Latest / The Inspired Stories Podcast / Ryan Baird's Investment Banking Revolution: Why Relationships Beat Transactions in Silicon Valley

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Ryan Baird's Investment Banking Revolution: Why Relationships Beat Transactions in Silicon Valley · The Inspired Stories Podcast

0:04
Welcome to another edition of the Inspired Stories podcast,
0:08
where leaders share their experiences so we can learn from
0:12
their successes and be inspired by how they've overcome
0:15
adversity. My name is Anthony Kotaspodi and
0:18
today's guest is Ryan Baird. Ryan is the Managing Partner at
0:22
Baird Augustine, a cross-border neo investment bank founded in
0:26
2010 based in Los Gatos, CA and focused on providing financial
0:33
services to individuals and corporations in various sectors.
0:37
Baird Augustine aims to provide investment opportunities and
0:42
deliver innovative solutions, and they have been recognized
0:45
for the unique approach to cross-border investments.
0:49
Ryan himself has an impressive track record in investment
0:53
banking, risk management and leadership, having previously
0:57
LED Leica, a social media platform that raised $35 million
1:02
from investors. He also played a key role in
1:05
investing in Xiaoping, the electric vehicle company now
1:09
listed on the New York Stock Exchange as XPEB.
1:14
In addition, Ryan is a managing Partner at How Family Office,
1:19
where he continues to steer strategic capital initiatives.
1:23
He is also founded Flotilla Asset Management and was
1:27
instrumental in innovative ventures across diverse markets.
1:32
His passion for fostering growth and innovation has made him a
1:36
prominent figure in the industry.
1:38
Now before we get into all that good stuff, today's episode is
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2:11
All right, back to our guest today, the CEO of Baird,
2:14
Augustine Ryan. Baird, I appreciate you making
2:17
time to Share your story today. Thanks for having me, it's good
2:21
to be here. So Ryan, you've had some
2:24
interesting career stops along the way before forming Baird.
2:29
Augustine, how would you characterize sort of the arc of
2:33
those earlier experiences? Yeah.
2:37
So I've always been in the institutional investing space,
2:42
starting right here on Sand Hill Rd.
2:44
I was working for Morgan Stanley in their private wealth
2:47
management division, working with clients.
2:49
I had $50 million of investable assets or greater with Morgan
2:53
Stanley. And then I went into the hedge
2:56
fund space where I was arbitraging volatility.
2:59
I did some corporate development where we were looking for
3:01
companies we can merge with or acquire.
3:04
I did Global Venture where we were investing in nine different
3:09
countries every single year and then bringing the top start-ups
3:12
back here to Silicon Valley and helping them raise capital.
3:16
And then I ran my own start up and you know, the way I would
3:20
really categorize it is I've always been in the institutional
3:23
investing space where talking to investors that can deploy
3:27
anywhere between 5:00 and $100 million into one deal and lots
3:34
of interesting lessons along the way.
3:36
And I'm happy to share share any of the insights you want to know
3:41
about. Yeah, thanks for that.
3:43
Say more about arbitraging volatility.
3:46
What does that mean? Yeah.
3:48
So back when I was trading for a hedge fund and then running my
3:53
own hedge fund, we were arbitraging volatility.
3:56
So we were trading US listed options that are on stocks.
4:02
And you can kind of think of it like insurance.
4:04
If you're not familiar with options, you can basically and
4:07
buy insurance on stocks. So if they were to fall, you
4:11
don't lose as much money as if you didn't buy the insurance and
4:15
vice versa. You can buy insurance that it
4:17
doesn't go up too much. You can sell that insurance, you
4:20
can sell the downside or buy the downside insurance or sell it as
4:24
well. So it gives people a lot of
4:26
options. And what we were really doing
4:31
was just hyper focusing on three to five different names.
4:36
A lot of the other market makers or people that were providing
4:39
liquidity in that space, they would focus on 100 plus names.
4:44
So what my mentor did was just start focusing on the high
4:48
volume names and he trade, he trained us how to do that as
4:51
well. And we were essentially just
4:55
trying to buy really, really cheap volatility and sell
4:59
expensive volatility at all times.
5:01
And then at the end of the day we would go home market neutral.
5:05
So we wouldn't be speculating on direction because honestly we
5:08
had no idea where the market was going to go.
5:11
So during the day, we would just try to sell expensive volatility
5:15
by cheap volatility. And then when it got close to
5:19
the end of the day, we would make sure that we were market
5:22
neutral so that we weren't taking any market risk.
5:26
And was this a sustainable practice?
5:29
So the big lesson from arbitrage is that my teacher in or my
5:35
professor in college was correct in that arbitrage is there, but
5:41
it doesn't stay there. And you know, I started my firm
5:46
Flotilla Partners in in 2010 and I had the dream of running this
5:51
for decades. But during the time period that
5:54
we were running, the fund options went from being priced
5:58
in nickels to being priced in pennies.
6:01
And once they made that transition, our margins just got
6:05
crushed. So saw the writing on the wall
6:09
and and made my move. Interesting.
6:13
So just that switch from Nichols to pennies was enough that that
6:20
shrunk the available margin that could be had on either side,
6:25
whether you know, you were shorting or longing.
6:28
And and so you're like, oh, I, I see where this is going.
6:31
Time to tap out. Exactly.
6:34
There was some other more technical rules too that
6:37
happened that that also were a big influence.
6:40
But you know, a lot of the stuff that I was doing doesn't even
6:44
really exist anymore. For example, if you were to
6:50
provide liquidity on some exchanges, you would get a
6:53
rebate and on if you took liquidity on a certain exchange,
7:00
you would pay a fee. So there actually became a a
7:04
moment where you can arbitrage these fees.
7:07
And I'd written some algorithms to help do that.
7:12
And that's just a crazy world where, you know, you're trading
7:16
at the same price and you're getting a 10th of a penny, but
7:20
you're trying to do it a million times to make that 10th of a
7:23
penny. And you know, it just became
7:27
tougher and tougher. We were also based in San
7:30
Francisco and it kind of felt like we needed to be close, more
7:35
closely located to the exchanges if we were going to continue to
7:38
do it. And we really just didn't have
7:40
the capital to to make that kind of investment.
