Speaker 1: Welcome the Money in Wealth with John O'Bryant, a production
Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey Hey,
Speaker 1: it's John O'Briant, and this is the Money and Wealth
Speaker 1: podcast series on the Black Effect Network on iHeartRadio. So
Speaker 1: today we're going to break down some myths, the theory
Speaker 1: that successful people just sort of glide through life and
Speaker 1: somehow have no obstacles and challenges and everything sweet right
Speaker 1: around in fancy cars, get on private jets, and you
Speaker 1: go to conference rooms and sign documents, and you go
Speaker 1: to the bank and cast a check and all this stuff.
Speaker 1: You spend money and you lounge all the time. Just
Speaker 1: not true. I mean, it might be true for the
Speaker 1: children of successful people or the grandchildren. But by the way,
Speaker 1: there's an old saying. First generation makes it, second generation
Speaker 1: spends it, third generation loses it. It's a saying, but
Speaker 1: it's also very accurate. It holds up to scrutiny because
Speaker 1: the second generation, unless their first generation is very very
Speaker 1: careful and very thoughtful, the second generation has not been
Speaker 1: taught the skills and tools it needs to not just
Speaker 1: spend the money, but to make it. And then the
Speaker 1: third generation just has no scruples at all. They're just
Speaker 1: spoiled and they absolutely lose it, literally lose it and
Speaker 1: lose it. So it's responsibility the first generation of hustlers
Speaker 1: with a purpose to make sure they pass down more
Speaker 1: than the money and pass down the knowledge. So I
Speaker 1: want to act like for a moment that you're my children,
Speaker 1: that you're my brothers and sisters, You're you're my family,
Speaker 1: and I want to give you the gift of insight.
Speaker 1: I want to put you in the room right so
Speaker 1: as you're jogging or driving or listening or cooking or
Speaker 1: reflecting or whatever every do you do when you listen
Speaker 1: to podcasts, I want you to get into this and
Speaker 1: then pull out your pen and paper or your iPad
Speaker 1: or your iPhone, your note taking app. I want you
Speaker 1: to really indoctrinate yourself into this story of what happened
Speaker 1: when I built I've now I we my team has
Speaker 1: delivered about four point eight billion dollars of capital to
Speaker 1: underserved neighborhoods. My enterprises overall, which is John O'Brien Holdings,
Speaker 1: I've created forty to fifty enterprises, three of the largest
Speaker 1: in their category in the country, the largest financial literacy
Speaker 1: organization in America Operation Hope. I'll break that down of
Speaker 1: how I built that in another podcast. The largest financial
Speaker 1: inclusion into the in America in the largest minority controlled
Speaker 1: owner of single family rental homes in America, and that
Speaker 1: company recently sold. And that's part of the story of
Speaker 1: what I'm going to tell here. So the story begins.
Speaker 1: The story begins with a cautionary tale. I have a
Speaker 1: policy in my office don't ever do anything you don't
Speaker 1: want to see on the front page of the New
Speaker 1: York Times in five years. So because I run a
Speaker 1: high profile nonprofit organization in addition to for profit organizations,
Speaker 1: I deal with donor money, I deal with partner money.
Speaker 1: I deal with investors' money.
Speaker 2: You know.
Speaker 1: Don't put me in a limousine ever. I mean ever,
Speaker 1: that's not what donors and partners investors want to see
Speaker 1: their money being used for. You might see me in
Speaker 1: a town car if you do, or suv. I'll probably
Speaker 1: be sitting in the front passenger seat. Don't buy me
Speaker 1: a first class plane ticket. I'll upgrade. I travel so
Speaker 1: much now that it's you know, pretty common, actually very common.
Speaker 1: I'm got to get upgraded. Don't buy me a don't
Speaker 1: put me in a five star.
Speaker 2: Hotel.
Speaker 1: Put me in a four star hotel, I won't know
Speaker 1: the difference, and it's probably more appropriate. So, you know,
Speaker 1: perceptions matter, and so it's not just the letter of
Speaker 1: the law to rule the law. It's also the perception.
Speaker 1: And by the way, if you're black and you're born
Speaker 1: on probation in America, so black, brown woman, whatever, you
Speaker 1: gotta be twice as smart, twice as intelligent, twice as well, dressed,
Speaker 1: twice as smart, get up twice as early as stay
Speaker 1: twice as late, and hustle twice as hard, and be
Speaker 1: twice as honest. And because you're not getting a second chance.
Speaker 1: And so this unfairness, I didn't take it as a negative.
Speaker 1: I took it as a as a badge of honor that
Speaker 1: if I could, you know, follow all the rules and
Speaker 1: be keep my nose cre extremely clean and all that stuff,
Speaker 1: then I'm just gonna be a The haters gonna make
Speaker 1: me better. I'm just going to be a better businessman.
Speaker 1: And such has been the case, by the way, right,
Speaker 1: So all the dramas just made me made me a
Speaker 1: better businessman, I believe. So the first thing I had
Speaker 1: to do is figure out because I was an entrepreneur
Speaker 1: that I founded a nonprofit organization, and then I had
Speaker 1: to you know, shed my reputation as an entrepreneur and
Speaker 1: really become this this nonprofit leader and be focused on
Speaker 1: that for twenty five years and really put my for
Speaker 1: profit business on the back burner. Even though my profits,
Speaker 1: the money originally that came from the nonprofit for the
Speaker 1: nonprofit came from my for profit business.
Speaker 2: That's a own another story for another time. But I
Speaker 2: had to be I had.
Speaker 1: To immerse myself in the nonprofit and make sure that
Speaker 1: I did things completely appropriate for a nonprofit, which is
Speaker 1: completely different than a for profit entity, and not let
Speaker 1: the two mix my for profit and nonprofit. My actually,
Speaker 1: my for profit literally physically has a separate office address,
Speaker 1: separate you know, staffing, you know all that stuff, separate
Speaker 1: books and records. Of course, then my nonprofit. Do not
Speaker 1: mix the two. Please, You do not want to go
Speaker 1: to jail. One thing you do not want is the
Speaker 1: irs on yourtail. You will go to jail. That didn't
Speaker 1: get an alcohpoone for murdering mayhem, the guidm for tax evasion. Right,
Speaker 1: uh so, if you're black and brown, and like I said,
Speaker 1: people are going to be watching you. They're going to
Speaker 1: assume you're going to slip's going to screw up, and
Speaker 1: so don't don't. Don't give them the luxury of that.
Speaker 1: I'll deal with another video. I'll deal with how people
Speaker 1: tried to take me out several times. This is about
Speaker 1: how I did one hundred million dollars deal part time.
Speaker 1: So I was looking for years about a business I
Speaker 1: could do that would not interrupt even though these are
Speaker 1: all my relationships and all my relationship capital and all
Speaker 1: the stuff I built. Use my personal relationships to build
Speaker 1: my philanthropy Operation Hope, and to make it the largest
Speaker 1: of its kind in the country, largest financial literacy culture
Speaker 1: or organization in America, UH with the international reach. I
Speaker 1: wanted to make sure I had if I if I
Speaker 1: wanted to re emerge as an entrepreneur and as a
Speaker 1: businessman in that brand, that it did not in any
Speaker 1: way conflict with my nonprofit. So I couldn't. There's a
Speaker 1: whole bunch of stuff I couldn't do. I couldn't be
Speaker 1: a banker. I couldn't start a bank, compete with my
Speaker 1: partners as student. People say, oh, you should start a bank.
Speaker 1: Why would I do that and compete with my partners.
Speaker 1: It's ridiculous. I should be a mortgage broker. No, I
Speaker 1: can't be a mortgage broker because because operations put people
Speaker 1: into homeowners homeownership. Can't be a finance broker. I couldn't
Speaker 1: be a finance seer. Uh.
Speaker 2: There's a whole bunch of things I could. Couldn't be
Speaker 2: a credit provider.
Speaker 1: There's a lot of things that I just couldn't do
Speaker 1: from an ethical perspective that would give anybody any reason
Speaker 1: to say, Aha, see that John Brian guy. He's double dipping,
Speaker 1: he's you know whatever, he's playing funny because he's got
Speaker 1: this nonprofit he has this for profit business. Well, I
Speaker 1: thought a long term, a long long and heart, and said,
Speaker 1: you know, I really like I really liked the single
Speaker 1: family residential business and single family residential rental business business
Speaker 1: and rent to own as an aspiracial platform. I want
Speaker 1: to own homes. I want to.
Speaker 2: I want to.
Speaker 1: I want to own quality, affordable homes and rent them
Speaker 1: out to quality people who are working class. That was
Speaker 1: my vision and it didn't conflict with Operation oping anyway.
