship and moving to something which is kind of sucks, but that's the reality. You're playing a game with your career and I think that the days of working for a company for 15, 20, 30 plus years are gone. So I think you have to be strategic if you're going to get the most set of the time when you're working. Anyways, moved from very large. Yeah, I couldn't agree more. I was going to say, so yeah, I mean, it is what it is. It sucks for an employer, which is also why I'm a strong advocate for if you are an employer and you're hiring somebody, um, enter into a period of time contract with them. Could it be two years, three years, whatever, you know where they want to go. You know the commitment they can give your company so that at the end of the day, you're not disappointed with that higher, and you're you've both mutually committed to the goals of that individual. So you're not asking to say that for 10 years. You're not, you're not fooling yourself. You're saying, give me three years of your life to get to here and then I'll help you get to where you want to go next. This is the way I think that leaders should hire an op right now because it's more in line with how employees think through their careers. Well, it's tough because when you're running a small organization, you, you know, they're making a bet on you. You're making a bet on them. You're investing a lot when people leave in a small organization. It does make a big impact, but there is the reality that a lot of people are job hopping. And so if you can create incentive plans or expectations up front where, hey, this is the kind of benefit you get if you're loyal and you stick around. And this is, you know, the metrics we need you to hit. And we of course want you to be able to go above it. And these are the kind of results you get. If you're up front with people and you show them the vision, a lot of people are willing to, you know, to jump in with you and go on the ride. Yeah. I would say that I would say that's exactly what you should do. And it hurts more when you aren't expecting somebody to leave because then you have a gap in your workforce and you're pushing that work onto someone else. And then that other person's life sucks a little bit more. So I would just say like the way that I navigated my career is a way that a lot of people navigate their careers even more so than when I was still working for someone. So I would say just understand that as a leader or a founder or a CEO or whatever hiring anybody. Anyways, so move to a smaller company. That company was acquired by a private equity firm for a large aid figure exit that was private, but that I didn't have equity in that company, but that company showed me the power of ownership and equity. And what that could actually translate to in my career, right? If I had a piece of something when you go through that exit event, well, then that could be a nice payday. Super high risk as well because not every company gets acquired for a significant amount. But that was sort of like a light bulb moment for me. It was okay. It's easier to work in large companies. It's harder and way more high risk to work in smaller companies. But if I play my cards right and I trust my own expertise and I can go into a company and execute on ABC XYZ because at this point I was a more senior sales marketing executive. Maybe I can actually have an impact on helping them get from where I join them to where they're going to go to a potentially an exit if I have a piece of that. And that's great. So this is like the concept of switching from employee to equity owner. Did a whole bunch of consulting, taking fraction, equity and companies. But that was very difficult because startups don't have a lot of money to pay you. So it's a lot of it's a lot of sweat equity. Yeah. And part of the pun. But then I think there's pause here. There's really like two really important things I think to underline here is yeah, this concept of you're thinking like an investor, thinking like an owner when it came to going out and finding the job. At first, you're going out, you're taking a little bit more risk, but you're getting an opportunity to build skills knowledge and more importantly to have a higher level role in a smaller company where you can learn and grow much faster. But you're giving up maybe some of the security and potentially some of that front front end compensation. But in return, you're gaining those skills. And then in some instances, you can get that equity. And I think it's a really valuable thing to recognize because there's so many small companies whether it's a startup or just a boutique firm where you can go in and have that strong upside if you're really a top performer. Those kind of organizations are not good if you want to just kind of sit back, kick back and not really like drive things forward because you're going to miss that opportunity that you could if you're just sitting back at a big corporate company. Yeah, like I think that one idea or one thought that is really resonated with me across my entire career is extreme ownership. Like ownership of your situation, your condition, your, you know, your bank balance, everything, your health, like a massive extreme ownership. So I don't, like I don't put a lot of not trust. What's the word? Expectation on anyone else to improve my life situation. So if I want more and not saying you have to, you don't have to want more. If you want to optimize for ideal life and you're comfortable with the income that you're currently earning, there's a lot of easier ways to do