7:43
Gotcha. OK.
7:44
So when did you start some of the newer ventures that you're
7:48
still involved with today? Maybe let's start with Barrett
7:51
Augustine. What what was the, what was kind
7:54
of the founding idea behind that?
7:56
Why? Why go through the trouble?
7:58
Yeah, that's a great question. So both of my parents actually
8:03
worked for Hewlett Packard their entire careers.
8:05
So I've I have the HP way ingrained in me and the HP way
8:13
was to run a business that is very relationship focused.
8:17
It's not necessarily it's not transactional, it's not
8:21
transaction focused. And if you look at Silicon
8:25
Valley, I mean, Steve Jobs had an internship with Hewlett
8:28
Packard, Wozniak worked for Hewlett Packard during the early
8:32
days. Apple was very much a
8:34
relationship focused business and that's how they were able to
8:37
achieve such big things. And Google, Amazon, Meta, they
8:42
all copied HP and you know, they were able to accomplish big
8:47
things because of this relationship based culture.
8:50
However, over the past few decades, we've seen these tech
8:54
companies that start off being very relationship focused,
8:59
starting to grow to be 50,000 people, 80,000 people.
9:03
And once you have that many people, it's hard to remember
9:05
everyone's wife's name and their birthday and how many kids they
9:09
have and what they're involved in and the culture changes.
9:13
And you start seeing the average 10 year, how long people work at
9:17
A at a particular company, you see that number start dropping.
9:20
And in Silicon Valley, previously, it was well over 10
9:23
years that you would see people, you know, have a career.
9:26
And as Silicon Valleys become more transactional, you see that
9:31
average 10 year really starting to decline.
9:34
And now only NVIDIA and Tesla have an average tenure over 2
9:39
years, which just means there's an incredible recruiting costs
9:43
that is happening in Silicon Valley because people are kind
9:45
of bouncing around trying to maximize their paycheck.
9:49
Even at these really quote UN quote desirable high level
9:54
employment like like I think about an apple their their
10:00
typical turnover is is faster than two years.
10:02
Is that right? That's correct.
10:04
Their average turn is less than two years.
10:08
And you know that just speaks to Silicon Valley becoming more
10:13
transactional as it's gotten larger.
10:15
Now the exact same things have happened in investment banking.
10:19
I mean, when I was at Morgan Stanley, we are very much a
10:21
relationship based culture and you know, we would do anything
10:25
for our clients whether it was relating to finance and in our
10:29
job versus just just being a friend.
10:33
And, you know, when I did Global Venture, I got to meet a lot of
10:38
new family offices that I hadn't met before.
10:41
And many of them would want introductions to some of the
10:44
bulge bracket investment banks. And I was shocked.
10:49
The feedback I got back from the introductions was really
10:52
negative. And I take that personally.
10:56
And basically, you know, these investment bankers were just
10:59
treating these family offices very transactionally.
11:02
And that and the attitude was, you know, pay us or you're dead
11:06
to us. And, you know, the first few
11:09
times that happened, you know, I'd realized there was there was
11:13
an opportunity. And, you know, along the way, my
11:18
partner, Henry Augustine had reached out to me.
11:20
He wanted to help me raise capital to launch a hedge fund.
11:24
But I was running my start up at the time, so it wasn't really
11:27
good timing. And he had told me that he had
11:30
launched a investment bank called Peer Equity Partners,
11:34
where he was just going to work for clients for equity.
11:38
And I was like, wow, that's a crazy idea.
11:40
How I don't know how you're going to make any money, but
11:42
love crazy ideas. Let me be on the board and oh by
11:48
the way, I know a company that is looking to sell right now for
11:52
a couple 100 million. They I've already introduced
11:54
them to a number of bulge bracket investment banks.
11:58
Sorry, let me let me stop you there.
12:00
What is Bulge Bracket Investment Bank?
12:02
What does that mean? Oh, so bulge bracket investment
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banks are like JP Morgan, Morgan Stanley, Goldman Sachs, City,
12:10
The Big? Boys.
12:11
The big boys, they're the bulge bracket.
12:13
Everyone else is kind of chasing them or will probably be one day
12:17
acquired by one of them, but it just basically means that you're
12:21
getting introduced to the best in the industry so.
12:25
You had this, you had this company that, you know, looking
12:28
to exit for $100 million and. Yeah.
12:32
So, so I introduced introduced them to Henry and kind of wanted
12:38
to see how the investment bank would proceed.
12:42
And at the same time I was leaving, I was winding down my
12:45
startup and I was talking to a number of startups that wanted
12:49
to either have me be the head of Corp dev or or be their CEO and
12:54
help them raise capital. And it just dawned on me that
12:58
instead of working for one of these companies and putting all
13:01
of my eggs in one one basket, I can actually start an investment
13:04
bank with Henry and we can work with all of the startups and
13:08
help all of them raise capital. And that's when Barrett
13:11
Augustine was born. You know, we still do have a few
13:15
legacy clients that we are working just for equity.
13:20
But the vast majority of our clients, they've already raised,
13:24
call it, 5 to $25 million. And now they need to raise an
13:28
institutional round. And the CEO would much rather
13:31
work on building the business versus talking to hundreds of
13:35
investors. So we take over that role.
13:38
We'll also help them, you know, reach any of their business
13:41
objectives while we're taking over the the investor relations
13:45
process. OK.
13:47
So that's what you're doing. You're stepping in to say, hey,
13:50
we know how to talk this talk. We've got relationships with the
13:53
institutional investors. Let us go out, present you to
13:57
them in the way that we know you know that they are sort of open
14:01
to receiving it and you can still continue building your
14:04
product or your service over here.
14:05
Focus on what you're good at. That's correct.
14:09
We want them to focus on what they're good at.
14:11
We don't want them spending time, you know, talking to a
14:14
bunch of investors when they can be focused on building the
14:17
business. And So what does a typical
14:21
portfolio company look like for you guys?
14:23
Are there particular industries or sizes or geographical
14:26
locations that you're looking for?
