48 Minutes On #1 Category Billionaires Used To Create Wealth

Well done. One more time for Carlton Dennis, everybody. Well done. What a great group you brought together. I love events like this and I love Carlton. I've known him for now for years, followed his career as all of you, and it's pretty darn cool. So, good job on this event. It's beautiful and there's some amazing people here. I had breakfast with a number of y'all this morning and it was cool to be with you. So, this is a top quality group. Don't let the speakers get in the way of meeting the incredible people, people here. Can I get an amen? Amen. Alright, well, that's a good crowd. I like it. I usually tell people, if you come to an event like this and you sit there and take notes— sorry, if you just sit there, psychologists tell us you'll remember about 0% long-term. If you take notes, psychologists tell us you remember about 2 to 5% long-term. Not too bad. If you use your body, your voice during the sessions, it jumps to 15 to 17% you remember long-term. There's a reason why, you know, when you speak, like, you're the one who remembers everything the most, and then people in the audience, like, forget, like, you know, a day later. That's kinda why. So, is it okay today if I, we kinda more interactive, if we use our bodies and voices? Yes! Can I get a yes? Yes! Oh, this is a great group, look at this, Carl, you got a good group here. And my brothers from breakfast, how we doing? Good to see ya. Alright, hello, high five up here. If you can, stand up, high five 2 people around you, tell 'em, Hey, I'm happy you're here. Good to see ya. As we get going, I know Carl and Jen— say hello, happy you're here. Hello, happy you're here. High five 2 people, tell them what's up. There we go, we got a good group here. Real quick, who runs a business in here? Actively runs a business? I love it. Who's more on— we talked about, what do we— where's my guy that's more— he's like, I'm not a W-2, I'm a W-0. Yeah, right here. Yeah, 'cause the government takes all your money, right? Yeah, okay, who's more on that side? You're, you know, you're W-2? That's the thing. Okay, well today this should be a fun talk. I'm gonna talk a lot about how to scale. Okay, I got nothing really to sell you. I'm not pitching you some investment opportunity, nothing. I wanna talk about building investment funds primarily and how to scale. So I have a little quiz here for you. So I love this quote, watch what people do, not what they say they are going to do. Amen. Okay, real quick, what do these people all have in common? I got Grant Cardone up here. Cody Sanchez, Tai Lopez, and Pace Morby. What do all 4 of them have in common? They're on YouTube and stuff. They're influencers. Good. What else? Real estate. Real estate's one of them, but not all of them. You know, Cody and Tai don't— they're not really much in real estate. Oh, he said it right there. Say it one more time loud. They all are running investment funds. Isn't that interesting? All of them teach something online. They teach you how to buy businesses or Grant Cardone was just doing sales training and then got into the fund world. They're all running funds. Here's a little snapshot of their funds. Grant Cardone currently manages about $4.5 billion of assets under management in real estate. Cody Sanchez does contrarian thinking, buys small businesses through private equity, which is a type of fund we'll talk about in a minute. Pace Morby, I was just with him a few weeks ago. He's raising $100 million for a real estate fund. You know, he's the creative finance guy. Don't ever use anybody else's money. Well, he's raising $100 million for a fund. Tai Lopez, they raised a few hundred million years ago to buy Pier 1 Imports, RadioShack, and I think that fund kind of went south a little bit. I don't know if it's doing so hot right now, but the concept is there, okay? The concept is there. These people, it's funny, they teach something online. You watch their YouTube videos, they'll talk about networking or something, but what they're actually doing in the background is building incredible wealth through investment funds. And most people aren't watching what they are doing. They're watching what they hear online and they're not seeing what actually is happening. Is that making sense? Can I get a yes? Yes. A few other people. This is Alex and Leila. You guys know them, the Hormozis. This is me and Alex actually went boating in Bear Lake. I think, yeah, it's me trying to flex on Alex right there. This is a couple years ago. What are they doing? Private equity. That's what they're doing. I was with Russell Brunson here a few weeks, let's see, a couple months ago. He is buying businesses at scale right now. They bought Magnetic Marketing, LadyBoss, he's doing private equity. This is what the wealthiest, smartest people in the world right now are doing, are launching investment funds. If you look at the Forbes 100 list, it is riddled with fund managers. The number 1 asset class of billionaires is running investment funds. That's crazy. Number 2 is tech, number 3 is fashion. You guys have probably heard, you know, the number 1 vehicle to make most millionaires is what? Real estate, okay? It's true. The number 1 vehicle to make the most billionaires is private equity and/or investment funds. This is a different level of game. So is it cool for the next few minutes we talk about this game? Yes, sir. Yeah? Sound good? Okay, so that's the plan for today. We're gonna talk about kind of this path that most people go on. They have, you know, a lot of— who's like done their own deals before? You bought a property before, you self-funded your own deals. Okay, that's step number 1, and that's a fine path. That's great. There's nothing wrong with any of this. I'm just telling you the path that people go on. Next is you do a single asset fund, or, and, or people call it syndications, SPVs. There's a lot of words for it. I like to call it a single asset fund where you raise money from people, you pull money together to go buy a single property. Okay, is that making sense? And then after you do a couple of those, the next one would be a full-out fund. A fund is, well, let's see if I got the right slide. No, I don't. We'll just dive in. What is a fund? What do I mean? So let's define some terms here. Sound good? Yeah. When I talk about a fund, what is a fund? A fund, all it is, is a pool of money. That's it. It's a pool of money. Investors are putting money into this pool and then Fund managers are drawing from that pool and making investments. Whenever those investments make money, it flows back to the pool of money and gets split between the manager and the investor. Not too bad, right? Okay, this is like the oldest business model on earth. It was like back in the whatever, 