it than to work in a startup. But I knew, again, I had my north star since I was like 16 years old of I need to make X amount of dollars to be comfortable. So that's on me. So you got to put yourself in these positions where that's attainable. So I think that that's what that sort of pushed my migration into these higher risk companies where you're starting to think like an investor with your time, right? It's not investor so much with your money, but it's investor with your time, which if done right, then eventually gives you the opportunity to be an investor with your own money. I think one of the things a lot of people overlook in the tech industry in particular, because I started my career in managing consulting and then worked in tech in the startup world was, you know, very ingratiated in that space and VCs. What was fascinating to me as I left was recognizing how much risk people are taking when they're joining a startup, even if it does have 10, 15, 20 employees, because a lot of startups don't make money. They're really focused on getting market share and it's all based on that next founding, uh, funding round. And so I think a lot of people don't recognize how much risk they're taking in exchange for that potential upside because most startups don't turn into that big payday. But if you can be intelligent and really understand the industry, the market, where the players and get in with an organization instead of founders that really do have the backing to turn that into something great, it can be a phenomenal way to be able to make, you know, a big payday at some point in the future. Well, my investing strategy is very similar to how I align with companies. So what's the value add? What like I see where the company's at now? I see what they're doing and what success they've achieved so far with the strategy they've deployed. What are the things that I know? What are the levers that I can pull that can take it to the next level? So if I see that they're doing everything that I already know and they're sort of like they've been in the market for X period of time and they've already done the playbook and most companies haven't, but say they have, well, maybe I wouldn't align with them professionally, maybe I wouldn't invest in because I don't see an opportunity for growth that I know. I don't have that unfair, unique advantage that I can deploy into that company. So again, at the time, I was not thinking this through so thoroughly, but this is just naturally what made sense to me. So worked with a whole bunch of startups, found one in particular that I was like, okay, this company's been in the market for 10 years now. Co-founders are product and technical, like technically oriented, they're not sales and marketing people. Let me take my years of experience and sales and marketing, deploy it to a great product that has some samples of product market fit and really pour gas on the fire. And that was the last company, which was a broadcast software company. It was called Swift. We sold that at the tail end of COVID. So that was the play, really. And that's the same play that I did. I didn't put money into that company. I put my expertise into that company, right? But that's the same play that I do now when I invest in companies. Or when I choose to spend my time doing anything because you asked another question, what are you doing now? What's your company now? Well, we can talk about it. And part of its podcast, part of its private members community. And then I also do again, some angel investing, private equity investing, but it's all the same concept. It's like, what's the thesis? What's the idea? What's my unfair advantage? An unfair advantage could be knowledge. It could be skill set. It could be network. There's a whole bunch of different unfair advantages you bring to an opportunity. But that's how I evaluate any opportunity, be it new company, investment, whatever. If I don't know it, and I can't improve it, and I can't value add to it in some capacity, why would I be doing it? Leave it to someone else who knows this. Yeah, I think it's a really important thing to point out because I call it being an insider. So like becoming an inside investor, whether you're the insider yourself or you're connected to people who are insiders and they have those unique relationships or network or skill sets or knowledge, whatever that is that's going to lead to a higher rate of return with less risk. What I think is super valuable that I think a lot of people when they are stepping into the world of investing, whether it's time, money, relationships, any of those things that they're using as the currency is they overlook the fact that there is phenomenal ways to add value to an organization that is beyond the dollars that are being invested. So you you just explained how you have skills and knowledge and you were able to get a piece of that company, help them grow and as a result get a big payout. The same thing is true when you're writing a check, if you can go in and write a large check, but you can also bring skills knowledge, relationships, any of those things to the table, it can allow you to earn, you know, additional points or percentage of of equity or participation that can be a real game changer if you're willing to think creatively. Yeah, I think that the concept of this insider advantage, Peter, I think it's Peter Teal that originally coined the phrase earned secret when he looks for who to invest in. And I'm going to show you why that just doesn't apply to writing checks, but that earned secret