14:29
We're really stage agnostic, industry agnostic, but they tend
14:34
to be raising $100 million plus. That's kind of the main common
14:40
thread. If they're not raising $100
14:43
million right now, they're already a super successful
14:47
entrepreneur that has already had $100 million exit and this
14:51
is their next big idea. We'll step in and support them
14:54
as well. So $100 million to myself sounds
14:59
like a lot of money. Paint a picture for where these
15:04
companies are at when they're raising that kind of capital.
15:10
Sure. So one of our clients right now
15:14
is building robots to go help the nursing shortage that we're
15:20
experiencing right now. These robots don't walk because
15:24
they don't really need to. They just roll and they can
15:27
administer all of the medicine, Florida State, and document it,
15:32
which is really important. They can also give shots.
15:36
They can also cook food and deliver it, and you flip out the
15:39
battery once every 24 hours and they're good to go.
15:45
They're not there to replace the nurses.
15:47
They're there to do things that nurses don't really like doing
15:50
in the 1st place so that the nurses can do more human things.
15:54
This client already has $300 million contracts to build these
15:59
robots out, and they're raising $100 million right now to build
16:04
a manufacturing center to to build these robots.
16:09
Can we mention their name? Yeah, they're called Beyond
16:11
imagination. The Co founders are Doctor Harry
16:17
Klore, who is the only person to get APH 2 PhD simultaneously.
16:23
He got his in physics and science.
16:25
And then we have Ray Kurzweil, who's often considered one of
16:28
the leading minds in AI. He's been on the cover of Time
16:34
magazine and, you know, very highly regarded and we're, we're
16:39
honored to be working with them. So have they developed?
16:43
Like, is there a working prototype out there that is in
16:47
practice that people are interacting with now?
16:51
Yeah, you can check out the videos on YouTube.
16:53
It's beyond imagination. The robots are blue and they're
17:00
going to continue scaling and deploying these robots.
17:04
And, you know, we're just excited to grow with them.
17:08
That's fascinating. I mean, this is this is really
17:12
futuristic stuff that's here today.
17:16
OK, so we got to do a little sidebar because that's just the
17:18
first one you brought up. Give us another Porco that is
17:23
doing something particularly fascinating right now.
17:26
Sure. So we also host a lot of events
17:29
for investors. I think there's a there's a lot
17:33
of events for entrepreneurs out there and I think those events
17:36
are really, really great. But we do events for investors
17:40
and we allow investors to talk about their portfolio companies.
17:44
We just had a BBQ this last Saturday and had a really,
17:47
really good time with a group of about 65 people here in the Los
17:52
Gatos Hills and we had a number of great start-ups.
17:55
So one that I would point out is called Orbit Fab and they are
18:01
creating gas stations in space or they would send up a
18:07
satellite and it would be solar powered and it would last for
18:10
about 5 years and then it basically falls from the sky and
18:14
they put a new one up. Now they've invented a way to
18:18
actually refuel them while they're in space, essentially
18:22
taking the SpaceX model of reusability and applying it to
18:26
satellites. And now everyone who's sending
18:30
satellites into space can use them a lot longer.
18:35
And it reduces the cost of creating these things and
18:38
reduces the cost of of deploying the technology.
18:42
So up until now, the reason that a satellite traditionally has an
18:47
end of life is not because it, I don't know, sort of
18:51
disintegrates or falls apart or becomes antiquated.
18:53
It's because eventually whatever power source is on board is no
18:58
longer adequate to sort of keep it flying in the correct part of
19:03
orbit, to keep it safe and aloft and all of that stuff.
19:06
And so when that happens, it's sort of plan for it and the
19:10
satellite just falls out of the air, burns up in the atmosphere
19:13
and they send another one up to fill its place.
19:15
Am I understanding that correctly?
19:17
That's correct, yeah. And so now there's some sort of
19:19
a mechanism and what is it doing?
19:21
Is it like swapping out of battery or like what?
19:24
What is the refueling process actually look like?
19:27
It's it's a satellite that's floating over to the other
19:30
satellites. It has this really high tech gas
19:33
nozzle that essentially will insert the fuel and and not make
19:37
any of it leave. And this gives them a a lot more
19:42
optionality. Where before the satellites
19:44
would just kind of float around Earth and you didn't really want
19:48
to move them because you didn't have that feel available.
19:51
Now you can actually move them and redesign them and and just
19:56
extend the life by, you know, 5-10 X.
20:01
And so it's gasoline that's powering these things.
20:03
Well, they have. Gasoline that's powering the the
20:06
the movement component. Yeah.
20:08
It's a special type of fuel that they use in in these satellites.
20:12
But incredible company, you know, leading their market in a
20:17
new industry and, you know, really excited about where where
20:22
they're headed. OK.
20:23
So as I understand it, there's sort of three pillars of your
20:27
business and we kind of have touched a little bit on the
20:29
investment bank. Say more about the events that
20:32
you were just mentioning. You host these in Los Gatos
20:36
where you are, who's invited, why do they come?
20:40
What's the benefit that folks get from attending?
20:43
Yeah. So we do a lot of dinners and
20:48
barbecues and walks around Lake Versona, all with accredited
20:52
investors. And depending on which investors
20:56
we have with us will depend on which portfolio company gets
21:01
talked about. So we're always changing the
21:05
different industries. But these events are for family
21:08
offices, founders that have already raised, call it
21:13
$5,000,000, founders that have already sold a company for $100
21:18
million plus. And they're just looking to
21:21
connect with other people that are deploying capital across the
21:24
alternative asset class space. And, you know, we'll have a lot
21:28
of these smaller hikes and barbecues and, and dinners.
21:35
And then once a year we're going to be doing the Silicon Valley
21:38
Economic Forum and we're going to be bringing together some
21:43
high level people to do our annual events.
21:45
And the formula is pretty simple.
21:47
We get a institutional investor with 100 billion AUM or greater.
21:52
At our last event we had Fiona Ma, who's California State
21:56
Treasurer. She overseas our state fund with
21:59
150 billion under management. She's also on the board of
22:02
CalPERS, which has a half a trillion dollars under
22:05
management and she's invested in a lot of emerging managers.
22:09
So a lot of emerging managers like to come out and, and, and
22:13
hear her talk. We also get a CEO that's taken a
22:16
company public. At this last event we had Dan
22:19
Springer who took DocuSign public, gave a great talk about
22:23
the whole process and how to deal with board members.