Speaker 1: So I think, Okay, I'll do that. So I pursue
Speaker 1: that for several years and the answer was no, not no, no,
Speaker 1: Just like you know, I'd go to I talk, I'd
Speaker 1: go to my friends on Wall Street and raised this,
Speaker 1: particularly my friend Michael Arraghetti, who was the founder of
Speaker 1: a CEO of areas management, and I raised this and
Speaker 1: he was like, you just couldn't figure out how this
Speaker 1: would work. And it was the industry was too it
Speaker 1: was too early on, you know. In his opinion, this
Speaker 1: was early two thousand, early twenty twelve. Maybe might I
Speaker 1: might start raising this maybe a twenty ten during the
Speaker 1: economic downturn, mortgage crisis, right, so in real estate was down. Also,
Speaker 1: It's like, well, why would you want to do it
Speaker 1: in this environment? But I knew real estate would rebound anyway.
Speaker 1: And we get to the crux of the story where
Speaker 1: it starts getting interesting. So at some point around twenty sixteen,
Speaker 1: he said, yeah, this might work, John. So I went
Speaker 1: and found I didn't want to go, you know, build
Speaker 1: homes from scratch. I don't want to be a real
Speaker 1: estate developer. I didn't want to be a you know,
Speaker 1: a contractor. I wanted to use my skills, so I
Speaker 1: wanted to I'm a builder, a business builder, not a
Speaker 1: home builder. So I was like, well, let me go
Speaker 1: buy some assets, buy some single founder residential homes and
Speaker 1: run it like I would want to run that portfolio
Speaker 1: of homes in my neighborhood. So I went to go
Speaker 1: try to buy a portfolio of homes a lot, and
Speaker 1: it takes you so much energy as to succeed big
Speaker 1: is to succeed small. So I wanted to succeed big,
Speaker 1: and so I went about trying to do this and
Speaker 1: to get an investor for this enterprise and make a
Speaker 1: long story short, the investor said, no, we're not interested.
Speaker 2: Uh.
Speaker 1: And it wasn't just we're not interested, like on a
Speaker 1: business basis. There were some games like without getting into
Speaker 1: he said who said this? And he said who did
Speaker 1: this to that person? There's a guy who's put in
Speaker 1: charge of evaluating the investment who didn't like me. It
Speaker 1: was personal and he resented me. And I won't name
Speaker 1: I'm only going to name positive names here. Right by
Speaker 1: the way, here's my philosophy for living. Talk without being offensive,
Speaker 1: listen without being defensive, and always leave even your adversary
Speaker 1: with their dignity because if you don't, that's spend the
Speaker 1: rest of their life working to make you miserable, it
Speaker 1: becomes personal. So step over mess and not in it.
Speaker 1: Always always leave even your adversary with their dignity right.
Speaker 1: And so I'm not going to talk about the people
Speaker 1: who who did me wrong, did me dirty, that was
Speaker 1: in my neighborhood. I'm going to just commend the people
Speaker 1: who actually helped me build because the drama doesn't matter, right,
Speaker 1: those people weren't going to stop me. I take no
Speaker 1: for vitamins. So this guy, I know, I got him
Speaker 1: in my mind's eye. He sense apologized by the way,
Speaker 1: but he stood away from me doing what would have
Speaker 1: been a deal that would have if I had done
Speaker 1: that first deal, I mean, I'd have a company three
Speaker 1: times large and the company I actually ultimately ended up building.
Speaker 2: But you know, God, everything happens for a reason.
Speaker 1: So I'm actually glad this didn't happen the way it
Speaker 1: was set up originally. So because this guy would have
Speaker 1: been my partner. It had been horrible because he was
Speaker 1: only my other friend was gonna only to invest if
Speaker 1: this guy signed off on it, and he had to
Speaker 1: put his money in it. And he told me this
Speaker 1: was a dumb IDEA single family residential rental Holmes was
Speaker 1: a dumb idea, and he wouldn't put his money in it.
Speaker 1: He wasn't going to recommend his friend to put his
Speaker 1: money in and put the money in it. And you
Speaker 1: see this as a theme over and over again. I
Speaker 1: had to not get emotional. If you listen to any
Speaker 1: of my content, you hear me say whenever you make
Speaker 1: an emotional decision is going to be a bad one.
Speaker 1: So I didn't, you know, I didn't get emotionally wound
Speaker 1: up about this guy. I was disappointed. I was frustrated, sad,
Speaker 1: but I was like, okay, you know, fine, next item.
Speaker 1: So I just I never give up. By the way,
Speaker 1: Hank Aaron has a record for the most home runs,
Speaker 1: but he also has a record for the most strikeouts,
Speaker 1: because you cannot hit a ball you don't swing at.
Speaker 1: So I never give up. I'm unrelenting. I mean I
Speaker 1: am resilient, and I again I take note for vitamins,
Speaker 1: and I believe success is going from failure to failure
Speaker 1: without loss of enthusiasm. And I never ever, ever, ever, ever, ever,
Speaker 1: ever ever ever give up, and neither shoit you. Only
Speaker 1: in the dictionary does the word success coming for the
Speaker 1: work work, because it's alphabetical so I'm about to no
Speaker 1: pun intended here, I'm about to give up, not give up,
Speaker 1: but you know the business I proposed. The answer was, no,
Speaker 1: you're gonna get nose. Don't focus on the nose. Don't
Speaker 1: focus on the ninety eight nos. Focus on the two
Speaker 1: yeses right, the knows don't matter. Success has a thousand
Speaker 1: mothers and fathers and failure as a bastard child. No
Speaker 1: focus on the nose, focus on the yes. Nobody's going
Speaker 1: to remember your failures. So this guy caused his deal
Speaker 1: to flush. My friend was like, I'm sorry, I can't
Speaker 1: do anything unless he signed off on it, And so
Speaker 1: we went and had dinner and talked about other things.
Speaker 1: Don't take it personal and don't make your benefactor feel
Speaker 1: like they owe you something or you're resentful, like you'll
Speaker 1: lose a friendship and you'll make it make them feel
Speaker 1: like you're only their friend because of what they can
Speaker 1: do for you, and you make them feel uncomfortable in
Speaker 1: the reality is nobody owes you anything but a shot,
Speaker 1: just an opportunity. That's it, not an outcome. So I
Speaker 1: remember calling my friend Michael Raghetty back one day and saying, look,
Speaker 1: I'm tired of When I started Operation Hope, I did
Speaker 1: it with my own money. But because I've only been
Speaker 1: doing the opperation over now for two decades, I've stepped
Speaker 1: away from business and I have some passive assets, but
Speaker 1: there are not enough assets to cover how big Operation
Speaker 1: Hope has gotten when it needs payroll covered or whatever.
Speaker 1: And I write, over twenty thirty years, I've written checks
Speaker 1: to operation over half a dozen times or more. Give
Speaker 1: it to my chief of staff racial and said, hold
Speaker 1: this in case, you know, the donor money doesn't come in.
Speaker 1: I'll cover payroll again. I'll cover the operationial story in
Speaker 1: another podcast another time. So it's like Michael, I need
Speaker 1: to be able to cover Operation Hope in case it
Speaker 1: can't make payroll and it's just too big now or
Speaker 1: whatever it's needs are. I don't want to go begging
Speaker 1: the donors all the time. I want to be able
Speaker 1: to reach in my own pocket and pull out of
Speaker 1: assets and cover myself. So the big deal didn't work,
Speaker 1: that's fine, can we do? You know, I'm just going
Speaker 1: to go buy one hundred homes, which was much smaller
Speaker 1: than the two thousand homes I was targeting. Right, And
Speaker 1: I've always been a big dreamer, and so one hundred
Speaker 1: homes seemed like a really small deal comparison to the
Speaker 1: two thousand homes that he just said no to, or
Speaker 1: his colleagues said no to.
Speaker 2: And so.
Speaker 1: He's like, okay, cool, we can do that. So I
Speaker 1: went and called another colleague that he and I booths
Speaker 1: and it both knew and I knew he trusted. And
Speaker 1: that guy's name was John Bartling. And John Bartley, who
Speaker 1: was the CEO of a division of ares at that time,
Speaker 1: previously had left to become then CEO for a time
Speaker 1: at Invitation Homes, and now as the vice chairman, became
Speaker 1: vice chairman and then chairman of the investment division at
Speaker 1: Deutsche Bank guards Steel. Try to see how all these
Speaker 1: pieces come together here in a minute, I called John Bartley,
Speaker 1: and John Bartlay I told my vision and the details
Speaker 1: here don't matter. John and I had this relationship and
Speaker 1: John thought this was a good idea. But I couldn't
Speaker 1: I needed financing I needed and John couldn't, you know,
Speaker 1: give me the homes.
