Latest / Money And Wealth With John Hope Bryant / Let My Accident Be Your Purpose

Transcript

Let My Accident Be Your Purpose · Money And Wealth With John Hope Bryant

0:00
Speaker 1: Speaks to the Plannet.
0:01
Speaker 2: I go by the name of Charlamagne the God, and
0:02
Speaker 2: guess what, I can't wait to see y'all at the
0:04
Speaker 2: third annual Black Effect Podcast Festival. That's right, We're coming
0:08
Speaker 2: back to Atlanta, Georgia, Saturday, April twenty six at Poeman
0:11
Speaker 2: Yards and it's hosted by none other than Decisions, Decisions Man,
0:15
Speaker 2: D B and Wheezy. Okay, we got the R and
0:17
Speaker 2: B Money podcast were taking Jay Valentine. We got the
0:20
Speaker 2: Woman of All Podcasts with Sarah Jake Roberts. We got
0:22
Speaker 2: Good Mom, Bad Choices. Carrie Champion will be there with
0:25
Speaker 2: her next sports podcast and the Trap Nerds podcast with
0:28
Speaker 2: more to be announced. And of course it's bigger than podcasts.
0:31
Speaker 2: We're bringing the Black Effect Marketplace with black owned businesses
0:34
Speaker 2: plus the food truck court to keep you fed while
0:37
Speaker 2: you visit us. All right, listen, you don't want to
0:39
Speaker 2: miss this. Tap in and grab your tickets now at
0:42
Speaker 2: Black Effect dot Com Flash Podcast Festival.
0:45
Speaker 1: Welcome the Money in Wealth with John O'Bryant, a production
0:49
Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey. Hey,
1:00
Speaker 1: this is John Hope Bryant and this is Money and
1:03
Speaker 1: Wealth and this is a very special episode where I
1:10
Speaker 1: break down how I bought a twenty million dollar company
1:16
Speaker 1: when I was about twenty one years old, and that
1:20
Speaker 1: was by accident. By the way, I'll explain every bit
1:23
Speaker 1: of it because that sort of stumbled into great and
1:26
Speaker 1: it's just by I mean people. I love when my
1:32
Speaker 1: loved ones told me that half of life is just
1:34
Speaker 1: showing up. Half success is just showing up. This doctor
1:36
Speaker 1: David Dalton, my father in law, and I think that
1:41
Speaker 1: this story will prove that that's mostly right. You got
1:45
Speaker 1: to show up with the right attitude, show up with
1:47
Speaker 1: work ethics, show up with hustle, show up with integrity,
1:50
Speaker 1: show up with leadership, show up with initiative. You can't
1:54
Speaker 1: just show up. You got to show up and show out.
1:57
Speaker 1: But you don't have to do anything extraordinary other than
2:01
Speaker 1: what you promised. And I will explain to you, with
2:06
Speaker 1: no money, how I bought a twenty million dollar company
2:10
Speaker 1: by accident. I will then explain to you how you
2:17
Speaker 1: can purchase a company two million to twenty million dollars
2:22
Speaker 1: on average, How you can buy a company two million
2:25
Speaker 1: to twenty million dollars in range for non recourse debt,
2:31
Speaker 1: which means not personally guaranteed and do that on purpose,
2:36
Speaker 1: and all of that's tied to a ten trillion dollar
2:40
Speaker 1: plus generational, once in a lifetime generational opportunity coming your way.
2:48
Speaker 1: This is John O'Brien and this is Money and Wealth
2:52
Speaker 1: on the Black Effect Network. So when I was ten
2:59
Speaker 1: years old, you probably know if you follow my story,
3:02
Speaker 1: I started my first business, and I had several businesses
3:05
Speaker 1: from age ten to age twenty probably try to probably
3:09
Speaker 1: tried one hundred different business concepts, most of which didn't work.
3:15
Speaker 1: But success is going from failure to failure without loss
3:19
Speaker 1: of enthusiasm. I just never, ever, ever, ever, ever was
3:23
Speaker 1: going to give up. And as a good friend of mine,
3:28
Speaker 1: Tony Resterer would say, if you don't freaking quit, you
3:31
Speaker 1: can't freaking fail. He didn't use the word freaking. You
3:34
Speaker 1: can figure the rest of that out. This is a
3:36
Speaker 1: PG podcast. Tony is a great entrepreneuri businessman, and he's right,
3:44
Speaker 1: if you don't quit, you can't fail. So it wasn't
3:47
Speaker 1: that I was the smartest guy on the planet, although
3:50
Speaker 1: I think I'm reasonably smart. It was that I just
3:54
Speaker 1: had a greater work ethic than everybody else. And well,
3:58
Speaker 1: the devil is lazy. So as I was saying, love
4:03
Speaker 1: is work, non love is laziness, an anti love is evil.
4:05
Speaker 1: Evil exists, but it's very rare. Most people are just lazy,
4:10
Speaker 1: physically lazy, financially lazy, spiritually lazy, intellectually lazy. They just
4:15
Speaker 1: don't want to do the work. They want somebody else
4:18
Speaker 1: to do the work for them. What would happen if
4:22
Speaker 1: you're willing to do the work. Well, again, that's probably
4:26
Speaker 1: half a success. Just showing up right tight and ready
4:30
Speaker 1: to work throughout the night. An entrepreneur works eighteen hours
4:35
Speaker 1: a day to keep from getting a job. Success is
4:39
Speaker 1: going from failure to failure without loss of enthusiasm. These
4:43
Speaker 1: are not just sayings that I use in my life.
