The land ofthe gilded loafer isn't just for those from Ivy's 🧵
#1 Go where they already want what you're selling.
- Bunch of us on z twitter looking for SMB, RE, storage deals & employees
If someone finds me deals/operators in my target. I'd pay 'em.
Who can you solve a problem for already in the space?
#2 Find deals, get paid
- You could get a % of carry (profits)
- Or a finders fee for the business
- Or even a position as a scout if you find a lot
#3 Good deals, in their target.
If not on target, worthless.
- You can't send sloppy deals
- Have to learn each investors thesis
But since I only do 1 deal per 100-200+ I look at...
- if you bring me one you save me 10's of hours.
#4 Single biggest prob right now is dealflow.
Not capital. Not marketing.
Solve the problem, make a profit.
Example in action:
Just got sent a deal for a RV park in my DM's.
- cashflowing
- $100k-$5M check size
- proven operator
- nice margins
- room for improvement
Doing the deal, paying the finder.
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1 Deal did 500% return in 3 years, and this early 1 also went to ZERO
A THREAD about a deal of mine and the dark side of investing in SMB business...
👇👇
Invested in a very small CPG company to take a large minority position.
- $50k invested
-$50k in debt
- $$$$$ in time & stress
This was a TON of $ for me.
(Dang that's still a lot of $, I hate losing $20 bucks)
My Pain in 60 Seconds:
- the company went to $0.
- lost all the $
- ended up ruining my friendship w/ the founder
- wasted a year trying to fix it
- now can’t even look at this type of food 🤢
When I started in finance, I had to google what a mutual fund was.
Not my 💡moment.
How bout I save you the embarrassment of doing what I did & asking if I had to "carry" something when they said I got carry... 🤦♀️
Top terms to know (so u sound supa smart):
#1 Equity kicker
- Aka a sweetener
- An option to buy equity...
- At a discounted price...
- Bc u invested in a company today...
- Like when they throw in hot dog when u buy a car (same same really)
#2 Full ratchet 🔧
- If company u invest in goes down in value...
- 🔧 for preferred shares protects u from...
- Getting diluted (aka owning less of company)
How fast did Venezuelan $ become worthless? (PS I was there).
May 2015 bolívar lost 25% value in week; $300 = $1
May 14, $400 = $1
May 21, $500 = $1
July 3, $600 = $1
Feb 2016 $1k = $1
Nov 9, $2k = $1
Nov 21, $3k
Feb 2018 lost 99.6%, 25k = $1
Today $248k = $1
In economics, things take longer than you think, then happen faster than you think.
Don't be left holding the last Bolivar. Asset up.
This was a tragedy.
Started by incompetent politicians
Finished by idealistic citizens
WHY PASSIVE INCOME IS CRITICAL? And how to get it?
1st Why?
Out of a job for a year is NORMAL
- 60% of American adults live with chronic illness
- 42% have more than one
- 1/4 Americans will have a disability (That’s 61 MILLION PEOPLE)
Even for us young hustlers:
- 1/4+ of today's 20 year olds can expect to be out of work for at least a year bc of a disabling condition before they reach retirement
And yet we SUCK at saving:
65% of households lack a mere six weeks of take-home pay on hand.
37% of respondents unable to cover more than a month of normal spending.