1600s, like, hey, we're gonna open up a blacksmith shop, put some money in. When we make the shop, whenever we get the returns, we'll split the returns. Or like Christopher Columbus, give me some money, we're gonna get some boats, we're going to the New World. When we get some money back, we'll split the returns, right? Like, this is not that complex of a business. So then what is the difference between, have you guys heard the terms private equity, hedge funds, venture capital funds, real estate funds, debt or private credit funds? You've probably heard those terms before. Yeah. What are those? I've had the ability, we'll talk about my story just in a second, but I've worked now, we've launched over 300+ of these funds. We launch right now about 2 a week. Our clients manage about $4.7 billion in their funds. So I've looked on the backend of all of these funds. I actually run a few of them right now. I'll talk about them in a minute, but I run 2 investment funds currently, manage about $50 million. We've, last year we partnered with 8 other funds. We put a check of about $1 million each into those funds. And across the board, they're all kind of the same. And I wish I had a whiteboard here, I could write them up. I don't have my screen, but. So let's define terms for a second. So they're all just a pool of money. And this is something that kills me about finance. They take really, and Carlton knows this, tax code. You take really complex things with complex words, and so that regular people don't understand it, them. You know what I'm talking about? And then once you understand it, it's like, oh, this isn't that hard. Anybody ever had that happen before in any aspect of life? You're like, why do they make it sound so complex? So I'm going to try to make it— it's really not that crazy. I've worked on the back end of all of these and we've structured all of them, okay? So how do these— what are the terms here? So let's just start simple. So again, if maybe on your paper you can write them down: private equity, venture capital, real estate funds, private credit funds. I'll go through each one of these. What is the difference? Alright, let's start with an easy one. What is a real estate fund? Okay? A real estate fund, all that is, is a pool of money. And what do they do? Buy real estate. They buy real estate. And when the real estate makes money, they split the returns. Not too bad, right? Yeah, let's move on a little bit harder then. That's a real estate fund. What's a private equity fund then? A private equity fund is the exact same thing. It's a pool of money. Investors put money in but guess what they buy? They don't buy, yes, they don't buy real estate, they buy, say it one more time for me. Businesses. Businesses. They buy private equity, or private ownership in private businesses. There's a great firm on Wall Street called Sycamore Partners. Anybody heard of them? A few of you. Maybe you've seen my content, I talk about Sycamore Partners. Sycamore Partners, most people don't know who they are. Sycamore Partners owns Nine West Shoes, Aeropostale, Staples department store. 2 years ago they tried to buy Victoria's Secret. Last year they were trying to buy Kohl's department store. Those are all owned by the same people. Sycamore Partners, a private equity firm on Wall Street. They manage about $10-11 billion. Is this making sense? Can I get an amen? Amen. Alright, I guess amen was probably the wrong time for that. We'll roll with it. I got Carl, I'm looking at Carl over here with all the amens. Okay. Alright, so we got real estate fund, private equity fund. So, what's a hedge fund? A hedge fund is a pool of money. Instead of buying real estate or instead of buying private businesses, they buy Public securities, stocks, bonds, options, crypto, anything public, futures. That's it. And they're called hedge because they do different strategies inside of there, but that's pretty much it. It's not that complex. Y'all following along? One more, venture capital. What's venture capital? It's a pool of money. Instead of buying those other things, they invest into early stage startups, kind of like Shark Tank. Okay? So all these funds are structured pretty much the same. We'll get to that in a minute, but this world isn't that crazy. Well, what's so cool about this world is it's created some of the most wealth that this world has ever seen is in this vehicle, and most people don't really know much about it. So, in the next few minutes, I wanna talk about how you could maybe deploy this into your business, into your strategy, what you guys are doing. Sound good? Yeah! Yeah? Okay, so real quick, who am I? Why do I have authority to talk on this subject? Really quick, okay? We're not here to talk about me, but I'll just give you a brief background. We can leave this up or not, but I'm Bridger Pennington. This is my beautiful family. Actually, I gotta show you my family first. This is my beautiful wife. We grew up on the same street together. We grew up 7 doors down from each other. Isn't that kind of crazy? We have a 3-year-old son, Jonah. We just had a baby girl, Paris. She's like 6 months old. We're building the family. We got 11 chickens. I live in Utah, which is awesome. It's sweet. It's pretty fun. We got a little homestead in Utah, kind of in the middle of the city, actually. It's really fun. I'll take you back though a little bit. I'm from Utah so what religion do you think I am? Mormon. Mormon, okay? The official term of the church is Church of Jesus Christ of Latter-day Saints and what do Mormon members or LDS members do when they're 18, 19 years old? They go on a mission, okay? So, I went on a mission. I went to Taiwan, okay? You put your papers in, you don't choose where you go. I went to Taiwan, learned Mandarin Chinese for 2 years. That's all I did. There's no school, no girlfriend, no phone, nothing. You are a minister teaching door-to-door religion for 2 years, which is pretty wild. People are like, man, is it so hard to run businesses and do it? I'm like, man, try selling door-to-door religion in a foreign country for 2 years. Everything is easy after that. Can I get an amen for that? Amen. There we go. Okay, that's the time to use the amen. Alright, there we go. No, it is tough. It is tough. Most rewarding thing in my life though. So amazing. It was awesome. If you see Mormon missionaries out there, Just honk at them, give them a wave. It's tough being a missionary sometimes. I mean, you're out there, it's every day, it's 24/7, no breaks, like that's all you do. And it's one of the most life-changing things ever. So anyways, I did a mission, came home from a mission, and I hit the ground running. I felt I was ambitious, wanted to get going. I started 6 businesses my first 2 years of college, okay? I started a Chinese tutoring business, I