22:27
We'll also try to get someone from the MAG 7's investment
22:30
team. At this last event we had Alan
22:32
Wu, who does corporate development for NVIDIA.
22:34
He was talking about where NVIDIA is going to be investing
22:36
in AI over the next few years. It was a great off the record
22:39
talk and then we featured a number of GPS across commercial
22:44
real estate, private equity, hedge funds, venture capital,
22:47
crypto. We've also seen a lot of GPS in
22:52
the entertainment industry, especially film.
22:56
And then we feature a number of our clients that are all
23:00
raising, you know, between 50 and hundreds of millions of
23:03
dollars. And then lastly, we have elected
23:08
officials, a lot of the family offices in our network like
23:11
talking to them. We had the mayor of San Jose,
23:13
the mayor of Santa Clara, the mayor of Fremont, the vice mayor
23:16
of Sunnyvale, City Council member Man Tanaka from Palo
23:20
Alto, and a couple economic development commissioners.
23:24
And then the last thing we like to do is to make our events not
23:27
too stale and to keep them exciting is we like to partner
23:32
with different cultural groups. This last event we partnered
23:35
with Rev Art, which is a beautiful gallery in San
23:37
Francisco, and they just opened up a new gallery in Mountain
23:41
View and they came and did a pop up art gallery at our event.
23:45
And then we had Spot, the Boston Dynamics robotic dog.
23:49
Give people a tour of the pop up art gallery, which is pretty
23:54
fun. You had a robotic dog giving a
23:56
tour. We had a robotic dog giving a
23:59
tour of the art gallery and then we had night robotics security
24:05
guards in the the parking lot and they're a publicly traded
24:08
robotics company. That's great.
24:11
And it sounds like the folks that you've got coming here are
24:13
sort of the cream of the crop in your corner of the world, right?
24:17
These are the top level investors, you know, very
24:20
successful founders and you guys are positioning yourself sort of
24:25
at the center of all this, the connectors so that you know,
24:29
just sort of more deal flow, more opportunities come to you
24:32
guys because you're known as being sort of the center of all
24:34
this space. Yeah.
24:37
We just want people to know who we are and some of the families
24:41
that we're working with and help them deploy their capital into
24:46
above average deal flow. It's it's it's amazingly simple
24:49
and amazingly complex at the same time.
24:53
Yeah. And then the sort of third
24:54
component as I understand it is your hedge fund say say more
24:59
about. That, yeah.
25:01
So in a previous life, I was running a hedge fund arbitraging
25:06
volatility. And the problem with that
25:09
strategy is that it's arbitrage, so it can only take so much
25:13
capital before the arbitrage that just isn't, isn't big
25:17
enough to take more capital. And you know, I didn't like the
25:22
idea of the arbitrage going away and then you have to find a new
25:26
arbitrage. Otherwise you have to start all
25:29
over or, or cease to exist. So we've really honed a long,
25:36
predominantly long strategy where we're investing in market
25:39
leaders early. Being in Silicon Valley, we get
25:43
to see all the hype cycles and all the buzz.
25:46
And I feel like that has given us consistent advantage in
25:51
finding these market leaders, you know, a year or two before
25:54
Wall Street really understands them.
25:58
I'd actually be curious to hear quite a bit more about that,
26:00
whatever it is that you're allowed to say in terms of the
26:03
trends that you're seeing. You talked about the the off the
26:07
record conversation that you had with the the gentleman from
26:10
NVIDIA and you're in the middle of a lot of really interesting
26:14
conversations it seems like. What are the things that you're
26:19
kind of jazzed about that are taking place right now?
26:22
Yeah, I mean, obviously AI is everywhere.
26:24
It's almost like just saying you're involved in tech is is
26:28
saying that you're involved in AI now.
26:31
But going a little bit more specifically, I think space is
26:34
probably one of the biggest opportunities in our lifetime
26:37
that's in front of us right now. We're really excited about some
26:41
of the satellite companies in our portfolio.
26:45
And then you know, robotics is also a huge theme and we have a
26:52
number of different portfolio companies in that space.
26:57
And then the last thing I would say is blockchain and web three.
27:02
I've been following Bitcoin since 2009 and really didn't
27:09
think it was going to last this long.
27:12
But I've been telling people if it hits $1000, things probably
27:15
going to be going a lot higher. Because if it's not, if it's not
27:19
worth 0, then it's worth something.
27:22
And what that something is, I think is yet to be determined.
27:26
But I think one of the biggest trends right now that no one's
27:29
really talking about is that Bitcoin is eating Wall Street.
27:34
And it really started with micro strategy, which is now called
27:38
strategy. And the really innovative thing
27:43
that they did is that their whole business model is just to
27:48
own Bitcoin as their treasury asset.
27:53
And what they've done in order to raise capital is to sell
27:57
convertible bonds. And what this does is for the
28:02
first time, a bond manager now has access to a Bitcoin backed
28:11
bond. Now this bond manager can't
28:13
invest in Bitcoin, They can't invest in micro strategy, they
28:18
can't invest in preferred stock, but they can't invest in the
28:22
bonds. And now that MicroStrategy has
28:26
allowed those bonds to be available, they were the number
28:28
one performing bonds in the global bond market.
28:33
And if you're a bond manager and you didn't own MicroStrategy,
28:36
you weren't one of the top performing managers.
28:39
And this is a big deal because now a lot of companies that are
28:42
just holding Bitcoin as their treasury asset can also go to
28:46
Wall Street and sell convertible bonds in order to buy more
28:51
Bitcoin. And it's accretive because these
28:55
convertible bonds convert above where the stock is trading
29:01
today. So they basically sell a billion
29:04
dollars in bonds at a, let's call it a 50% premium to where
29:09
the stock is trading. They go and buy a billion
29:13
dollars of Bitcoin. They get to add a billion
29:16
dollars of Bitcoin to their balance sheet.
29:19
And because of the convertible bonds are above where the
29:23
current stock price is, it adds more Bitcoin per share.
29:30
And the new way of tracking a lot of these companies is how
29:34
quickly they're adding Bitcoin per share being compared to
29:39
other companies. I know this is kind of a, a
29:42
mouthful and it is a lot. I feel uniquely positioned to
29:46
understand this because of the derivatives involved in all of
29:51
this. The convertible bonds are
29:52
essentially A synthetic leap call option.