4:46
Speaker 1: This is how I live my life. This is literally
4:49
Speaker 1: the context for success in my world. I also take
4:56
Speaker 1: note for vitamins. So here you go. I get to
5:00
Speaker 1: eighteen years of age and you again, if you follow me,
5:03
Speaker 1: you probably know that I ended up homeless for six
5:07
Speaker 1: months of my life when I was eighteen years of age,
5:10
Speaker 1: just taking too many risks. And yes, my mom and
5:14
Speaker 1: dad would have taken me in if they had known
5:15
Speaker 1: I was homeless, but they didn't put me in that situation,
5:18
Speaker 1: and I didn't expect for them to bail me out
5:20
Speaker 1: of it. I also knew that if I had told
5:22
Speaker 1: my mother, who worked at McDonald douglas air Craft, hard
5:25
Speaker 1: working black woman, if I had told my mother that
5:27
Speaker 1: I was homeless, she would have forced me to come
5:29
Speaker 1: home and live with her, and she would have got
5:32
Speaker 1: me a job at me donald Douglas Aircraft, making X
5:34
Speaker 1: dollars an hour like her. I think it was fifteen
5:37
Speaker 1: dollars an hour, eighteen dollars an hour, which was which
5:39
Speaker 1: was a really great wage back then. But I just
5:42
Speaker 1: was not interested in being a W to employee. I
5:47
Speaker 1: didn't want to be a ten ninety nine either a contractor.
5:50
Speaker 1: I wanted to write the check, not cash it. So
5:54
Speaker 1: I didn't want to be a W two employee. It
5:56
Speaker 1: was all good. I just that was just not my
5:58
Speaker 1: calling for my life. So I didn't tell my mother.
6:02
Speaker 1: So in the course of me being homeless, and that
6:06
Speaker 1: was again just too you know, too much month to
6:09
Speaker 1: end my money and too many risks that didn't work out.
6:14
Speaker 1: And I'll do it a separate podcast just to really
6:18
Speaker 1: unpack in detail theless homelessness experience, because it was quite
6:22
Speaker 1: a trip rainbows after storms. Really, you cannot have a
6:26
Speaker 1: rainbow without a storm first. With all that drama, there
6:29
Speaker 1: was just beauty in the midst of it, the relationships
6:32
Speaker 1: I met, the experiences I had, the grit that I gained,
6:35
Speaker 1: the resilience I mean, I mean, we do do tell
6:37
Speaker 1: me no today, I had no and I walked in
6:39
Speaker 1: the door. No, it's not so bad. So in the
6:44
Speaker 1: midst of all of this, I ended up meeting some
6:50
Speaker 1: special people. And I remember I had this investor named
6:57
Speaker 1: Davel Mayra, and I'm a Maria owned Malibu Cinema, and
7:03
Speaker 1: I had run through some money that he had invested
7:06
Speaker 1: in couple of my businesses. I think it was a
7:07
Speaker 1: mobile detailing business and a constant promoting business and a
7:11
Speaker 1: marketing clothing marketing business, and they all went bust. And
7:19
Speaker 1: I went with him with great integrity to say I'll
7:21
Speaker 1: pay you back. And he said, well, you know, you're
7:23
Speaker 1: not doing very good at this entrepreneurship and small business
7:26
Speaker 1: thing at the moment. How about you go get a
7:28
Speaker 1: job to pay me back. Because I also had bought
7:31
Speaker 1: a car from Dable Mara. In addition to me being
7:34
Speaker 1: my venture investor, he was my transportation. I couldn't pay
7:38
Speaker 1: the car note either, so I was really forced to say, yes,
7:42
Speaker 1: it's one of the few jobs I've ever had a
7:45
Speaker 1: traditional job. But I felt I had to have the
7:49
Speaker 1: integrity to say temporarily, I have run into a wall. Failed.
7:55
Speaker 1: It wasn't I'm not a failure. It was a failed experiment,
7:59
Speaker 1: and I need to reset myself and try again. So, yes,
8:05
Speaker 1: you know I messed up. I'm going to now do
8:08
Speaker 1: as you say and go get a job so I
8:10
Speaker 1: can begin to pay you back. So he introduced me
8:13
Speaker 1: to a guy named Stephan Codder Miller Way Cotter and
8:16
Speaker 1: Company was the name of the investment company. And Steve
8:24
Speaker 1: Miller can visualize him now in my mind's I actually
8:28
Speaker 1: God rest his soul and he asked Steve to give
8:32
Speaker 1: me a job. So Steve did that, gave me a job.
8:36
Speaker 1: It was in the Westwood Gateway complex in West Los
8:38
Speaker 1: Angeles at Santa Monica and Supovida and this beautiful marble
8:43
Speaker 1: building that they occupy. Actually it was on Santa Monica. Actually,
8:48
Speaker 1: Brian Group Ventures occupied the Westwood Gateway complex. Later this
8:52
Speaker 1: was a block south of that in the Olympic Towers
8:57
Speaker 1: at the four or five Freeway, and Olympic Boulevard for
9:03
Speaker 1: those who know Los Angeles and Way Cotton Company was
9:08
Speaker 1: there had, as I recall, you know, a court of
9:11
Speaker 1: the floor, a private banking group. I didn't know what
9:15
Speaker 1: that was, and they assigned me it was the only well,
9:21
Speaker 1: it was one or two black people there. They assigned
9:23
Speaker 1: me to go make equity loans in south central LA
9:28
Speaker 1: with private money. I didn't know what that meant, but
9:30
Speaker 1: essentially it was a hard money loan to people who
9:33
Speaker 1: couldn't afford to pay it back, who had equity in
9:34
Speaker 1: their houses and inner city neighborhoods. And these were, you know,
9:38
Speaker 1: essentially little old ladies who had one hundred thousand dollars
9:42
Speaker 1: a home with no mortgage on it. And they wanted
9:44
Speaker 1: me to find these people because of course I'm black.