built websites for people, I wholesaled real estate. I mean, I typed on YouTube anything like, you know, like make money on YouTube, you know what I'm talking about? I tried all of them and actually some of them did pretty well. We made money, I was doing well, like we were kind of like making— I was making 3 grand a month, 10 grand a month, 1 grand a month in college while in school, okay? My dad finally grabs me and I grew up in a normal house in Utah. I'm gonna come out here. Is that okay if I come out here? You guys cool with that? Okay, I grew up in a normal house in Utah. My dad drove a car with a dent in the door and which is fine, nothing horrible but just nothing great either. I just grew up in a normal neighborhood in Utah. My dad grabs me, he's like, Bridger, you're kind of like a chicken with your head cut off. You're doing all these businesses. I want you to go meet with my business partner. This guy could really help you out. I'm like, cool, I'll go meet with whoever, right? I'm a young hustler. I'm like, I'll do whatever. So I go meet with this guy, pull up to his house. I pull up to this gorgeous white mansion. It's like massive. Pull up, I'm like, who is my dad's business partner? This guy is crazy. I get out, I knock on the door. I'm a little nervous. Dad's partner comes to the door, opens it up, and I'm like, I thought I was gonna get kicked off the property. I don't know, I was just nervous. Anyways, he's like, come on in, Bridger. I come on in, I walk in this beautiful home. White furniture, he's got a wine cellar in the basement, you know, basketball court inside of his house in the basement, just the whole deal. I come in, I sit down. To make a long story short, we start to talk about life and business and he finally— I finally asked him this question. I go, how did you get all of this? Like, how did you do this? And he goes, Bridger, when I was in my 20s, I was a lot like you. I started a bunch of businesses, I tried a bunch of different things but then he goes, then I figured out the secrets of the ultra wealthy. The ultra-wealthy families of the world, they send their kids to the best universities. Sometimes they cheat to get them in. You guys have seen that, right? They like pay somebody off, whatever, but their kids go to the best universities. Then, then those kids, they send them to work in investment banking and consulting, and then they want those kids to go work in the fund world, private equity, hedge funds, venture capital, real estate funds, or come back home and run the family office. And he said, I met a guy years ago that ran a private equity fund. He was one of the Youngest, wealthiest people I'd ever met in my entire life. And he said, I don't care how long it takes me. I don't care if it takes me 1 year, 5 years, or 20 years. I was going to figure out what the term private equity meant, and I was going to figure out how to get in that game. And so he just went after it. And he said, me and your dad started some funds, and at the time, he goes, we're managing about $8 billion of real estate. This is years ago. Remember Grant Cardone? Grant Cardone manages about $4.5 billion. That's twice as big as Grant Cardone. I was like, huh. And today, they're over $48 billion today. They are now, my dad's since retired, he's one of the largest shareholders still, and that's 10x Uncle G. Nothing against Uncle G, but 10x, let's go Uncle G, okay? That's 10 times bigger than Cardinal Capital. And I'm sitting there, I'm like, can I learn from you? I'm like, I'll come for free, I got your coffee in the morning, I will be your guy. Don't pay me anything, I will just come, just let me take notes. And he goes, Bridger, go talk to your dad. He goes, your dad knows way more about this than I do. And I said, no, we live in a small house. My dad drives a crappy car. You live in a big house. I wanna learn from you. And he says, sorry to break it to you, Bridger, me and your dad make about the same amount of money. True story. And I, my chin drops to the floor. I'm like, huh? I leave the dude's house. I drive straight to my dad's house. I'm like, Dad, what the heck? Like, why happened? Why haven't I been able to order a soda at Chipotle for the past decade? Because it's too expensive. We didn't go on vacations, nothing, dude. Anyways, long story short, my dad says, you know, I like to save and invest my money. My partner likes to spend his money, but yeah, this is what we're, you know, we run these multi-billion dollar investment funds. Anyways, I can talk for an hour about this. I won't. You guys are loving it over here. These guys are chuckling, bro. They got me. I'm just like telling more. So my dad, anyways, we sit down, he starts to teach me about funds. And so for like the next, I don't know, 12, 18 weeks, every Sunday night I'd drive to his house, get the whiteboard out, and he'd teach me about funds. How they're built, how they're put together, how to raise capital, how they're structured, how international feeder funds work, how Cayman Island funds work, Luxembourg funds. We talked about the whole gamut of funds. And there's a funny thing in life, when you start to learn about something, you start to recognize that thing in your life. Anybody ever bought a car before? Probably. You start to see that car everywhere. You know what I'm talking about? Yeah. Same thing happened for me with funds. I started to learn about funds and I started to see investment funds everywhere. I was in college, I was running my startup thing I was trying to do and I was working a job in college. At that job, I saw an opportunity where I could launch a fund internally for that business. They had clients coming through that needed financing. I'm like, we could provide financing to them where money was the only thing stopping us from growing. That's a great place for a fund to start. If money is the only thing stopping from something or some strategy from scaling, a fund, you bolt that on to something and it can really take that thing off. And I saw an opportunity. I said, we could do this. So I worked with the owners of this business. I'm 22 years old. I was so excited to put this thing together. I got my whole— I got documents put together, all the stuff. And then I'm— it's my time to raise money. So I got to go out and raise money. And I'm like, who's going to give me money? Dad. I have no— my dad, right? Yeah, exactly. That's what I thought. I got no tracker, nothing. I'm going to go pitch my dad. Who said that? Was that you? Yeah, spot on. I'm like, dad's got money. He doesn't spend it on us kids. It must be somewhere. Yeah, I'm going to go pitch my dad. So I'm like, perfect. So I go late Sunday night. I go to my dad's office. I walk in. Sit down with him across his desk. I said, Dad, and now I'll say this. He helped me a lot, mentor