29:58
And it's just fascinating. It's a, it's a huge financial
30:01
innovation. It's giving traditional fund
30:06
managers access to Bitcoin derivative products.
30:10
And now that MicroStrategy has been so successful, it's been
30:14
included in the QQQ. And I would guess that later
30:20
this year it's going to be added to the S&P 500.
30:23
So whether people know it or not, if they have a retirement
30:27
account, they're probably a little bit invested in Bitcoin
30:32
and it's a little bit now, it'll be a lot later.
30:35
OK. So a couple of questions on
30:37
this. I want to wrap my head around
30:38
it. Why can't investors just invest
30:41
directly in Bitcoin? What's the hurdle there?
30:44
So this actually, this whole thing came to me because the
30:49
Bitcoin ETF was going to come out.
30:51
I thought that I was going to research all the Bitcoin ETFs
30:56
and be like, oh, OK, if you don't want to hold your Bitcoin
30:58
yourself and you want to hold the ETF, this is the ETF we're
31:02
recommending to family offices. And what happened was, is we, we
31:07
learned about all the ETFs, but we found micro strategy.
31:11
And what we realized is that if you own the Bitcoin ETF over 20
31:17
years, you lose a little bit of your Bitcoin because you're
31:20
paying the management fee every year.
31:24
If you buy micro strategy today over 20 years, your Bitcoin per
31:31
share inside MicroStrategy grows.
31:35
And that's the big difference. So in my opinion, you would
31:40
rather own MicroStrategy over Bitcoin because if you just own
31:45
Bitcoin, you just own Bitcoin and it doesn't grow.
31:48
If you own a Bitcoin ETF, you actually lose a little bit of
31:52
Bitcoin along the way. And explain what an ETF is,
31:55
Ryan. An ETF is an exchange traded
31:58
fund that gives you exposure to the Bitcoin index.
32:03
So you could either own that index and get a mirrored
32:07
exposure to it, or you could actually hold it yourself, but
32:11
then you risk getting hacked and and all these other things that
32:16
are that are problems. So an ETF is just like the S&P
32:20
500, the SPY that holds the top 500 companies in the US.
32:26
The Bitcoin ETF just holds Bitcoin.
32:29
And So what is it about MicroStrategy that allows and,
32:33
and, and sort of the mechanisms that are at play here that
32:36
allows the value of the Bitcoin per share to rise over time,
32:41
whereas in an ETF you're you're going to lose a little bit
32:44
because of those management fees.
32:46
Doesn't MicroStrategy, aren't they exposed to sort of the same
32:49
management fees? MicroStrategy holds its Bitcoin
32:54
at Coinbase as its custodian, and they're not being charged
32:59
the the same rates that an ETF has to charge its holders.
33:05
So because, you know, if you own the ETF, you know, it's like
33:09
point 8.9% per year that you're losing right?
33:14
Where if you just own MicroStrategy, you're not paying
33:16
that fee #1 and #2 Michael Saylor, the CEO of Strategy, has
33:22
said over and over again that he's just going to continue to
33:25
sell bonds, preferred stock, and stock in order to buy more
33:30
equity. And as long as he does that, as
33:34
he buys more Bitcoin, your Bitcoin per share gross.
33:39
And I don't think a lot of people fully understand this,
33:43
but once they do MicroStrategy and these, you know, there's,
33:50
there's dozens of companies that are doing this.
33:52
It's not just MicroStrategy, but MicroStrategy is the clear
33:56
market leader. When did I'm trying to figure
34:00
out because we've seen the price of Bitcoin, you know, be highly
34:04
volatile, but in I and I don't you can clue me in here what the
34:08
exact time frame is. I feel like in the last year,
34:11
maybe 18 months, the price has really risen sharply again.
34:17
And so I'm curious how that recent increase in price has
34:23
aligned with MicroStrategy and the strategy that they're
34:27
implementing. Are these sort of running in
34:28
parallel? Is this the I guess the bigger
34:31
question I'm asking is, is this the reason that the price of
34:36
Bitcoin has gone to the moon again?
34:39
I mean, this is, this is part of the reason.
34:42
And, you know, I think kind of the first step was the Trump
34:46
administration being much more friendly to the blockchain space
34:54
and then #2 strategy leading the way with their Bitcoin treasury
35:00
strategy. And then dozens of other
35:04
companies have started copying their strategy.
35:07
We're just now starting to see states want to hold Bitcoin as
35:12
their treasury strategy. We've already heard countries
35:16
are discussing keeping it on their balance sheet.
35:20
It sounds like the US wants to potentially convert their gold
35:24
into Bitcoin. And, you know, there's only 21
35:28
million bitcoins, so the price needs to be readjusted to the
35:33
demand. And, you know, we're only at
35:36
about a 3% adoption rate of Bitcoin.
35:39
So that's like the Internet in 1990.
35:42
That's like social media in 2005.
35:45
And I think as more states, countries and companies get
35:51
involved, we'll continue to see it become volatile.
35:55
But I think it'll prove to be a more scarce commodity than gold,
36:01
silver, oil that it just seems like we keep finding more of.
36:07
So Ryan, what's your opinion is there?
36:12
And maybe you can help me rephrase this question if I get
36:15
a little bit wrong, but is there actually usable functions for
36:20
Bitcoin either today or coming soon?
36:23
Or is this really a speculative tool because people have decided
36:29
that there's value to it and it's scarce, and so that's
36:32
what's driving up the value of it?
36:35
I mean, I think there's a, there's a lot of different
36:38
reasons why people own it in the US, You know, our central bank
36:44
does a pretty good job of keeping inflation around 2%.
36:48
So, you know, Americans have a harder time understanding
36:53
Bitcoin versus people who are in emerging markets where there's
36:57
just runaway inflation. When people see Bitcoin, they
37:02
go, oh, wow, that it's really volatile, right?
37:04
It's really risky, but it's really reacting to global Fiat
37:09
currencies, which are volatile. And when you have runaway
37:14
inflation, you know, that is being priced into Bitcoin.