Speaker 2: He had to sell them to me.
Speaker 1: So we're very friendly, but it was business, and business
Speaker 1: again is not personal business. It's just business. So in
Speaker 1: order to buy these homes at that time.
Speaker 2: This was now twenty sixteen ish.
Speaker 1: I needed about ten million dollars, which would have been
Speaker 1: three million dollars of equity to give or take in
Speaker 1: about seven million dollars worth of debt financing. So Michael said,
Speaker 1: I'll put up the equity. Personally like, don't worry about it,
Speaker 1: I just write the check. So I target these assets,
Speaker 1: put together a portfolio that I thought Michael might like.
Speaker 1: Back then, you could buy a home for less than
Speaker 1: one hundred thousand dollars in the Atlanta market that I
Speaker 1: was going to buy these homes Atlanta in North Florida,
Speaker 1: so I could be around, I could get to the
Speaker 1: assets myself to manage them if I needed to, and
Speaker 1: I need to do something again, it was time because
Speaker 1: I was really the CEO of Operation Hopeful time. So
Speaker 1: so in an institutional real estate space, this was a
Speaker 1: small investment. Again, I know this doesn't people are listening
Speaker 1: to this. They're trying to buy one to two homes,
Speaker 1: which is one home. Don't own eight home or think
Speaker 1: they want to buy five homes. I'm saying, I'm really
Speaker 1: saying something is crazy. But I have friends that own
Speaker 1: twenty thousand, fifty thousand, eighty thousand homes. I'm sorry. They
Speaker 1: run institutions that do I know people who own you know,
Speaker 1: thirty thousand apartment building units, one hundred thousand apartment building units.
Speaker 1: So it's called institutional investment. It's Wall Street. So anyway,
Speaker 1: this was a very small target, you know, fifty to
Speaker 1: one hundred homes. I just wanted something that was I
Speaker 1: called a pocketbook asset that I could basically fit in
Speaker 1: my pocketbook and I could put it out in case
Speaker 1: I needed to bankroll my nonprofit, cover it myself versus
Speaker 1: begging somebody. I believe in that James Brown version of
Speaker 1: affirmative action, open a door where I get it my
Speaker 1: dang self. So fast forward. I'm trying to work this out,
Speaker 1: trying to find the portfolio. And I found the portfolio.
Speaker 1: I've gotten the money now from Michael, I'm about to
Speaker 1: do the deal. So I get on the plane now
Speaker 1: my Operation Hope hat is on and I'm flying to
Speaker 1: LA to meet with a friend, a guy who became
Speaker 1: a friend who I met through Michael Raghetty. He was
Speaker 1: Tony Wrestler, who is chairman of Arias Management, co founder
Speaker 1: of ARIS, co founder of Apollo baller, good guy, and
Speaker 1: for the sake of this conversation, just so you put
Speaker 1: him in a bucket. I guess a billionaire now probably
Speaker 1: won't be saying this, but it's public record. Michael and
Speaker 1: Tony are billionaires at this point. But back in that
Speaker 1: at that time, Tony Resterer was, you know, the billionaire.
Speaker 1: And I had never done with asess business with a
Speaker 1: billionaire before. I knew a few, but didn't do business
Speaker 1: with him. So I flew to Los Angeles trying to
Speaker 1: get this guy to be a donor the Operation Hope. Now,
Speaker 1: don't laugh, but this is a very important lesson here.
Speaker 1: I flew to LA to try to get Tony Wrestler
Speaker 1: this is twenty sixteen ish to be a twenty five
Speaker 1: thousand dollars donor annual donor to Operation Hope. It wasn't
Speaker 1: about the money. It was about I wanted him to
Speaker 1: be part of this family, but I also wanted his money,
Speaker 1: and so I flew there. Been cultivating him for a while,
Speaker 1: I got an appointment. I flew there and I'm sitting
Speaker 1: in his office and he says, yeah, yeah, yeah, I'll
Speaker 1: give you the twenty.
Speaker 2: Five thousand dollars.
Speaker 1: It was almost like, just this gets you off my back,
Speaker 1: like you've been stalking me basically, you know, just to
Speaker 1: get you out of my office, I'll give you twenty
Speaker 1: five thousand dollars through you know, my philanthropic giving to
Speaker 1: help you good work around financial literacy. So I'm preparing
Speaker 1: to leave his office. He says, what else you got?
Speaker 2: Excuse me?
Speaker 1: He says, what else you got? I said, I don't
Speaker 1: know what you're talking about. He said, no, you look,
Speaker 1: you just took money out of my right pocket, and
Speaker 1: it's a nation, it's philanthropy. Twenty five thousand dollars. What
Speaker 1: you got in your right in your left pocket? You're
Speaker 1: a smart guy. What kind of business ideas do you have?
Speaker 1: This is number of God talking here through him. So
Speaker 1: I'm like, well, I've got this business thing I'm doing.
Speaker 1: I'm you know, single family residential rental homes. I'm gonna
Speaker 1: get people a chance to.
Speaker 2: Go for rent to own. Blah blah blah. I talked
Speaker 2: from maybe now mind you.
Speaker 1: I had a PowerPoint presentation with philanthropy and all this
Speaker 1: stuff and scheduling meetings, and now you know, for twenty
Speaker 1: five grand I mentioned I mentioned this for I don't
Speaker 1: know a minute and a half description. Tony says, I'm in,
Speaker 1: and I'm like, you're in for what? He's like, I'm in.
Speaker 1: I'm going to be an investor in that.
Speaker 2: I want to.
Speaker 1: I want to be partner of that business. I'm like, well,
Speaker 1: I've already got an investor for that. He's like, well, okay,
Speaker 1: well who is it? I said, I said, well, it's uh,
Speaker 1: you know, Mike Gregetty. He says, well, Michael is my guy.
Speaker 1: He works with me. Just just tell Michael I'm in
Speaker 1: for half. So I'm like, well, I'm not sure you don't.
Speaker 1: I'm telling you it'll be fine.
Speaker 2: I'm in. This is a good business. Fine.
Speaker 1: He never never argue with a donor or investment partner
Speaker 1: if they're legit, and this guy was absolutely legit. The
Speaker 1: answer was just yes, I'll figured it out later, hoping
Speaker 1: that Michael wouldn't get upset with me. So, but Michael
Speaker 1: knows told me very well. So I leave and fly back.
Speaker 1: Now what's the moral of the story. First of all,
Speaker 1: the first thing is it's much harder to do philanthropy
Speaker 1: than it is to do business. I went there, I'd
Speaker 1: been talking to this guy for six months, a year, whatever,
Speaker 1: it was trying to get twenty five grand, and when
Speaker 1: the right business idea came up for two point five million,
Speaker 1: basically ten times that amount, go round it up to
Speaker 1: three million. He was in in a minute and a
Speaker 1: half when he thought this, Yeah, this is doing well
Speaker 1: and doing good.
Speaker 2: This is cool.
Speaker 1: It just shows you how big business is versus philanthropy.
Speaker 1: You know, if you can find a business model, it'll
Speaker 1: lift forever. Philanthropy you're begging forever. So I go back
Speaker 1: to Atlanta and about a week later we had a
Speaker 1: conference call with meet Tony and Michael Uh, Tony Rester,
Speaker 1: Michael Seragetty, myself, and so Tony says this, and this
Speaker 1: is the difference between Tony Michael Ragetty's is genius. I
Speaker 1: mean I literally think Michael has a genius like you.
Speaker 1: In fact, I know he does. He's a mathematical genius.
Speaker 1: He's he's a he's a savant, he's operational excellence. He's
Speaker 1: his skill is building and running organizations. And Tony skill
Speaker 1: is he's a dreamer times a million, and he's got
Speaker 1: you know, uh, visionary courage just to say yes to
Speaker 1: stuff even though the details aren't there. Michael needs the
Speaker 1: details there and it works. These guys work very well
Speaker 1: together because they stay out of each other's way and
Speaker 1: they know what each other's strength is.
Speaker 2: Okay, So.
Speaker 1: Mind you, what never happened without Michael Raghetti both saying
Speaker 1: yes to me, putting up their internitial equity, and introducing
Speaker 1: me to Tony. Okay, but Tony had a different role
Speaker 1: to play, as you're about to see. So Tony says,
Speaker 1: I'm in to this thing.
Speaker 2: I'm a partner.