9:47
Speaker 1: It wasn't racist, by the way, it was target marketing.
9:51
Speaker 1: These were actually decent people. They just wanted a good
9:53
Speaker 1: return on their money. This is where I really began
9:56
Speaker 1: to learn the lesson of how capitalism is a gladiator
9:59
Speaker 1: sport business. This is not emotional and the color was green,
10:03
Speaker 1: like these were decent people. They just wanted to run
10:06
Speaker 1: a successful business. They had to have a return on
10:08
Speaker 1: the private money that had been invested in their company.
10:11
Speaker 1: They had to lend it out and get a return
10:14
Speaker 1: on that and have profit for them. And one of
10:18
Speaker 1: the few places that they discovered they could relent it
10:21
Speaker 1: out and get a proper return was in south central
10:25
Speaker 1: LA in the way in which I just described. So
10:30
Speaker 1: after doing this a little bit, I realized these were
10:33
Speaker 1: hard money loans. I called him the perfect eyesighte loans
10:36
Speaker 1: twenty points and twenty percent interests, and after the loan
10:39
Speaker 1: you went blind it was twenty I mean, in other words,
10:43
Speaker 1: twenty points is twenty percent, twenty points is a fee,
10:47
Speaker 1: and twenty percent interests. So twenty percent plus twenty percent
10:51
Speaker 1: is forty percent. So if you're making one hundred thousand
10:53
Speaker 1: doar loan, I mean, that's forty thousand dollars that in interest,
10:58
Speaker 1: and then you'd have you'd ask the borrowed to pre
11:00
Speaker 1: pay some of the payments, so maybe they would get
11:04
Speaker 1: fifty thousand dollars out of one hundred thousand ur a loan.
11:07
Speaker 1: They were happy because they got the cash and they
11:09
Speaker 1: didn't have any payments for a year or two. But
11:12
Speaker 1: to me, it was just it was ridiculous. So I
11:15
Speaker 1: stopped doing that within a couple months. Once I realized
11:18
Speaker 1: how bad it was and said, look, let me turn
11:22
Speaker 1: you into a real business. There are these actors in
11:25
Speaker 1: Hollywood that I know. That's another podcast I was doing
11:28
Speaker 1: when I was in the entertainment business. The actors I
11:32
Speaker 1: know in Hollywood have made some movies and had some success,
11:35
Speaker 1: but they don't know when the next movie's coming, and
11:37
Speaker 1: they don't know how long the cash has to last them.
11:40
Speaker 1: So they have these properties, but they need a bridge
11:43
Speaker 1: loan every now and then, a bridge loan, meaning a
11:46
Speaker 1: loan between one bridge to another over a waterway. It's
11:50
Speaker 1: not literally a bridge loan, but that's what they call it.
11:52
Speaker 1: That's where the phrase comes from, a bridge loan. So
11:55
Speaker 1: maybe now you understand when you hear these phrases a
11:58
Speaker 1: bridge loan, where this comes from. And I was going
12:02
Speaker 1: to make a bridge loan from these wealthy investors to
12:06
Speaker 1: these wealthy actors in Hollywood and producers on assets, mostly
12:11
Speaker 1: real estate that they owned. Although I did do a
12:13
Speaker 1: loan or a collector horse and a horse trailer, and
12:20
Speaker 1: I did some other had some paintings, but mostly on
12:23
Speaker 1: real estate. And all these memories are coming back to
12:27
Speaker 1: me now so I went to the owner of the
12:40
Speaker 1: company and said, look, versus making these loans to these
12:44
Speaker 1: little old ladies in south central a who can't pay
12:47
Speaker 1: you back, how about we make a loan to these
12:50
Speaker 1: wealthy people up north who can pay you back. They're
12:53
Speaker 1: going to pay you the same interest rate, and it's
12:56
Speaker 1: a and it's more honorable. And and they said, well
13:01
Speaker 1: that sounds like a great business you could you know,
13:03
Speaker 1: we'll we'll write you know, we'll give you the same
13:05
Speaker 1: deal we did and go go at it. And said, well,
13:08
Speaker 1: I actually want to be your business partner. And they
13:10
Speaker 1: said what I want to be your business partner? I said,
13:13
Speaker 1: tell you what. And I didn't have any authority from
13:15
Speaker 1: the guy who gave me this job to say this.
13:18
Speaker 1: Take the salary back. Remember remember I was only there
13:22
Speaker 1: to pay back a debt. Pick the salary back, take
13:24
Speaker 1: pick the car allowance back, take the mileage allowance back
13:28
Speaker 1: on the car, take the expense account back. I don't
13:33
Speaker 1: need any of it. What I want is half interest
13:36
Speaker 1: in a new corporate entity with no assets in it.
13:40
Speaker 1: But but I want your Rolodex, mister step Steve Miller.
13:44
Speaker 1: Back then it was a Rolodex. It literally set on
13:45
Speaker 1: the decks and it's it was a spindle on it
13:48
Speaker 1: spinned when you rolled it over a rolodex. They called
13:53
Speaker 1: it with business cards on it. I said, I want
13:55
Speaker 1: access to your rolodexs for access to capital. I'll give
13:59
Speaker 1: you acces to the marketplace. I'll go hustle and get
14:02
Speaker 1: you the customers. And I basically won fifty percent of
14:05
Speaker 1: every deal I close. And they looked at me and
14:11
Speaker 1: shrugged their shoulder. Seeing a good deal of having basically
14:14
Speaker 1: a free employee, said sure and laughed. They said, you
14:18
Speaker 1: got to do this, and you got to pass up
14:19
Speaker 1: the California real estate tests. Well, so I went to
14:23
Speaker 1: I sort of went about what I was trying to do.