is an entrepreneur who's lived in an industry for a period of time and they know something that no one else knows. That's the statistically the highest hit rate success rate of entrepreneur. Somebody who has an earned secret who's lived in an industry till they're like 40 and they see an issue in the industry and then they build a product or service to solve the pain point or the issue they've experienced over their lifetime in the industry. That is the most successful statistics have proven this out entrepreneur versus what we think of what an entrepreneur is, which is like a Stanford grad that dropped out or a Stanford dropout, excuse me. So that earned secret applies to what Peter Teal and what I just literally interviewed Chris Dixon from Andries and Horowitz and he heads up all their crypto division. He's the guy who basically stood up their crypto division. And this is also how they invest. They look for people who have earned secrets in whatever product they're building. So that's from an investor looking at an entrepreneur, but the concept is very similar. If you are a sales and marketing operator or a product operator or anything that can monitor, it's usually sales and marketing or product or the product includes technology. Those things can radically change the trajectory of a business if executed on properly. If you have earned secret or experience in those categories and as a fractional operator you go in and you apply that and you become a repeat fractional or full-time CXO and you help companies explode that way or you're an investor and you have that secret sauce and this is what large VC firms and funds now do. They have operational partners that go in and you can deploy that secret sauce and that earned secret and that earned expertise to that particular investment opportunity. Then it just de-risks everything, right? It's figuring out where your unfair advantages because like a great example is in our business in the real estate side, we met a group, a high nine figure, low 10 figure family that has a lot of experience, but they don't do exactly what we do. But what they bring to the table is they can write very, very large checks and by having them involved just being able to talk about it, that adds a ton of credibility and trust to the organization. Not only are they going to get a great return on their investment, but they also are going to get additional other benefits. And so just by figuring out what is it that you have that somebody else doesn't and how can you be of value, that family in particular by being an anchor is able to then get bring in other anchors and get additional participation that a normal investor wouldn't because most people don't have what they have, i.e. the track record, the name, the relationships and all those kind of things. And so you just have to think to yourself, what is it that I have that other people don't? And how can I go and find the right places to make those connections? I would ask you something because I've seen this in real estate as well, because I'm not from real estate. Now I'm trying to figure this game out. So when you invest in real estate, do you focus on a certain state or a certain type of real estate? I mean, type of real estate is obvious, but do you manage down even more? Yeah. So I think I think one of the biggest mistakes people make is that they're not insiders when they start. So when someone first begins being being an investor, it's like going into a new industry without any relevant skills. Obviously, everyone has a set of relevant skills, but they don't know those little insider things. And so for example, in the Colorado market, we know it very detailed down to the street. So we know where the government's making investments, we know where big companies are making investments. We know what a property's worth, you know, without even necessarily run the numbers just because we understand details at that level so we can move fast. Like this morning, I went and looked at a property and we're going to have an offer out by the end of the day, hopefully beating everyone else that's got to come in from out of state or whatever it is to try to compete. And then, you know, we invest in other markets with a different strategy because we're able to then apply that strategy that works in that market. And so being niche is extremely valuable. If we were just doing general real estate in Denver, we would have a tough time. If we were trying to buy 300 unit buildings in Denver, we're competing against New York and LA firms. And despite us being able to do that in the past, the market today, we're getting the biggest return on investment by buying 50 to 100 unit buildings. Things we normally wouldn't look at, but we have an advantage locally that others don't. And so it's the same thing as what you're talking about, you know, in the business world, this is just, you know, another type of asset and you got to have that insider knowledge. I was going to say, I think that like what you do and how you deploy capital and how you buy, it's very similar to my closest friends who are the most successful in real estate. I have a very close friend who only does Ohio. And he's now, and now he lives in South Florida, but I've asked him many times, like, why don't you, why don't you do something? He's like, I don't know South Florida. I know Ohio and I know how long it takes to get this permit and to do that and do this and this person in this office and this city. And it's just, it's so, it's interesting because what this lesson is is that you should