Speaker 1: So now it's the three million dollar equity check to
Speaker 1: buy these homes. And I'm I'm in New York City
Speaker 1: on business and I'm going through the tunnel hanging to
Speaker 1: Laguardier Airport. I remember this like it was yesterday. It
Speaker 1: was four o'clock in the afternoon, about to turn the
Speaker 1: corner into the tunnel, and I'm on the phone with
Speaker 1: these guys, and Tony says this. You know, I've been
Speaker 1: thinking about your idea. It's a great business idea. You've
Speaker 1: done really good research here. It's just dawns on me.
Speaker 1: Why do three million, we can do thirty million? Actually,
Speaker 1: why do thirty million? We can do one hundred and
Speaker 1: thirty million. We're in for one hundred and thirty million. Now,
Speaker 1: mind you, I had if I was driving a car,
Speaker 1: would a run into something. But I just had to
Speaker 1: stay cool, you like, it's just no drama. Chill, don't
Speaker 1: get too excited, you know. Frankly, I had to make
Speaker 1: sure I heard what I thought I heard first of all,
Speaker 1: Like they we're gonna do one hundred million of debt
Speaker 1: and thirty million in equity. Would listen to one hundred
Speaker 1: and thirty million dollars. Let you grow the company and
Speaker 1: then we'll figure out a way to institutionalize it after that,
Speaker 1: mind you. I started out with this grand vision and
Speaker 1: I got shot down multiple times right all these games
Speaker 1: being played. But once I got to the principles the
Speaker 1: real players directly and I accepted a much more modest investment,
Speaker 1: much much more modest, mean micro modest in comparison to
Speaker 1: what I originally was looking after it, and I didn't
Speaker 1: get an attitude about it.
Speaker 2: And it didn't make them feel guilty. It didn't make
Speaker 2: them feel like they.
Speaker 1: Were chumps or punks or you know, they're doing something
Speaker 1: wrong their businessman. They made the proper business decision, and
Speaker 1: I probably would have done the same thing if I
Speaker 1: was then, by the way, but this was a different
Speaker 1: situation and I was gracious that they did this. They
Speaker 1: didn't have to do it. And you know, off we went.
Speaker 1: So I fly back to LA and I got to
Speaker 1: leave some of these details out. One this is a
Speaker 1: very short podcast, and too it's study of your business,
Speaker 1: and I can't there's something that I can't say. But
Speaker 1: Tony introduced me to his bankers, and i'll give credit here.
Speaker 1: It was City National Bank in this particular example, and
Speaker 1: they gave me a credit line I'm sure guaranteed by Tony,
Speaker 1: although no one told me that. And somehow I got
Speaker 1: hooked up with Freddie Mac and I got a letter
Speaker 1: which I'm gonna frame this letter. I got a letter
Speaker 1: committing tuned in fifty million dollars to me from Freddie Mac.
Speaker 1: I gotta figure. I gotta figure about how I got
Speaker 1: hooked up with Freddie Mack because it wasn't tied to
Speaker 1: Michael or Tony. It was on my own, my own efforts.
Speaker 1: They were like, oh, this is a great business idea,
Speaker 1: we'll put up tow it in fifty million dollars to
Speaker 1: support you. And I'm so glad I didn't take that
Speaker 1: commitment that would have made me go bank up because well,
Speaker 1: interest rates went the wrong direction. First of all, for me,
Speaker 1: as I recall, that wasn't the biggest problem. The biggest
Speaker 1: problem was there was a huge pre payment penalty that
Speaker 1: that would have made this deal. I couldn't. I got
Speaker 1: into it. I basically couldn't get out of it, you know.
Speaker 1: And I ended up taking down about thirty five million
Speaker 1: of that two undred and fifty million from Freddie mac
Speaker 1: and could could barely afford that. And when I close
Speaker 1: the steal, you'll hear this in a second. So when
Speaker 1: I get this commitment from Tony and Michael, I don't
Speaker 1: I don't want them to transfer any money yet. I
Speaker 1: don't want the money. I want the venture to have
Speaker 1: the money. Right, So I go and find my first
Speaker 1: group of homes to buy and check them out, go
Speaker 1: look at them myself, get them, you know, go kick
Speaker 1: the you know dirt, look at them, review them, inspect them.
Speaker 1: I went personally to inspect the number of these homes.
Speaker 1: He couldn't expect all of them. It was a lot
Speaker 1: of homes. And I remember I was buying homes at
Speaker 1: fifty homes, seventy five homes, one hundred homes at a
Speaker 1: time building this business and across the country, and there
Speaker 1: were some sketchy transactions. There was some sketchy sellers of homes.
Speaker 1: There was times where I had to pull a ten
Speaker 1: million out of sec line of credit out of my
Speaker 1: out of nowhere.
Speaker 2: To get a deal closed.
Speaker 1: I had people who were drunk around me who I
Speaker 1: had to ignore. I mean, just all kind of craziness.
Speaker 1: I had to keep my cool at every step of
Speaker 1: this this way, by the way, people were drunk around
Speaker 1: me were not tied to any of my partners. It
Speaker 1: was folks part of the deal, the transactions I was
Speaker 1: looking at. So just because you got money doesn't mean
Speaker 1: you have sense, by the way, So again I'm giving
Speaker 1: you the short version of this. So I started accumulating
Speaker 1: these portfolios, and I had to sign hundreds of documents
Speaker 1: because each one of these homes you had to sign
Speaker 1: mortgage documents and lending documents and ESCRO documents. And I'd
Speaker 1: be in the city traveling and I just I would
Speaker 1: ask somebody, can I use your conference room? And you know,
Speaker 1: a delivery truck would show up with boxes and documents
Speaker 1: and I'd sit there and have literally I've got photos
Speaker 1: of me signing these documents in these different offices. So
Speaker 1: let me fast forward here. So I told you about that.
Speaker 1: I got this Freddy mc commitment for twenty fifty million
Speaker 1: dollars and the prepayment penalty em the money was like no, actually,
Speaker 1: interest rates went down, that's.
Speaker 2: What it was.
Speaker 1: Uh, And I had these I had like five or
Speaker 1: six percent money, which is we're back to that number
Speaker 1: again now. But the interest rates went down and this
Speaker 1: money became very expensive. But I couldn't refinance out of
Speaker 1: it because it was a pre payment penalty. It was
Speaker 1: a lot of money. I mean like a lot of money.
Speaker 1: So I'm really appreciing Freddie Mack gave me the deal.
Speaker 1: But the more money I took from them, the more
Speaker 1: I was locked into the deal. Okay, that's not the
Speaker 1: important part of the story, but I'll get to that
Speaker 1: in a minute, because it comes back. It comes back
Speaker 1: to me. So I go and buy these homes, I
Speaker 1: accumulate this portfolio, I hire staff, I do. I decided
Speaker 1: a contract model where I'm going to contract for my
Speaker 1: chief financial officer, for my auditor, for my property manager,
Speaker 1: all that stuff. I wanted to contract out and in
Speaker 1: order to be efficient and grow the company quickly, and
Speaker 1: not have all this infrastructure. And so I had like
Speaker 1: six or eight employees running a huge corporation, and I
Speaker 1: got the occupancy up to an institutional quality. I had
Speaker 1: institutional quality auditors and all that stuff.
Speaker 2: You know.
Speaker 1: Not one time that Tony and Michael coming out at
Speaker 1: my books, not one time did they. They just knew
Speaker 1: I wasn't spending the money on limousines and crazy stuff
Speaker 1: and parties. That's not who I was. They made an
Speaker 1: assessment of who I was on the front end, which
Speaker 1: is why they didn't need powerpoints and business plans all
Speaker 1: that stuff for me. They knew my character. They just
Speaker 1: need to make sure I knew how to run a business.
Speaker 1: So this one person that they made sure who oversee
Speaker 1: everything from the side was his attorney named Monica Shilling.
Speaker 2: Yes, Monica had mentioned your name. Who is a baller.
Speaker 1: I mean, she is incredible, And if I told you
Speaker 1: what her ali rady is, you'd fall out. And Monica
Speaker 1: had to curse me out on more than one occasions
Speaker 1: without curse words. I remember one day I had an idea,
Speaker 1: one of my many ideas, and I owned a sizeable
Speaker 1: portion of the venture, and so I'm like, well, Monica
Speaker 1: I don't understand why I can't do this, Like, I'm
Speaker 1: the majority shareholder here, I want to do X, Y
Speaker 1: and Z. And she's like, John, they're the money. Excuse me, Yeah,
Speaker 1: they're the money. You own the majority of the shares,
Speaker 1: but you have a different kind of share structure. Then
Speaker 1: they do. Their share structure gives them rights and privileges
Speaker 1: yours don't because they are the money and the money
Speaker 1: makes the rules. Please everybody remember this. Don't get upset
Speaker 1: with the money. The money.
Speaker 2: And I had to.