14:25
Speaker 1: In the first year, I did absolutely zero in business.
14:29
Speaker 1: The whole year zero in business. So I'm making no
14:31
Speaker 1: money and I've done zero in this new business I proposed.
14:36
Speaker 1: And I'm not paying the guy back yet either, so
14:39
Speaker 1: he's not happy. The people in the office are laughing
14:43
Speaker 1: because I've just I've just failed the California really Today
14:46
Speaker 1: tests three times. Now. The law used to state, somebody
14:51
Speaker 1: listening to this can tell me whether this is still
14:52
Speaker 1: the case in California. But the California real estate law
14:56
Speaker 1: used to state that if you failed the California real
14:59
Speaker 1: Estate test, this wasn't a broker's test, this was a
15:03
Speaker 1: basic real estate test. If you failt this test four times,
15:08
Speaker 1: you're too dumb to be an agent. You couldn't take
15:10
Speaker 1: it anymore. And I failed it three times. And so,
15:14
Speaker 1: after no revenues and failing three times the office, when
15:18
Speaker 1: I walked in, they would snicker and somewhat openly laugh.
15:22
Speaker 1: I ignored them. To this day, I ignore the noise. I
15:26
Speaker 1: walked consciously through life, oblivious of most things around me,
15:29
Speaker 1: because it just doesn't matter. I failed the California real
15:33
Speaker 1: Estate tests three times and passed it the fourth time,
15:37
Speaker 1: walking right through the criticisms and sneers and jeers. The
15:43
Speaker 1: second year I did nine million in business. The thirty year,
15:47
Speaker 1: I did fourteen million or so in business. The third
15:50
Speaker 1: year I did twenty million. I think it was twenty
15:52
Speaker 1: one million in business. No one was laughing anymore, and
15:56
Speaker 1: I was paying back my debts. I think I'd paid
15:59
Speaker 1: back my debts too, the guy who had loaned me
16:02
Speaker 1: the money initially. Now, even though I'd done these deals,
16:06
Speaker 1: doing that volume does not mean that that was money
16:09
Speaker 1: in my pocket. I was brokering loans assisionally, so I
16:12
Speaker 1: was getting fees off of all of this volume that
16:15
Speaker 1: I was doing. Of financing a deal here for five
16:18
Speaker 1: hundred thousand, a deal here at the eight hundred thousand,
16:20
Speaker 1: I'd get fees on that, and I'd pocket the fees.
16:23
Speaker 1: Well in the last year or so, they couldn't pay
16:26
Speaker 1: me the fees, and I couldn't figure out, at least
16:28
Speaker 1: not all of my fees. They couldn't figure out why
16:30
Speaker 1: this successful company wasn't paying me. And that's when I
16:33
Speaker 1: began to really realize, and everything's not what it appears
16:36
Speaker 1: to be. Everything this glitters not go. We had a
16:38
Speaker 1: nice office building and the executives went home. They had
16:41
Speaker 1: beautiful homes, they had nice cars, and they were wearing
16:44
Speaker 1: suits and all that stuff. I didn't realize they were
16:46
Speaker 1: in distress. And so I found out that they couldn't
16:51
Speaker 1: pay me and that they were trying. And I found
16:53
Speaker 1: out because they brought me an employment agreement to sign,
16:56
Speaker 1: because they found a European buyer to buy the company,
16:59
Speaker 1: and they wanted me to sign an agreement for employment
17:02
Speaker 1: to this new European company. And so I went to
17:04
Speaker 1: the owner, Steve Miller and said, well, mister Miller, now
17:07
Speaker 1: I'm twenty something, you know, twenty I don't know what
17:09
Speaker 1: it was, twenty twenty one ish twenty two. I'm not
17:14
Speaker 1: an employee, Steve. I'm a co owner. I'm a businessman.
17:18
Speaker 1: He says, you're not a businessman. You're lucky. He sneered
17:21
Speaker 1: at me and snatched the employment agreement and turned in
17:25
Speaker 1: his desk away from me. And I realized this didn't
17:29
Speaker 1: go very well, and so I figured the only way
17:32
Speaker 1: I was going to be free was to buy my freedom,
17:35
Speaker 1: so to speak. So I was going to buy the company.
17:37
Speaker 1: So I went to the Yellow Pages. This is a
17:40
Speaker 1: Google search today, but I went literally to the Yellow Pages,
17:44
Speaker 1: opened it to law firms, and I wanted to find
17:47
Speaker 1: somebody who could represent me to buy Wade Codder and Company. Well,
17:52
Speaker 1: my division was WWCC Funding Corporation and the division I
17:58
Speaker 1: had a partnership interest in, and they couldn't pay me. Well,
18:02
Speaker 1: they didn't pay me because they couldn't pay me. They
18:03
Speaker 1: didn't have any money, and that's why they're selling the company.
18:07
Speaker 1: So I opened the Yellow Pages and I found the
18:11
Speaker 1: ads for the biggest law firm for business. I went
18:14
Speaker 1: to business law law firms and then business legal firms,
18:18
Speaker 1: and I found the law firms in Century City, California,
18:21
Speaker 1: where all the ballers hung out, and the law firm
18:24
Speaker 1: that had the biggest ad, which was Jeffer, Mangos, Butler
18:28
Speaker 1: and Marmoro. I couldn't say Jeffers. I didn't want to
18:32
Speaker 1: screw up Jeffers. I didn't want to Mango, Mangos or Mamo.