37:21
And, you know, if you live in an area where there is runaway
37:24
inflation, I mean, are you going to own gold or are you going to
37:27
own Bitcoin? What are you going to do to
37:30
protect yourself from inflation? And that's really the great
37:34
debate for me. You know, I've been very
37:39
skeptical of Bitcoin, but no one's hacked the network, and
37:45
it's growing exponentially. And that in itself, I think, is
37:51
extremely valuable. And I do believe in the future,
37:55
especially as Bitcoin becomes less volatile, I think it'll
38:00
just be used like cash. However, right now, until we get
38:05
to that type of adoption, I think it's mostly just going to
38:07
be used as a store value. Let's shift gears and maybe talk
38:12
a little. Bit about some of your previous
38:14
work like ALYKA, tell me about this company and the exciting
38:21
exit that you were a part of Yeah, so.
38:26
I'm really passionate about allowing people to own their own
38:33
data. 20 years ago when I was in college and people were talking
38:38
about the Internet, there was this idea that everyone would
38:42
own their own data and we would be able to monetize it.
38:46
And, you know, we wouldn't need some kind of universal basic
38:50
income because everyone would just be monetizing their data.
38:55
If we have robots doing all of our work, the costs of a lot of
38:59
things drop and you could literally just live off of your
39:02
data. So we built a platform that is
39:08
similar to Instagram and we did a beta test in Southeast Asia
39:13
and it did very, very, very well.
39:16
And but our our dream is to bring it to the US.
39:21
So we sold that code and we're really want to.
39:30
Either fund an. Entrepreneur that can bring
39:32
something like this back or or to start it ourselves.
39:36
But the idea is that when you go on social media, if you see an
39:41
ad, you should earn money from that ad.
39:44
That advertiser is paying to get your attention.
39:49
And yet Facebook takes all of the money and doesn't share it
39:54
with you, even though, in my opinion, the advertiser is
39:57
paying the person. And right now, you know, there's
40:01
no real incentive for you to put on your Facebook.
40:05
You know, where you're from and what movies you like and all
40:09
your preferences. You know, what brands do you
40:12
prefer because that's your own profile.
40:15
Yeah. If you did that, you would get
40:16
better ads sort of tailored to you so.
40:20
Our idea is we can build a social network.
40:26
And we can. Allow the users to give us more
40:31
data because they know they're going to be compensated for the
40:34
ads that they watch. And that way we can send more
40:37
targeted ads to people than other platforms.
40:43
And the idea is to give away 90% of the ad revenue.
40:48
We just keep 10% to run the platform and then one day we'd
40:52
be able to monetize the wallet. And so this but this is.
40:58
Correct me if I'm wrong. This is something that you built
41:01
and then you exited to another company?
41:04
Yeah, we we built. It and did it in Southeast Asia
41:08
and realized that we had to rewrite the whole code if we
41:11
were going to do it in the US. So we sold that off in Southeast
41:17
Asia to another strong entrepreneur that we believe is
41:20
going to be bringing it back. But, you know, we're, we're
41:25
looking to do something in the US.
41:28
Got you. Tell me.
41:30
A little bit about how the family office that you're with
41:32
now. Yeah, so.
41:36
Hot does a lot of debt offerings and we can do really anything in
41:41
the whole supply chain. Often times we'll find companies
41:47
that you know just need better debt options and we can step in
41:51
and and hopefully help them. We'll also come into private
41:56
equity acquisitions. They're obviously acquiring cash
42:00
flowing assets and we find that we can help a lot of those GPS
42:06
get the debt that they're looking for.
42:11
What else is it that you're involved with here?
42:13
Focus on risk. What is this?
42:16
Yeah, so. Focus on Risk is our investment
42:19
club that we started back in 2009.
42:22
I think I'd mentioned we started doing in events for investors.
42:26
That's the big thing that separates us from other people
42:30
and we just had a BBQ this last Saturday that was a big success
42:36
and we're looking to do our next one on June 1st.
42:40
So you guys have? Sort of with Baird, Augustine,
42:45
you guys have success and just you know yourself personally
42:48
successfully managed a lot of high stakes fundraising, large,
42:52
large scale projects multiple times.
42:56
What what do you think it is about either your personality or
43:00
your mindset that has been really crucial to kind of
43:05
pushing your success forward? What makes Ryan Baird so
43:10
successful? Honestly, I think.
43:12
It's the focus on risk. That's why I named the group
43:15
that way. There's a huge mistake that I
43:22
see a lot of founders make over and over again and, and it's
43:25
having these ridiculous conversations about how much
43:28
money they're going to make. The reality is, is you can't
43:31
control your profit, but you can control your risk.
43:35
So I'd much rather not have conversations about what color
43:39
Lamborghini someone's going to buy and talk more about the
43:43
risks of the business that would prevent them from being
43:46
successful. And having these honest
43:49
conversations and removing these layers of risk is really what
43:54
helps these companies get to that next level.
43:57
And it's just an intense focus on what is the biggest risk that
44:01
is preventing us from moving this company forward.
44:05
And usually, if you can figure that out and you can evangelize
44:09
that to your advisors and board members and employees,
44:12
everyone's got their eye on the prize and you can remove that
44:15
risk. So let me play devil's.
44:18
Advocate, because I want to better understand your point
44:20
here. You know, I'm a founder.
44:22
I've got a company, we've got forward momentum.
44:25
Things are going well. Of course I can control my
44:27
profit to some degree. I'm going to do the right kinds
44:30
of advertising. I'm going to form strategic
44:32
partnerships. We're going to listen to our
44:34
clients and, you know, build the feature sets that they want.
44:39
What? What do you mean that I can't
44:41
control my profits? And where I really should be
44:44
focusing my energy is on managing my risk.
44:47
Well, if I told you. To increase your profits to a
44:51
billion dollars a year, you wouldn't be able to do that
44:55
without major reform to the business, right?
44:59
So when I say you can't control your profits, it's it's that you
45:05
can't control the if you could 100% control them, you would be
45:09
a trillionaire, right? Or whatever number is bigger
45:12
than that. So instead of focusing on things
45:16
that you can't control, I'd much rather you focus on some details
45:21
that could increase your profitability or it can increase
45:27
your conversion rates, or it could open up your top of the
45:30
funnel greater, right? Things that you can quantify and
45:34
and really talk about are the things that we like to bring up
45:37
when we're talking to clients. So you mean getting?