Speaker 1: I was like, yeah, yeah, you're right, they are. They
Speaker 1: are the money. I'm gonna become the money, which I
Speaker 1: have become. But back then I was like, Okay, I'm
Speaker 1: gonna go along with this for the moment and thank
Speaker 1: you Monica. And fast forward. I built this company and
Speaker 1: I'm ready to sell.
Speaker 2: And so.
Speaker 1: At this point, John Bartling is now vice chairman of
Speaker 1: Deutsche Bank. He's gone in the banking and me, you
Speaker 1: know the relationship capital so Deutsche so so Deutsche Bank
Speaker 1: agrees to cover promise homes cover meaning to to to
Speaker 1: represent if you will. Even though I was really too
Speaker 1: small for them to be associated with.
Speaker 2: It's me.
Speaker 1: They needed something that's five times bigger than my company.
Speaker 1: But to give me credibility, make me part of the club,
Speaker 1: they agreed to cover quote unquote my enterprise. And so
Speaker 1: they built a fact sheet around me and a presentation book,
Speaker 1: a flip book for Wall Street. And so when we
Speaker 1: went to go sell the company, they put all the
Speaker 1: what's called KPIs keep k performance indicators together for the company.
Speaker 1: And because it was a contract model, as I mentioned earlier,
Speaker 1: I had the highest costs. It was the highest cost
Speaker 1: for everything because it was not internalized. It was externalized
Speaker 1: property management, externalized auditor expert.
Speaker 2: It was.
Speaker 1: It was efficient, but it was very high costs. And
Speaker 1: I built the company infrastructure out for a much larger
Speaker 1: company because I was going to grow the company. So
Speaker 1: it was just everything was more expensive than it should
Speaker 1: have been. And it was a startup company basically, so
Speaker 1: in comparison to all my peers in the industry, my
Speaker 1: numbers did not look impressive. And I was doing all
Speaker 1: this work for the community financial free financial literacy, and
Speaker 1: I made my company pay operation ope and annual membership
Speaker 1: feed like everybody else free financial literacy free. I mean
Speaker 1: of you, if you paid rent on time, I'd give
Speaker 1: you discounts if you raise your credit score at lower
Speaker 1: your rent ten percent, if you kept rent your credit
Speaker 1: score above seven hundred, I see, I walk my talk.
Speaker 1: I give you a chance to go for rent to own.
Speaker 1: Which is why the Better Government liked me and Freddie
Speaker 1: Meck like my model because I was giving people a
Speaker 1: shot in ownership where other companies were not really focused
Speaker 1: on that. They're just focusing on renting properties. So I
Speaker 1: had a social impact investment model. Didn't understand that's what
Speaker 1: my gold mind was. By the way, this was just
Speaker 1: who I am. It's how I run a business. So
Speaker 1: initially this was a negative. It was perceived please hear me.
Speaker 1: This was perceived to be a huge negative me doing this.
Speaker 1: Wallstreet was like this guy spending all this money on
Speaker 1: all these ancillarity services, He's not efficient in his operations.
Speaker 1: So when the book went out to Wall Street players,
Speaker 1: it was rather embarrassing to me because it was sent
Speaker 1: out to I don't know ninety companies on Wall Street.
Speaker 2: All the big players.
Speaker 1: They didn't laugh at me in my face, but there
Speaker 1: was no offers that came back. They're like, no, we
Speaker 1: don't want to invest or buy this company. And I
Speaker 1: had promised my investors to get them in and out
Speaker 1: in five years. So I finally got a couple offers.
Speaker 1: They were really miserable. Like one offer was so I
Speaker 1: owed Tony and Michael plus the banks plus Freddie mac
Speaker 1: a total.
Speaker 2: I owed a total of.
Speaker 1: About eighty eight million dollars and I get an offer
Speaker 1: for like eighty nine million.
Speaker 2: It was just one guy.
Speaker 1: I'm gonna not gonna mention his name, A nice guy
Speaker 1: friend to this day, but he tried to punk me
Speaker 1: a little bit. Uh friend meeting again. Businesses business person
Speaker 1: was personal. His job was to get the most benefit
Speaker 1: he can get with the providing the least value. My
Speaker 1: job was to get the most value with the while
Speaker 1: maintaining well the most value for myself and giving him
Speaker 1: the least benefit in the transaction.
Speaker 2: Or you know.
Speaker 1: In other words, he's trying to maximize his profit, so
Speaker 1: am I. But he wants to pay the least the
Speaker 1: lowest price. I want to pay the I want him
Speaker 1: to pay the highest price. That's the tension. Well, he
Speaker 1: comes back. I think this is like AE hundred million
Speaker 1: dollar plus company. In fact, I think it's more like
Speaker 1: one hundred and thirty million at that point. Although I
Speaker 1: didn't have any facts to back that up. I'll get
Speaker 1: to that in a minute. And this dude offered me
Speaker 1: ninety million. He knew me really well, and he knew
Speaker 1: he was. He knew he was he was trying to
Speaker 1: squeeze me. Well, he knew he was squeezing me. But
Speaker 1: he told me that his people would analyze the portfolio
Speaker 1: and came back and he's this, without question, it's worth
Speaker 1: It's only worth ninety million. He didn't think I was
Speaker 1: going to do my own appraisal. I was just going
Speaker 1: to take this word for it. So we did our
Speaker 1: own desk appraisal of the portfolio, and well, let's just
Speaker 1: say the value was significantly higher than he was proposing.
Speaker 2: But that was not enough.
Speaker 1: My kpiskey performance indicators on income and all that stuff.
Speaker 1: My structure of the deal couldn't just go on acid value.
Speaker 1: The structure of the deal was not compelling. So I'm
Speaker 1: thinking to myself, John, you know this is you just
Speaker 1: embarrass yourself in front of all of Wall Street. You
Speaker 1: got these ridiculous offers, but you promised to Michael and
Speaker 1: Tony get them in and out of this deal. So
Speaker 1: I offered to sell a company at that point, at
Speaker 1: basically break even, I would have gotten. I had two
Speaker 1: and fifty cents when the deal closed, because I was
Speaker 1: willing to. I had to pay them attorneys a million
Speaker 1: dollars almost I had to pay the bankers a half
Speaker 1: million to a million dollars. I mean, I might have
Speaker 1: end up owing money with a deal closed. Yes, you
Speaker 1: pay bankers and attorneys five hundred thousand million dollars into
Speaker 1: a deal that side without question. So I said, you know,
Speaker 1: I've got a better vision for this. And I went
Speaker 1: into to my partners and said I'd like to pursue
Speaker 1: my idea. And my partners were like, and again some
Speaker 1: things I just can't tell you. My partners, for reasons
Speaker 1: that are personal of them, said yes, you go pursue this, John,
Speaker 1: And if you can sell this company within the year,
Speaker 1: you know, you pay us our return, but the company's
Speaker 1: assets you own it, you know, And which was an
Speaker 1: extraordinary offer. They were basically giving up all their ownership
Speaker 1: if I was able to find a buyer within a
Speaker 1: year's period of time for the company. And that that
Speaker 1: was very generous of them. It got my attention, and
Speaker 1: so I called the CEO of a bank and said
Speaker 1: you know, I think that this company I created might
Speaker 1: qualify under the community we investment in and he's and
Speaker 1: I explained the company to him and how I structured it,
Speaker 1: the financial literacy and the rent to own and all
Speaker 1: these different things doing different from everybody else, which people
Speaker 1: have seen as a cost up until now as a negative.
Speaker 1: And this banker was like, yes, I think you're right, John,
Speaker 1: I think this does qualify in the Community Reinvestment Act
Speaker 1: and other government compliance statutes that banks have to comply with.
Speaker 1: This is a fabulous investment and it's for profits. You've
Speaker 1: you know, you structured it really well. They're doing well
Speaker 1: and doing good. Congratulations. Can I invest in it? In fact,
Speaker 1: he said, I'd buy it if you're in my area,
Speaker 1: but you're not in my area. Can I invest in it?
Speaker 2: Sure?
Speaker 1: So again I'm going to leave the details out here,
Speaker 1: but he offered to put several million dollars into the business,
Speaker 1: and I gladly took it. And the key was the
Speaker 1: interest rate. He's like, how about two percent? And I
Speaker 1: was like, fantastic, Now the two percent to pay two
Speaker 1: percent for the cost of equity. Everybody listening to this
Speaker 1: doesn't stand deals. This is extraordinary it was extraordinary when
Speaker 1: I did the deal.
Speaker 2: One. Yeah, I don't know the year.