18:38
Speaker 1: But I could say Butler. So I called and asked
18:41
Speaker 1: for Jim Butler, who was a partner in the firm.
18:44
Speaker 1: And Jim Butler answered the phone and I said, this
18:48
Speaker 1: is John O'Briant. And back then I would say John Bryant,
18:51
Speaker 1: and I want to buy this company and I want
18:55
Speaker 1: you to represent me. And he said tell me about
18:57
Speaker 1: this company and I said, it's way Cotter and Company
19:00
Speaker 1: an WCC funding. He said, wait a minute, that Steve Miller.
19:02
Speaker 1: Yes it is, and he said waiting, hold on, you're
19:05
Speaker 1: buying this company. Yes, I am, And so I explained
19:08
Speaker 1: it to him and he said no, no, no, no, I
19:10
Speaker 1: can't represent you. You can't do this. I said, no, no, no,
19:13
Speaker 1: this is racism, this is true discrimination. You can't tell
19:15
Speaker 1: me what I can do and he said, look, hold
19:18
Speaker 1: on a minute, wait a minute, let me call you
19:20
Speaker 1: right back. Give me your number. And this is why
19:24
Speaker 1: you should never assume or presume anything. When you assume,
19:27
Speaker 1: you make an ass out of you and me. And
19:31
Speaker 1: so he called me back and he says, look, you
19:35
Speaker 1: can't buy this company. Yes, I'm telling you, I'm going
19:37
Speaker 1: to buy this company over, you know, over the round
19:41
Speaker 1: and threw what I'm gonna get to it. You're not
19:42
Speaker 1: gonna tell me what I can do. If you want
19:44
Speaker 1: to represent me, somebody will. He said, young man, calm down,
19:48
Speaker 1: you can't buy the company because the company's broke, right,
19:51
Speaker 1: And I've done a little research and it appears the
19:54
Speaker 1: only asset in this company, the only people making any
19:57
Speaker 1: money is your division. You. You're the only thing value
20:03
Speaker 1: in this company, which is why they got upset when
20:04
Speaker 1: you wouldn't sign the employment contract. How much they owe you?
20:07
Speaker 1: And I told them the amount and he said, well,
20:10
Speaker 1: they can't afford to pay you that, So you don't
20:12
Speaker 1: want to buy this company. I'm not racist, I'm trying
20:15
Speaker 1: to help you. You don't want to buy this company
20:18
Speaker 1: because if you buy the assets, you buy the liabilities.
20:21
Speaker 1: This is like an act of financial literacy lesson. I
20:23
Speaker 1: don't know what an asset or a liability was back then,
20:27
Speaker 1: and they got a lot of liabilities, and you don't
20:29
Speaker 1: want to be saddled with any of that. You're the
20:31
Speaker 1: only asset, So you want to basically use what they
20:36
Speaker 1: owe you as collateral well as payment if you will,
20:41
Speaker 1: to buy the company, to buy your division, so that
20:45
Speaker 1: you release them from your debt. You are part of
20:49
Speaker 1: their if they have to file bankruptcy or something, you're
20:51
Speaker 1: going to be one of the debtors. I know the
20:53
Speaker 1: debtor was either and it's gonna be very messy for them.
20:57
Speaker 1: If you will some documents I presented for you, I
21:02
Speaker 1: would developed for you. Jim Butler said, I'll negotiate management buyout.
21:09
Speaker 1: I didn't know what that phrase was, either for you
21:11
Speaker 1: to acquire your own employer and become a businessman, and
21:20
Speaker 1: I said, yes, calm down, apologize for calling him a racist,
21:25
Speaker 1: and he did the deal, and we used the capital
21:31
Speaker 1: that was owed to me in fees to purchase the
21:35
Speaker 1: company and wipe out any debt, any obligation I owed
21:39
Speaker 1: to them and any obligation they owed to me. And
21:42
Speaker 1: that's how I bought my first company. By accident that
21:47
Speaker 1: then turned into Bryant Group Companies, Inc. A California company.
21:53
Speaker 1: We moved into a fancy office place on the eighth
21:55
Speaker 1: floor of the Westwood Gateway complex in West Los Angeles
22:00
Speaker 1: on Little Santa Monica and Supovida Boulevard. Now I have
22:04
Speaker 1: capital when I've got all this stuff, but I couldn't
22:07
Speaker 1: actually sign the lease because the company that owned the
22:11
Speaker 1: building and I can't mention the name of the company
22:13
Speaker 1: because they still own the building, but your own research,
22:16
Speaker 1: the company that owned the building had never seen a
22:18
Speaker 1: meet before, and when I walked in to sign the lease,
22:22
Speaker 1: they're like nah. And I don't think it was pure racism.
22:25
Speaker 1: I think it was just a lack of familiarity with
22:28
Speaker 1: a me, a young black capitalist who was credible and
22:32
Speaker 1: like we we're good. And I was trying to release
22:35
Speaker 1: out basically a quarter of a floor Florida ceiling windows, marble,
22:41
Speaker 1: you know, beautiful building, and I realized the game that
22:46
Speaker 1: was going on, so I decided instead to play the
22:53
Speaker 1: game better than them. When you're being run out of town,
22:56
Speaker 1: get in front of the crowd and made like a parade.