me through putting this fund together. So he knew all about it because because I kept asking him questions. He knew all the stuff I was doing. And I said, Dad, I want to thank you so much for helping me. How would you like to be our first investor into our fund? And you can imagine how that conversation went. He said this. He said this. He goes, Bridger, I have the money to invest. But if I invest in your fund, it would ruin the experience of you raising money on your own. Wow. This will be a crutch that you'll never be able to recover from if I do this. So for that reason, it's a no. For the next 8 years— that's 8 years ago, I think, is that 8 or 9 years ago? My dad has never invested in a single property deal side thing I've ever done. But he was an amazing mentor. I could pick up the phone and call him anytime. He'd work on stuff, help me put stuff together. Didn't give me money but gave me his time and knowledge which was way more valuable. Pretty cool, right? And so, I left his— at the time though, I took that as a hard no. I kind of left with my tail between my legs a little bit. I hit the streets, talked to everybody I knew. I raised a whopping $49,500. from like 7 investors when I was 22 years old, which is teeny. For me, I was excited 'cause that's, you know, at 22 I was like, that's a lot, but in the terms of the fund world, that's like micro. But it was enough to get started. I launched my first little fund. We got a 64% return on our money on that first little fund. So that's pretty good, right? Small amount of money, but good returns right here. BlackBridge Holdings right here, 64%. We then dovetailed that into a second fund. We did 219 deals over the next 3 years. I think I got 62%, 47%, and 36% cash-on-cash return We then had a competitor come and buy us. I actually exited and sold that fund. Isn't that kinda cool? We then, I then, during that time period, and I'll kinda skip here for a second, I now run Ugly Unicorn and Fund Launch Partners. These are 2 different funds. Again, we manage about $50 million of AUM. One's in crypto and blockchain. It was fun hearing Colin this morning talk about crypto, and then the other one's a GP stakes fund. We actually invest into funds here, and I'll talk about that in a second. During this process, myself, my dad, and I didn't mention my brother's an investment funds attorney, worked at the largest law firm in the world for a while, funds. We all are in Utah for crying out loud. None of us worked on Wall Street, none of us did like this Ivy League track record and so people started to ask us like how did you do this? Like you guys are just regular Joes. People that know us well like you guys are really regular Joes, like how did you do this and so we started to put YouTube videos out. Anybody ever filmed themselves on camera before? Yeah. Not that fun but we did it. We're like hey, I think people want to know this. We started to put a podcast out, YouTube, it took off. We've had over 100,000 people take one of our courses online on investment funds. Most of our courses now we've just made for free. Our goal is to democratize Wall Street. We want to help regular people just like us figure out this game. This game is so crucial to understand. We need more— we altogether need more people understanding this game, 'cause if we don't, we will be slaves to BlackRock, State Street, and Vanguard that control roughly 15 to 20% of the S&P 500, Trending to be about 40% in the next decade. There are mega funds buying up everything. People, who's my people in real estate? 2021, 1 in 7 homes were purchased by Wall Street, 2021. 2022, 1 in 5 homes. 2023, 1, actually they didn't report the data, best estimates is 1 in 3. Holy cow. Isn't that crazy? We need more people to understand this game of funds. So we launched Fund Launch as a business. We've had amazing success. We've thrown multi-thousand person events. It's a bootstrap business that we've ran. We incubate people to launch their investment funds. This is my partner Mason. This is us. And we put a lot of content online for free just to help more people understand this game. And if people want help implementing it, that's what we do, okay? So this is our event we threw last year at Funnel Launch Live. We had about 2,000 people there, which is pretty fun. Let's see, and there's a picture of my dad and brother. You can kinda see him there, which is pretty cool. So my goal for today, with that nice little backstory, let's talk about you. My goal today is that you should consider Launching a fund. Okay, yeah, give me— where, who is that? Yeah, give me a yeah, let's go! One more time, say it loud. Yeah! Yeah, alright, I like it. Let's get into it, okay? So this is for business owners or investors who want to scale. Again, I got nothing to sell you today, I really just want to help more people understand this game, cool? Yeah? Okay, let's dive in. So, uh, what's my next slide? I gotta go look. Alright, so, um, I want to tell a quick story of why choose this path, is that okay? Yeah, it does. It's a very interesting story. This is John D. Rockefeller here. You guys know him, titan of industry, Standard Oil. Let me give you a few facts about John D. Rockefeller. He was worth $900 million in 1913. So that was 3% of the US GDP. Isn't that crazy? If, and again, the United States has changed its place in the global position since then, but if you did just do that straight math, That's a $600 billion net worth today, okay? One of the wealthiest people to ever live. Now, I read a very interesting book just barely from him, 38 Letters from John D. Rockefeller to His Son. Highly recommend this book. This is just letters. They just compiled letters that he wrote to his son over the course of his time. Now, I want to— actually, can I just share a side story that's really crazy? Like his villain origin story. He's got the— you know, like superheroes have these villain origin stories? Yeah. Listen to this. John D. Rockefeller, when he's like 55, he's like king of the universe guy. He has a picture on his desk and somebody asked him about this and he writes in this letter to his son, he's talking about this picture, he goes, this picture is one of my most prized possessions. And it's a picture of him with his school-aged friends when he was like 7, 8 years old. You following? He tells the story thus. This is years later looking back on this. He goes, when I was about 8 years old, A photographer came to the school and was going to photograph us. We were all excited. We all got to school, we were excited, we had a photographer there, we're going to take a photo. So they all line up in front of the schoolhouse, take a photo. And guess what the photographer says? Hey, and he grew up in a poor family, hey, this poor boy in the front with, he had ragged clothes