45:40
More into the details, not just saying I want to make $50
45:43
million this year so I can buy a green Lambeau.
45:46
It's more of, well, OK, if $50 million is your target number,
45:51
what are the steps that we have to achieve before that?
45:55
We've got to make the funnel a lot wider so we get more folks
45:58
in. We've got to improve our
45:59
conversion rates so that the funnel doesn't look quite so
46:02
narrow at the bottom. It's a little bit wider.
46:04
You're just talking about sort of focusing more attention on
46:07
each of those individual in between steps.
46:10
Exactly. Gotcha.
46:12
OK. Let's shift gears for a moment,
46:14
Ryan, because I, you know, successful guy, you've been
46:17
involved in lots of different cool ventures.
46:20
So many interesting things going on now.
46:22
I think it'd be really helpful for folks if they could hear a
46:25
serious challenge that you've overcome in your life.
46:29
What was that? Whether it was personal or
46:31
professional, how'd you get through it and what did you
46:34
learn coming out the other side? Yeah, so.
46:38
When fundraising for my previous startup, I mean, we talked to
46:42
every single VC on the planet that I can get in front of, and
46:47
they literally all said no. And, you know, there's a moment
46:52
in a startup's life where you're kind of too early for investors,
46:57
but you also need money in order to move forward.
47:02
And without being able to raise that capital, you're kind of
47:05
dead in the water. And this happens to, you know, a
47:09
countless number of startups And, you know, we we were faced
47:15
with really tough choices during that time period.
47:18
And the way that we got out of it is we just tried to
47:21
communicate as much as we possibly could to people that
47:24
would listen to us, our advisors.
47:27
And we started telling them where we're going to be, where
47:31
we think we're going to be in three months to six months.
47:34
And every time that we would do that, we would really sandbag
47:37
those expectations. If we knew we were going to have
47:40
one, you know, Blogger write about us, we would let them know
47:45
that. And then we would do everything
47:46
in our power to try to get another Blogger to pick us up.
47:50
And when we came to our quarterly reviews, it was, hey,
47:55
remember we thought we were going to get this, you know, one
47:58
piece of earned media. Well, we got two of them.
48:01
Remember when we said we thought we were going to have 100,000
48:05
users? Well, we have 150,000 users, so
48:08
we were constantly under promising and over delivering
48:11
because we wanted to build that rapport with the people that
48:15
were working with us. And by doing that, we were able
48:19
to get some Angel checks because they were able to follow our
48:22
progress and see that we were beating our own expectations.
48:27
And after doing that for a couple of quarters, those Angel
48:33
checks gained even more confidence in seeing us execute.
48:38
And eventually, you know, we had raised from over 300 Angel
48:43
investors, which I don't recommend doing.
48:45
Wow, that's a lot of work. But you know, we had to kiss a
48:49
lot of frogs in order to find someone who would eventually
48:52
fully believe in US and, you know, be the main anchor
48:56
investor in the project. So.
49:04
VCs aren't. The only investor in venture and
49:10
you know, VCs are very much looking the the best ones are
49:15
looking for pattern Breakers, but most of them are looking at
49:18
pattern recognition. And, you know, if you don't have
49:22
those numbers when you're fundraising, it's going to be
49:27
very difficult to raise from, from VCs.
49:30
So I, I really was fortunate that we got to meet some great
49:34
Angel investors that introduced us to family offices.
49:37
And then we were able to, you know, build rapport to them by,
49:42
you know, letting them know where we thought we were going
49:44
to be and then busting our ass to make sure that we were ahead
49:47
of that every time we had an update.
49:51
And you know, we raised all their money from family offices
49:55
and angels and we didn't go the VC route.
49:58
And I actually recommend that to a lot of people because, you
50:03
know, VCs are very much looking at the returns in their fund.
50:07
And that doesn't necessarily that's not necessarily
50:11
synergistic with your, your business where family offices
50:15
are looking at their whole portfolio.
50:18
And if there's synergies, that's often times one reason why
50:21
they're they'll invest and to give their portfolio companies a
50:25
strategic advantage over other companies.
50:28
Oh, so a family office? May decide to invest not only
50:32
because they see maybe the profit potential of this company
50:35
really becoming big, but because, oh, that fits with
50:39
another one of our investments over here.
50:41
They could provide some services to them that would really give
50:45
them a leg up on their competition.
50:47
That's correct. Yeah, and another great thing
50:50
about a lot of family offices is they don't have this, you know,
50:54
bizarre, you know, exit by year 10 kind of philosophy.
50:59
And I think giving founders the freedom to do what they want to
51:02
do is, is very valuable on people's journey and so.
51:08
Going the route of a family office can really give the
51:12
founder, the entrepreneur, a bit more flexibility in terms of the
51:16
path forward and sort of the timeline for needing to be
51:19
ready. Absolutely, yeah.
51:21
And so it it. Sounds like that was a big
51:24
lesson. You know, folks are listening to
51:26
this in various stages of, you know, figuring out if they want
51:31
to raise funds, trying to raise funds.
51:33
And they're like, oh, that, that's interesting that that's a
51:35
good piece of nugget. The other thing I heard you say
51:37
is under promise, over deliver. So I'm rather than shooting for
51:43
the moon and tell you we're going to have a million
51:45
followers by the end of the month, be like, we're going to
51:48
get to 100,000 followers by the end of the month.
51:52
And then when you contact them, you're like, yeah, actually
51:54
we're at 170. And they're like, oh.
51:58
That gets their attention. You're.
51:59
Not just blowing smoke, you're delivering and then so.
52:05
Yeah, that's correct you. Know, I think founders need to
52:09
understand the arena and you know, as a family office or an
52:15
investor, you're constantly seeing founders that are going
52:20
to be failing and you're constantly being thrown
52:24
information that you don't have any way to, to really verify.
52:29
So a lot of investors are highly skeptical of everything that you
52:35
tell them. And you know, the best way to
52:38
build rapport with them is to not lie to them and to be super
52:42
open, honest and transparent. If you need to raise capital,
52:46
let them know that you are raising capital.
52:49
If you're looking to get more earned media, let them know that
52:53
you're looking to get more earned media.