22:58
Speaker 1: So I found a a guy who met who was
23:02
Speaker 1: like a Central Casting. I found this guy who was
23:04
Speaker 1: running an Australian publicly traded company. And I can't mention
23:07
Speaker 1: his name either because I don't embarrass him. But he
23:11
Speaker 1: was six', four beautifully Handsome australian white dude who was
23:16
Speaker 1: running a publicly traded company that had gone. Bust he
23:19
Speaker 1: come To america at least or bought this mansion In Pacific,
23:25
Speaker 1: palisades had A jaguar convertible and lovely wife and, lifestyle
23:30
Speaker 1: but he was going broke. SLOWLY i don't know HOW
23:33
Speaker 1: i ran in this, guy BUT i had put the
23:34
Speaker 1: word out and NEEDED i needed an. EMPLOYEE i need
23:37
Speaker 1: a president for my. Company WHAT i needed was a.
23:39
Speaker 1: Front by the, way typically if somebody is a white,
23:43
Speaker 1: company they have a black or minority front to try
23:45
Speaker 1: to get. CONTRACTS i was a black owned. COMPANY i
23:47
Speaker 1: needed a white front to get this. Lease SO i
24:01
Speaker 1: hired this, guy wonderful human, being made him my, president
24:06
Speaker 1: gave him a company. Car he had lost his his
24:11
Speaker 1: car by the time we cut the. Deal he had
24:14
Speaker 1: lost his, transportation SO i bought. IT i bought him
24:16
Speaker 1: A yugo because it's ALL i could. AFFORD A yugo
24:19
Speaker 1: is a really crappy, car by the, way and this
24:23
Speaker 1: car was so bad that he was on the. Freeway
24:24
Speaker 1: and this a small Little yugo and this guy was
24:26
Speaker 1: six y. Four this guy was on the freeway and
24:29
Speaker 1: he called me one day in the windshield wipers and
24:32
Speaker 1: one of the side of mirrors that had flown off
24:33
Speaker 1: on the. Freeway that's how raggedy his car. Was, Anyway
24:38
Speaker 1: i'm so busy running the, business doing my, THING i
24:40
Speaker 1: didn't notice when he actually sold the company car and
24:44
Speaker 1: pocketed the. Money so many, stories BUT i didn't care
24:48
Speaker 1: BECAUSE i was winning the. BATTLE i wanted TO i
24:50
Speaker 1: WANTED i was winning the. WAR i wasn't too concerned
24:52
Speaker 1: about the. Battle SO i Needed Chris blacks in the
24:55
Speaker 1: front from. Me and When chris walked, in he looked
24:57
Speaker 1: Like central. Casting so Anyway chris went, in would, say
25:00
Speaker 1: anyone's a mission's, name but it's actually it's actually embarrassing to,
25:04
Speaker 1: me not. Him great, guy great, friend and thankful to.
25:08
Speaker 1: Him this day he went and signed this. Lease he walked,
25:11
Speaker 1: in the company immediately signed him, up same deal they
25:16
Speaker 1: turned down for. Me don't get, mad get even business
25:19
Speaker 1: is not. Personal so we signed the lease AND i
25:23
Speaker 1: move in and learned another lesson between business and. Busyness
25:29
Speaker 1: and when you're out for log see your, Inflow you're
25:31
Speaker 1: overhead will be your. DOWNFALL i, STARTED i started six
25:33
Speaker 1: divisions at the same, time had meetings going, on BUT
25:36
Speaker 1: i didn't have any revenue coming. In and, anyway that
25:40
Speaker 1: that all sorted out and worked out just fine over,
25:42
Speaker 1: Time AND i don't have time to go into that
25:44
Speaker 1: on this. Podcast, uh Maybe i'll continue the story what
25:47
Speaker 1: happened with that company a little. Later, ultimately that's, UH
25:52
Speaker 1: i got involved with philanthropical. WORK i was so interested
25:54
Speaker 1: in philanthropical. WORK i was sort of missing an action
25:57
Speaker 1: a little bit in my own. Business became a mentee
26:00
Speaker 1: Of Tom bradley and created a city government agency for
26:05
Speaker 1: the city Of Los angeles and still existed this. Day
26:09
Speaker 1: by the, WAY i became the precursor for the idea
26:12
Speaker 1: Of Operation, home which was created a couple of years
26:15
Speaker 1: after that after The Rodney king. Riots, okay now let
26:19
Speaker 1: me pivot to. You, now so why is my accidental
26:22
Speaker 1: acquisition an opportunity for an intentional purchase of a business
26:27
Speaker 1: from two million to twenty million on average for you
26:29
Speaker 1: in non recourse? Debt And i'm gonna go one step.
26:33
Speaker 1: Further this is actually easier to do than starting a
26:37
Speaker 1: one hundred thousand dollars restaurant with bank. Money this is
26:42
Speaker 1: easier to do than starting a little club or opening up.
26:45
Speaker 1: Restaurant i'm not telling you not to do. That i'm
26:47
Speaker 1: just saying starting a little business trying to raise one,
26:51
Speaker 1: thousand two hundred, thousand four, hundred five hundred thousand crowdfunding
26:55
Speaker 1: and personal guarantees and getting a bank loan and debt
26:58
Speaker 1: and all this kind of stuff using this is much.
27:01
Speaker 1: Easier listen to me, Now i'm about to give you
27:03
Speaker 1: a little. Bit As JAY z would, Say i'm gonna
27:05
Speaker 1: give you a million dollars worth a, game but nine ninety.
27:07
Speaker 1: Nine but this is none ninety nine because as a
27:09
Speaker 1: subscriber to this, podcast you didn't pay for. It all,
27:11
Speaker 1: Right i'm giving you free, game all. Right write this.
27:14
Speaker 1: Down the baby boomer generation is going to be the
27:17
Speaker 1: first generation over the age of sixty, five more people
27:20
Speaker 1: from sixty five than under the age of eighteen in
27:22
Speaker 1: the next ten to twenty. Years this group of baby
27:25
Speaker 1: boomers are all trying to retire and at the same
27:28
Speaker 1: time they've collected about one hundred and eighty trillion dollars of.