on, let's have him move out of the picture. Ew. Because I don't want him to ruin the picture. Photographer, the teacher takes him out of the photo. They take the picture and that's the photo he has on his desk. And he goes, this is one of my most prized possessions because it's the day— he goes, in that moment I stood and I looked at my friends and I said, I'm gonna be the richest man to ever live. Amen. And he said, I will never have this happen again. And furthermore, he writes in his letter, he goes, I don't look back with sadness or distaste or a victim mentality or whatever. He goes, it was the day that shaped my life. It's the day that put me on this path to go conquer the oil world. Yeah. He goes, it was actually the best thing that ever happened to me was that day. Isn't that a crazy villain origin story? Okay, so that's in this book. So let me tell you another story though, more related to fun. So John D. Rockefeller's in Ohio. He's Standard Oil. He keeps saying his goal is to be the one and only oil dominant power of the United States or the world. A competitor arises in Pennsylvania. This guy's very popular competitor. He gives him an offer to buy his company. The guy says no. He starts— the guy in Pennsylvania starts supplying oil supplies into New York. You following? So John's like, this is messing up my plan so I need to take action. So he says, in this book he talks about this war plan he creates. He goes, I'm gonna go out and set forth to you know, take out this competitor of us. So he goes, first thing I did, he goes, I went and bought all the— well, first off, sorry, he called the railroad companies, all of his friends ran railroads. He said, can you please not let his pipeline cross your railroads? And they said, sorry, he already called us, he's already crossed your pipeline, our railroads. He's like, shoot. So he hangs that up. He then buys an entire strip of land between Pennsylvania, the whole Pennsylvania. He's like, I made farmers incredibly rich. I just gave them huge offers and bought a strip so that he couldn't put a pipeline over the land. Is this making sense? Yeah. But he goes, it was thwarted. He already beat me to it. He found a passage through that I hadn't bought and he already had put his pipeline. So he's like, I wasted all this money. So he goes, furthermore, he goes, I had to go back to the drawing board and now this competitor in Pennsylvania was supplying oil into New York. So he goes, we had to come back. I got with my team and he goes, we set out a new game plan. He goes, we went to the supplier of barrels in, I think it was in New York or Pennsylvania, you know, like the big oil drum, I'm not sure what they're called, but huge barrels that they actually house the oil in. He goes, I put in the largest order this supplier had ever had. And I said, if you want my order, you have to fulfill it fast. Hence, you can't fulfill anybody else's orders. And so he took over essentially this one manufacturer, just all the order flow, 'cause he put in the largest order ever. So he goes, that was step number 1. Step number 2, I went and bought the end refineries, or the end buyers, excuse me, in New York that were buying from him. I bought their companies. as many as I could, and made them buy from me. So he bought his own supply chain. Is that making sense? He goes, third, I dropped my prices below market and ran at a loss for 6 months so that anybody who was end consumer would buy oil from me. And I bled my company so that he would bleed as well. And at the end of 6 months, I called the guy up. I made him an offer. He sold his company to me and I took over the whole Pennsylvania region and he became That was one of the stories of how he conquered the United States. Isn't that interesting? People are playing different games than me and you. We're like, oh, I'm going to go buy— and there are some great talks today. We're going to buy a little Airbnb or a little real estate thing. There are bigger games being played. I have friends right now, oh, I'm going to go buy an HVAC business or a laundromat or whatever. I go, hold on. Look at the actual market share of where you're at in As a, we talked about W-2 people in this room and/or business owners. There's a concept called Red Ocean and Blue Ocean Strategy. Anybody read a book or talked about this before, heard this? This concept comes from, there's different markets. They call 'em red oceans because they're bloody. They're bloody with, you know, think about sharks. The sharks are all eating, it's bloody, they're very competitive marketplaces. Statistically, 74% of market share goes to one company in a red ocean, one. You ever heard somebody say like, oh, if I just get, you know, 2% market share from Amazon, will be billionaires. You ever heard somebody like have a business idea like that? It's a very thwarted strategy, doesn't really work that well. Let me tell you why. Let's take Google for example. Google owns online search, right? 94, 95% of online search is Google. Microsoft had this idea, what if we launch Bing? Remember Bing? Yeah. They spent $1 billion developing Bing and they've spent over $11 billion and they're Microsoft. I mean, they have all the end users, they have the computers, we can just put Bing on all these and we'll We're gonna upset Google as a market category king. You following? And maybe we'll grab 30%, 40% market share and make it more even. Google had like 94%. That launched about 12, 13 years ago. What's the market cap of Bing today? Less than 2%. Less than 2%. One of the largest companies on Earth spent $11 billion and only got 1 to 2% market share of this category. So question for the audience. I'll come down here for y'all. Question for the audience for a prize from Carlton. I don't know what the prize is. What is the second largest? Carlton's like, oh shoot. He's already given you guys a lot of stuff. Actually, the swag is sweet though. I love the swag. You guys love the swag? Yeah, clap it up. Oh, let's go. Well done. Sorry, I was like squirrel side note. Okay, back to the question. What's the second largest search engine in the world? Yahoo? YouTube. YouTube. Who said YouTube? Okay, gold star for YouTube. I don't know what swag is available. YouTube. Interesting. YouTube was a blue ocean. Video search. And now it's become a red ocean because all Vimeo and stuff and YouTube dominates about 94% of search. Isn't that interesting? They didn't make something competitive, they made something different. And then Google bought YouTube for a huge sum of money and because they're a category king. Now, new question. Who's the biggest threat to Google right now and their category king dominance? ChatGPT. ChatGPT. That is pulling away huge market share from Google because it's, again, it's something different. People that are playing