specialize to the point where you know this thing better than anyone else and you actually don't diversify when you start. You actually specialize in in what you are the subject matter expert in. And I think that even in my investments, you were asking about that, the things that I've lost money on are things that I don't understand and the things that are still running because I lost a lot of money in angel investment, which is just a really high risk precede, like, $5,000, $15,000, $20,000 checks. And then I take those same checks and do smaller private equity investments in cash flowing companies, in categories like CPG, like SAS, that I know. And those are still running and those are still operational. And I can understand the opportunity, I can understand if the founders full of shit, I can understand if when I'm doing due diligence, they're showing me like the back end to their Facebook ads, if it makes sense, if the numbers make sense, if they were like doing something funny with the numbers to try and make it seem better than it is, the CAC to LTV ratios, the row ads on ad sets, I can see and I can understand this stuff more than somebody that was a real estate person trying to go acquire a small consumer goods company, CPG company. Yeah, I think it's really valuable to recognize that diversification is really good for preserving wealth and concentration is really good at creating wealth. Like, if you run a business, majority of your wealth is going to be in your business because it's something you control. And at a certain point in time, it's going to make sense to then diversify into other strategies. And the only time you should do that is when you find people who you trust, but you still have to have a certain amount of knowledge to know whether they're talking, you know, a good game or whether they really can play, which is a challenge a lot of people have. And it's one of the difficult things I think in the real estate spaces, I definitely am a big proponent and believer in real estate. But when somebody comes to me and they say, hey, should I invest in this deal? I don't even care about the deal per se. Of course, I do. But what I care about is who's operating it? What's their background track record? What are they? What have they done? And how are they going to do it? And what's the structure? And the interesting thing is when people are first coming into investment, they, oh, this is exciting. But the people who are running it just like in a founder run company is the most important thing next to what is the strategy and is it going to work? Like my strategy for overcoming that hurdle is quite simple. So I'll put money into thing. And this is not something that I learned leaving a company. I've lost quite a bit of money learning this lesson because another thing people don't realize is just because you've made some money, you become a good investor if you're good opera, like it's not the case. And maybe this comes intuitively for people, but it wasn't for me. But then I stopped focusing on stuff that I didn't know, only put money into stuff that I do know. And for anything that I wanted to put money into that I didn't know, I would build relationships with people that were experts in that thing. But I wouldn't put money or go into a deal with somebody else until I've probably known them for about a year and a half, a year and a half, two years, three years, gone to a wedding, gone to a birthday party. Like, they're friends. Like I don't put money into deals with people that are outside of what I know who are not friends. It's very rare for me. I'm not an institutional investor, right? I'm a casual investor. So maybe this is not doable for some of the audience. But I think enough people listening to this are probably not professional investors. And they're like, OK, I want to get into real estate. OK, we'll start with investing in what you spent your whole career doing and make some friends who are real estate investors and just spend time with them. And don't don't become friends with them. Become friends with them because they've been successful in real estate. That's great. But become friends with them because they're good people. You like them. You start to get to know them. You start to get their circle of friends. Get to know their circle of friends. And over time, if you want to do a real estate deal, do you know what to do with a real estate deal with? I think it's a super valuable thought. It's a very, very conservative strategy. But what I'd add on to it is if you build those really close friendships with people who are experts and have expertise in that specific space and niche, they are going to have people that they can refer you to that they trust. And because you trust them, that's going to help get you one step closer to then being able to make a smart decision. So what I'm curious, Scott, you've been both on the investing side. You've been on the operating side. From your perspective, how do you or what have you seen that's different between the way that owners or operators think versus the way that an investor thinks when looking at a business? Well, I think that this is not a hard and fast rule, but sometimes owners do not look at an exit strategy, which I think is incorrect. I think a lot of, and this will, this will decrease as the business grows because there will be more systems and operations in people in place that will help guide you forward. But I think in like the sub 10 million 50 employee category, I think a lot of businesses are driven by just the owner's