27:33
Speaker 1: Wealth that's about thirty five to forty percent of all
27:36
Speaker 1: the wealth in the. World here in The United states Of.
27:38
Speaker 1: America they're going to take their stocks and their, bonds
27:42
Speaker 1: and their real estate and liquid, assets and they're going
27:46
Speaker 1: to give them as inheritance to their kids and their
27:50
Speaker 1: wives or husbands or. Whomever and there's an old. Joke
27:54
Speaker 1: the first generation makes, it the second generation spends, it
27:58
Speaker 1: and the third generation. Loses it's not always, true but
28:01
Speaker 1: it's a popular saying for a, reason meaning that the
28:06
Speaker 1: kids and the family members don't really want the. Businesses
28:10
Speaker 1: i'm gonna say that. Again it's one hundred and eighty
28:13
Speaker 1: trillion dollars one hundred and sixty trillion dollars to, say,
28:17
Speaker 1: conservatively of generational. Wealth about eighty eight to one hundred
28:23
Speaker 1: tree of that training dollars of that is going to
28:26
Speaker 1: transfer in the next decade to two decades when it.
28:30
Speaker 1: Transfers the liquid versions of that and things that can
28:33
Speaker 1: be made, liquids real, estate, stocks, bonds cash and cash
28:38
Speaker 1: equivalents will transfer through inheritance to the, heirs the children
28:44
Speaker 1: whoever that is bestowed upon in the. Wheel but the
28:48
Speaker 1: thing that will get stuck in most, cases and ninety
28:50
Speaker 1: percent of businesses do not have a plan for what
28:54
Speaker 1: comes next when they stop running the. Business about ten
28:58
Speaker 1: trillion dollars conservatively of these assets are successful, businesses the
29:04
Speaker 1: basis of which created the wealth That i'm not talking.
29:08
Speaker 1: About so we're talking about business that has in real,
29:12
Speaker 1: estate in many, cases has a client, list has a good,
29:15
Speaker 1: reputation has a good, name is a going, concern a,
29:20
Speaker 1: popular successful going. Concern is nothing wrong with, it nothing
29:26
Speaker 1: wrong with it except the kids don't want, it the
29:30
Speaker 1: wife doesn't want, it nobody wants. It but you should
29:34
Speaker 1: want it because that's your ticket into the big. Game
29:39
Speaker 1: And i'm gonna tell you a little. Secret if you
29:41
Speaker 1: can find one of these, businesses and most of these,
29:44
Speaker 1: businesses you got to hunt for them. Now but most
29:46
Speaker 1: of these, businesses they don't have an exit. Plan the
29:49
Speaker 1: small business owner that owns it has made no plans
29:54
Speaker 1: for what comes next when they're tired running that. Business in,
29:57
Speaker 1: again in most, cases the kids don't want, it the
29:59
Speaker 1: wife DOESN'T i, wanted the husband doesn't want. It if
30:01
Speaker 1: the why it's running the, business the husband doesn't want et.
30:03
Speaker 1: Cetera so they're, stuck and you can solve their problem
30:08
Speaker 1: by buying it from. Them, now you if the business
30:11
Speaker 1: Is i'm gonna make this. Easy the business is a
30:13
Speaker 1: two million dollar, business and you can get that and
30:16
Speaker 1: negotiat a. Price so let's say it's worth two million
30:18
Speaker 1: dollars and you negotiate a price of one point nine,
30:22
Speaker 1: million which is a reasonable. Negotiation by by the, way
30:24
Speaker 1: a successful negotiation is where everybody leaves this negotiation slightly. Annoyed,
30:29
Speaker 1: okay nobody got everything that they want. It so you
30:32
Speaker 1: agree to buy this business for one point nine million
30:35
Speaker 1: in this phantom example of a two million dollar business that's.
30:38
Speaker 1: Profitable and Maybe i'll deal with valuations of how you
30:42
Speaker 1: evaluate or create a value in a business in another,
30:44
Speaker 1: podcast but that's less. Important now somebody can help you
30:47
Speaker 1: get to an evaluation of the. Business, well let's assume
30:50
Speaker 1: it's worth two. Million you get it for one point nine,
30:52
Speaker 1: million but they want you to pay it in, cash you,
30:55
Speaker 1: know because they're trying to cash out us intake that
31:00
Speaker 1: To Wall. Street Wall street is producing three or four
31:04
Speaker 1: times more cash flow Than washington D c ever does
31:07
Speaker 1: in a. Year everybody's obsessed By washington D c is
31:10
Speaker 1: on the news all the, time and nobody's talking About
31:12
Speaker 1: Wall street In New York, city which is like a.
31:15
Speaker 1: Country and you go To Wall, street you go to
31:17
Speaker 1: a private equity. Firm sometimes it's venture. Backing but make this,
31:22
Speaker 1: simple a private equity. Firm it is what it sounds,
31:26
Speaker 1: like private equity and who is doing what in a
31:31
Speaker 1: more sophisticated version of WHAT i did way back when
31:34
Speaker 1: In Los. Angeles an EXAMPLE i gave you WITH wcc.
31:38
Speaker 1: Funding they've got private money that's trying to get a
31:41
Speaker 1: return right and they're looking for. Deals you've brought them
31:44
Speaker 1: a business worth two. Million it's going to, grow continue to.
31:47
Speaker 1: Grow it has a, history it has, clients it has
31:50
Speaker 1: a balance sheet and income, statement has, assets there's nothing
31:55
Speaker 1: wrong with. It it has an owner that's trying to.