business at a big level are thinking in terms of market share and category king share, okay? One more quick story. This is Amazon with AWS. You guys know AWS? Yes. Runs like the backbone of the internet. This is some cool stats about AWS. 33% of global market share, internet share, is on AWS. They launched this back in 2005, 2006. They do $106 billion in revenue a year by itself. Standalone AWS would be an estimated $1.4 trillion market cap. Isn't that crazy? This is one of the most successful businesses to ever launch that most people have never heard of. It's inside of Amazon. It's one of their product lines. This is a very interesting strategy from Jeff Bezos. In his book, he talks about your margin is my opportunity. Your margin is my opportunity. When they launched AWS, they took a similar John D. Rockefeller approach. He ran AWS, like let's just say it's $1 for compute power, and most people are charging $1.02, $1.04, $1.03. He was charging $0.97. Ooh. Ran at a loss for years. to grab all the market share, 'cause their margin was his opportunity, and wiped out pretty much every competitor. Really, it's AWS and Microsoft Azure run the whole category, okay? So I'm gonna skip through a couple of these because, but this is the idea of, I don't think it's you want to play bigger, I think it's you have to play bigger. Otherwise, someone else who is playing bigger will come and wipe you out. If you are just running a small little business, oh, we, we do, you know, we have an HVAC shop and we're just running, we're doing good, we're opening up another location, which is fine. Someone that might come in and buy up 30 of your competitors, lower prices for a year, drag all competition to you and be the category king of your space. And you might say, well, Any Hour Services is a terrible service. Well, guess what? They're getting most market share. Supercuts is a terrible service. Well, they're getting most market share. You hear barbers complain about Supercuts all the time. Well, guess what? They make way more money than you do, even though it's a worse haircut, 'cause they grab market share. This is a friend of mine. This is Andrew and Shawna Smith. They did, this is their strategy. They found small, little small-town burger shops, you know, like that one small-town shop that's amazing? They bought 'em and they would blow 'em up. They were the ones who found Mobetta's, Swig. You guys know these brands? I'm not sure in kind of this part of the United States they're popular, in the Midwest, but Swig, Mobetta's, they found 'em at one location, two locations, they blew 'em up into hundreds of locations. 'Cause they were this good small town shop. That's one strategy, okay? We're seeing a major wealth transfer right now, so let's get into a little bit of tactics here of what you can do. We have people that have gun store businesses that buy, they bought out all their competitors. So instead of building more businesses, they built a fund, they went and bought their competitors and pulled it in together into one business, okay? So I'm gonna go, I'm gonna kinda jump here. So what is a fund? We'll talk about this in a second. So earlier, we talked about a fund, right? What is a fund? Remember it was a pool of money? Investors put money in. So there's a few— it's not called a pool of money, there's different terms. Let me give you the terms. Sound good? Okay, the first term is a limited partnership. That is your pool. Okay? That's the pool of money I talked about that the money flows into. And again, I'll pause. This is how 99% of private capital in the world is raised. Trillions of dollars are raised through this little structure right here. Okay? You have a limited partnership. Investors over here, or limited partners, what they're called, LPs, limited partners, put money into a limited partnership. Remember we talked about earlier, a pool of money, investors put money in. I'm just changing the terms here on the screen. Okay? Following? Can I get a yes? Yes. Alright. Then you have fund managers that manage this pool and they go make investments. Those managers are usually in 2 entities, a general partner and a management company here. Okay? We'll hit a couple of these in a second. And this is all governed by what I like to call the Bible. Or the LPA and PPM, the limited partnership agreement and private placement memorandum, okay? So, let's dive into this briefly. A lot of people ask me, well, can a fund, you know, can we invest into Bitcoin mining machines or can we invest into Airbnbs or can we invest into real estate? The answer is yes because you write the Bible. What's really cool about funds is you, me and you write the LPA and PPM. These are big documents, they're about 100 pages each of compliance. But what's cool is there's a lot of leeway in there. You can actually write in the terms of what you want to do. Okay? Most funds here are making a performance fee and a management fee. Do you guys see that on the screen? Yes. So, when you're running a fund or someone's running a fund, a lot of times the limited partnership, if the investment does well, they split the returns. Oftentimes it's 80/20. So, 80% to the limited partners, 20% to the general partner on a performance fee. Is that making sense? Yeah. Yeah? Then oftentimes funds will charge usually a 2% management fee. 0.5% per quarter that's charged just to run the fund. That goes to the management co. Following along? So you've heard of a fund before like a 2 and 20 fund. Anybody heard that before? What that means is a 2% management fee is paid and a 20% performance fee or carried interest is paid to the general partner on this. This is how pretty much most of the big private equity large shops. Now there's hurdle rates, there's high watermarks, there's other things we can dive into. We won't touch on that today probably, but this gives you a base format of how this works. Now, a couple things to work on, and Carlton told me today, he's like, some people might not build a fund, but they might invest into funds. It might be good to understand a few things. If you're gonna be a limited partner, which by the way, I'm an investor in a number of funds. I run 2 funds and then I invest in funds, 'cause I don't want, Personally, like, I'm not that handy of a guy, I'm not that good at real estate. I will happily pay somebody else to do real estate for me. Like, I don't like doing that, but I'm good at other things so that people can invest in my funds. Is that making sense? Yeah. So I'm a limited partner in some of these funds. Whenever I invest in funds, I make sure to do a number of things, and maybe I can give you a quick list here and then we can, uh, we'll kind of move on. Number 1, I want to— first off, I really want to understand the whole gamut of what's going on, which is great. All of