pure hard work and a little bit of ability to manage an insane amount of chaos. And beyond five to 10 million dollars, you really have to start thinking about firing yourself as the owner from most of the jobs that you're doing, building systems and processes and hiring people that can actually grow and scale because you can't just hustle your way to a significant size business. And you also have to start thinking about at that point, or you should start, you don't have to, you should, if you want any kind of work life balance or enjoyment in life, you should start thinking about how do I build how do I build a business that is able to be acquired without me working in the office every single day. So an investor immediately already thinks that going in because that's the only way they get their money back if they can buy a business that isn't completely contingent on the founder or what's known as key man syndrome or key man problem, right? So that's the way if investor always has to think there always has to be some sort of return in the future and no investor wants to turn into an operator ever. So that would be the one thing that investors that investors look at when they're acquiring a business that maybe an owner hasn't thought of yet. However, eventually an owner will have to think of that. And it's not just something they should be thinking about if they want to sell, it's something they should be thinking about firing themselves from all the jobs they're doing so that they can truly achieve a massive scale because that's the only way to really get to any significant size. But around 10 million to 15 employees is when most businesses start to break, when just the hard work from the founder is no longer a sustainable business strategy. Yeah, it's such a good point because a lot of owners, they had to do the work to create the business and get it where it needed to go. But there's a whole nother level to operating a business as it grows and a private equity company doesn't want the owner to stay involved. I mean, sometimes they do. But most of the time they're looking to buy a business that is batteries included. It's ready to go. Well, they don't want, they definitely don't want, because this happened in the first company that I was a part of that was acquired by private equity. I'm sure the owner personally accounted for about 50% of the company sales every single year through relationships he's built over the past 10 years. Yeah, that's not a good huge discount for that. For sure. Yeah. Yeah. Because what if he wants to retire? What if he wants to take a step back? Okay, well, he's working, he's working 80 hours a week right now. So how is that a, how is that a purchasable business? So part of the process in being acquired because I was part of it was it was bringing in somebody leads sales and marketing, bringing in operations, like a COO. So VP sales and marketing, COO, like basically getting people to take over all the stuff he was doing, which was he was a sales and marketing CEO founder. He loved selling to customers and he really cared about these relationships. That's great. But you've got to know you have to be self aware enough to say, listen, this is not sustainable. I can't, I don't want to be doing this with the rest of my life. I want to have a life. I want to travel. I want to be at my kids' graduation, whatever it is. And also, I want to eventually sell. So I think that that's something I believe you should be thinking this way from when you start a business. But this is not something a first-time entrepreneur would think of. It's usually something a second-time entrepreneur would think of because they realize a shit show that they went through the first time to get a business ready for exit. And that also includes like not treating your finances like it's a family business like actually like doing doing all the things properly, which seems silly. But I mean, you've looked at deals. I'm sure that are very messy that someone's treating it like it's literally a family business where their cousin has like a business debit card and they're buying shit. And they're just like, why? Why? They're not an employee. They're not on the books. You have to tighten this up. And there's different ways to structure it so you can still achieve all the things that you want to achieve in terms of how much money you're taking out of the business what you're spending money on. But just it has to be like a tightly knit package so that it can be sold. But that same package can also be scaled. Yeah. I mean, they call that in the industry addbacks when you're buying a business. So you can't always, you can't always trust them. So there's always going to be a discount for that. So obviously, you know, on the real estate side, you know, we're creating a 15 to 20% return or a 20 to 30% average annual return when we're buying growth-focused assets. When you're investing yourself into private equity, you're adding your skill set. You're adding additional value. What type of return profile or multiple is common in the type of private equity that you're looking at in particular? And I know it's different across kind of as companies grow and different industries. But I'm curious from your perspective, what have you seen as far as the kind of rate of return investors are looking for or that you're personally expecting when investing in PE? When I'm when I'm investing in PE, the returns are very similar to what you're proposing. Plus, there's dividends paid out obviously because we want to be profitable. So that's really