Speaker 1: This was twenty twenty ish, twenty eighteen, twenty nineteen, twenty
Speaker 1: twenty ish interest rates were next to you know, zero
Speaker 1: one percent or whatever it was. But still to get equity,
Speaker 1: which is very risky money at two percent, it's extraordinary.
Speaker 1: But maybe equity would have cost if you're a big,
Speaker 1: huge Wall Street player, you're a Blackstone or black Rock
Speaker 1: or whoever your KKR maybe which back then would have
Speaker 1: cost them four percent Now equity would cost you seven, eight, ten,
Speaker 1: twelve percent today, depending on who you are.
Speaker 2: I was getting at two percent.
Speaker 1: It was unheard of, and so I took that investment
Speaker 1: in the company and paid them back, which I so
Speaker 1: proved I could borrow some money and pay that money
Speaker 1: back to an institutional investor. So track me now here.
Speaker 1: How many banks are there in America? Forty five hundred banks?
Speaker 1: What's their asset size? Trillions? Trillions of dollars? Trillions? I mean,
Speaker 1: I don't think last time I checked it. I'm probably
Speaker 1: gonna get this wrong, but you know, I think it's
Speaker 1: more than fifteen trillion dollars. It's a lot of money
Speaker 1: and it's forty five hundred banks, and I tapped for
Speaker 1: the first time an FDIC insured bank to do investment
Speaker 1: in this category. I created basically a new capital stack,
Speaker 1: a new way of structuring capital for this kind of
Speaker 1: investment vehicle. And I've done it because of my reputation,
Speaker 1: my brand, because of how it operated. This business to
Speaker 1: for whom everybody else saw was a throwaway, a risk, stupid.
Speaker 1: They thought it was again. I'd already gone to market
Speaker 1: one time and it was told this this doggedne hunt.
Speaker 2: Basically right, they.
Speaker 1: And you know John's and Night's guy, but you know
Speaker 1: this is not We're not going to pay for this.
Speaker 1: But once I got this money, they realized how much
Speaker 1: more money was available. Wall Street realized at this low rate.
Speaker 1: I was like, okay, that changes the valuation to John's enterprise.
Speaker 1: He's proven that the market is willing to finance his
Speaker 1: business at institutional levels, with institutional quality money at low
Speaker 1: cost to him. Two ways to make money make more
Speaker 1: spend less so versus jamming my tenants up for huge
Speaker 1: rent increases, I was benefiting by giving them affordable rents,
Speaker 1: which then also allowed me to apply for low cost
Speaker 1: debt and equity I hope this is making sense to you.
Speaker 1: Not play the tape back slowly and it'll slowly make
Speaker 1: sense to you over time. You know somebody who's banking.
Speaker 1: Have him explained. There's only so much I can break
Speaker 1: this down our podcast. But you're really smart, you'll get it.
Speaker 1: You'll get it enough. So to make a long story shorter,
Speaker 1: I did this twice. I borrow the money. And by
Speaker 1: the way, I'll tell you this to do with a
Speaker 1: credit card, you get a credit card. I did this
Speaker 1: myself at a secure credit card when I was eighteen
Speaker 1: years old. I was homeless, three hundred dollars limit secured
Speaker 1: by a three hundred dollars deposit at the bank. Because
Speaker 1: my credit was toe up from the flow up. I
Speaker 1: was homeless and I didn't have a good credit. I
Speaker 1: had bad credit. It was it four hundreds or five hundreds.
Speaker 1: It was horrible, so no one would loan me any money.
Speaker 1: So I got a secure credit card for three hundred
Speaker 1: bucks and I paid twenty five dollars a month minimum payment.
Speaker 1: And then after a few times, I so I run
Speaker 1: the credit card up to three hundred. I'd pay it
Speaker 1: down to one hundred. Credit running up to three to
Speaker 1: two hundred and fifty. We had a three dollar limit.
Speaker 1: Pay it down to fifty dollars, running up to three
Speaker 1: hundred dollars, pay it down to ten dollars. You know,
Speaker 1: it just showed that I had the capacity to charge
Speaker 1: and pay. And then ultimately they gave me an unsecured
Speaker 1: credit card, and now I have a Meer Express Black Card,
Speaker 1: amongst others, which has no limit on it. Technically, in
Speaker 1: this specifically particular example, I did the same thing. I
Speaker 1: got that investment for two percent, paid it off before
Speaker 1: it was due, well before it was due. I had
Speaker 1: a ten year term. I paid it off within a year.
Speaker 1: I wanted to prove I could take the money in
Speaker 1: and pay it off. This was a few million dollars
Speaker 1: they loaded.
Speaker 2: To me again.
Speaker 1: Now interest rates had gone up a little bit, but
Speaker 1: I still got that money added, you know, a rate
Speaker 1: that was far better than any of my peers, who
Speaker 1: are multiple times larger than me. This firmly established that
Speaker 1: John Bryant was a player and could build a business
Speaker 1: that was institutional quality. And my occupancy rate was ninety
Speaker 1: six percent, which means that nice sin of my properties
Speaker 1: were occupied. And I had this minority vendor program where
Speaker 1: we're reinvesting in the neighborhoods and communities. Half of all
Speaker 1: my vendors minorities and women. I was in financial literacy
Speaker 1: for residents and Wall Street Journal had written me up
Speaker 1: for an article where I'd gone take people from rent
Speaker 1: to own my home paper. The AJC had written us up.
Speaker 1: Freddie Mack had written us up in a policy paper
Speaker 1: meaning a white paper, meaning they used as an example
Speaker 1: of this is exactly why, this is exactly how we
Speaker 1: want these companies that are institutional quality. They're investing in
Speaker 1: these neighborhoods to operate, or they're doing well and doing
Speaker 1: good at the same time, not just raising rents on
Speaker 1: people and writing and I give them a shot to
Speaker 1: own so and so forth. So we became the poster
Speaker 1: child for good behavior on Wall Street in this sector.
Speaker 1: And I owned about seven hundred homes just under that
Speaker 1: at that point. And I went back to market and
Speaker 1: got several offers, very good offers above one hundred million.
Speaker 1: And I knew the properties were worth at that point
Speaker 1: in one hundred and fifty million ish. I didn't know.
Speaker 1: I had a gut feeling, but I promised Tony and
Speaker 1: Michael I'd get them out within five years. And we
Speaker 1: were at that five year mark, and I had two
Speaker 1: great offers and a number that I thought was fair,
Speaker 1: and I took one of those offers and paid off
Speaker 1: all of my debt, all of my equity, gave my
Speaker 1: investors their return plus their interest, didn't ask for a discount,
Speaker 1: didn't ask a hookup, didn't ask for well, you know,
Speaker 1: an Ata boy. I met my commitment and I kept
Speaker 1: them just like I was willing to do. When I
Speaker 1: would have been dead broke and having paid off all
Speaker 1: that money and been basically in even stevens so to speak,
Speaker 1: maybe even in the hole. By the way, I would
Speaker 1: have been negative as I mentioned earlier, and that the
Speaker 1: deal closing was painful. I can't go into details of
Speaker 1: the deal closing, but it was. It was painful, but
Speaker 1: we got through it, and we honored all of our
Speaker 1: commitments to the investors. I made a commitment to Operation Hope.
Speaker 1: Was able to take some of the money that I
Speaker 1: made in the for profit and hook up and help
Speaker 1: my people on the nonprofit side of my life who
Speaker 1: don't get bonuses, who don't have stock options because a
Speaker 1: nonprofit is owned by the public technically, even though the
Speaker 1: founders owned by the public.
Speaker 2: That's the law.
Speaker 1: So I gave some of my senior leaders. There's videos
Speaker 1: on it so you can watch that. Bottom all a car,
Speaker 1: a new car, uh new to them. Someone were previously owned.
Speaker 1: Some of them were brand new. Bottom all of the
Speaker 1: bought them the car of their dreams. I found out
Speaker 1: we just one of them wanted as a car and
Speaker 1: got them an investment account.
Speaker 2: Uh.
Speaker 1: Some of them cashed it out, some of them kept it.
Speaker 1: I had a couple of my employees get upset because
Speaker 1: I didn't give them a car or an investment at
Speaker 1: cauqun you believe that. It's crazy. I gave my exact
Speaker 1: stive assistance. They were part of that group. I was
Speaker 1: so proud to be able to share that with them
Speaker 1: doing well and doing good at the same time, and
Speaker 1: then made a forward commitment to help the organization. The
Speaker 1: people at Deutsche Bank who helped that get that deal done.
Speaker 1: I've mentioned John Bartling a couple of times, but the
Speaker 1: people who were behind the scene. Mahesh, my god, Mahesh
Speaker 1: was unbelievable and I'm like, I say this name properly. His
Speaker 1: last name, Mahesh shrin of us Vasan shrin of us
Speaker 1: On s r I N I v A s A
Speaker 1: n shrend shrining Busson. So see that prop say that
Speaker 1: properly he was. He was an investment banking, corporate securities.