you probably know that. Understand everything that's going on, all the stuff that's happening. Number 2, I want to know every single way that the person selling the investment is getting paid. And I'll ask them that. Walk me through every single way that you make money. Because they'll make money through the general partner, the management company. Some groups write in their LP and PPM, we're going to hire my brother-in-law's construction firm to build the real estate. and I'm an owner on that. Oh, and we're also gonna hire my cousin's electrical firm, and I'm an owner on that. Does that make sense? There are some, and again, we'll talk about how to negate that in a second, but sometimes there are fund managers that do, you've probably heard of scams and frauds that do nefarious things. If you ask that question, walk me through every way you make money, and really drill into it, it just helps you understand what's going on. Sound good? Yeah. Yeah, that's a good question. Number 2 question I always ask, To validate what they just told me. Do you do, this'll, oh my gosh, this has now become a rule of mine. I do not invest into any fund, any investment, anything, and they could be your best friend. I have people, like literally my best friend calls me all the time like, dude, let's invest. I'm like, great, I need 2 things to happen. Do you do annual audits on the firm? Meaning, do you have an outside party come and audit your fund every year? Like right now, I pay $20,000 a year for a firm out of New Jersey to— I invite an auditor in and they audit my fund every single year on both funds. So I pay $40,000 roughly a year. Does that make sense? Most people avoid audits. We invite auditors in every year to do an annual audit. Number 1, do you do annual audits? Number 2, do you use a third-party administrator to help manage and run your fund? Okay, those are made for your notes. If you're looking to invest in a fund ever, Or build your own fund, make sure you do those things. That keeps away 99% of, like, I know I have a bunch of, I have one friend, he's lost about $20 million investing into bad funds. Now, he's pretty rich, he's worth like $200 million, so he's good. But $20 million's still a lot for anybody, you know? He's lost $20 million investing into bad funds, roughly. And I asked him, like, did any of them do annual audits? Well, no. Did any of them do third-party administration? No. Easy, easy, easy stuff. So can I get a promise from y'all before you invest in a fund or anything like that? Make sure they do annual audits or make sure they— and then, and guess what people will say to you? They'll be like, oh hey, we're just brand new. We're just starting out. We're just buying a restaurant down the street. And at least what I say, well then it's probably too early for me. Call me back in a couple of years when you do annual audits. But I love you to death. I want to support you. I'll also help you other ways. I'll come give you a 5-star review. But if you're going to take my hard-earned cash, I need to see an annual audit. And I'm telling you from someone who runs funds. I run 2 funds. I've ran multiple funds before. I work with lots of funds. You'd be surprised how, if you don't have an annual audit and you don't have third-party administration, how easy it is to fudge numbers. And/or it's not even on purpose. You just make a mistake. You're just like, oh shoot, we just didn't get the returns right because someone messed up. That's why you, it's like you have to pay these people to do this. Sound good? Yeah. Okay. Now, once done correctly though, beautiful vehicle. This is again, this is how BlackRock runs their funds, Blackstone, all these huge firms all do something like this. There are 2 different types of funds generally speaking, and I'll walk through this briefly. Close-ended funds, okay, and you can, I kinda just put it all on the screen for you there. Close-ended funds, and the other one's open-ended funds. So a close-ended fund, let me walk you through this real quick. You guys cool if I just, I'm getting into content. I was like story, and then now we're to content. Is that cool? Yeah. Yeah. Yeah? This will help you understand when investing into funds. How does this thing work? A closed-ended fund, you can see a timetable here, 0 to 10 years. Usually in a closed-ended fund, I'm gonna use an example here, it's called a, this is a total of a 7 to 8 year target close. Do you guys see that over here? I guess you guys, if I walk over there, you can't really see it. Target close, I guess I got a laser pointer. Okay, target close, 7 to 8 years. We're gonna raise money for our first 18 months, While we're raising money, we're going to do capital calls and start deploying that capital. We're going to have kind of a value-add growth period, and then we're going to start selling and disposing of properties here. And our goal is that everything is paid back to you over the next 7 years. We have the, we have the option to extend 2 years or 3 years if we need to up here for a total of 10 years. We'll have all your money back by at least 10 years. That's how a lot of funds run. So it's good to understand timing, and usually your money is illiquid in these funds. You can't pull money out. Yeah. That make sense? So this is what would be called a closed-ended fund. Oftentimes when you're— so you might be sitting there like, well, man, that's like a long time. In this type of structure, yeah, it is. It is a long time. There's no way around it. So this is what a lot of funds do. They launch fund 1 and they're capital raising. The moment they're done capital raising and starting to deploy, they then start raising for fund 2. Do you see that? How that timetable would work out? And then down below you'd raise for fund 3 here and you're running now 3, 4 funds at the same time. So you'll see people like, oh, I'm on venture capital fund 5. When my dad retired, they had 117 funds running at the same time. Isn't that crazy? 