the goal. If somebody is promising you more than that, I think that they may not have like if a business does exceptionally well and it hits some sort of growth curve and blows up overnight, that's fine. But I would never really promise that. And I actually tend to stay away from deals that are promising more than 12 to 15%. Yeah. I just I just don't think it's responsible. So I would I would like to I would love that. But I've been more I've been burned more on deals that promise those types of returns versus the ones that are 12 to 15% plus they pay dividends because there is some margin left over at the end of the or there's some there's some profit leftover than the year than somebody who's 20% and like fizzles out here and a half. So I think that's that's a really important thing to point out because you know different deals different structures are going to offer a different return to the investor. But people who are who are buying things and they're expecting and projecting a very high rate of return unless they've done it over and over and over again in that exact same niche and you know exactly what they're doing they have an exact plan and they're still setting lower expectations than they create it can be a red flag for sure because for my perspective PE has a little bit more risk than real estate less less risk than venture capital. So it's a nice in between place and what I've seen is always you know somewhere in that 15 to 20% return including the dividends including that appreciation and then when a deal goes really well you know it's you know 50 to 100% more than that. Correct the difference being in venture capital or angel investing I mean you you probably have like a depends on the firm like a like over a 50% failure rate or things go to zero. So I mean yes you can have even an even an venture capital unless you are doing a seed round and most people don't have the capital to participate in like a even a series A which is now pushing 10 million dollars or B or C or D which is just astronomical amounts of money. Unless you're doing a seed round which is I don't have the stats in front of me but I'm sure 80 to 90% failure rate more maybe you're probably not going to be expecting more than 20% like an A round I don't think I used to have a chart of it I wish I could I probably should have pulled that up but an A round I don't think they're even expecting more than 20x. This is what boggles this is what boggles my mind you know I've done some angel investing mostly I've looked at it for fun. I'm I actually look at angel investing as gambling and I'm going to put my chips in but the I really don't gamble about when I go to the casino I'm going to put my 50 or $100 out and I don't expect to get it back but it'll be kind of fun to go along for the ride and play and you know as a result I invested early in SpaceX and momentous and ore ring and a bunch of these other interesting companies but what blows my mind is how much risk there is versus the return that's being projected or is realized because you know coming from real estate I don't have the opportunity to triple or quadruple or 10x somebody's money I might double it I might triple it but it's probably not going to be higher than that unless there's some crazy thing that happens but in the venture capital world all it takes is one of those deals going 10 20x that makes it all over its failure it could be ridiculous right but but that's the issue that I have with venture capital because venture capital is not a popular investment vehicle because it's it's a safe investment vehicle it's popular because it's sexy it's sexy that's it and and like you could make the same argument for crypto yeah it's just a very sexy investment vehicle and there's hype around it and there's there's headlines around it and and people are becoming I mean crypto more so than even VC like people are becoming you know to millionaires worth tens of millions overnight in crypto so you you buy into the hype and you're like well why can't I be one of these people yeah or you think you're smarter than you are which is the thing that people have an issue with too and you have some success and then you're like well I'm sure I could be an angel investor I've made money how hard could it be this is where it's it's the irony because I get it it is sexy that's why invested in those companies because their name brand they're cool I use some of the products I really respect the founders etc but I know because I'm looking at it rationally and logically I know that I'm making that tiny little bit like 5 10 25 grand not huge but in real estate it's the same thing you buy a 300 unit you know five year old or brand new multifamily building you're gonna get like a five six percent maybe eight percent return maybe 10 it's not very very high but it's sexy it's much easier to sell versus a big part of what our business is focused on is buying you know buildings that don't look good making them look good selling them and we make big money on that but it's ironic because if investors were really being rational they would choose to invest in that type of a strategy over something that's sexy but you know everyone gets kind of pulled into this trophy type asset where they can say hey I own this big building or I own SpaceX or whatever it is well yeah I mean so I see again I just referencing the one friend I know that does a lot of real estate in Ohio and he's buying homes for I'm sure he has over a hundred properties right now so he's not buying you know he's not buying massive properties