52:56
Same thing if you're looking to expand your advisors and board
52:58
members, you know, let people know that that you're doing
53:01
that, put that out into the universe and then let them know
53:05
what you are going to accomplish over the next month or the next
53:09
quarter. And you know, those types of
53:13
things need to be well thought out because the last thing you
53:18
want to do is tell them that you're going to close three
53:21
clients by the end of the quarter.
53:23
And they go, OK, well, let me wait until the end of the
53:26
quarter. If he's telling the truth, I'll
53:28
invest. If he's not telling the truth,
53:30
I'm going to pass. You don't want to get there and
53:32
be like, ah, there's they're just not closed yet, but we
53:36
still have them as a prospect or whatever excuse it might be.
53:39
They don't want to hear that. They want to hear that you're
53:41
executing and that when you say you're going to do something,
53:44
you're going to get it done. And you know, I, I have found
53:51
founders that under promise and over deliver and that they have
53:55
very successful fundraisers and they have lots of investors that
53:58
want to be on their cap table. It's the founders that are
54:01
deceitful and are just exaggerating and just straight
54:08
up lying are the ones that really have the toughest time
54:12
raising capital because they're just a below average deal.
54:17
How about for somebody that's even?
54:18
Earlier in the process, they're like, I can't even get somebody
54:21
to take my call, Ryan, like what advice do you have for somebody
54:25
in that position, I mean? If you're somebody who can't get
54:31
any meetings and can't get in front of people, you're probably
54:35
not the right guy to start a startup.
54:38
Startups are extremely high risk, and I would argue that 90%
54:44
of the founders that start a startup don't have the
54:48
personality type to to run a successful business.
54:52
Maybe it's good experience for them, but you know, the best
54:59
founders are able to pitch. And as an investor, you're not
55:05
looking at the pitch of, oh, if this person gives me a great
55:08
pitch, I'm going to invest. It's a lot deeper than that.
55:12
I think if the person can pitch, can they pitch the business to
55:18
get someone to leave their job at Apple or Google or one of the
55:22
top tech companies to your startup for low pay and some
55:27
equity? You know, that's a big pitch.
55:30
Can this person actually do that?
55:32
If they can't do that, then they probably are going to have Tier
55:36
2 talents and you don't want to be investing in Tier 2 talents.
55:41
The other thing, the other question you're asking is can
55:43
this person get earned media? Can.
55:47
They pitch their. Story and get into blogs or get
55:51
onto some podcasts or get into some media or is this the kind
55:56
of founder that's going to have to pay APR team to get any kind
56:00
of media and that's going to be an additional cost on this
56:04
business for the rest of their life that's.
56:07
Interesting. So you kind.
56:08
Of see this as almost a helpful filter.
56:11
If you can't get a meeting, if you can't get some earned media,
56:16
if you can't get some, you know, someone to leave Apple or
56:20
another relevant tech company to come join your team.
56:23
That probably says a bit about your personality, your drive,
56:27
your ability to be able to sell this to all the people around
56:30
you in your ecosphere. And that's a good indication
56:33
that it's not something that you want to put your dollars into.
56:36
Absolutely. Absolutely.
56:38
It's not just the pitch to raise capital.
56:40
It's the pitch to get employees, it's the pitch to get media.
56:45
It's the pitch to raise capital from other investors that we're
56:49
going to be trying to sell to, you know, if, if you have a
56:53
great investor, I mean, or a great founder that can raise
56:57
precede money but can't raise a money, then what's the point,
57:04
right. So, you know, some people think
57:08
like pitching is overrated or whatever.
57:10
And I, I completely disagree. I think the people that are
57:13
charismatic, that can get things done cheaper, faster, better,
57:18
those are the those are the horses you want to bet on.
57:22
Yeah, Ryan, I've. Just got one more question for
57:24
you, but before I ask it, I want to do a couple of things.
57:27
First of all, I'm going to invite listeners to go ahead and
57:29
hit the follow button on your favorite podcast app.
57:31
You want to get more great interviews like the one we've
57:34
had here today with Ryan Baird from Baird.
57:36
Augustine Ryan, I also want to let people know the best way to
57:41
get in touch with you or to follow your story.
57:44
What would that be? Yeah, they can look me up.
57:48
Online, our company website isbairdaugustine.com people can
57:53
also look up Focus on Risk. We have a very active accredited
57:57
investor group on Facebook X and LinkedIn and we're pretty
58:04
public. So if you can't find me, then we
58:09
can teach you how to Google. And who are the kinds of people
58:14
that you would like to hear from?
58:17
Yeah. So we're always.
58:19
Looking to meet family offices and investors really just so
58:23
that we could understand their investment thesis.
58:28
And then we're always looking to meet founders that are either
58:31
raising $100 million plus or have already had $100 million
58:35
plus exit. We believe that we can help them
58:37
on their next venture. That's great.
58:40
Last question for you, Ryan. I usually like to ask people
58:44
about, you know, what they're sort of excited about in the
58:45
future, but we've kind of already had a chance to talk
58:47
about that, you know, AI, space, blockchain and Web 3.
58:53
So let's do something a little bit.
58:54
Different if you and. I were to reconnect in a year
58:57
and you're celebrating something.
58:59
What would you hope that one thing is?
59:04
A year might be a little quick, but we definitely want to go
59:09
IPO. We believe that we can also play
59:15
in the Bitcoin treasury space. We're super excited that we got
59:19
our first Bitcoin payment this week from a client and you know,
59:25
we're really well positioned to help funds and founders in the
59:30
Web 3 and blockchain space. So hopefully by this time next
59:37
year, we'll have the plans to go public in about a year after
59:40
that. OK, so two years.
59:42
Would be you think a reasonable time frame for that to take
59:45
place? That would be amazing, yeah.
59:47
All right, well, let's keep in touch.
59:49
We'll do a follow up episode. Sounds good, Ryan.
59:52
I want. To be the first one to.
59:53
Thank you for sharing both your time and your story with us
59:56
today. I really appreciate it.
59:59
Thank you. It was.
59:59
Great being here. Folks, that's a wrap.
1:00:02
On another episode of the Inspired Stories podcast.
1:00:04
Thanks for learning with us today.