Speaker 1: Just a jewel of a guy. Uh and another guy
Speaker 1: who worked on the HESH side by side to get
Speaker 1: this deal done was Shaffing for Tah Shaffing t f
Speaker 1: A T t A H. And they just were just
Speaker 1: honorable through and through and again. Monica Shilling, the the
Speaker 1: attorney was there from from start to finish, and and
Speaker 1: everybody discounted their fees when they saw that I was
Speaker 1: giving back to my philanthropy and I wasn't getting everything
Speaker 1: I wanted and in the deal. By the way, if
Speaker 1: you if you do a deal and you're ecstatic, then
Speaker 1: the person is miserable, it's not a good deal. If
Speaker 1: you do a deal where everybody's slightly irritated, it's probably
Speaker 1: a good deal. A good deal is where everybody's slightly
Speaker 1: irritated but basically pleased. If one person's excited, the other
Speaker 1: person's miserable, it's not a great deal because somebody won
Speaker 1: and somebody absolutely got thrashed. You want win win, not
Speaker 1: win lose and a good negotiation again is what everybody
Speaker 1: is slightly just slightly irritated about the transaction, and it's like,
Speaker 1: you know, I kind of got more of that. We
Speaker 1: clearly I left money on the table for a number
Speaker 1: of reasons, but you know, I was happy with the transaction.
Speaker 1: I was able to meet my commitments. I built something
Speaker 1: that the Black Enterprise says was the largest acts as
Speaker 1: the capital deal outside of entertainment in sports for a
Speaker 1: black man in the capital markets on Wall Street. In
Speaker 1: other words, I got to tune it, meaning not a
Speaker 1: credit facility from Bearings, which is an institutional provider of capital,
Speaker 1: a credit line basically to recapitalize this company when I
Speaker 1: sold it, because I stayed on as an investor. I
Speaker 1: stayed on as an owner of the new company, even
Speaker 1: though it was passive. I'd sold the company to someone else,
Speaker 1: which is a whole of experience. You know, is your baby,
Speaker 1: and you gotta learn that you don't control it anymore.
Speaker 1: And so I sold it in Christmas Eve twenty twenty one,
Speaker 1: and I went through to Taco Bell and got a
Speaker 1: got a number one, number one or number three whatever
Speaker 1: the hard shell tacos are with the Taco Supreme with
Speaker 1: a with a coke.
Speaker 2: I think with a coke they made to pepsi products.
Speaker 2: I don't know.
Speaker 1: Anyway, I got a number I got. I got the
Speaker 1: hard shell, the Taco Supreme, three tacos. Right when that
Speaker 1: was told, the deal had just closed. The wire transfers
Speaker 1: were all going through. It was going through the drive through.
Speaker 1: That's how I celebrated. No flys, no drama, just keep
Speaker 1: it moving. It's hard to hit a moving target. That
Speaker 1: was Christmas Eve twenty twenty one, and I gave the
Speaker 1: car the cars everybody for Christmas. Between Christmas and New
Speaker 1: Year's I think I've had to learn a lot of
Speaker 1: lesson about letting go. I've had other businesses to distract
Speaker 1: my attention, thank god, but on that one, I had
Speaker 1: a you know, things were not going to be done
Speaker 1: exactly the way I wanted them done anymore. I could
Speaker 1: have influence, but I didn't have power. And over time,
Speaker 1: I've let going more and more of it because again
Speaker 1: I'm not the I'm not the principal owner, and I've
Speaker 1: got other things that you know, they're they're excited me,
Speaker 1: and that's all good, and wish them well with that.
Speaker 1: But I was able to build something very substantial and
Speaker 1: I'm very proud of it. And I just sent a
Speaker 1: note to Tony and Michael recently and said, you know,
Speaker 1: I know this was not your intention. But another friend
Speaker 1: of ours is Michael Milkin who financed Reggie Lewis. Reginald
Speaker 1: Lewis the first man to do a billion dollar deal
Speaker 1: on Wall Street Beatrice International McCall pattern company before that.
Speaker 1: I believe Beatri's International nine hundred and fifty billion, I
Speaker 1: think it was in nineteen eighty five or something like
Speaker 1: crazy unbelievable in that year. And for that to be
Speaker 1: for that to be done, and Michael milkon backed them
Speaker 1: when nobody else would. People said that that that they
Speaker 1: wouldn't finance Reggie Lewis. What Michael Milton says, what he's
Speaker 1: got my backing and financing. And I said, it's sad
Speaker 1: to say this, but outside of of what you see
Speaker 1: these big construction companies, and there are real estate developers
Speaker 1: like Don Peeple's and there's a russ Hermon and Russell legacy.
Speaker 1: The Russell family runs that. Now that's you know, it's
Speaker 1: a different business, uh uh. And I'm not gonna get
Speaker 1: in their business model. But it's really substantial, really really
Speaker 1: well done, and they're they're much larger than me in
Speaker 1: their areas, right, But it's but outside of like entertainment,
Speaker 1: like a B. E. T deal or our essence, Well,
Speaker 1: no that we don't know if the numbers were around essence.
Speaker 1: But it's so few deals by black entrepreneurs. You can
Speaker 1: you can count me, you can count them on one hand.
Speaker 1: But outside of here's a great eg Smith, a great example.
Speaker 1: Robert Smith is an example in my laying because he's
Speaker 1: in finands and he's built, you know, a billion dollars
Speaker 1: multipillion dollar enterprise. But outside of Robert Smith, in my space,
Speaker 1: this was the largest acts of the capital deal which
Speaker 1: I did part time for a black man to pull
Speaker 1: the lever on, to clip a coupon.
Speaker 2: They called it.
Speaker 1: Built a company in five years and sold it. Built
Speaker 1: it from nothing, sold it five years later. That's, by
Speaker 1: the way, the purpose of a company is to build
Speaker 1: it and to sell it, to monetize it. That's a
Speaker 1: whole other conversation for another time. And then you go
Speaker 1: take the proceed and you go buy something else, build it,
Speaker 1: you know, buy it or build something else, sell it.
Speaker 1: Monetize it, keep it going. You don't have to own
Speaker 1: a company for nine zillion years, which you wanted. Generational wealth,
Speaker 1: not generational headaches. And you go find enough the North
Speaker 1: Pole end of South Folks who built Blockbusters should have
Speaker 1: sold it to Netflix now and they would bankrupt. You
Speaker 1: see if people at Sears, people Kmart, people put code.
Speaker 1: I mean all these companies just just stayed the party
Speaker 1: too long. A hunder the conversation. Other time we're at
Speaker 1: the end of this podcast. I hope you've enjoyed this
Speaker 1: beyond the fact you got to know when to exit,
Speaker 1: when to walk office, to drop the mic and walk
Speaker 1: off the stage. I think the issue was that, uh,
Speaker 1: this is a lot. This was you know, me getting
Speaker 1: a twoity million dollar credit facility from one lender one
Speaker 1: hundred million dollars to another non recourse debt, which means
Speaker 1: it wasn't personally guaranteed, just on the credibility of the
Speaker 1: enterprise to build a company from zero to market into
Speaker 1: you know, assets of you know again without getting details
Speaker 1: who worth over one hundred and fifty million dollars and
Speaker 1: within without any government assistance, without need, without any hookups,
Speaker 1: without need in front of action, without need subsidies, just
Speaker 1: just doing straight business and really operationalizing the financial literacy
Speaker 1: that I've been teaching and preaching at Operation Hope, really
Speaker 1: walking the talk. And by the way, Frederick Douglass, who
Speaker 1: everybody knows being abolition in the eighteen hundreds, was also
Speaker 1: a businessman later on in his life. If he got
Speaker 1: his freedom and was and did all his stuff and
Speaker 1: ran newspapers whatever, he also owned real estate that'd be
Speaker 1: worse today, about six million dollars in Baltimore, Maryland. And
Speaker 1: there's a plaque up on the wall of the real estate.
Speaker 1: If you're in Baltimore, go check it out, a historical
Speaker 1: plaque that shows where he owned that real estate that
Speaker 1: gave him financial freedom. He also owned a huge real
Speaker 1: estate in Anacostia that is a National Historic site today
Speaker 1: you can go check out. So he was a businessman
Speaker 1: civil rights, not just civil rights. So it is entirely
Speaker 1: as possible. A friend of mine, who is a CEO
Speaker 1: of Key Bank, told me once Chris Gorman is his name,
Speaker 1: CEO of Key Bank, one of the partners of Operation,
Speaker 1: told me once that it is entirely possible that the only.