117. Wild. Alright, let me give you one more here. The other style of fund is open-ended funds. This is how a lot of hedge funds on Wall Street run. You start today, They go in perpetuity, they're going forever. Money flows in and it's usually locked up for a period. So for example, let's say, hey, your money flows in, it's locked up for 9 months or a year. But then after that, you can actually withdraw your money out or new money can flow in. So it's open, I mean money can come in, they strike a NAV price, a net asset value price of the fund and money can flow in and out, okay? I'll tell a little side story. So you guys know Ray Dalio? Yeah. You heard of him before? Read a bunch of books? He ran Bridgewater Associates. Get this, okay? He ran an open-ended fund. Per SEC rules, you can only raise from 1,999 people, so 2,000 people. Once you get over 2,000, it's now a public offering. You probably gotta file with them on the public exchanges, but this is a private offering for 2,000 people. They raised their last fund in 2005. They filled up all the spots. Minimum check size, so to invest in Ray Dalio's fund, 'cause they only have so many spots, You had to have a $4 billion net worth, minimum commitment of $100 million to be in his fund. Isn't that kind of crazy? These are some of the most exclusive clubs on planet Earth, okay? And then they're closed. He hasn't raised money since. Jim Simons' Medallion Fund, he's like, we haven't raised money in 15 years because they're closed. And so you'll see some people like they aggregate capital together and then come in together into that. But I just want to give you a sense of this. This is the biggest game on earth. This is the game that's happening. Now, what we're seeing is people at the micro level play this game. So we've helped hundreds of people now go out, build small funds to go acquire 5 properties or 10 properties or buy their competitors' businesses together. Is that kind of making sense? So there's again your open-end and closed-end funds. I want to— so was that enough fun talk? I want to share one last story and then I'll get off and I'll be at lunch. You guys can just come chat. Back when I was— so I do funds, I do funds all day every day. This is all I do. When I was 24 years old, I got a call from a guy, very wealthy individual in Utah. He has a private jet, drives a supercar, huge house. He invites me to his office. I sit down in his office. He gives me the pitch of a lifetime. He says, Bridger, I love what you're doing. I've seen all your stuff. We need to scale our thing into a fund. We currently manage about $100 million of restaurants. I want you to be the fund manager. I'm gonna give you about 25 to 30% equity, and we're gonna build this thing into a huge brand. Like crazy. I go home, I'd just recently been married, I go home and I tell my wife, I'm like, honey, this is like what we've worked for. Like, this is the moment. You know what I'm talking about? You ever had that moment before? I'm like, dude, this is it. Like, this is our next level. And I— me and my wife, and we're, you know, prayerful, trying to be faithful people, and we're like, let's pray over it. Let's just see if this is the right decision. And I want to end with this because I think this is crucial for everyone here. Because you're going to get— there's lots of people to talk to and pitch and meet with, and I had this great person come to me like, hey, let's, you know, let's partner together. This guy's twice my age. He's like a mentor of mine. Like, he wants to partner with me. I'm like, oh my gosh. We kneel down and pray. Now, God does not always speak to me. I'm a little old Bridger, but there are a few moments where God does, and I've trained myself, if God speaks to me, I'm gonna listen. We kneel down and pray, and separately we get the answer. Guess what the answer is? No, do not do this. And it was very clear. It was not like kinda, it was a clear no. So I'm— I go, okay, I'm not gonna do this. Like, I trained myself. This was like an amazing opportunity, millions of dollars on the line. I'm like, no, I'm not gonna do it. So I step away. I'm like, I'm not doing this. So the next day I call him up and I'm like, hey, I just don't feel good about it, I'm sorry. And he goes, he's kinda like, you're kinda dead to me, like, see ya. Like, good luck, good luck. Like, really, he was kind of mad. He was really mad at me. And I said, sorry, I just don't feel good about it, I'm sorry. So I go on my life. 3 weeks later, I get another phone call from a different guy, very successful individual, he drives a Ferrari, he lives in this, he has, anyways, all the stuff. I go to his office, big high-rise. I'm like, this guy's twice my age, he's like 50 years old. He's like, Bridger, same pitch. He's like, let's do a fund, $100 million fund. I have all these clientele. We'll raise this thing overnight. I'm like, oh my gosh. I'm like, that's why I said no to the first one. You know what I'm talking about? I come home, I tell my wife. I'm like, dude, this is it. Like, this is— God's helping us out. It's amazing. We're like, hey, let's pray about it again though. Let's just confirm. You can probably guess what the answer was. No. No. And I was really shocked. Like, I— and I was— then I was like, is this just me? Am I self-sabotaging? Is this actually God? You know, have you ever done that before? You're like— What? But I remember, I've like, no, that was pretty distinct. So I tell the guy no. I'm like, I'm just going to follow. And I live my life. Nothing happens. I go on a year, 2 years, 3 years, 4 years. I think probably was it 4 and a half years later. This is last year. First guy, huge blowup. Allegedly a $500 million Ponzi scheme. that he was running. I got— I was like, oh my gosh. Within a matter of months, the next guy raided by the FBI, his whole office was also running a big scam, something else internally. Isn't that crazy? I knelt down that night and said the most heartfelt prayer. Yeah. The most heartfelt prayer. I was like, wow. I mean, that's career-ending for someone in my space. Even to be associated with that. And I would have had no clue 4 or 5 years ago, right? Because it takes time for stuff like that to come out, right? And I remember kneeling down and praying like, God, thank you so much for giving little old Bridger an answer to a prayer 4 and a half years ago when I was really excited to partner and do something and jump into something. And we've tried to play the long game. I want to build a, like, long-term family, long-term businesses. I want to play the long game. And my message to leave with y'all is there's great people here. Meet everybody, talk with Carlton. And I believe in 2025, we got— we kind of live in some crazy times. Is that good to say? We got World War III on the brink. We got all sorts of stuff. I think, I think more people need God in their life. This group's got amens. I love it. Give me an amen. Amen. To a Mormon boy, this is all the Baptists. My dad grew up Baptist. You know that? Amen! Let's go. I love it. We need more God in our life. Pray. I think it's worth— pray over everything. Yes. Business decisions, partners, employees. Who— what you guys do, what we do impacts the world. The ripple effects of what we do. Especially when you run a fund. You're managing lots of money. It is huge. So, when you have employees and people that look up to you, sometimes their employer is the most impactful person in their life. Be that person that makes waves and moves things and be prayerful about it. My name is Bridger Pennington. Thank you all for having me today. Let's give a huge round of applause to Bridger.