31:58
Speaker 1: Exit you're going to get the to acquire that business with,
32:02
Speaker 1: you and they're going to finance it with non recourse,
32:04
Speaker 1: debt which means you don't have to personally guarantee, it
32:07
Speaker 1: and they're going to give, you if you're, lucky a
32:10
Speaker 1: two twenty. PLAN i make this really. Simple let's assume
32:13
Speaker 1: they give you ten percent ownership of this, business and
32:17
Speaker 1: they're going to own ninety, percent and maybe you earn into,
32:20
Speaker 1: more but you're going to get ten percent of this
32:21
Speaker 1: business or maybe twenty percent of the business when you,
32:25
Speaker 1: bought and they're going to own the rest of, it
32:27
Speaker 1: and they're going to finance it non recourse to, you
32:29
Speaker 1: so they're if it goes, bust they take on the,
32:32
Speaker 1: debt not. You and you can, say, well Why i'll
32:36
Speaker 1: get more than, That, well you didn't put up. Anything
32:37
Speaker 1: you brought them the. Opportunity this is better than the finder's,
32:40
Speaker 1: fee and you get to grow this. Business and as
32:42
Speaker 1: you grow this, business any value you create over the
32:45
Speaker 1: one point nine million dollars and you already, got you,
32:48
Speaker 1: know just under ten percent of that in the original purchase.
32:52
Speaker 1: Price by the, way when you negotiated, it you negotiated
32:54
Speaker 1: a profit. Upfront and the better you, negotiate the more
32:58
Speaker 1: profit you have walking into the. Deal and every dollar
33:01
Speaker 1: that you earn after that you get ten, percent twenty,
33:04
Speaker 1: percent whatever you. Negotiate and if you get, lucky if
33:06
Speaker 1: you get really good at, this you own fifty percent
33:09
Speaker 1: when you buy this, company and maybe who, knows maybe
33:12
Speaker 1: some miracle where they just finance. It AND i don't
33:16
Speaker 1: see this, world but maybe you own eighty percent of this,
33:19
Speaker 1: business and they're just taking to take a small precision
33:21
Speaker 1: percentage of this plus an interest rate. RETURN i doubt,
33:24
Speaker 1: that but in this, example or they're gonna they're gonna
33:28
Speaker 1: Take you're, going you, know own ten or twenty percent
33:30
Speaker 1: of this. Business and if you grow this business from
33:32
Speaker 1: two million dollar business over five years to a four
33:35
Speaker 1: million or six million dollar, business what that means you
33:38
Speaker 1: just became a, millionaire maybe several times over because you
33:44
Speaker 1: might be to sell this business for multiples of its
33:48
Speaker 1: cash flow and or profitability and or valuation over. Time
33:53
Speaker 1: and SO i just gave you a short crash, course
33:56
Speaker 1: uh here on how you can do a deal on.
33:59
Speaker 1: Wash this is a ten trillion dollar opportunity coming over
34:04
Speaker 1: the next ten or twenty. Years is happening right. Now
34:07
Speaker 1: you should go hunting in your, neighborhood hunting in your,
34:10
Speaker 1: county your, city and your. State hunting for businesses as
34:14
Speaker 1: you drive by, them as you look, in whether it's
34:17
Speaker 1: retail businesses or all the office buildings you, see or you,
34:20
Speaker 1: know just if you see somebody who you. KNOW i,
34:23
Speaker 1: mean don't go hunting for senior, citizens but you go
34:25
Speaker 1: see somebody who seems to be more mature as an.
34:29
Speaker 1: Owner and if you confirm they're the owner and inquire
34:33
Speaker 1: if they have any, interest make sure you wear a,
34:35
Speaker 1: suit make sure you look, proper that they have any
34:37
Speaker 1: interest in selling their, business and you might be interested
34:40
Speaker 1: as a buyer and look like somebody who might be
34:42
Speaker 1: able to acquire this, business looks. Serious if they say,
34:45
Speaker 1: yes you've got a. Deal and all you do now
34:49
Speaker 1: is find a bank that has a venture capital, division
34:51
Speaker 1: or a private equity, division or a private equity, firm
34:54
Speaker 1: and you. LOOK i deal with capital structures in a
34:57
Speaker 1: PODCAST i did last. Year go back and listen to.
35:00
Speaker 1: That and now you begin to access. Capital AND i
35:04
Speaker 1: believe you can access non recourse, capital which means no personal,
35:07
Speaker 1: guarantee plus an upside or sweetener for. You so you
35:10
Speaker 1: get a closing. Fee when the deal, closes you get
35:13
Speaker 1: a piece of the deal and a. Salary probably you
35:18
Speaker 1: pryably negotiate that AS ceo of this new. Company and
35:21
Speaker 1: now you're well a, baller at least a mini. Baller
35:26
Speaker 1: It's john. O'Brien this is money and wealth and there's
35:29
Speaker 1: more where this came. From tell me what you'd like
35:31
Speaker 1: to hear And i'll dish it out every. Week in
35:35
Speaker 1: the episodes Of money And, wealth this is how you
35:38
Speaker 1: buy a twenty million dollar company on, purpose with no personal, guarantee, honorably,
35:45
Speaker 1: honestly where everybody, wins all, right love and, Light tell a.
35:49
Speaker 1: Friend money And wealth With john O'Brien is a production
36:07
Speaker 1: of The Black Effect Podcast. Network for more podcasts from
36:10
Speaker 1: The Black Effect Podcast, network visit The iHeartRadio, App Apple,
36:14
Speaker 1: podcasts or wherever you listen to your favorite. Shows