but he's cash flowing pretty well he has a tight team and he does well for himself and and he's buying homes that are like 25,000 30,000 40,000 dollars and he's fixing them up and I'm like it's not sexy at all because I see I see his Instagram and he's like walking through them the houses are shit and there's like literally shit on the floor I'm sure in some cases and it's just like it's not but he's as an investor wildly more successful than many people that just sit on their ass and go to angel list and put money in some new tech stock and even angel list is more vetted than just you know shooting from the hip and and and taking pitches from people on LinkedIn for the next tech start I've been putting into putting in 10 15 20,000 dollars into a founder that you've never heard of before with no track record so I mean humans are humans emotions drive unfortunately a lot of our choices and then we justify those emotions with logic is as flawed as our logic is so I think education is the answer education and understanding of different opportunities especially people that are not like like a people that didn't go into finance and didn't understand investing from a earlier age or a younger age it's just like don't be naive don't be so myopic in in your in your thinking like you think about the work it took you to be successful at your craft or your job why would making money in another format be any different put the same amount of work and respect into that particular thing and that thing being investing right and learn about it you didn't become a successful CEO or founder or sales executive or marketing executive in two years it took you 10 20 30 years so don't be naive yeah well two two last questions before we wrap up today Scott tell me what was the biggest mistake or lesson that you learned while investing sort of touched on it very briefly I have to say it's it's investing in things that I don't know if anything about just because it seems like a sexy fun opportunity like all my mistakes happened in not all my mistakes most of my mistakes happened in angel investing um less so in in PE angel investing was more me like sort of just acting on my own and trying to put money into things I didn't understand or I thought I understood but they were not industries that I grew up in so just because you know like I came my whole career is B2B enterprise SaaS like that's actually what I know and then you could niche down even further and say well I know telco and I know broadcast I know video and streaming tech those are the companies that I helped build um but I would say that just because there's nuances to B2B enterprise SaaS or other SaaS or consumer SaaS so a lot of it was ego and just thinking if I had success in one field I could translate that success into understanding another field and put my money and make my money grow I think that's I think that's a fallacy I think that when we talk about specializing people don't even understand how important is to niche down and like a particular thing that even an adjacent thing can throw a curveball that you're not aware of so that would be my biggest issue it was ego and thinking that I knew more than I did putting money into things that I had no business putting money into yeah before I get to the last question Scott tell people where they can follow you or listen to your show yeah so uh have an awesome podcast kind of like this one uh where we have conversations very much like this so it's called success story um you can get that anywhere you download your podcasts or social super easy it's all at Scott D. Clary um so if you want to follow me there you can connect with me I'm pretty much active anywhere and everywhere amazing well this has been a lot of fun as we kind of wrap up Scott for the folks who are listening and they're thinking to themselves hey I'm really interested in getting involved in private equity or angel or real estate but they just feel like they know what to do but they haven't taken that first step what advice do you have for them I would say start with a fund first and invest your money through somebody that has a track record significant track record just so you understand the process um so you don't have to do everything yourself to begin with and and just like try and pay attention to first of all be an auto diet act be a self-taught individual and you go watch youtube videos listen to podcasts you can get a majority information there but when you start to put your money into something I would say start with a fund or start with somebody else who you trust or a close friend trust and has had success with and has a track record with before you do your own thing even for a few years like I think it's just a smart move because again if you were for example trying to learn how to I don't take a product to market you'd probably work for a company first before you start your own company that's usually a good pathway and increases the odds of success so I think that that's the the same path that you should follow if you're trying to learn how to invest in a new thing that you don't have experience in and you don't have to do it for like 10 years but do it for like a year or two at least well that's such good advice and uh it was really amazing having yon Scott we'll have to do it again real soon thanks all for listening and we'll see you on the next episode thanks for listening to the mastermind set podcast make sure to hit that subscribe button and if you'd like to watch another years one up top and here's another great video right down below