Speaker 2: True freedom is financial freedom.
Speaker 1: It's deep having a white man and telling a black
Speaker 1: man what freedom really is. But I'd give a brothers
Speaker 1: some credit. And then Tony Wrestler told me that is
Speaker 1: entirely possible that that in the twenty first century, the
Speaker 1: new era of civil rights issue just social justice. Issue
Speaker 1: just might be access to the capital, low interest rates
Speaker 1: and opportunity. Access the opportunity at scale. I agree to
Speaker 1: that acts as the capital low interest rate because you've
Speaker 1: got good credit and good credibility and access to the
Speaker 1: opportunity at scale just might be social I call it
Speaker 1: social justice through an economic lens. I call it silver
Speaker 1: rights from civil rights in the streets to pursuing silver
Speaker 1: rights in the c suites and the business suites. Right,
Speaker 1: So this is just a new era and a new time,
Speaker 1: and it takes new skills to operate the new in
Speaker 1: different ways. And for all the people who I didn't think,
Speaker 1: who are there with me on the journey, I apologize
Speaker 1: if I didn't mention your name, Please no blame it
Speaker 1: on my head.
Speaker 2: Not my heart. You only have an hour here with
Speaker 2: this podcast to get a lot of information. But I
Speaker 2: wanted people to.
Speaker 1: See that this that the that I built this thing
Speaker 1: and sold it did not get all the value out
Speaker 1: of it. When I sold it, I left value on
Speaker 1: the table for the buyer. You know, I took a
Speaker 1: hunch on a hunch, I took a I took a
Speaker 1: risk that that my I hit some upside on the
Speaker 1: other end of the deal when I participated as an
Speaker 1: owner of the new enterprise. But that was not guaranteed,
Speaker 1: still not. But I left considerable equity on the table
Speaker 1: because I wanted my new owner, my new the new
Speaker 1: owner of the company, my partner basically to win. I
Speaker 1: want I've always wanted my partners to win more than me.
Speaker 1: It's really important to me that my partners say that
Speaker 1: was a good investment. I did that with John, and
Speaker 1: I made money, I built wealth. It was I felt
Speaker 1: good about it. It ended well because you can go
Speaker 1: back to that. Well again, you can go back. It's
Speaker 1: not it's not a transaction, it's a relationship. A transaction
Speaker 1: is a getting business. Relationship is a giving business. And
Speaker 1: and uh, the new owner of the company, Uh, I'm
Speaker 1: sure will do well because in part of how of that,
Speaker 1: I stopped haggling over every dollar at the closing table
Speaker 1: and made sure there was enough room for him to
Speaker 1: have a lot of running room. I don't I don't
Speaker 1: have the right to mention his name. But the new
Speaker 1: owner of the of the Promise Homes company, who's a
Speaker 1: good guy, by the way, the owner, the guy who
Speaker 1: put the money is a nice man, uh from South Africa,
Speaker 1: et cetera.
Speaker 2: Uh cooldo.
Speaker 1: I wanted him to have a smile on his face,
Speaker 1: not you know, even if he has frustrations along the
Speaker 1: way when they when they, when of the dust settles,
Speaker 1: he will say, this was a successful transaction. And I
Speaker 1: knew when I close the deal. I can't control everything,
Speaker 1: but I knew when I close the deal, I left
Speaker 1: him with something very very valuable at closing, So everybody
Speaker 1: won no what it was ecstatically happy. I mean, I
Speaker 1: wasn't like, oh my god, over the moon because I'm
Speaker 1: part of it. Was like, man, maybe I should just
Speaker 1: kept this company and pay Michael and Tony off and
Speaker 1: just you know, just moved it forward myself and kept
Speaker 1: all this money for myself.
Speaker 2: Well that's that's a greed.
Speaker 1: Brace approach, and that's not how I flow. And I
Speaker 1: don't let the perfect become the death of the good.
Speaker 1: Right step over mess and not in it and just
Speaker 1: always try to find a way to be positive. I
Speaker 1: can't guarantee you that being positive it's going to make
Speaker 1: you a success, but I absolutely guarantee you that.
Speaker 2: Being nailive it's going to make you fail.
Speaker 1: And through this entire process, I have found decent, caring
Speaker 1: people who were rooting for me right to win, even
Speaker 1: people who didn't want to pay me what it was
Speaker 1: worth and who didn't want to you know, they you
Speaker 1: could tell that they actually wanted me to win, even
Speaker 1: though they were try to grind me for every dime
Speaker 1: or dollar or whatever. I'm glad I don't have more
Speaker 1: than an hour to tell the stories. I really would
Speaker 1: have told more of it than either you need to
Speaker 1: hear or what was appropriate to say. But hopefully you
Speaker 1: got a sense of here that this was a grind.
Speaker 1: This was not easy. That I had to take no provitamins.
Speaker 1: I had to find encouragement every day. I had to
Speaker 1: not take things personal. I had to step over messing
Speaker 1: not in it. I had to never give up. I
Speaker 1: had to be respectful and honorable to my partners. I
Speaker 1: had to treat other people's money like it was my own.
Speaker 1: No limos, no private jets, none of that. No flossing,
Speaker 1: No diamonds, No going to take somebody else's money and
Speaker 1: going use it for stupid stuff. Be efficient, and then
Speaker 1: right when the chips are down, right when everybody's about
Speaker 1: to count you out, look for the rainbow after the storm.
Speaker 1: You cannot have a rainbow without a storm.
Speaker 2: First.
Speaker 1: I'm gonna go frame the closing documents for this deal.
Speaker 1: It just again, Michael and TONI kudos to you. You
Speaker 1: created a little bit of history, not since Regel Lewis
Speaker 1: as somebody financed a black man at a few hundred
Speaker 1: million dollars on Wall Street. Institutionally in nonsports, non entertainment space.
Speaker 1: It just doesn't happen that a black man gets a
Speaker 1: check for a couple hundred million dollars or a lending
Speaker 1: facility for a couple hundred million dollars on non recourse
Speaker 1: investment for something that he owns now that he's managing
Speaker 1: he owns. It just doesn't happen every day. Unfortunately, we
Speaker 1: hope that that that in ten years is commonplace. But
Speaker 1: this was pretty pioneering and I want to thank them
Speaker 1: and everybody involved for making it happen and seeing it through.
Speaker 2: All Right, This is John O'Briant.
Speaker 1: This is Money and Wealth on the Black Effect Network
Speaker 1: podcast series, And this is but it's what I meant
Speaker 1: by when I brought to the Kingdon's podcast, Like there's
Speaker 1: a lot of folks talking about financial literacy and talking
Speaker 1: about you know, they're an influence or whatever. I'm not
Speaker 1: hating on them, but you can't talk you can't really
Speaker 1: talk about things like this unless you've done it, like
Speaker 1: you you know, you've got to be in in the deal,
Speaker 1: not talking out the deal, in order to.
Speaker 2: Know what it's like to do the deal.
Speaker 1: And there are many times where I could have gone bankrupt,
Speaker 1: belly up without question.
Speaker 2: I mean a dozen.
Speaker 1: Times that things were just not going the right way
Speaker 1: at all, where where failure looked like it was right
Speaker 1: around the corner.
Speaker 2: And but you know, thank God for Michael O.
Speaker 1: Yergetty and Tony Resterer who believed and I and I
Speaker 1: paid my back my debt back. I look him straight
Speaker 1: in the eyes and go do another deal with him.
Speaker 1: And by the way, we are doing other stuff together,
Speaker 1: both in the philanthropic space in the business space, because
Speaker 1: that's what it's about doing well and doing good at scale.
Speaker 1: It's about a relationship, not a transaction and growing together.
Speaker 1: The new colors green. It's not black and white or
Speaker 1: red and blue. It's green. Maybe it's always been green.
Speaker 1: It's in the color of us currency. Let me know
Speaker 1: what you think about this podcast. Tell your friends, subscribe, Share,
Speaker 1: Let's go change the world together. Go to Operation Hope.
Speaker 1: Become a member of the eighteen sixty five project. Get
Speaker 1: my book Financial Literacy for All should have said that
Speaker 1: earlier as a bestseller. Give it to a friend if
Speaker 1: you already bought a copy, and donate one into your
Speaker 1: family's name, to a library or a title I school.
Speaker 2: Let's Go John O'Brien.
Speaker 1: Money and Wealth with John O'Brien is a production of
Speaker 1: the Black Effect Podcast Network. For more podcasts from the
Speaker 1: Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts,
Speaker 1: or wherever you listen to your favorite shows.
Speaker 2: The pat